Chit Chat Stocks - Investing Power Hour #48: Emmet Savage From MyWallSt; Buffett's 2022 Annual Letter

Episode Date: March 5, 2023

The CCM Investing Power Hour is a live-streamed show every Thursday at 9:15 AM PST. On the show, Ryan, Brett, and a rotating list of guests have an unscripted discussion on a variety of investing topics. You can watch the show on our YouTube channel here: https://www.youtube.com/c/ChitChatMoney Follow the show on Twitter: https://twitter.com/chitchatmoney Subscribe to our newsletter: https://chitchatmoney.substack.com/ Interested in more info like this from Emmett: https://charging-and-fearless.beehiiv.com/subscribe?utm_source=chitchatmoney&utm_medium=referral&utm_campaign=promo ****************************** This episode is sponsored by Stratosphere.io, a web-based terminal for financial data, KPIs, and more. Try it out for FREE or use code “CCM” for 15% off any paid plan. Sign up here: https://www.stratosphere.io/ ****************************** Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. On this show, host Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guests is not formal advice or a recommendation. Now, please enjoy this episode. Welcome into the Chit Chat Money Investing Power Hour. My name is Brett Schaefer, and I'm joined as always by Ryan Henderson. But today, we have a special guest. Hasn't been on

the show before, but wants to join us from my Wall Street. It is Emmett Savage. Emmett, how are you doing today? How are you doing, Brett? Great to see you. And hi, Ryan. Good to meet you both yeah ryan uh you've been talking with emmett about my wall street a little bit more so why don't you kick some off with some questions and then we'll get into some fun topics for the power hour today sure yeah emin and i just kind of uh i saw they wrote an article uh a while back that included chit chat money uh in in one of their uh top podcast lists and so i uh sent him over a message and said, we'd love to learn more about my Wall Street. And so we kind of got to chat in and then figured it'd be good to kind of do a joint interview. But I guess maybe there's

some overlap on kind of our listener basis, but also maybe not. So why don't we just start, I guess, with, we can talk about your investing journey after, but what is my Wall Street for people that don't know? Well, for sure. My Wall Street is a business that I co-founded here from Dublin in Ireland, where I'm broadcasting to you from today. And it has a very simple mission, which is to get the world investing successfully. So the business is nine years old and we are basically determined to create as many successful investors as we can. And that's done through a whole range of methods, as you well know, because you are part of the movement that's getting the world investing successfully. You mentioned the goal there. What was the genesis? You mentioned

you started it nine years ago. What was that story? What was your lead up to that? What was your own investing journey like? I suppose the origins for whether it's chitchat money or my wall street begin with the founders and then the actual business so what i might do is i suppose i'll tell you a little bit about my wall street the business and then i might rewind quentin tarantino style and tell you a little bit about how it really began for me when i was a kid but the origins and the genesis of my wall street goes back to a very small advertisement that my co-founder and i placed in the irish times newspaper about 15 years ago and it said something like, learn everything you need to know to start stock investing and to do it successfully

and come to a hotel in Dublin. And if you're not 100% satisfied, don't even pay. So we kind of put a promise out there that you could come along, pay something like 250 or 300 bucks if you're happy with what you got. And at that stage, certainly in Ireland's history, 15 years ago, there wasn't as many commentators, there weren't as many online brokers, the movement towards mobile, cell phone and app based trading and investing was in its earliest, earliest stages, if it was even born at all. So that was the very start. And if you cut from that very first room full of people in the hotel, we learned that we learned by teaching. Very often teachers love teaching because that's how they learn it's that whole thing you got to stay one page ahead of

everyone on the class and then we do it over and over compounds your own learning so there's there's no better way to learn than to teach because it forces you to be clear it forces you to think through every single step of what you're saying and that it's there's it's threaded the logic is clear and there's nothing there's nothing that's too difficult to explain I mean I studied physics for my undergraduate degree. And when you've done that, everything is a great relief. Like you can describe and explain the stock market to a child and they'll get it that quick.

Like for example, you know, the stock exchange is just a grocery store for shares. That's all it is. And every country has a grocery store and every country more or less has a stock exchange. But instead of going into that grocery store to buy milk and bread, you go in and you buy a little bit of Coke

and a little bit of Disney. And then a kid gets it, a kid gets it. So there's nothing that can't be brought back. And I love teaching because it actually, you know, teaches, I'm teaching myself as I'm teaching others. So that was the start of My Wall Street and the genesis. If you cut to today, My Wall Street is changing outcomes for the everyday investor. As I said, our mission is to get the world investing successfully.

And our app is on millions and millions of devices around the world. There's about 5.5 million active users of our app around the world. We have a range of tools for everyday people who, thanks to us, are creating generational wealth. And we, like you, have a podcast called Stock Club. It had about one and a quarter million listeners in 2022. Well, one and a quarter million listens. So it might be someone's mom listening to their son 50,000 times. I think our mom's listening to us, so that's all right.

Yeah. But I like our goal is to compound six simple rules into everyone's life. So irrespective of the platform. So whether we've built a beautiful app for the mobile phone, the iPhone or Samsung or Android or whatever, or whether it's a podcast or whether it's, you know, uh, just a website, really what we do and what we obsess on are six golden rules as we call them. Um, And they're very simple. The first is get started. You know, you can be successful at nothing until you start it. You can look out the window and dream of being playing in the World Series or being a

premiership soccer player, but you got to get out and kick the ball and swing it back. So get started is the first rule. Second rule that we live by in my Wall Street is think long term. We are the long term buy and hold guys. We forgive quarters and even years of missteps by businesses once the business is strategically on track. Our third rule is you never borrow money to buy because as we know, guys, and as I'm sure all of your listeners know, debt is a double-edged sword. And when you borrow off the power of your portfolio, as much as you might increase the upside, you are going to damn your folio to

on the downside. Our fourth rule is diversify. Don't put all your eggs in one basket. Our fifth golden rule is buy what you believe in. That's really important one, which I might remind you in a while. And then the sixth golden rule is invest what you can, when you can, because stock investing is the most beautiful form of investing because you can take $10 and put it into this thing for 50 years. No one will feel $10 go from their wallet or for 50 years, put 10 10 bucks away for 50 years, where most other assets, collectibles or appreciating assets require you to dig deeper in your pocket. So invest a little often. So they're the six golden rules. And when I mentioned about buy what you believe in, I think when you've bought something

you don't believe in. And Ireland, where I lived, went through an economic surge. I suppose historically, Ireland was not a prosperous nation since the beginning of time, more or less. And then the 90s arrived and there was an economic surge. I mean, I look at a TV show, America in Colour, and they've colourised footage of New York City 100 years ago. And honestly, it looked more advanced than Ireland in the 1970s. So the point I'm making is that the economic surge has only really occurred in Ireland's history over the last 30 years. And along that way, along that journey in the last 30 years, there's been advice, you know what you should buy? You should buy an apartment in Bulgaria. And the listener is like thinking, I couldn't even put a map on the, a pin

in the map where is Bulgaria. So you don't believe in it. Don't buy it. You've got to own what you believe in. So anyway, that's, that's my Wall Street. We, we have a large audience of people whose trust we've earned. And we have, I suppose, a suite of products that are designed exclusively to delight people. And well, the last two years have been tough, as you well know, in the stock picking world. But that is my Wall Street. And we're out to create a whole new generation of successful investors. I really like those six rules. And I kind of find your founding story fascinating of just putting up the ad and then letting anyone kind of come and watch you in person, do you think that would, if you were doing it again today,

starting from just cold start from kind of today, do you think that would still be the method of kind of an in-person event like that? Or do you think that would be much harder? Everything has gone harder because the race to zero is over. Almost everything you can pay for has a substitute product that's free so you can open a brokerage well let me just don't think it's i'm trying to find a broker in my mind that doesn't charge has zero commissions but an old world brokerage or you can go to ameritrade or robin hood or any of those guys the race to zero is there so what i do the same today well do you know something uh probably but the audience would have a predictable profile they would not be so i'm gonna hazard a guess i'm significantly the

eldest the older of the three of us here but i guess the room full of people would be even older than me so i'm 48 years old and i reckon the room would be full of people older than me because i think those that generation have probably gotten there so what i put it yeah i i think um i do believe that you should uh give as much good as you can to the world free of charge so our learn app which is uh ranked number one by apple in its category in 112 countries which teaches people how to invest in the stock market is on millions and millions of phone and we have so like actually honestly hair raising testimonials from from people whose lives have been changed by learn has is absolutely free we don't even ask for an email we don't even want to know where you are

like people are very sensitive to toll gates you know whether it's hey give us a dollar or give us your email or uh click here for an advert all of those things are toll gates and people are so what we took a big decision on and um it was it was i mean it was the right thing to do but it was to put the most beautiful best built product out there free of charge because that's how you earn trust and a part of me as an entrepreneur thinks well you know what I could stand in the corner of a street and hand out the world's best sandwiches free every day and sure I'd have handed out five million wonderful free sandwiches after a fixed amount of time um but it's a long journey like it's a long journey you earn trust and it comes back just as you've earned

trust with chitchat money and we earn trust with our podcast and people can I think authenticity shines through and i think the product you've built a product that we've built it's authentic we don't chase the wallet we it's at the end of a funnel that's quite a journey um but it but it exists and and actually the kernel kernel of my wall street the beginning of the beginning is i think an even more interesting story which we might get to yeah i have a question about um i don't know more another question about my wall street but first uh before i forget we need to talk about today's sponsor, and that is Stratosphere, stratosphere.io. Today's episode is presented by Stratosphere, our investing home screen for fundamental research. Stratosphere's

dashboard tool lets us easily track our investments and stocks. We are researching with a nifty news feed, SEC file aggregation, and a fundamental charting tool to compare companies. We are going to be comparing companies throughout this episode. In the latter half, we're going to be using it. can you let me share my screen I want to show it to Emmett I don't know if he's ever seen this because it's kind of cool yeah I'll try to multitask here by reading the script while

clicking this is going to be tough but let me just do that first have you ever have you ever heard of stratosphere no please show me if you can okay yeah it's a cool uh is it yep okay I'll take let me it's uh it's cool I mean

they are a sponsor so you know this is paid but also so it's like kind of your typical um data aggregator but let's take what's a good example google they've got um like data that's beyond financials so i'm it's always a little slower when i'm sharing my screen but it's got like all the historical metrics on like specific company specific kpis so you can go like youtube ad revenue which is really really kind of hard to get elsewhere that is very hard to get nice yeah unless you want to go through each one but anyway sorry i know i interrupted the ad there brett but uh yeah let me yeah let me wrap up the ad and then i'll have one more um i have another

question for emmet uh ditch yahoo finance and start using stratosphere for your investing home screen. We do as well. And you'll see us throughout this episode using Stratosphere as a way to help us research, as a way to help us spur some discussion. And you can try it for free at stratosphere.io. That is stratosphere.io and use promo code CCM for 15% off any paid plan. All right, Emmett, here's a question I have. What was the biggest contributor to your guys' success? And I guess you've been steadily growing over the last few years, but was it the free app launch that you were just mentioning? Was it just your philosophy in general? Was it some sort of marketing strategy? what do you think was i don't know just for any you know for us i guess personally people who might be trying to do something similar so there are two sides i can tell you what i think was the best thing we did and i'll equally tell you what i think the worst thing we did perfect perfect you

know there's because i i'd almost say the best thing we did is the opposite to the worst thing we did um so yes i think um yeah so i think the the the point i already made about trust and authenticity is very very important i think people are very sensitive right you me and everyone else we can smell when it's a sales pitch um and that shouldn't be the case you build an audience large enough and you've earned their trust. You haven't bought their trust. You haven't insisted on it, but they trust you. That comes through having a consistent message, a consistent tone of voice and complete authenticity with products that doesn't have something in their way that kind of is like, oh, come on, you're really trying to send me off

here to do something else. So that'd be one thing. So yes, the learning product we built and And it has tens of thousands of downloads every week, thick and thin. And that has a momentum for years and years. Actually, I'll tell you a lesson we took from that. So we looked at a particular month on our Learn app. And it's just called Learn by My Wall Street. You'll find it on the App Store. And we thought, you know what?

Be nice to make some money. Let's charge a dollar, right? And in the month prior to that decision, there was like 60,000 downloads. We're like, let's charge a dollar. see what happens while downloads fell the minute we charge it a book now sorry let me set the context apple had given this their platinum star featured it in multiple countries it had news usa today ran a piece on it with a full pager with big banner at the top and like it it had a like confetti was being thrown at the product and um we thought let's charge a book because

you know we can't make money at a tenner and the month after the downloads fell from 60,000 a month to 3,000 a month 95% fall off so we thought is it worth 3,000 a month at the cost of losing you know uh the the 60,000 effectively 60,000 downloads we said no so we switched off uh we switched off the book charge and it took a while to creep back up. Other things that really was finding good backers. Like if you're building a business that needs to be capitalized and have investors, we have been so fortunate to be surrounded and backed by investors who buy into the long-term journey. And the last two years has been, it's been awful. Like it's been, what's just been terrible in all of our businesses in all of our portfolios and in fact in all of the

world there's been a global disaster one after the next over the last few years and it's had you know the word tailwind and headwind has appeared in so many investor presentations you're either hearing about the tailwinds or the headwinds and and that seems to be an accelerated like life is happening quite fast so i do think that um you know despite the last two years having great backers and Motley, the Motley Fool were our first investor. And that was something that for me in the big defining moments of my entrepreneurial life and even my professional life, flying to Alexandria, meeting the senior guys at the Motley Fool, where I had worked and written, you know, I'd written for the Fool since I was in college. And I might rewind and tell that

story where I had earned trust there and they trusted me and I trusted them and they had my back and and said yes we'll invest in your business and and that was another moment of greatness I'll always remember because you know I so deeply appreciated um their support and them saying you can do it and then helping us you know out the trap um so having great backers and giving as much as you can of high quality away from nothing is kind of two of the things we did very well with respect to the team you build around you. Someone who like a talented jerk can destroy a business. And I'm not saying we ever had a talented jerk, but what we've always had is somebody who has great spirit, who really works hard. We all know from our life that

somebody who gives their all is better. Like one outstanding person is better than 10 great people. So we've tried our best to surround ourselves with outstanding people. Now the things that we did that just weren't so hot was spend money on advertising. And man, we did it. You couldn't even believe the amount of money we spent on advertising. And then the game changed as we all know with iOS 14.5 or whatever it was where Apple changed the rules about tracking and can this app track you no thank you uh leave me alone and that changed the the cost of acquiring customers so um yeah best thing we did was surround ourselves with good people and give away lots of value worst thing we did was spend too much money on marketing and i'm just glad

we're alive to tell the tale yeah it's confusing because for us too we've we've really struggled to find something that works at marketing wise we've really held off on it really because we don't uh you don't have the funds for to do a big any sort of campaign yet but we haven't really investigated or not investigated found anything that has great returns for these type of you know financial informational products and i just find it like i wonder if it'll ever get built i don't know yeah likewise so like there you go you're on the other side of the world to me you're in chile ryan you're up in seattle is that right i'm here in ireland and dublin uh and from our three corners of the globe and our perspectives haven't found it.

And we've spent a lot of millions testing everything, an awful lot of millions. All right. Well, let's talk about your investing strategy too, because you kind of told me your story last time we spoke, and this will maybe transition into some of the potential investing news of the day. How'd you get started? and I guess like how would you describe your own strategy and maybe could you talk about I think you mentioned that you wanted to talk about your early time writing for the fool yeah okay so what

I'll do is I'll rewind a little bit I'll break that into two halves which I guess is the story that predated my Wall Street and then I guess how my own strategy and how it has you know how it's worked out for me because I have been a very very active avid stock investor my whole life my entire life. So really, it was my own dad, my father got me interested in shares when I was just a kid, maybe eight or nine years of age. But the real, real beginning happened long before I was born. Ultimately, my father developed an interest in the stock market when he was a young man, after a tip off from his uncle, who headed off to Australia, as many of the Irish did, they went somewhere where there was employment. And he emigrated, my father's uncle, my grand

uncle in 1963. And he called home in 1965 with a tip to buy shares in a business called Wim Creek, which is actually a small town in Western Australia. And in the 1960s, there was a big boom of copper mining in the town. So my uncle rang his, sorry, my granduncle rang my grandfather and said, buy shares in this. You got to buy shares and don't sell until I tell you. You got it. And you can imagine back in the early sixties, the price of a phone call to Ireland alone would have been like, you know, price of what we pay for a car today. But like, so my father, my dad and his family, and honestly, every Irish family had zero experience in stock investing. It might have been the same in America. I mean, America is so much further advanced, but certainly in the

sixties, you know, it was like finding a talking cat. It's like, if you bumped into someone in the 60s and they said I invest in shares he'd be like what is that who are you you alien so it just wasn't done so um however they figured it out my dad and his brothers they figured it out and they bought into the company and it rose marginally then it stalled it sat flat and flat and flat for weeks then months then quarters and then what turned into years um and uh he as I said the uncle said, don't sell till I ring you. But they decided, that's it. He's now ringing us back. We're going to sell it. So they sold the shares. He hadn't called. And it's at that point, as these things go, Wim Creek started to rocket up and up and up. And then they weren't watching

it. There was no internet. It wasn't like Wim Creek was reporting the Irish newspapers. And then one day, my father's uncle rang to say, sell now. We're up 20-fold. But it was too late. the family had already sold. And at that point, and it was at that point where the penny dropped in my father's mind and said, this is a wealth creation mechanism. I never even knew this thing could happen. So fast forward to the 1990s, I went to study for my undergraduate degree, as I mentioned already. And I went into college in 92, at which stage soon after the internet came to the home, traditional brokers went online and suddenly the average person had access to the biggest capital market in the world, which of course is the US stock market. So he, my dad and

I started to invest in stocks as a hobby online, which is the story of so many people. And I was, while I was studying physics, ultimately my passion was stock investing. And I was kind of living a lie, working on physics, which I enjoyed, but that was how it really, really began. So about halfway through my degree, or maybe towards the late nineties, I started a blog on Yahoo's Geo cities, which was the first user created content. I mean, we're living in a social media world where if you still wish you can broadcast nonstop to 20 different channels. In those days, nothing, there was one blog, open platform owned by Yahoo. And I started a blog. And then there were sites like the Motley Fool, which was also born in the late nineties. So you get some guidance from like

David and Tom Gardner, and you could buy shares for 10 bucks a trade. And suddenly the market was starting to move. And when you compare this to the very first stock I bought, which happened to be Dell computers, I dialed up from a phone, you know, and spoke to a broker in New York and I paid 80 bucks commission on one share, which I bought for 70 bucks. And that's like, you know, when I think back, it's like, come on, please. So anyway, a few years later, I started writing about my stock ideas for the Motley Fool. I was part of their analyst community. So a bit like that teaching thing, I was, I was, you know, I was learning from teaching. I was learning from writing. And then, and then the real essence of investing life came in at me before I turned 26,

the dot-com bubble swelled and swelled and swelled. And I would say I'd learned and lived all of the major lessons that you can get about stock investing by the time I was in my mid twenties, thanks to dot-com bubble. It is actually ironically the best thing that ever happened to me. And those people who lived through it realized it was devastating. And it was devastating to me because on the run-up to the dot-com bubble, I was borrowing money from my broker online. I was buying more shares. I was taking bigger positions. The market was soaring, going up and up and up. And that leverage was helping me get to the sky. I was listening to rumors. I was leveraging not a million miles from the NFT crypto thing recently, but let's not go

there. But ultimately I lost every penny. And it was a lot of pennies because I was 20 something. I was nearly a millionaire and I was working a day job as a, as a physicist engineer. So like by the age of 26, I was back where I was started, uh, having given up all of my gains, but rather than pack it in, I decided to commit to learning properly. And you know, that expression, I was born with nothing and I still have most of it left. Well, that was me in the, in the, in the, like early two thousands. And as you know, Ryan, the stock market is a mechanism that can take a normal person from modest beginnings to transform their future if it's done right. And, and, uh, and that I guess might be as a segue into my, uh, investing

strategy. Yeah, definitely. Let's, I guess, uh, uh, how would you describe yourself as an investor today. We want to talk maybe a little bit about, and I don't know if you can talk about specific stocks you own or anything, but we want to talk about earnings this quarter as well, because we're kind of coming to the end of earnings season. Is there anything that you really maybe liked recently? Any trends that you're kind of following that are more like present day, I guess? Oh, for sure. I mean, I spend my life looking for growth stocks and I guess to answer the first point you made there about my own uh approach in a nutshell i'll give it to you in a few words as opposed to a big chat i i build a diverse basket of unleveraged growth stocks i don't borrow a

diverse basket of growth stocks that are bought and held for the long term and when i say the long term i buy a stock and i really genuinely think i'm gonna hold this till i die someone else is going to have it. So I think longer than like as long as possible. Um, and I, I, I run a subscription service called horizon, which I'm not trying to plug plug. Um, and, and the reason I mentioned it, it was about 20 months ago. Um, yeah, it was about 20 months ago. I had all of my trades analyzed. I mean, I have my, my portfolio audited. Um, but between 1999 and 2017, I made a total of 451 purchases in my portfolio. So I bought 451 times, which averages at two purchases a month for nearly 20 years. So what I'd like to do is tell you how those 451 buy decisions

went over two decades, which will allow me to tell you my best investing decision, my worst investing decision, and will allow me to park the car in the garage that you asked for, which is stocks do I like right now? So I had 450, uh, I had 451 purchases in that period and 214 of those are about half of those purchases were related to companies that were either acquired or went bust or delisted. So the vast majority of those were acquired at a premium to the price I paid, like Marvel was bought by and Pixar book bought by Disney and whatever, but like, um, so half of the stocks don't exist anymore. The other half of the ones I bought were tied to companies that are still in existence and trading today. So the average return of all of my buys when we did this

study 20 months ago, which albeit was at a market high, but let me just tell you the data. So from 20 years of buying, the average return on every single one of those buys was 696%, which is equivalent of saying 451 eight baggers right um my best buy decision was netflix in may 13 2003 which is up 32 000 for me um and that's what i'm that's that is my addiction to find the next netflix that is where i spend my life that is what i've dedicated my life my career and my reputation and my business to finding there's no question of doubt about it so my worst buy if excluding the ones that went bust because there's a landscape of those, was probably superconductor technologies, which I think is still on the go. But from when I bought it,

it's down 99.9999%. So that was my worst. But when I dig into those 451 purchases, 45.9% of them are up over 100%. So nearly half or two baggers. And then when I whittle it down, whittle it down, 5% of them are up 30 fold or 30 baggers and two and a half percent of them, which is 11 out of 451 are up 50 fold, right? So when you average it all out, because that's what a portfolio game is it's a big game of averages and this transposes to what warren buffett said uh last saturday um like my winners have hyper hyper rewarded me for my losers i've lots of losers but in 451 stock trades half when disappeared the other half have gone on to create uh in varying degrees wealth and that's uh and that's where we are now and that's really the

And that's why I have a basket of unleveraged, high growth, long term buy and hold stocks. And that's where I'm at. So thematically, the stocks I like today and the businesses I'm loving right now, no doubt are being discussed on your show. And like I've a lot of names jump to mind thematically. I'm a big fan of, um, CRISPR as a, as, as like when I bought shares in Dell way back when, hello, hello. Um, when I bought shares on Dell, it was like, uh, that was space age. Nobody had own computer. Are you kidding me? In 1992, it was like saying, I'm going to buy, I actually, it's a joke. It's not even a joke. I'm going to buy shares on rocket ship company. You can do that

now. Virgin galactic, which I happen to think is going to have a Renaissance and it looks good to me, but buying shares in Dell was like, are you kidding me? What is this machine you're buying for your home? Well, buying shares in CRISPR today, to me, is analogous to that because it's crazy. But like Arthur C. Clarke said, suitably advanced technology is indistinguishable from magic. It is true. It's like you, we three have seen something. Someone showed us something at some point. It might've been the first time you saw an iPhone or the first time you saw a Tesla are. The first time you might've had a life-changing medical treatment where you're like, that's like magic. I didn't even know that that stuff happened. So CRISPR is going to do

that. CRISPR is a technology that changes, that is changing lives. Previously, illnesses that were described as incurable and will never go away are now being cured. And very, very, very many more are going to follow like a domino falling. It's even as a technology going to de-extinct species enter jurassic park but like um so i happen to like crisper therapeutics as an investment and it's um a co-founded by someone who won a nobel prize in medicine um two ladies one uh jennifer and emmanuel sharpante won the the nobel prize a few years for this mind-blowing technology so i happen to like it um there there is uh i mean like my there i have a long list of businesses that i'm liking right now i think the market has adjusted everything and good and bad and the baby's gone

out with the bath water and everything is suddenly on sale i believe with a long-term perspective other stocks that i like and i'm just going to look at my my ticker here i mean big friend of CrowdStrike, I'm sure you've spoken about it. I think, let me have a look. I think LoveSack is a wonderful business. I really do. Which one's LoveSack? Is that the big?

Sackinals, yeah. Yeah. Oh, we've got a couple of those. Incredibly efficient business. It's the third highest profit per square foot of retail in America after Tiffany and Apple. Can you imagine? A thing that sells beanbags. and but the point is that it's not only a product that uh is uh has a founding ceo at the helm it's

not only a product that is growing growing growing but it's also one that is doing good like it's taking all these plastic bottles out of the ocean and doing whatever it is you do to plastic bottles to make it like a soft comfy couch they've repurposed 100 million bottles but i have a long list of businesses that i genuinely believe are the next dell and i'm investing heavily in them and I'm running a service called Horizon Plug. And basically I invest my own money and people can look over my shoulder. The last two years, a lot of people looking over my shoulder will go, don't listen to them. But believe me, it's a long term game. And I'm certain that Horizon is going to create generational wealth. All right. That's a good, that's a great overview.

I think we need to get you back on to talk, do a deep dive on CRISPR Therapeutics because we haven't covered that company on an interview before. And I think it'd be fascinating to go into the the real insights and how that technology works to me maybe maybe maybe love sack maybe love sack would be better yeah well i see like i mean a deep dive uh i can only go as deep as i've got considering we're here on live you know usually i'll sit with notes and i'll study it but i mean happy to to take the lead and i'll take the follow i'll talk as best i can no uh i mean on a yeah on a on a separate uh podcast where we can all you know prepare a bit better but the i always like to have everything i have everything committed to memory

and i read everything uh you know but i like am i locked and loaded talk about crisper hell no it's so complex i mean i could tell you very quickly that edit has its biggest competitor to me looks like a business that's really going to struggle to stay alive because it's runway versus Its revenue share-up technology with other partners is not favorable, whereas CRISPR Therapeutics is in pole position and has cured an illness called sickle cell anemia and has a pipeline that is really, really encouraging and has the runway to get there. And that's why I would believe in it more than, for example, Editas. But there's actually 60-something companies that are listed that are either fully or partially commercializing CRISPR therapeutics. So for your listeners who aren't entirely sure as to what CRISPR stands for, it's Clustered Regular Interspace CRI Paladin Repeated. My mic is going off.

It's that gene editing, right? Gene editing. Its first version was cut and paste. I mean, that's how people understand it. It was described to the ordinary reader or listener as the cut and paste of genes. And it is truly a fascinating technology that I believe you need to have a stake in. Now, that is me going back to 1990, describing what's a home computer. Well, there's a whole pile of wires. And, you know, so I can tell you, I know what I know, but I need to literally have read it five minutes ago, or it's like super, super bleeding edge. No, it totally makes sense.

Let's hit another topic. And that is Buffett's annual letter. You mentioned it. Yeah, I guess any will maybe me and Ryan can add in. But first, you can go any big takeaways from you this year. Um, yeah. Any big takeaways? Well, for sure.

I mean, I read it. I love it. I've read all of his letters and I think they're, you know, if an investor was to only read one thing, there's the F the essays of Warren Buffett is available on Amazon and everywhere. And you can get them right through from 58 years ago, right through to today. And each one of them is a beautiful, eloquent expression of why it's wonderful to be a long term investor. So the kind of five golden rules that I said,

sorry, six golden rules that we advocate here on my Wall Street, the first one is get started. So sometimes I think it's not quite a rule, but the six golden rules are entirely inframed and they just keep coming out of his letters over and over and over again. What I found was quite nice about this one and this year's letter was he spends a reasonable amount

of the letter talking about Charlie, Charlie Munger, his co-founder, who he said in the letter, and I'm going from memory here, and I'm going to quote from memory. I've good memory, actually. I retain almost everything I read, and that's why I don't regurgitate it, because something else might have been written. But he said, Charlie and I pretty much think alike, but what it takes me a page to explain, he clearly sums up in a sentence. That's exactly what he said in the letter. And he said, and then he went on to say his version moreover is always more clearly reasoned and more artfully and succinctly, and some say bluntly articulated. So he opened up by kind of pouring praise on Charlie Munger and then went on to kind of summarize Charlie's approach to

investing now Charlie Munger is 99 years old and part of me wondered as like I mean 99 we all we're all going to be retiring it's pretty old yeah it's up there you know um and you know we none of us unfortunately can live forever despite CRISPR so I think this was in large part a um I don't want to call it a swan song i mean i wish charlie a farewell yeah a final farewell but like it was nice i guess look if they're still around in a year from now of course to be i'm sure further celebrations that we have a centenary uh mega investor on our out there but anyway he went on to say the insights of charlie which is very rarely the focus of warren buffett's letter were laid out first he said that the world is full of foolish gamblers and they will not do as well as

the patient investor. That's the first thing that Warren said that Charlie says. And I thought that is so true. Like the one thing that I advocate as a person and I advocate as an investor and my Wall Street advocates is you have to be patient. And he said, but I just thought that that was just a lovely opener. He also went to say on that, I thought this kind of a little bit dark he said early on write your desired obituary and then behave accordingly i thought that was great i i there's probably a more modern way to say it's dire journaling or manifesting or whatever but like write your obituary um which i i have to admit i haven't done but uh i'll i'll do it in 50 years um but write your obituary early and then live your life accordingly um we went on as well

to say that charlie says i don't care whether you are rational or not you won't work on it uh he said if you stay irrational you get lousy results so remain we always have to remain rational and i guess the key takeaway for me is that every day we are swayed by emotions they our emotions are there to serve us they're there to make sure we operationally get through the day but when you think about investing, or you buy, I'm going to buy a share in Rocket Lab. Let's just say I'm going to buy a share in Rocket Lab. I like it. I put it, there it is, my scorecard. And every time I look at my scorecard and my brokerage account, I will be hit by a micropop of emotion. Now, you have to park that. And it is quite difficult. And in our game, in yours and my game, where you

go outward and you say, I love this business. I love shares in Acme Bricks. I think every brick in the world is going to be an Acme Brick. It's the greatest bricks on earth. And a year later, Acme Bricks are not just not being used. There is this further anchoring that exists in our psyche, which is all I said it was. And I really work hard to, to, on that, like, I really don't want just double down on something because I said it. And equally, I do give, like I bought shares in Clover, or rather an IPO, C or D or whatever it was, Chamath Palihapitiya's thing. I still have them. I bought into Chamath as opposed to Clover. My opinion on both Chamath and Clover have moved on, but I have a safety net of, yeah, I give it 10 years. You know, their results came out the

the other night, I thought, yeah, sales up 106%. It's not too bad. Our revenue up 106%, path to profitability, new CEO, blah, blah, blah. You know what? Yeah, I'll give another 10 years. If you keep saying, I'll give it another 10 years with kind of carefree abandon, it actually adds a triviality to short-term thinking. Anyway, back to Buffett. He says that patience can be learned. Patience can be learned. Sorry, Buffett said about Charlie. Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage. It's a huge advantage. And it's true. Like it's true. We've all done it irrespective of what you studied in college. Your most productive moments of college are when there's nobody near you and

you're inside there with a book or a pen or online or whatever. Like, so like concentrating hard is something we don't give ourselves enough time or space to do and and i i know as a fact that charlie and warren sit there reading all day like the glitz and glam of their uh of their magnificent performance uh is is is a consequence of concentrating hard by the way speaking of their magnificent performance i thought it was very funny that that um uh warren said in early in letter that they've had satisfactory returns you know the reason we've had satisfactory returns is like about one out of every five years he's had a good stock purchase and he didn't sell and that to me caused a and a further reflection you know one in six golden rules one of the rules

that we all obey i'm sorry we run by is um is uh diversification because we acknowledge that probably 19 out of 20 stocks we buy will be fine or awful but one out of 20 will be absolutely astounding you look at it and go i bought netflix 32 000 to go or whatever it is you know of course i uh yeah well first off buffett does have high expectations for himself and i think for any listener your expectation should not be as high as him to have 20 you know uh 50 years of just you know turning the greatest stock performance ever and he does uh that's i think that's why he says satisfactory because he he holds himself to such a higher standard than everyone but yeah He mentioned that one good investment every five years.

And it kind of got me thinking, I think this would be a fun game. I'll go first in case, because I've been thinking about why you were talking. What do you guys think? And you don't have to choose five, but I'll choose five. The five best investments they ever made at Berkshire Hathaway, which I guess is really Buffett, but also the team over there. I'm going to go and really in no particular order. I think you have to include Apple because it's so big.

You have to include national indemnity for the insurance kickoff. And then I'm also going to include General Re for at the top of the dot-com bubble with the Coca-Cola stake. So such a large part of the portfolio kind of diversifying into that float away from equity and allowing them to have freedom in the kind of the 2000 to 2010 period to open up their flexibility. And I'm going to add Coca-Cola and American Express. I think those would be my five curious what your guys' thoughts would be.

I think that list is probably pretty accurate. Maybe Geico, you could throw in there as well. The thing I find fascinating, and he went through the dividends from Coca-Cola and American Express during the letter. And I was thinking about this when we were like, we looked at American Express this week and I was looking at it. he's owned that for what is it 35 years now probably that's correct yep um and you think like wow you know look at the look at the power of like just just holding on to something when you're right about like the qualities of the business but that but both coca-cola and american express were like these weren't like novel concepts these were mature companies really

they were i mean american express had been around for 140 years before buffett made his investment um i guess he invested once in the 60s or something like that but same with coke's been around a long time like even those really mature businesses can like just uh the power of compounding even from a large base i think it's yeah it's kind of staggering to look at but do you know what he holds up as his greatest model investment actually and i agree with with all what you both said Ryan and Brett like completely and if you just said to me just off the top of my head what you know what were the greatest Berkshire investments I'd agree but what Warren says was See's Candy he bought that for 25 well Berkshire bought it for 25 million dollars in 1974

here's a little guess for you actually I'm really stealing from my own podcast which is going live tomorrow I only said this an hour or two ago so sorry to our overlapping listeners guess how much C's candy returned $25 million, 1974, 2014. Okay. So nine years ago, how much had it returned in bottom line profit to Berkshire? Guess. In 2014? I think I've seen this stat before, so I'm going to let Ryan guess, but it's still, the

listeners are going to be very shocked. Oh gosh. I have, I have, I don't know this. I don't know the size of C's for him. Let's go. And this is cumulative, right? yeah yeah oh cumulative profit or just in 20 years so they bought it for 25 million what had it delivered to berkshire and bottom line profit sent up to the omaha 2014 yeah yeah yeah so

so we're talking about 40 years yeah 40 years later i'm gonna say uh Two and a half billion. Yeah. Outstanding guess. Was it close? Very close. Very close. I think I'm going to remember it as being 2.2 billion.

And Brett gets the... But I've seen that before, so I'm cheating. Yeah. Yeah, you get the golden brittle, peanut brittle award. It was actually, well, at the time, $1.9 billion. dollars you can imagine there was another nine years of earnings plus you kind of compensate for uh inflation so i reckon 2.2 is probably spot on i'd imagine it's delivered around 3 billion but they like the guys identified and sees candy it was at that time like a hundred year old business

they bought it for 25 million bucks uh mary see the the mom was happy to good luck give me my 25 million and uh and now today it just generates and it's less than i think it's 0.1 percent of the berkshire folio but from a impact return perspective i think well i'll put it forward as their greatest investment and i fully agree with the ones you said like they bought 400 million shares in coca-cola for like 1.3 billion they paid the same amount as well for amex 1.3 billion. So they definitely have, to your point, Ryan, they've built, they've bought these mega brands, businesses that are so well-established and see giant oak tree businesses. And then these tiny little ones that were just like rocket fuel. And that I think is a very nice analogy for the

folios that we wish to build in our own lives. Yeah. Here's another, I think, interesting point there that takes kind of what you were saying as an example is with the 10-year stuff and having the time horizon and giving a management team of a quality business 10 years, or really maybe not even the management team, giving a quality business 10 years time or even longer is these companies, specifically Coca-Cola and Amex, over the years that Buffett has owned them, which we would say probably pushing on 35 years now from the first time they purchased them, have gone through 10 year periods where they've struggled and yet he didn't he didn't really you know i don't know change i'll bring up if you guys yeah if he has i don't think he ever sold i don't think

he ever sold mx or coke shares in either if i'm not mistaken i know he he held on to his coke position just never really sold or bought after a while i don't know if he did the same with american express hype it just i mean it's more than just a trivial throwaway comment like like hyper patience is rewards it doesn't always reward but you the greatest brands and names in our lives today had decades of banal or uninteresting performance you know very very rarely perhaps never does a business just grow grow grow from the word like the route to success is a zigzag it's a it's a long path and whether it's the growth in chitchat money whether it's growth of my Wall Street or whether it's growth of Apple. I mean, Apple had 17 years of zero

performance. You could have bought shares on Apple and sold 15 years later and lost 42% of your investment. Imagine. And then wait another 15 years and you're the Lord Merv, your local term. So I totally agree with that point. Brett, what are we looking at? Oh, nice. Oh, yeah. I'm showing the chart here of Apple. The time period you were talking about where nothing happened. Now, since they've executed so well, it doesn't even show up yet. You don't even see it. I'll bring up Coca-Cola maybe as well. But if you change the, yeah, okay. Go for it. Go for Coke. Coke's another good example, but Apple's a great example because you can see there for just the longest time. There you go. Like imagine, move your cursor or whatever to the left there. Yeah. So Brett, move it further to the left. Okay. I'll go as far as possible. For sure. Okay. That, that there is a, that is a,

imagine to our listeners and viewers, that's where you are now. That's where you are now. and you have got to wait. I'm not talking about co-care. I'm just talking about the returns of your life. The first 10 and 15 years are the least glamorous, the least exciting, the least rewarding. They're the ones that you will be forced to question your decision.

And then you get older and grayer, like I don't even remember if I've shares in them. And then all that magic happens. You know, like I think of Activision. When I hear the word Activision, only one thing comes into my head, the number 11. And I'm going to tell you why, because I was at a particular stage of my life where I checked my folio every day, multiple times a day, and possibly just sat watching it for years

and end. And Activision shares were 11 books for years and years and years and years. And I was watching it for hour after hour after hour for years and years. I'll go to my grave. Someone says, okay, think of a number when I say word Activision, I'll go 11 because it was 11 books. And now Activision, as we all know, has been acquired multiple, multiple, multiple, multiple of 11 bucks when you bring in the splits. And the point is that overchecking, overwatching is a tiresome game.

Patience is not tiring. You go and live your life. You buy these stocks. You take the best decision you can at the moment. You fill your folio full of wonderful businesses, whether as big as Coke or Berkshire or something small and risky like CRISPR. And it will work out. Unless you're the unluckiest guy or girl in the world, you will build a basket of quality businesses. Sure. One fifth to even one third will be a pile of garbage. The middle third will be okay. The top third will bring you up there. Yeah, that's a great example of how Buffett works. And I think another thing to highlight is when you look at Coca-Cola, the first 10 years they made the investment was fantastic. If we look at this chart here, I'll just describe it. In 1998, it went up, I think, somewhere around 10-fold or even more from the original investment.

But at that time period, you could have argued that the stock's overvalued. I think at 1998, it might have been trading at like 50 times earnings for a company that's not really growing that quickly. I mean, steady growth, but not growing that quickly. And you could argue the most rational thing for him to do would have been to sell, would have been to get out. And yeah, if he went in and out of the company, it could have worked. One, though, they don't get the dividends.

Two, they're paying capital gains tax. and over the long-term, I think it's still worked out correctly, but he had the patience of someone with a permanent capital base where if we kind of go to maybe, yeah, holding in the 2009 area, the stock price hadn't moved since over 10 years, since 1998. And I think it's just an example of you can't beat yourself up over short-term stock performance, especially if you're an individual without any outside investors, without anyone except yourself or maybe your family that you're uh taking care of what was the metric he always tracked for coke like cases sold per share or something like that he's like that's what i'm

focused on is coke sold per share or something like that yeah yeah he always gets his shareholders to open their kind of coke at the agm or the uh the what stock for capitalist event but it's um Um, uh, yeah, when, when you, to your point, I mean, you have this long-term perspective is the way to win out because you can sleep soundly at night. Uh, just know that the system, the process works out. It's like, it's such a, it feels like such a cliche to just be like, well, you know, just focus on the long-term, but the, I think this, like this episode hopefully illustrates the like the actual compounding power of having a truly long time horizon and even if i think

brett reminded me yesterday we were looking at dropbox who which we own and and the quarter was kind of a meh quarter he's like yeah like companies have bad quarters and it's like you don't have to sell just because one thing goes wrong it's uh if you're right about the qualities of the business, and you have a diverse set of companies, you're going to be a winner over time. Couldn't agree more. A quarter is 12 weeks. Now, if you're buying a business to hold for 20 years, what the hell does it matter about 12 weeks of activity? Completely agree. It's just a distraction. It's like they have to report, or at least they choose to report within the framework of the exchange. And honestly, it's just distraction. It's noise. It's like, tell me

about it next year like harrod hughes corporation which i wouldn't say i'm a fan of but what i do like about it is that they only report on their numbers once a year they're like if you don't like it leave it yeah that's that is a great example and uh what was i going to say on here uh on that topic oh i just blanked on it i that well what were you talking about ryan before that the um how one quarter doesn't make it yeah one bad quarter doesn't ruin an investment no what was i thinking yeah i don't know i don't know but i think uh emmett we're coming up on two o'clock um for any listeners or watch two o'clock uh my time yeah excuse me uh east coast time we're coming up on noon uh east coast time for any listeners who are interested in my wall

street i know you guys really you know are so successful you don't need the plug but you are you kidding me i've done a very good job of pumping us we need the plug of course we need the plug. Okay. Well, for anyone, you know, that hasn't heard of you guys before, what was the best place to start? I know we're going to have a link that we'll put in the show notes. Well, I have two things. The first is number one, download our learning app completely free, no hooks learned by my wall street, no strings attached. So that's, that's one. And as I said, a lot of people have used it and loved it. And then the second thing I would just say to your, to your listeners, and I think you're going to be so kind as to drop a link in your show notes, which is a sign up for a

service we've got called charging and fearless which is named after charging bull and the fearless girl who are the two statues on wall street and what it basically every tuesday we deliver you to your email inbox with again no strings and no hooks an overlooked investment that has been neglected by analysts um and news outlets and online gurus and all the rest but has a ton of potential and it's a great way to diversify your folio across the globe and sectors and market capitalizations, because our system, which is, I pause to call it AI, but it's human aided computer intelligence, looks for the best investment available in the world right now. So it might go to Poland exchange, it might go to the Australian stock exchange, it might go to

wherever, it might go to the Dublin Irish stock exchange, but we look for the best out there. um and therefore it's a geographical market cap thing and basically it will deliver a stock with market beating potential through inbox whoops every tuesday just click in the show notes add your email and i promise we won't beat you to death with emails we just send you a a um uh we'll send you a basically a stock our system we spent 10 years building this machine by the way we only launched it a few weeks ago so every tuesday you'll get a nice thing charging fearless click into show notes, but I can follow for more. All right. Perfect. That is, that is, I, I, uh,

I enjoy having you out because you know how to be concise with the, uh, with the pitches. And, uh, I really appreciate that. The, uh, but let me take our disclosure. Um, what, what do we have to talk? We're not financial advisors. Well, I want to, I want to talk about, uh, the, our stuff. If you, if you're interested in our show, follow us on either Twitter or sign up for our newsletter to keep up with the show. Give us a review on Spotify, Apple podcasts,

These shows typically go live every Thursday morning Pacific time around lunchtime on the East Coast, typically 1230 Eastern time. But if we have a guest on like Emmett, we might do it a little bit of a different time. We are not financial advisors. Anything we say on the show is not formal advice or recommendation. We are general partners at Arch Capital and clients may hold securities discussed in this podcast. Thank you all for listening.

Emmett, thank you for joining us. We'll see you next time. Bye.