Animal Spirits Podcast - Talk Your Book: How Not To Invest Like Buffett

Episode Date: April 19, 2025

On this special two-part episode of Animal Spirits: Talk Your Book, Michael Batnick and Ben Carlson speak with Barry Ritholtz to discuss his new book, How Not To Invest. Barry is the co-founder and Chief Investment Officer of Ritholtz Wealth Management, as well as the host of the popular Bloomberg podcast Masters in Business. Then at the 30:00 mark, the guys talk with Alex Morris to discuss his new book, Buffett and Munger Unscripted. Alex is the founder of The Science of Hitting Investment Research. Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Learn more about your ad choices. Visit megaphone.fm/adchoices

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This podcast is for informational purposes only and should not. be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Ben, I got to tell you, there are some people that have said, like, oh, if you're investing, don't read investment books, or there are people who invest in that don't enjoy reading investment books because they spend all day in the numbers. And I totally get that everybody's point of view is different on every topic in life. So, But for me, I still very much enjoy reading investment books.

I got to tell you. It's not old. They don't get old for me. I still get something out of it, too. I feel like sometimes you need, even if it's just evergreen messages, you need them beat into your head again and again to keep you on the right path. And for Barry's book in particular, so today we talk with, this is a two-fer. We've got how not to invest by my partner, Barry Riddholtz, and I've lived with Barry

for the last 13 years. I've heard every one of these stories multiple times. And somehow, I still enjoyed reading this book because he makes it fun. It moves. It's quick. We also spoke with Alex Morris, who substack, I adore.

I don't know that's too strong a word. I don't use that very often. I really enjoy his substack. Alex wrote a book called Buffett and Munger unscripted. And he did something really interesting. he can't imagine the lift this was, he went back through the archives, watched all 30 plus years of the Berkshire annual meeting, and he condensed that into some of the most important lessons that you could take from two of the greatest months to ever do it.

It's a really big book, but it's really well done too where you can use it as a reference book. You don't have to read it from cover to cover. You can pick and choose. which spots look at. It's really well done. I can't imagine how much time it took him to put it together. All right. So here is our conversation with Barry, and this is fun to Barry has obviously spent a lot of time in front of the microphone asking questions. And for the shoe to be on the other foot where now we're asking him questions was it tickled my funny button. I got to be

honest. Fascinating conversation. For your listening pleasure, ladies and gentlemen, the great Barry Ripples. Barry Redholtz, welcome to the show. Well, thank you for having me. All right. So I've been reading you for almost 20 years, which is nuts. And the smile out of your face is hilarious. I wish people could see this.

Going back to the street or what? No, I started reading Barry at the big picture. Which was sort of around the same time the street.com, early 2000s. But I didn't ask a question of that. Go ahead. All right. So, Barry, you. You went against the grain as you want to do.

People have been, the length of books has been getting shorter as people's attention span has been getting shorter. You took up all 420-something pages of this book to fill it in. And I would say that the book, how not to invest, is a culmination of your life's work. Do you feel that way? To some degree, yeah. So first, two things. First, a lot of really short chapters, page and a half, two pages.

Yeah, it's like blog posts, right? Like a lot of more short blog posts. Short ideas. A lot of white space. a lot of charts, so it's not as big of a doorstopper as it looks. I had to argue with the publisher. They wanted to start each chapter right in the middle of the page. I'm like, guys, it'll be a thousand pages if we do that.

You got to start at the top of the page. But you told me you've been, I've read all this stuff before. I've seen all this. That really isn't true. 80% of the book is new. I might have started with an idea. Dude, I've read all of it. All right. So how much of it was new? How much of it have you seen before?

Okay. A lot of the, a lot of the actual stuff is new because John Wick didn't come out until whatever. That's right. All of the- Or squid games. But dude, I wasn't insulting you. The concepts are timeless. That's the whole point. Yeah, the idea is how do I find a way to express these that is understandable and accessible to everybody, not just professional investors, but, you know, mom and pop investors who maybe want to stop shooting themselves in the foot. So when you're writing this, you have a voice in the back of your head or an audience. Are you thinking about who are you thinking about as the reader? So you know my dirty little secret.

We've talked about this before. My podcasts are for an audience of one. It's, wait, I get to sit down with Bill Bernstein or Dick Thaler for two hours. I don't care if anyone listens. And as a writer, you know, the famous Daniel Borson quote, he was librarian of Congress. I write to figure out what I think. And so a lot of this was some was that, but a lot of this was sort of revisiting ideas and concepts that I was very comfortable with, but we hadn't had an opportunity to really explore in a long time. So I'll give you two good examples. The Cisco magazine

cover on on fortune magazine right the one stock you have to own the stock did nothing but go down for 20 years after that lost 95% of its value and nobody's perfect what when i wrote about that in 2000 on geocities nobody gave a shit nobody was paying attention to me right like i don't you guys have slightly different history than i do like i wandered in the desert for decades before anybody knew who the hell I was. And then the financial crisis, you know, for better or worse, put me on the map. So suddenly people started paying a little attention to what I was saying. But that first Cisco piece, it landed crickets. You're like, hey, is it this kind of ridiculous? The stock's up 46,000 percent. It was forecast to be the first

trillion dollar company. They used to do zero vendor financing. Now, 95 percent of the sales. I'm not going to lie. I still don't know what they do exactly. Routers. Would you say that the whole, like, a big part of the reason for this book is just because you've been doing this for so long and so much of the stuff that you see from other people and pundits and advice just annoys you a little bit? He can't help himself. Well, I'm saying, like, I trust me, I have the same feeling like. No, Ben, Ben, Ben, you and I are able to see something that's ridiculous and just wipe it off who gives a shit. Barry can't help himself. He has to call out everything he sees.

But that's part of it, right? Like, get rid of all the bad stuff because there's a lot of it out there. There's some of it. Look, my neurodivergence is a unfortunately heightened sense of right and wrong injustice. And I just feel like obligated to call out bullshit where I see it. Look, it was never my intention to open a wealth management firm. I never wanted to do that. But we were at a shop that was a broker-dealer and an RIA.

Very careful. Okay, so let me rephrase that. I have always watched the relationship that you have as a consumer with an accountant. There's a fiduciary obligation for them to put your interest first. With a doctor, the Hippocratic Oath, first of above all else, do no harm. With your attorney, they must zealously represent you to the best of their ability. why when you go to a financial relationship about paying for your kids college, paying for your retirement, your money and your savings, is that relationship no different than the guy selling

you a used Toyota? Like, that never made any sense to me. And so, Batnik, I don't know if you remember back in the old old days. It's like, this is being done wrong. We can do it better. There's a right way to do this. Now we take it for granted that. a broad approach, diversified, using low-cost ETFs, embracing, at least for a healthy chunk of your portfolio, indexing, and being a fiduciary to your clients, I think that's become a lot more accepted today. But when we launched, like, that was the outlier side of things. So, Barry, three years before, maybe four years before we launched, I was at an insurance company, as you know, and I heard all sorts of nefarious behavior, people tricking,

unsuspecting buyers into buying bad whole life policies for no reason other than it was to line the seller's pocket and I get it. Obviously, we're all driven by incentives. But talking about the book. So was there, all right, this, I don't know if this is controversial or not. Do you think anybody learns anything from reading a book about investing? Like actually, not just learns, applies the learnings. Yes and no. I mean, first of all, we know that financial education has a really short half-life. That's number one. Number two, the whole theory behind the Charlie Ellis side of things, what we learn from Charlie Ellis and the losers game is that teaching people what to do doesn't seem to work. Not only don't they remember it, but there's the entire behavioral side

that screws all that stuff up. So rather than say, here's what to do, buy this, buy that, how to build a portfolio. I spend most of the book telling people, hey, if you avoid the unforced errors that we all make, and throughout the book are some of my biggest boneheaded investment decisions. And those are all true. Those are all dumb, either things I bought and shouldn't have, things I sold and shouldn't have, opportunities I passed on and shouldn't have, you know, we all make these stupid mistakes. If only we made fewer them, fewer of them, we would be so much better off. And that was, you know, I had postponed doing another book for a long time. And the pandemic kind of gave me an opportunity to visit some of these, like that Cisco post

of, gee, no one paid attention to this in 2000. Maybe we should revisit it. The business week piece before Bloomberg bought Business Week, sorry, Steve, here's why the Apple stores are going to fail. Like, what are you crazy? It turned out that the Apple stores are the highest grossing retailer. No one's even close. Second place at half the dollars per square foot. Those anecdotes about people being wrong. That's never going to go. And then there's a theme that comes through that, you know, not only can you trace it to Charlie Ellis and Charlie Munger, but to the podcast, the Masters in Business podcast, when you have people like Howard Marks tell you how important humility is, being humble, that everybody thinks they know what's going to happen and, you know,

understanding the role of luck and life and serendipity. Batnik, you of all people understand serendipity. So these themes kind of came together and suddenly it got to the point where it felt like I wanted to take all of these ideas and put them in a coherent, structured package that could be digested by anybody. I agree with you that the context is so much more important than tactics, but most beginning investors assume that they need the tactics. I think you're one of the first people. I remember writing about it, like the Washington Post, about why politics and investing don't mix. And you have a chapter on it in the book. Literally my first column. So I remember you were one of the first person to beat that drum. And so I keep hearing from people now and saying,

hey, hey, you Ridholtz people told me for years, politics and investing don't mix. What about now? to be fair to us, we never thought there would be a president who would come in and destroy the economy and stock market on purpose. So hand up. I didn't think that was ever going to happen. But the point is, is not that politics don't matter. It's that if you're using the politics in every four years or every two years or whatever to make your decisions, that's where the problems come in, right? Right. There's a genius study I reference in the book that takes anonymized brokerage firm data by county. So you can tell how a county voted.

You can cross-reference the investment portfolios with how they voted for president. Red counties sold equities in 08 when Barack Obama got elected and in 2020 when Biden got elected and left a ton of money on the table. Barack Obama from 08 to 16, markets went straight up. Blue counties sold in 2016 when Trump got elected and in 2024 when Trump got elected. 2016, despite the pandemic, the market screamed higher for four years. So the takeaway from that is if you allow your national vote or even your local vote to determine your portfolio, I include a great chart from our colleague Callie Cox that shows the growth of, I think it was a growth of a dollar since 1950.

If you only had it in the markets when a Republican was president, it's worth $53, $63. If when Democrats, it's worth $83 or 103. But if you kept investing the whole time, it's worth $1,200. Like, it's just so blows everything away. And then the takeaway is do less and try not interfere with the magic of compounding over decades. Josh and I were talking about this yesterday. It really, it feels like the noise is unbearable. It's coming from all directions. The algorithms are, of course, programmed literally to prey on our worst fears. I think that we both agree that the phrase tune out the noise is absurd and

insulting. How do you tune out the noise? But how do you like contextualize the noise or to the extent that you can maybe dampen it and make it less in your face? What are some of the tactics that you found helpful over the years? Two things. First, and, you know, the real reason I wrote the book is because Batnik is tired of my war stories. So I'm like, I'm going to put this all down. Tell somebody else. I've heard it. Because like, I can, as I'm typing, I hear his eyes rolling back in his head. But this is really true. I started on a trading desk. And I learned that if I read the Wall Street Journal on the way into work. On the subway, like I would, whoever was the last person in my head would affect

my wrist tolerance, how I looked at the world. So that's where the reads came from. I just started saving my stuff to read at the end of the day because it had a very different impact at four o'clock than it did before 9.30. And then you go home, you go to sleep, you get a fresh reboot. You're good. So that's number one. Number two, and part of the reason I talk about all those terrible magazine covers, why Nokia is still the king, Blackberry is the one to beat, sorry Steve, the Apple store won't work, Cisco, the one stock to own, why all the squid game couldn't get made, John Wick had to be financed by Keanu, which made him so much money, you have no idea. And then, you know, everybody passing on Star Wars and Raiders, I want people to realize that the vast majority, the firehose of news, of media, of social media, of blog posts, of magazines, of television, 90% of it is speculative bullshit. It's just people's opinions, wishful thinking, unsupported allegations, and mixed into this are some news. facts. I love the Laslo-Borigny piece that each year they, and Mike, you could, when you're in

the office next, there are stacks of them in my office, right? They just have a book of all the headlines from the Washington Post, the New York Times, the Wall Street Journal. And when you look at them with the benefit of hindsight and you know how the outcome was, they're technically accurate. They're factually correct. But what comes through is the emotionality, the hair on fire. And so I wanted to show people, you could read all of this stuff. You could watch whatever you want, but just be aware of how manipulative unintentionally, or if you're talking about algorithmic social media, well, that's the entire point, the outrage. But so how do you, how do you solve for that. My solution is I put together a list of my All-Star team. And I don't feel the need to

dip into the fire hose all that much. If I want to know about real estate, well, then I'm going to read Bill McBride and Jonathan Miller. If I want to know about market structure, it's Sam Rowe, ETFs, it's Dave Notic. I talk about you two guys using data and storytelling. In fact, I think Ben is the single best writer integrating hard factual data with narrative storytelling. You want to talk about psychology and investing? Well, read Jason Zweig or Morgan Housel. On and on it goes, I have my team of All-Stars. Batnik, how many of your charts find the way into the book?

You're one of the few people that says, let's look at this data over the long haul and see what it means. So, yeah, you have to create your own group of All-Stars who've lived through a few cycles, who have a defendable approach, who don't run around with their hair on fire every time there's a problem and who, you know, have been a lot. We're all going to be wrong eventually, but you want people who have been a little more right than wrong as opposed to consistently being out on the edge and only occasionally getting right because they got lucky ones. Ben, would you say that if you were to, like, think about the Mount Rushmore of investment mistakes or the most common top 10, whatever you want to call it?

There's, it's hard to pick a single one, but one that stands out to me that we've been talking about just now is people listen to air quote experts. They think because somebody has a credential, is on TV, made a good call, that they know what's coming next. Would you say like, like, at least I see that all the time. And I'll even tell people friends who ask me, like, dude, I don't, I don't, ask me. about stock, you probably know more about it than I do. Like, no, yeah, but what do you think? People do not believe, no matter how hard you try to dissuade them, that nobody can see the future. Well, that's like the biggest novice mistake, right? I think there's different, like a novice mistake and a professional mistake. That's probably one of the bigger novice mistakes, right?

Absolutely. The first chapter is the halo effect that you see someone who sounds smart is successful. They've made some money. You think they have to know what they're talking about. you know, Sam Zell, one of the greatest real estate investors of all time, never made a penny forecasting recessions. And our friend Eric Golden of Canopy said that when Sam Zell would show up at fidelity, like the conference room would overflow. Everybody wanted to hear his prognostications of what was coming next. The guy called himself the gravedigger because he would dance on the graves of people who got over leveraged and were forced to sell real estate deeply discounted. He never made a penny forecasting a recession.

And, you know, that halo effect is really good, is really significant. But then once you get into the world of, um, forecasters and outliers, somebody makes an outlier forecast and they're right. That's it. They're going to keep making outlier forecasts forever. I stole two things from Ben. One was about Michael Burry, something you linked to with a guy who tracked all of Michael Burry's call.

Brilliant investor killed the big short. Absolutely is great. And has been forecasting crashes ever since. But the irony is he might not be executing his calls. He does not. He made $100 million on the big short. Reputedly is worth a billion dollars today, despite forecasting a crash every year. That's not how he he traded.

He's a very specific trader. And the same thing is really true with rich dad, poor reader. That was a post from Ben. I had to steal his title about the book. This guy has become a catastrophist. Despite selling 32 million copies, he set up a number of LLCs. One of the LLCs went bankrupt. It's like, I don't understand.

How do you sell 32 million copies of a book? forecast a depression or a recession. My favorite tweet of Kayasaki's was in 2018, sell U.S. real estate. You don't want to hold it. Has there been a better time in your adult lifetime to buy real estate than 2018? Oh my God, it went straight up from there. So you have a good chapter in the book, too, about risk. I like your thing is like risk is unavoidable, but panic is optional. And you talk about externalities. hit the market like big geopolitical risks and it's funny because there are certain people now who think that what's going on right now is like the biggest risk we've ever seen and you lay some of

these out there you know stuff that sparked world war one and world war two and jfk being assassinated it's September 11th and obviously COVID-19 is not that long ago um I think there's a lot of people who have never been through a situation like this who are who are just like okay the world's coming to an end like this is this is happening people are there's certain people are people who are locked on that mindset and can't get out. Like, what do you tell these people who are who are getting close to panic, hitting the panic button? So it's funny. I had an interesting exchange with Ben Hunt. I did, I did a post, tune out the noise. And then the follow-up post to that was rising risk of policy error. And then the post this week is best and worst-case

scenarios for tariffs. And the worst-case scenario really came from Ben Hunt's, um, car crash of Pax Americana, where he lays out all this permanent damage that can't be reversed. Oh, and this is going to spiral and get out control, and it's going to, and it's going to be really bad. And I lifted some stuff from him and credited him. And he said, hey, you really made me think about the better case scenarios. So while we could all agree, why are we playing Russian roulette with a six-shooter and doing a one-and-six chance of blowing up a $28 trillion economy, that seems to be kind of reckless. Hold that aside historically when really bad things have happened and it feels like the

world is coming to an end. So I lived as an adult through the 87 crash. I lived through the 1990 and 91 double recession. You were not an adult in 87. Maybe your age was. Well, you and I both, you know, are barely adults today. So that's true. But in 87, I was 25, 26. So, you know, semi-adults. But, you know, then the 2000.com implosion, the great financial crisis, the flash crash kind of came and went. The pandemic. And then 2022, no matter how terrible, plus the invasion of the wrong. country after September 11th, no evasion of Iraq. No matter how terrible things are, the good news is there's a sort of homeostatic relationship. I think everybody understands homeostatic is,

hey, your blood sugar gets too low. You get a little jittery. You have something to eat. You sort of normalize. You keep eating crappy food. Now your blood sugar gets too high. like homeostatic, is your body automatically adjust to any extreme? We seem to have that in the United States in terms of politics. Like, I think people thought Barack Obama was, hey, we're moving forward. Look how evolved we are. Look how progressive America has become. And the reality was, no, there's been an undercurrent of pushback to this.

And now the pendulum's swinging the other way. And it's swung to Trump in 2016. then it swung back to Biden in 2020, then it swung back to Trump in 2024. I don't think it's an insane statement to say you go too far to the left and the body politics swings to the right. You could easily say we've gone way too far to the right to chaos and we're going to swing back the other way. I kind of like it in the middle.

But the world isn't static. the world is dynamic. And so, you know, who wants to bet me if Congress is going to stay in the same control in 2018, whether or not they take control of tariffs back, whether the worst sort of, you know, poor policy decisions, or at least let's call them risky policy decisions, do you think these are still in place in 2026, 2028, 2030? I think whoever gets elected in 2020, and I don't believe Donald Trump is staying for a third time. I think he just loves to troll people. I think there's going to be a global ass-kissing tour

and the worst sort of alliance-busting behavior we saw gets rolled back. The alternative is, hey, look at the Great Britain after the British Empire ended. Look at England post-British Empire. And that's before Brexit. Brexit made it worse. Do we want to be that sort of impotent, poor, also-ran country? That's the alternative if the U.S. electorate doesn't swing back. I'm not in the camp that nobody will trust us

again. And look, the world is too wealthy. That's hyperbole. It feels like nobody, it feels like New York is dead. Right. That's right. And, you know, New York is dead. And yet you can't get a reservation and a restaurant because they're booked a month out. You walk down the streets, it's a party. Yeah. All right. Well, Barry, you did it again. How not to invest.

I view it as a culmination of your life work. I don't know if you do, but it seems to me like everything that you've ever wanted to tell the investor is in this book. These lessons are timeless. Crisis is come and go. But the lessons of investor behavior and how to react and how to eliminate our own worst foibles, it's all in here. So I would encourage anybody listening to read the book. It's more important in 2025 than it was in 2024, right?

Yeah, talk about dumb luck. You know, I always quote... All right, I appreciate the time. Who do you always quote? Listen, son of a bitch. By the way, all... I'll play the music, Daniel. Right?

I literally had Michael's eye roll in the back of my head as a lot of those chapters were written. Like, yeah, hear that story before. Too bad. It's a good one. going in the book. All right. So in closing, Barry, what would you like to say to our listeners?

I'm just going to channel the great Charlie Alice. You know, Vanguard Board of Directors, Chairman of the Yale Endowment, he drew the parallel between investing in tennis. Most of us are not professional tennis players. Those guys win by scoring points, hitting with power precision. They score aces. They keep the ball away from their opponent. Amateurs lose through unforced errors.

We hit the ball into the net. We hit it long. We hit it wide. We double fault. Investing is the same thing. Instead of trying to pick the next NVIDIA or market time or whatever, just make fewer mistakes. You'll be so much better off than everybody else. Well said.

Thank you, Barry. Thanks, guys. Okay, that was fun talking to Barry. That's the first time we've had on Animal Spirits, obviously. And now here's our talk with Alex Morris. Alex, welcome to Animal Spirits. Thank you for having me. Fan, excited to be on.

Oh, thank you for that. All right. So you did something really interesting with your new book. You went back through the archives of all the Berkshire meetings going back to 1994. You plucked out the best lessons. You laid it out in a way that is digestible for readers. I'm curious, when you saw that they released the archive, did you go back and then you were like, hey, wait a minute, I should turn this into a book? or immediately did you think I'm going to write a book?

I'm going to go back. What was the thought process like? It took me a couple of years to kind of connect the dots from. When they released it, I thought this is really interesting that they're doing it. And I always loved as a young investor, Larry Cunningham's book, which is the essays of Warren Buffett, was a book that I loved. And I read all the time and still have a dog-eared copy on my desk. So I think I immediately thought there's probably something here.

I also thought somebody else would probably do it. And I also knew that it was going to be a lot of work to get it done. So at first I was just going through it more for kind of personal interest. And then after a handful of years, especially after someone from Harriman House reached out to me about writing a book, I thought, okay, maybe I actually should do this. How long did it take you to figure out how to compartmentalize the different, because you do a great job in the book of organizing it in different parts and different topics? like how did you even narrow down those topics? It took me listening to a couple of years to start to get a good understanding of exactly how I was going to try to bucket these things.

I mean, obviously I knew like I was going to do one on value investing and one on valuation and one on management, but then I had to kind of figure out how do you actually do that? Like when he talks about share of purchases at Coca-Cola, is that going to go in a cap allocation bucket or is it going to go in a Coca-Cola bucket? And things can end up in two areas as well. So it took a while to get a strong sense for how to really bucket them. And I basically at one point just built a very simplistic Excel sheet of, okay, you know, red, yellow green is this definitely in, maybe in, definitely out.

And to the extent that it's in, or maybe in where would it kind of go? And after I kind of finished, I went back and rebucketed things a lot. So it took, yeah, it took going back over the material probably two or three times total. All right. I want to ask a personal question. This is obviously a lot of work, like a massive amount of work. And if you back into the amount of money that you would make per hour, it's a joke, right? Like, we've written books.

It's a joke. And I love, love that you're donating 50% of your net proceeds from the book to glide a charitable organization that Buffett has supported for yours. So clearly, it's not just about money for you in terms of writing the book. So why did you do this? Is it like personal satisfaction that there's a book with your name? Is it for name recognition so that people subscribe to the substack, which I do and I want to get to later?

Is it for money? Like, why did you do this to yourself? Yeah. It wasn't for money. And thankfully so, as you point out, because I have a, well, so far I haven't received anything. I hope the publisher sends me a check at some point. I don't think it's going to be life-changing money is my expectation. Funny enough, the thing that's now.

become the most, from a financial perspective, probably the thing that's going to be most fruitful is the translation rights, which I didn't even know was the thing, basically. I didn't even think about it at all. So it's kind of funny how that worked. But no, I certainly didn't do it from a financial perspective. Wait, what do you think this is the biggest country for Buffett overseas? Japan? Oh, India. The one that, the one, I don't know how much I'm allowed to say, but the one that has been the largest by quite a margin is Korea, which, yeah. So, yeah. So, yeah, interesting to me as well. I didn't know this.

I didn't know the North Koreans love Buffett that much. Yes. I'm waiting. I think it's for the South. I'm waiting for the offer from the North still. They're really concentrated there. Exactly. But I had talked to enough people like you guys to have a sense that this probably wasn't going to be something that made.

Unless I reached Morgan House status, which is like impossible to do. So it wasn't really that as much as, you know, as I started going through at one, it was material for. for TSOH investment research. So I write a lot of philosophy articles that are built around quotes and conversations from periods in the past, from things they had talked about the meeting. So I was already kind of using it in that regard. You know, I thought over the long term,

maybe there's some benefit in terms of branding and, you know, what it might do for TSOH investment research. But that was all kind of secondary to being able to produce this thing that I thought would probably, if I did it well, be kind of timeless like the essays were. So I just thought it was something that, yeah, That's going to be a lot of time to put in. I also wasn't married and didn't have a kid before I started this. So that helped a little bit.

So personal satisfaction. Yeah, I think, yeah, that's certainly part of it. I mean, it's everything you mentioned. Having written a book is, it is like an accomplishment. I used to paint houses in the summer when I was in college. And when you're done painting the house, you feel like you actually did something. Yeah, and it still feels weird to say like actually, it still doesn't feel like I actually finished it.

So I think at some point I'll step back and be like, oh, yeah, I actually did that thing. That's pretty cool. So I'm of the opinion that nothing in the internet era is rated properly anymore. Like everything's either over or underrated. And it would be impossible to say that, oh, Buffett's underrated somehow. But I feel like in recent years, watching so many rich and powerful people trip over themselves and make themselves look like fools and sell out, it makes me appreciate Buffett even more. So I'm curious what your opinion of him as a person is because, and I guess this is more business persona,

because he didn't have a perfect life. If you read his biography, like his family life wasn't perfect. No one's is, obviously. Well, you know, there was some weird stuff where he did like a- He did a partner swap somewhere and it worked out. Everyone was happy. But what do you think about him as a person after going through this exercise? Yeah, I think I'd probably echo a lot of what you just said.

I mean, I think he's someone who was very focused on one thing or primarily one thing for a very long period of time. I think that's changed certainly to some extent over time. But I think that's very fair, and it also speaks to why his net worth is where it is versus anybody that we know. I just think the fact that he never really ruined his reputation after being in the public eye for that long is really extraordinary. And maybe it would have been different if he would have come up now in the social media era. But that's one of the most impressive things about him to me. Yeah, I mean, in terms of what they, everything they've talked about the meetings for 30 plus years now, business stuff, but also stuff broader than that.

I mean, it's all been consistent, basically, for long periods of time in terms of I don't, I don't, you know, the idea that he's out there in Omaha and people think he's like plotting or something. I just never really could get into that thing because it just doesn't make a ton of sense to me, given what he's done for so long. But, yeah. Alex, as you were writing this book, was there somebody that you had in mind, like an intended audience member? I thought of it as a range. I really thought of myself as starting off and call it the mid-2000s, someone like that who could read it and have it still be somewhat. useful to them. But I also really wanted something that I heard frequently and thought I would hear was, hey, I've listened to a lot or all these meetings before. Why would I need this book?

Or I've followed Berkshire for so long. Why do I need this book? I've invested for 20 years. Why do I need this book? I wanted those people to be able to pick it up and get value out of it. And thankfully, I've heard enough people say that they have. But I wanted to hit both ends of the spectrum. Again, just like I feel like the letters kind of do that as well. You read it, you read something two years into investing in the letters that stands out to you. And you can read the same letter 20 years later and different things might stand out to you from it. When I was first out of college, it was like 2005 for Christmas one year. My dad gave me a copy of Poor Charlie's Almanac, and I still have it.

And I didn't know much about Munger at that point in my life. I had maybe read a Buffett book or two and was still kind of coming up to, getting up to speed on him. But I read poor Charlie's Almanac, like, cover to cover in like two days. And I was like, wait a minute. And obviously I was way behind there. But what was your first experience with Munger and realizing like, oh, maybe he's even like more of a genius than than Buffett is.

Yeah, it's funny. So I'm a couple years behind you, but when I went to college, I stumbled across the book and the Warren Buffett shareholder letters. And I think it was, you know, at that point, there were no videos, obviously, or there wasn't even barely YouTube, right? So I mostly knew about Warren. A buddy and I, probably two years after we really got into this stuff, I went to the University of Florida, we drove to Omaha to go to the Berkshire Hathaway meeting.

Wait, so how old were you? like 20 maybe. Wow. Save some chicks for the rest of us, man. Well, we were sleeping in a crappy Honda Civic in Walmart parking lots, and that might not have been the problem with the chicks anyways, but that didn't help. But yeah, so I think that might have been the first time that I really, you know, started to see Charlie more and more,

and that at some point poor Charlie's Almanac and things like that. So, yeah. So what was that experience like as a 20-year-old going to this? Because I look back at myself when I was in my young investing days and just didn't know anything, but thought that I knew something? Like, so what was that like for you? Was it just completely eye-opening? Like, oh, my gosh, this is amazing.

And what was it like? I think it was 2009. Oh, wow. I believe. I believe it was 2009. Yeah, it was probably similar to what you just said, Ben. I thought I knew something, and I knew absolutely nothing. You know, getting there and getting, I really think we drove for two days,

went to the meeting and drove back for two days as I remember it. so it was like a big, it was a big rush in terms of the time of it all. You know, it's hard to remember now. I think I probably didn't take it in as much. I'm definitely a late bloomer in terms of a lot of this investing stuff. Like I wasn't doing it when I was 12 or anything like that. Like I've really picked it up in the last 10, 15, 20 years. I was the same way. I like, you hear these stories of people reading Barron's with their dad at the coffee table and picking stocks. I was never like that. I knew nothing about the market still, like after college, basically. But reading about Buffett was my first experience into, like, I read all the

Hagstrom books, Warren Buffett's Way and the Warren Buffett portfolio. Those are some of my early favorites. And like you said, I read the Larry Cunningham one. And I've heard people say, like, reading through his shareholder letters is like an MBA, right? Because you learn so much about business and in stock selection. So what do you think the meetings are like? If the shareholder letters like the NBA, what is what are the meetings like to you? Yeah, I didn't come up with the idea for the title, the gentleman that I work with at a Harriman House and Chris Parker. He was the one who came up with the idea for Buffett and Munger unscripted. I wanted to call it a Saturday in Omaha and I realized his title is much better.

But inscripted is such a perfect word. Like the letters are, especially these days, are edited and fairly short and they get across what Warren wants to get across. And the meetings are people asking about a wide variety of different topics where, you know, they can ramble and talk about something for two, five, ten minutes. depending on what Warren's thinking or a lot of times Charlie would say something that would then Warren would feel the need to kind of interject again into the conversation. So it was just unscripted. It allowed them to talk about things in a way kind of more freely when you talk about things like stock option accounting or, you know, during the tech bubble. I don't, as far as I remember, I can go back and look, he didn't write about these things in the letter in the same way that he

surely talked about them at the meeting when people were talking about or asking them about them in a very pointed way. So I think that's really the main difference between the two and, you know, why I think this material is so valuable in addition to everything from the letters. So, Alex, you write a substack, the science of hitting, and I'm a subscriber to, and I love it. And you do, I would say, I would say you do dives into companies because they're deep-ish, but they're not like too deep that you're like stuck on the mind. minutia where it's like it's plain English. And I really appreciate that about your writing.

I understand what you're writing. I'm not an analyst. I'm not covering these companies, but I feel like I have a sense of what's going on because you laid out so cleanly. And I bought Dollar Tree because of you. And I filed the company for a long time because of you. So one of the things that you do that I also appreciate is you share your portfolio. you share the first purchase, you share the percentage, you share your returns, you're extremely transparent. Do you think you're going to beat the market over the long term? I certainly hope so. I think it kind of goes back to what I was saying a second ago, which 20 years, certainly a long time in terms of how long the average person usually lives. But I've spent a lot of the last 20 years

really kind of building the foundation for what I think and how I invest. And hopefully, hopefully I've come a long way over that period. But the honest truth is some of it was still being big. built as recently as, you know, five years ago. And it's kind of always being built. Yeah, sure. Right. Especially as we're going through periods like this where, you know, you kind of step back and think a position like Dollar Tree being a notable example,

like how important is macro in politics, my understanding of even the lay of the land to my investment process. And, you know, you kind of test and learn as you go through periods like this. Wait, dude, sorry to interrupt, but Berkshire, Buffett bought Apple when he was like, what, 75 years old? So it's okay to be learning of the flow. A few years after they had said, or Charlie had said, basically, we'll never have the confidence in Apple that we do in something like Burlington Northern or even IBM, I believe you said. And fast forward five years, and they have, I think at one point a $200 billion position. So it's kind of interesting how that works. You know, I think I have a good understanding of what I'm looking for. And I think I have a good understanding of how to be not too smart, basically, how to do things in a way that's reasonable where I'll have staying power. And I think those two things together may lend themselves to the ability to generate good returns over time, potentially to outperform.

It's been obviously very difficult in a market that seems like it's just been straight up. And even just hanging on feels like it's been so difficult for the vast majority of my investment career now. And it's been really interesting to watch how really, really smart people have navigated that, right? it's 2010 to today has been kind of crazy. I try to get rid of as much of the noise as I possibly can and just focus on the individual companies, but obviously that can be hard to do at times. As a Buffett-discipline, are you contractually obligated to own Berkshares shares? I am not, but it's something I...

It's one of your larger positions. Yeah. I've owned it for a long time. I obviously have confidence in the capitalization. and the businesses that they own, generally speaking. I mean, obviously, we're going to go through a, we're going to go through an interesting transition period here at some point in the coming years. But yeah, it's something I've been comfortable owning, but it's a good example of what I'm saying in terms of, you know, I started in one place as an investor.

And I think the companies I'm interested in and that I probably kind of should be owning to the extent I'm going to be able to outperform is probably stuff that looks less like that and looks more like, you know, a dollar tree, a fever tree in terms of just how much is followed and where the opportunity set is, right? But that's a learning curve. I think one of the reasons why I gravitate so much to your writing is because a lot of what I do is focused, certainly on the podcast, is unfortunately the day to day. And I am the noise. I get caught up way too much in the gyrations of the market. But what you are doing on your subsection of science fitting, you're actually looking at the underlying companies. What a novel

concept that is. So I have a sense reading what you do, how you think about investing. but what is your framework? Would you say that you are a Buffett accolite? Obviously, you've learned a lot from him, but what is your personal? Because everybody's investing philosophy is personal. What is your personal investing philosophy? Yeah, I think maybe just a quick example in terms of what his is probably helps to frame this with Coca-Cola, which he started buying in the late 80s for people who don't know this.

He bought more three or four years later at a price that was three times higher than what he had paid in 89, I believe it was, which is not something that's that value investment. generally speaking, do too often, right? Pay three times what they had paid a couple years ago. They probably just let it sit. He bought a good chunk more, a handful years later at three times higher price. And I believe the last time he bought or sold a single share was in 1994.

And at one point during the 90s, that was an equity position that accounted for more than 30% of the equity's portfolio. So it wasn't like some small thing where he's like, hey, I got a lot of taxes to pay. I'm not going to touch this, you know, the kind of typical example that you would hear, is something that he's let's sit for 30 years and was a very large position at points along the way.

Directionally, I think that's how I kind of think about things. I'm trying to find stuff that I truly, truly, truly want to own, which obviously requires a lot of confidence in the business and then also the management team, which both of those things can change and they're interrelated. And as a result of that kind of first desire, it tends to lend itself to, in addition to being long-term, more concentrated. But then the kind of asterisk to all of that is still having some concern or consideration for valuation and kind of realistically thinking about what expected returns are, you know, three, five, seven years out and not getting too far ahead of myself.

So which has obviously been harder to do in the last, you know, six to 12 months or so with withholdings like a Netflix is a prominent one for me that I bought a lot of in early 2020, thankfully. largely informed from a Disney investment that had gone poorly, but it helped me to kind of appreciate the strength of Netflix's position. Then it did very, very well. And now you get to a period where it's like, okay, I think they're obviously going to be the winner in this industry. But I have to tie that back to some idea of what the valuation is and what the expected returns are, right?

And that's a lot more difficult at $1,000 a share than it was at $2.20 a share or whatever. So it's just always that balance and trying to think about things in the context of a portfolio. So again, I think a big part of what I do is just trying to be, reasonable and not getting too, you know, hopped up by outputs of a model or letting action kind of compound on itself, which I certainly did more as a younger investor in terms of, hey, something's down 5%. I'm going to buy more. It's down 5% again. I'm going to buy more. Next thing you know, it's your largest position. It's like, well, I didn't even intend for that to kind of happen. It's just my actions led to that. But that can happen so easily in investing,

especially when you're talking about a time period of, you know, you're going to do this for the next four years or whatever it is. So I just try to keep those things in mind. I try to be mindful of the things that I certainly don't know and I just try to kind of plot forward from there as intelligently as I can. Michael and I talk all the time about how the holding piece is so hard. Like you talk about Buffett owning Coca-Cola for, I guess, it's whatever, 30-plus years now. That is the hard thing to do of there's enough examples of stocks that had great returns and then fell flat and never came back versus the ones that, you know,

you buy an Apple or an Amazon or Microsoft early and hold it, and you make out like a bandit, I think that piece, knowing when it's time to hold a stock for multiple decades, I guess, becoming comfortable enough to do that. Like, how do you ever get there? I think it's very difficult. I think you have to have a lot of confidence in what you're doing. You know, I think about something that you said on one of your guys' recent podcasts that I was listening to, you basically talked about you have a set period of time that

you're basically adding incremental dollars to your investment accounts and buying more stocks. Like I think there really is, even for someone like Warren, like there's a mental, there's a mental part of it with having cash flow coming in and having new cash to allocate that makes the game a bit different than if you're sitting with a fixed pool or depleting from that pool, right? Like it just makes it, I think it makes it a bit easier, honestly, to think and act in that way. So I think that's a part of it. But I just think he really has a ownership mindset. And I think he, you know, particularly as you're talking about the wholly owned businesses and things like that, like I think he appreciated how that could be beneficial to Berkshire, but also how that truly compounds when you have, you know, again, all the companies that we know that you named, you know, there's some combination of they were in an attractive market or they had a leadership position in an attractive market and they had great leadership. but they kind of always tend to surprise to the upside, at least in my mind they do,

versus the alternative has a way to frequently surprise to the downside when you're buying something cheap, but you think the person running it sucks or isn't really working kind of in your interest. That has a way to surprise to the downside quite often. One of the hardest parts about investing, even if you have an ownership mentality, is there's a scoreboard every day, and you might have conviction, and I'm sure you've experienced this more than once in your career, but the market's telling you, buddy, you're wrong. And maybe the market's wrong. And how much do you, how much do you, how much does

your conviction, how much do you let your conviction fight with the market? Yeah. Again, I think it's something that I lean much more against as a younger investor than I do now. And I'm much more comfortable with the idea of one letting time play out and letting, okay, I have this thesis of X, Y, Z happening over the next few years. I need to let that happen to some extent. I don't need to make five purchases in the next six weeks. I can slow down and let things happen a little bit. I think John Hempton's work on losers' average losers, I think it's called, or wind average down is another writeout that he did. I think it's a great way of thinking in terms of what exactly do value traps look like and kind of how do you avoid those. So that is probably the part of my approach to, you know,

I guess trading you would call it, that has changed the most in terms of if something's going down, how am I thinking about buying versus selling or holding? So you're less likely to add to a position as it's going in your face, which I think a lot of young value investors, they would probably like love that and they'd be like bring it on. But you go through that once three dozen times and you're like, all right, maybe I should stop being such a tough guy. Like maybe the market's not completely stupid. Or just at least not reflexively slash immediately, right?

You can reassess the situation and buy more a month from now, potentially, but you also need to make seven purchases in the interim, right? I think there's something about the markets being open, it being down another 2%. You're like, I got to buy more now. So slowing down on that part of the equation, and then the flip side of that is being kind of willing to hold some things for, you know, when they feel like they're getting more extended. And obviously to the extent that you're working with a fixed pool, like those two actions are directly. related to one another because the money's got to come from somewhere. So those two things have been big. But yeah, in terms of, you know, kind of making a stand against the market, I kind of just constantly come back to, okay, what do I actually believe about this? And how does that kind of relate

to very roughly what the stock price is saying in terms of kind of where the key variables are going over time? And to the extent there's a big discrepancy between the two, then I'm willing to lay bets, which, as you know, from following my work is pretty infrequent, right? like maybe twice a year or something like that. I mean, Dollar Tree is a top position that has been added recently. But as you know, every other top position is there's two from 2011, there's one from 2018, and there's Netflix from 2022. So like it's really infrequent that this happens.

And sometimes, as you know, like a position like match that I got into, sometimes I get six or nine months down the road and I'm like, I think I'm just dead wrong on this. Even though it's a long term thesis, everything's gone against me so far. or something tells me I need to get out and kind of reassess, and maybe I'll be back in a year from now. When you say you're wrong, you're more likely to hear from management on the earnings call than you are to say, like, in the interim 90-day period,

oh, I'm down 13%. I must be wrong. You're going to hear from the management, which unfortunately, oftentimes by the time you hear, it's, you know, the stock will gap down 11%. But you say, okay, well, now I know I'm wrong. Now my thesis has been invalidated. Sure, I could have got out last week, but whatever.

I did it. How would you have known? and you take your cues from management and it is what it is. Yeah, you make the bet and if you find out you're wrong, then you adjust. But again, like, that's a perfect example. In the interim, like, I'm completely past the point of I'm almost certainly never going to buy and then buy again before getting an update on the actual business results or something for me.

Like, it's just, it's too much activity and it's kind of all unnecessary. That's experience. Like, there's no way that you could have done that early in your career because you're too fancy, you're too impatient, like patience is something that develops over time. Yeah, and it might not be optimal on the upside, but it definitely protects from something on the downside that I've experienced firsthand and have seen elsewhere closely. So the stock market right now is down 10 to 15 percent, something like that. But there's a lot of other stocks that are down 30, 40, 50 percent. Are you getting excited about anything right now? Like, are you starting to perk up a little bit

because a lot of stocks have fallen out of bed? Yes, there's certain ones. I mean, Dollar Tree is one that remains really interesting to me just in terms of the broader thesis and the changes that are underway particular, the family dollar, all the stuff that's going on with tariffs and trade now. I don't, my sense is it's not going to be a massive impact for them, but it's certainly not inconsequential. I mean, especially to the extent that it just makes the economy overall more difficult in their core customer situation more difficult, right? I think that's, even if they're kind of a share gainer in that environment, it's probably not a net win for them. I think five below is a really interesting company to the extent that they really key in on what their core value

proposition is, or at least has been historically, they are very exposed to kind of Chinese tariffs. Those are two in retail that I think are interesting. Airbnb is interested, interested in me for a really long time. I've always kind of struggled with the valuation and having clarity on on their competitive position internationally outside of kind of their key five, six, seven markets, but then also what their plans are beyond alternative accommodations. And it sounds like we're going to get some big news on that in the coming weeks. Use me as a contrarian on that one because I bought it at the IPO and I sold it like six months ago.

Yeah. Because it was, it did nothing for me. Alex, can I give you a homework assignment? Yes. One of my larger positions is IMAX. You ever look at that company? IMAX. No, I have not looked close.

Okay. They're the leader. Just saying. They have a role to play in the theater business. Is that what it is? Is that what it is? So the theater business is obviously gone to shit. But I think that their advantage is that when people do go to the movie theater, it's an experience.

You look at a movie like Dune Part 2 or any of the blockbusters, like the tempo blockbusters, they'll have 3% of the screens and 25% of the audience of the ticket sales. Like they are the clear leader. It's reasonable valuation. They're growing mid-teen double digits. Yeah, it's like a lot of these things. I think there's probably something comparable with their like sports rights. Like if you're at the very top of the food chain, then there's still a value there.

but to the things that are more, that can be more easily replaced by Netflix or other screen time is what's in trouble. In terms of IMAX specifically, maybe not specifically, but just broader to your style of investing. So IMAX is a billion dollar company. Is that way below your comfort level? No, I don't think so. No, I'd be okay with the billion dollars. I get nervous when we're talking about low hundreds of millions. And I'm not, I'm not very well versed on things like the amount of floater, the volume that's out there. But if that starts to be a question mark, then I get a little bit nervous, particularly if I'm telling, for people who don't know, I disclose to people what I'm going to do in my portfolio before I do it. So to the extent that people are using it to

buy or sell anything as they look into the work, that could be a bad situation for me if something's too small. Sure. So I'd have to be cautious about that. Well, Alex, like I said, I am I'm a big fan of your research, the science of hitting.com. I've been a subscriber for, I don't know, a couple of years now. And I don't read everything because some of the stuff doesn't, like you did an update this week on what was the egg company what was the deal with that vital farms okay so vital farms okay i don't know what vital farms is not of interest but i would say i read like 80% of your stuff and i love following it quarter after quarter um so appreciate and coming on the show hope this helps you with the book sales uh so thank you thanks guys happy to go back to being a listener

you guys are great what you do thank you all right thank you to barry and Alex Morris buy their books right now, I insist, buy their books. Or if you've read it, if you bought it, buy it for a loved one. Thank you very much for listening. Animal Spirits at thecompannews.com. We'll see you next time.