The Barry Ritholtz Interview: “Smart is good. Smart and lucky is better”

I’ve been reading Barry Ritholtz for well over a decade, and if there’s one thing I’ve learned from following his work, it’s this: investing isn’t just about money — it’s about psychology, humility, and learning to think clearly in a noisy world.

Ritholtz, the longtime market commentator, founder of Ritholtz Wealth Management, and host of the Masters in Business podcast, is out with a new book titled How Not to Invest. It’s not your typical “hot stock tips” guide. Instead, it’s a wise and often funny exploration of the behavioral pitfalls that trip up investors time and again.

As Ritholtz puts it, “The book is ostensibly about investing. But if you strip it down to its most basic form, it’s about decision-making, judgment, and behavior.” He likens smart investing to participating in humanity’s progress — buying into the slow, compounding gains of innovation, from safer cars to better sneakers. But he also warns about the instincts that evolved to protect us — like our fear of uncertainty — which now work against us in the markets.

In a world where fear drives headlines and complexity gets oversimplified, Barry remains a voice of clarity. This book isn’t about beating the market — it’s about not beating yourself. Here’s our lightly edited conversation.

Eric Markowitz: Barry, let me start with a challenge I faced recently. My daughter Beatrice, who’s three-and-a-half, looked at your book and asked, “What is it about?” It made me wonder: how would you explain this book to a child?

Barry Ritholtz: The book is ostensibly about investing. But if you strip it down to its most basic form, it’s about decision-making, judgment, and behavior. If I’m explaining this to a three-and-a-half-year-old, I’d say: we want to teach you to make good decisions — not just ones that work for now, but over time. Think of your life as a long arc, and the better your decisions across that arc, the better your life will be. And when people tell you life is simple, it’s often more complicated than that. Beatrice needs to think critically and be aware of people who may not have her best interest at heart. My area is investing, but at its heart, this book is about making better choices.

Eric Markowitz: She also asked me what investing means. So: what is investing?

Barry Ritholtz: At its core, investing is putting capital at risk in order to generate a return. You start with the risk-free rate — typically 10-year U.S. Treasuries — but even that carries risk, as we saw in 2022. Then you try to earn more than inflation. But philosophically, investing is how you participate in and profit from human innovation.

Even when the news sounds bleak, the world keeps improving — in technology, healthcare, and consumer goods. Look at cars. I love classic Corvettes, but they’re terrible machines compared to what we have today. Investing lets you benefit from that progress.

I tell a story in the book about how cars have evolved. I own an old Corvette. It’s loud, the steering is manual and laborious, the clutch is heavy, the brakes are terrible, and the safety features are laughable — just lap belts and one side mirror. It’s beautiful, but it’s not a good car by today’s standards. That’s what progress looks like. Gradual improvements over decades. It’s like Hemingway’s line about bankruptcy — “gradually, then suddenly.”

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The same applies to healthcare, clothing, phones, sneakers. Everywhere you look, things are getting better. And if you’re an investor — especially an index investor — you get to say: “I want to participate in all the genius ideas humanity creates.” Some of them will fail. But some will be brilliant. And I want exposure to those.

Eric Markowitz: So how do you stay optimistic in a world so filled with noise and fear?

Barry Ritholtz: First, context helps. From an evolutionary standpoint, false positives were fatal. So we evolved into pattern-recognizers with a bias toward caution. Then, you add media — 24/7 news, endless internet, and the need to feed the “daily beast.” Most of it is garbage. Sci-fi writer Ted Sturgeon said, “90% of everything is crap.” That applies to news, too. Even when facts are right, emotional headlines distort them.

During COVID, the news was technically accurate, but it felt like the end of the world. And yet the market dropped 34%, then started bouncing back. It wasn’t that the market knew something others didn’t. It made a probabilistic assessment: we knew what mRNA was, companies had been working on vaccines for a decade. So the market bet on that. And it turned out to be right.

We need to be better consumers of information. I have my own personal “dream team” of thinkers and analysts — Jonathan Miller for real estate, Morgan Housel for behavioral finance, Dave Nadig for ETFs, Ed Yardeni for macro, and others. People who’ve lived through a few cycles. People who have a track record and, more importantly, a defendable process.

Eric Markowitz: That resonates. I think curation is going to become even more important. And related to that, I’ve been thinking a lot about how focus plays a role in longevity — especially in the businesses I’m studying that have lasted for hundreds of years.

Barry Ritholtz: I’m of two minds on focus. Curiosity is good. Having broad interests is healthy. But when it comes to your craft, you need depth. You need reps. If you try to do everything, you become a jack of all trades, master of none.

Take my podcast, Masters in Business. I had no formal media training. The early episodes were rough. I showed up with four hours of questions for a two-hour show. Al Mayers at Bloomberg would coach me: if someone says they murdered their wife, don’t move to the next question. Ask them why! Ask follow-ups. Now, 500+ episodes in, I suck a lot less. That’s the value of reps and focus. You improve by doing.

Eric Markowitz: One of my beliefs is that wandering and curiosity are underrated. Jeff Bezos talks about how his best ideas came from open-ended exploration. What advice would you give to someone trying to be a great investor over the next 30 years?

Barry Ritholtz: After hundreds of interviews, I’ve seen common themes among successful people. One is luck. Howard Marks said everyone at Columbia Business School was smart and hardworking — but not all became successful. So clearly, you also need luck. Smart is good. Smart and lucky is better.

Second is intellectual curiosity. Everyone I admire is curious. They have wide-ranging interests, but they also go deep in areas that matter.

And third is humility. This might sound corny, but it’s true. Humility is massively underrated in markets. Finance often trains people to be overconfident. They’re afraid to say, “I don’t know.” But disasters like Enron and Theranos happened because no one asked the hard questions.

If you ask a portfolio manager, “How does your investment strategy work?” and they don’t respond with, “Let’s sit down, I’ll walk you through it,” walk away. It takes confidence to admit you don’t understand something, but it takes humility to know what you don’t know. Better to look stupid and learn than pretend and lose money.

Eric Markowitz: That’s so true. I’ve come to realize that investing — done well — is deeply interdisciplinary. It touches psychology, philosophy, even art. But in the public eye, it’s still often reduced to a stock pick or a quarterly forecast. How do we shift that perception?

Barry Ritholtz: A lot of what I do comes from compensating for my weaknesses. I’m disorganized. I get distracted. That’s why I started making a daily reading list — to prevent morning headlines from influencing my decisions on the trading desk. I’d make a list of ten pieces and read them on the train home, so the emotional tone wouldn’t color my behavior.

Writing helps me figure out what I think. It clarifies ideas and creates a record of what I believed and when. That’s important because of hindsight bias. Once we know how something ended — a movie, a stock crash — we forget what it felt like to not know the outcome.

On book tour for Bailout Nation, I’d ask: how many of you saw the financial crisis coming? 75% of hands would go up. Then I’d ask: how many were short? In cash? Very few. That’s hindsight bias. People think they knew — but their actions say otherwise. That’s why I used to write an annual mea culpa: here’s what I got right, here’s what I got wrong, here’s what I learned. And my rule? No mistake made twice. Make new mistakes each year.

Eric Markowitz: I love that. I used to think of writing like solving a puzzle — cutting, pasting, moving the best stuff to the top. One of my editors would always say, “Your most important point is buried at the bottom. Bring it to the top.” Also, the story you told about audience members raising their hands reminds me of the scene in Life of Brian where the mob cries out “We are all individuals!” and one guy goes, “I’m not!”

Barry Ritholtz: Exactly. It’s all behavior. Dave Nadig says, “Investing is a solved problem.” The hard part isn’t the allocation. It’s the behavior. If Bloomberg gave me a show, it would be ten seconds long: “Own a diversified portfolio of low-cost index funds. Rebalance every few years. See you tomorrow.” The real challenge is human behavior. Financial literacy matters, but it fades. A year later, people forget what they learned. They say, “Yeah, but this time is different…”

Eric Markowitz: My mom was an English teacher, so I always look at word origins. “Patience” comes from the Latin for “suffering.” Investing is basically long-term suffering. It’s enduring through the periods where nothing exciting is happening.

Barry Ritholtz: Exactly. Patience isn’t passive. It’s active. It means enduring through boredom, volatility, and uncertainty without abandoning your plan. The challenge is staying the course when everyone else is panicking.