Good Investing Talks - What to learn from Buffett & Munger Unscripted, Alex Morris?

Episode Date: March 31, 2025

What to learn from Buffett & Munger Unscripted, Alex Morris?

Dear viewers of Good Investing Talks, it's great to have you back on the podcast. I'm very happy to welcome Alex Morris of TSOH investing for the first time. Hi, Alex. Great to have you here. Thank you for having me. I know it's been busy for me lately with Berkshire's letter and annual report coming out and the meeting getting closer. I know it's the same for you, but I'm glad we're able to take a little time to do this. I think it'll be a great discussion. You already set the right frame because we're talking about your book, Buffett and Manga unscripted, which I didn't get in a physical copy rather than the e-book.

You have to physical copy. That's great. It's one of the benefits. One of the benefits of being the author, you can get a physical copy. People can buy it both ways. So that's the options are out there. And today I want to talk with you about the book in the second part of the interview about writing and publishing.

So let me start with a bit of a challenging question. Because there are so many Berkshire books out there. Why was this book missing in the Berkshire book universe? Yeah, I think, you know, well, first of all, your access to the Berkshire material changed in a huge and significant way in 2018 when they released the meeting videos back to 1994. And for anybody who's been to the meetings before, I think you surely agree that the content in the meeting is very different

than what's written in the letter. And I think at times it's also very different than what you've seen in CNBC interviews or elsewhere. That partly speaks to the nature of the questions. And I should say when they released the meetings, they released them back to 1994. So you're also getting a glimpse

into a part of Berkshire's existence where the composition of the meeting, the composition of the shareholder base was different than it really is today, you know, call it 30 years later. So there was this huge trove of meeting material and, you know, the challenge is then actually going through it and finding a way to, I mean, just to get through it is a challenge, right? It's something north of 150

hours of video and more than 1,700 questions. So just watching it for anybody would be a pretty big exercise. But then there's also, you know, retaining it and putting the content in a way that is digestible and most valuable, right? So I leaned heavily on the structure. that Larry Cunningham used in the essays of Warren Buffett, where he took Warren's essays over the course of decades and framed them in a way by the content or by the material that allowed you to more easily basically take everything in. So I used a very similar structure here.

And my opinion, after having finished the book and after having heard a lot of feedback from readers too, is that it gives you an ability to kind of go through certain topics and to understand how their views on a specific topic may have changed over time or even things where the views have not changed at all, there's insights there as well. But it allows for a certain level of insight from the material that, again, I think it's different material, but an insight from the material, even if you've reviewed it in a way that is very, very valuable. So I think it's a resource that, especially if you're

only paying 40 bucks for the book or something. I mean, it's worth significantly more than that if you're someone who really cares about investing or business operations generally. So how, as an offer, how have you designed to read the book or how can you or should you read the book? Yeah, I was listening to David Sanrae, who does the Founders podcast. I was listening to the episode he did about the book the other day. And I think he did a really good job basically saying it's more of like a resource. It's something that for me, I leave sitting on my desk. Again, very similar to the essays of Warren Buffett.

And as I'm reading about something that's happening in the markets are in the world and it may pertain to a particular topic, it's kind of something that you can just pull up and go to, okay, here's the section on, you know, market efficiency or here's a section on retailers and how that business has evolved over time. I think you just go to certain topics and really start to derive insights again that have been shared over the course of decades, but it's captured here and, you know, 10 pages or something like that. So you can kind of pull out the insights from that in 20 minutes, something that's been put together over the course of decades. So I think it's really, really, really valuable in that manner. With what kind of avatar or person did you write the book in mind? So who did you design it for? It's funny.

I really thought of it as a very wide range of readers. I mean, I imagine myself as, again, when I was reading, yes, there's a Warren Buffett for the first time. I had basically just started in this world of investing in business. I was almost 20 years ago now, but it's still a book that I pick up today, and I can derive a ton of insights from maybe different things than what I did 20 years ago, right? But there's still a ton of value that comes through when I read that book. So I think it's applicable for a very broad range of investors, and I think it's also very

applicable for, you know, business operators. And, you know, as Warren and Charlie have said many, many times, those two things are, you know, somewhat undistinguishable from each other and understanding the framing of both sides of that coin is really helpful for being good at either side of that coin. So I think it's really, really applicable to a to a wide audience. People have said, going to the Berkshire meetings is like going to church, right? You hear a lot of things that you've already heard before many times, but it's kind of in some ways refreshing or you pull something from something that you've heard before. You hear it in a different light and it means something different to you than it maybe did a couple of years ago.

I think it very much plays a similar kind of role. When was the book released? It was released January 2025. I can't remember the exact date now. It's been a whirlwind last couple of weeks and months. But yeah, it was released. I think it was January 20 or something like that. One month out.

Who have you seen resonating with it? You haven't really thought of maybe or what surprised you? It's funny. I haven't been overly, and this is probably informed by running TSOH investment research, my investment research service. I haven't been overly consumed by, you know, how it's doing sales wise or anything like that. So I don't totally know. I've heard feedback from a wide variety of people. A lot of people I know personally that I've met over time through Twitter and elsewhere, you know, Bill Ackman tweeted about it, someone I don't know, obviously. So, So there's been a couple of random people commenting on.

And again, David Center doing it for founders was really cool. Someone I don't know personally, but I absolutely love his podcast and the kind of books he's covered or it just means a lot for this to kind of be added to that library of material. So generally speaking, the feedback's been really good and we're only a month in. So hopefully the audience for it can continue to grow and be valuable to a wider group of people. you have structured the book in different topics and added a lot of quotes and wisdom from Buffett and Munger below it so how did you decide up to come up with these topics well it was certainly a work in progress and with some revisions along the way you know when I first started

going through the materials I needed to find a kind of find a way to structure it all and to have any sense for where is this given conversation going to land in the book and, you know, how I'm going to structure this in any way that that is somewhat digestible for the reader. So I think at one point there may have been, you know, something like seven or eight chapters. And then you get to certain discussions around things like Coca-Cola and sees candy. And it's like, okay, well, this probably deserves to be its own separate section, right? I could put it into somewhere else, but what's said here is somewhat distinct and so important that it probably deserves its own discussion.

A similar thing happened with with GEICO and US auto insurance. Like there's so much in here that is relevant just to the specific business, but there are insights that are so much broader as well. And it deserves to be pulled out and to become its own thing. So I started basically with a high level, or high level idea of these different chapters, you know, things like value investing, capital allocation, et cetera. then a Berkshire chapter, which allowed me to go in some of the, you know, some city areas that are talked about somewhat frequently, but not a ton, you know, things like Nettjets or Boersheims

or Nebraska Furniture Mart, things that I wanted in the book, but, you know, are not really deserving of their own chapter necessarily. So I started splitting it up that way and I eventually landed on, we've in total, there's 13 different parts to the book. And number 13 is a, is a catch-all of other topics with, you know, a bunch of things that, again, like just, isn't enough material there for them to be kind of their own chapters what topics have you left out i mean i left out again as you get to the later years of the meeting you know call it 2015 and onward you start to get a lot more of the the life advice type of stuff you know what do what would you go back and change if you could do it all over again those type of things you know

warren became uh his political voice up obviously as he became even more popular over time, his political voice became more relevant, you know, in U.S. politics and things like that. So that became a bigger part of the meeting. And, you know, it just wasn't really what I thought the scope of the book should be, or at least what I wanted it to be. And even with pulling stuff like that out, the book still almost 500 pages. So there also was, there also was the consideration of like, how do I make this, make this somewhat digestible for the reader to get to the stuff that's really, really important. It's somewhat challenging when you're working with Warren and Charlie, almost everything they say is really insightful, right?

So you kind of, you kind of want to include it all. But at the end of, I think the transcript I was kind of working with, and I compiled all the meeting, all the meeting transcripts was something like, I think it was more than 1,500 pages. So I had to kind of find a way to make this a little bit more controlled. So those things are kind of natural to pull out. But there's even stuff in there that in some ways bleeds over, like for example, Berkshire Hathaway Energy and talking about U.S. energy policy basically, right? So some of those things still find their ways in to the extent they're really relevant

to Berkshire's businesses specifically. But the stuff that was more general, I decided to keep out of this book. Maybe that's idea for book number two right there. I guess I'm going to give you a commission because you just thought of it, basically. Let's see. When it comes out, we can shut about it. And if what kind of, which free segments are your personal favorites or topics? No, that's a really good question. The discussion about national indemnity, which I've written about previously,

but there was more in the meeting that also shed line on this topic. And basically, I mean, the really short version of this is over a 25-year period, the premiums volume and national indemnity and insurance business at Berkshire was like a roller coaster. It went up very significantly. There was like a 15-year period where it contracted by something like 80% and 15 years. So a very sustained period of contraction and premium volume, which generally speaking, people would perceive as bad, right? Followed by a significant ramp as they came out of a certain period in those end markets. And it's a really fascinating discussion on basically the right way to run an insurance business.

And they also make a really good point in terms of the right way to run an insurance business. the right way to run national indemnity is not necessarily applicable to every other type of business out there, right? It depends on the variables in that specific business. So that's a discussion where there's just a ton of insights that comes out of that discussion. You know, another really prominent one is as they talk about seize candies and Coca-Cola, and it's nice that the meetings start at. I believe, if I'm not mistaken, 94 is the last year that Warren bought or sold the share of Berkshire. I believe it was that year.

And interestingly, I've written about this, so it's somewhat top of mind. 89 was the first year that they bought the stock, and the shares that they bought in 94 were bought at roughly three times. The price was three times higher than it hadn't been five years earlier. So obviously, you know, if most investors, myself included, the idea of buying something at a three times higher price five years later is like, man, that's really annoying to do. But the fact that Warren was making that decision, and that's kind of the first year that meeting when they start talking about that business.

There's a lot of really interesting insights that come out of those discussions. The other one that's really prominent to me that I think about a lot more than I used to is this idea of, well, one capital allocation, but also manager incentives. And you see it really clearly in the way that Warren talks about how they structure incentives at the wholly owned businesses. I mean, I think it was very prominent actually in this year's letter, the 24 shareholder letter when he's talking about the Forest River acquisition, the RV he talks about the discussion that he had with the founder and CEO of that company.

Again, it's just like one line, but to the extent that you have this history, which is laid out in the book of how he thinks about these things, it's a really interesting framing of what Warren is trying to get across to the managers of the businesses and the way he gets that across is how they incentivize comp, right? So that's something that, again, like you go in knowing this is really, really important. And then you walk away from it with kind of the Charlie Munger view on incentives, right? Like, I've thought this was important my whole life and I've understated how important it was. It's that type of takeaway for me.

Did you discover any pivots or 180 degree changes in the opinions of Buffett and Munger in the three decades you covered in the book? I think on a lot of stuff, it was pretty well cemented by this. this time, right? I mean, they've been investing for, I guess, probably even by 94, right, they'd been investing for more than four decades. So they had a very good understanding of what they were doing. And even running Berkshire, obviously, for decades at that point, too. So they had a good understanding of the constraints that they were dealing with there. The most prominent one in any business is what happened with GEICO and telematics. And coming out of

call it to 2010s, when Progressive started to make a bigger push there. And they were response on the front end was basically, we don't think this meaningfully changes the underwriting decision in U.S. auto insurance. It'd be interesting to go back and look, I need to do this, how expensive it was. Because at that time, telematics for anybody who doesn't know is basically progressive was sending people these devices that they would kind of attach to their car as a way to track their driving. And they would then use that information to change the underwriting decisions. over time, obviously, that's been basically replaced by cell phones. But they came into that period unconvinced that this was worthwhile to do.

They thought they basically had enough variables of their disposal to make intelligent enough underwriting decisions. And you see through this period from, I believe, 2011 or 2012 is the first time it's really prominently discussed. From this period of 2012 to 2022 or so, you see basically a complete reversal by into that period and kind of admittance that they're now behind as a result of having kind of missed the first part of that development. Pretty interestingly, I can't remember when this was maybe a year or two ago, and I can't remember if it was Todd or Ted, but one of them, when they

first met Charlie and they flew out to California and meet with them, they said to him, I guess it was probably Todd. They said to him, you guys are making a big mistake here in terms of not recognize the value of the data that's coming out of this business and how important it will be to managing the business. And in hindsight, clearly, that was directionally correct. And they kind of missed it. So that's the most prominent one in my, that I saw where, you know, they're thinking about a particular business issue really changed. On the flip side of that is certainly throughout the period of the late 90s and early 2000s, they very clearly saw what the internet was going to do to the newspaper business generally, I think they also appreciated in some ways how that was

going to float through to other forms of kind of digital information like media. So that part of that part of the discussion, just kind of funny in hindsight to look, you know, 25 years later and to go like, oh, these guys to some extent kind of saw where some of the stuff was going, which is pretty interesting, especially when you overlay the fact that they were at that point already in their what 60s they weren't exactly young guns at that point in time so they were still kind of staying up with how the world was kind of evolving and what technology could potentially do so that part of it all to me is pretty interesting hey Timon here it's great that you've made it that far into the video and I think it shows a certain passion for investing you're having

if you want to dive deeper and go further down the rapid hole you're invited to apply to my community good investing plus it's a place that's very helpful to people who are ambitious about investing it's helpful to investment talent as well as experience fund managers so if you're interested please click on the link below and now without further ado enjoy the conversation i want to switch now to the offer level and a bit of a meta level and people who are just interested in the book, I would recommend to just get it and read it. But let me carry on with the topic of writing and publishing with Alex here. What did you learn about yourself when writing the book? Well, for one, I learned that I was already fairly fancy, so you quit doing TSOH investment

research. I now have an 11-month-old son, but thankfully throughout most of the work process, he wasn't board yet, so I had a little bit more time at my disposal, throw an extra couple hours a week on top of the current workload. I think people have different views on this stuff, right? And it gets to kind of work-life balance to some extent. And I love, obviously, investing in the source material, but it was, there were times where I was quite busy for a while. So learning to adjust to that and to work through those constraints was interesting at times. I also learned a lot more about what it actually means to write a book. You know, I worked through the process of, you know,

listening to all the meetings, kind of organizing the transcript, picking the answers, making the edits that were necessary to kind of work it into the book, laying that all out, sending it to the publisher. And when I sent it, I was like, okay, like, we did it. We're at the finish line. And I've since learned that that is not the finish line. writing a book. There's a lot of extra work that goes into it after having sent like what you think is a final manuscript or whatever the term would be to the publisher. So that was a learning

experience. Another thing that I've learned is, and I've kind of seen this as well from again running TSOH investment research, it's this interesting balance of, you know, I'm not overly promotional, I don't think. But at the same time, to the extent that you want to get the word out about something, especially in today's world, you have to figure out a way to do it, right? And even learning kind of how bookstores, physical bookstores, think about what books are going to hold in their inventory is kind of an interesting part of the business that I obviously knew nothing about previously. So I've been learning this skill or how to do this a little bit more to some extent with TSOH investment research, but just getting the word out there

about something and trying to find the right audience for it is that has its own lessons. well. So maybe to dive a bit deeper, what do you learn about publishing a book and what would you maybe do differently in hindsight or what would you expect differently in hindsight? I mean, the main thing I learned is that it's a pain in the ass. It's a lot of work. It takes a lot of time. You better you better really love the source material and what you're working on and be ready to put in a lot of hours. I think back it's funny. My conversation with the publisher, effectively started with a cold email from them of, you know, hey, you have a decent following, you write articles, you should write a book.

And my response was, I don't really think I have a great idea. I had one thing that I was actually working on, which is kind of inspired by my former life as an equities analyst and the RIA business, investment advisory business, which was this question of, you know, for people who are not. really big into finance or investing, I was thinking of people like my parents or my grandma, people were asking me, like, what should I do with my money? It was basically a book about how to navigate an RAA relationship. And like, what do you need to know without becoming a fanatic about this stuff to be reasonably secure in how you go through that relationship,

right? And it's something I started to write. The problem was fairly early on. I was like, I kind of know this source material. I don't know every part of this topic as well as I probably should. But more importantly, there's parts of this that I'm not really in love with. And I don't want to spend a ton of time writing about this. Thankfully, I recognize that at an earlier stage. So when I went to the publisher and basically said, I have this one idea, but I don't really know if I actually want to commit the time to do this.

And I don't really know if there's an audience for it either. After that got shelved, there was a couple of weeks later. I was like, hey, there's also this other thing. I potentially want to do, which has since become Buffett and Monkron scripted. But, yeah, I think maybe the takeaway from that is, again, if you're going to begin this process, be sure that you want to do it. It's going to be a significant commitment of your time and the financials of writing a book. I don't know if there's standard terms across the industry or entirely how all this works, but my sense is that it's not a way to make life-changing

amounts of money necessarily, unless if you're Morgan Household and you can, sell a few million books that probably helps but there there's only one morgan household as far as i know selling investing books might be hard and because it's a small niche what is your strategy to do it if you have something like a strategy yeah on your on your last point real quick it's funny when i when i do periodically peruse the like the amazon rankings for the book it's funny how it's surrounded by a sea of like day trading and uh technical's books So I guess if you're going to write a book about investing, maybe that's the area to go into because it seems to be a bit hotter than potentially the world of value investing. My strategy is largely similar to how I think about TSOH investment research.

Granted, it's slightly different, but it's to kind of consistently repeat the message of what it is and to do that in a way that hopefully isn't overbearing. But to try to get the word out to the people who would be the right audience for the book, right? doing things like this podcast, is periodically talking to people about it at TSOH investment research and then hopefully letting word of mouth do its thing and having it fall into the hands of the right people. Beyond that, I still really haven't found a way to kind of speak about it or push it that that feels as effective as that. So it's kind of just letting it do its thing and hopefully getting a bit of a snowball rolling down the hill. Great. Fingers crossed for this. I have finished all my questions for the end.

There's always a chance for you to add something. Is there anything to add at the end of this interview? No, I'm very, very thankful to be on the podcast. I mean, to the extent that people want to know more about me and what I do, they can always check out TSOH investment research. I'm on Twitter at at TSOH underscore investing. And I'm always open to talk to people about the book or, you know, my research service.

if you have any questions about whether or not you're a good fit for one or either of those, I'm more than happy to talk to you about what they are and so you can make an informed decision. Awesome. Then we will link both below and the book link as well. So if you want to get the book, go to the show notes and get it. Thank you. And bye-bye to the audience. Bye-bye.

I really hoped you enjoyed this conversation. If you did, please leave a like and a comment and for sure, subscribe. to my channel. Traditionally, I want to close this conversation with the disclaimer. So here you can find the disclaimer. It says, please do your own work. This is no recommendation. What we are doing here is just a qualified talk that helps you, but it's no recommendation.

Please always do your own work. Thank you and hope to see you in the next episode. Bye-bye.