We Study Billionaires - The Investor’s Podcast Network - RWH024: Wealth, Wisdom, & Happiness w/ Tom Gayner

Episode Date: April 2, 2023

In this episode, William Green chats with Tom Gayner, one of the great long-term investors of our time. Tom is the CEO of the Markel Corporation, a global financial holding company, where he oversees about 20,000 employees. Here, he shares his time-tested advice on how to achieve enduring success in business & investing while also building a happy & fulfilling personal life. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 03:38 - How Tom Gayner made a fortune by setting up a retirement account at age 14. 10:59 - What he learned from his grandmother about the glory of long-term compounding. 16:29 - How to succeed through steady, persistent progress over long periods of time. 30:00 - Why humor, fun, & joyfulness are central aspects of Tom’s approach to work. 35:15 - Why it’s so helpful to set down your thoughts, principles, & values in writing. 38:33 - Why we should bet on companies that do things “for” their customers, not “to” them. 41:17 - What Charlie Munger teaches about the secret of success. 47:52 - How to flourish in business & life by compounding relationships built on trust & love.  1:00:46 - How Berkshire Hathaway embodies everything Tom looks for in a business. 1:09:08 - What we can learn about investing from the comedian Jerry Seinfeld. 1:12:17 - How Tom approaches the challenge of appraising a person’s talent & integrity. 1:13:23 - Why he prefers to aim for satisfaction, not optimization. 1:26:39 - Why you should never check your luggage when you travel. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Tom Gayner’s company, the Markel Corporation. Tom Gayner’s 2022 letter to shareholders. William Green’s book, “Richer, Wiser, Happier” – read the reviews of this book. William Green’s Twitter. SPONSORS Support our free podcast by supporting our sponsors: River Toyota Range Rover Briggs & Riley American Express The Bitcoin Way Public Onramp USPS SimpleMining Sound Advisory Shopify AT&T BAM Capital Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hi, folks. I'm really delighted to introduce today's guest, a legendary investor named Tom Gaynor. Tom joined the Markell Corporation back in 1990 to manage the company's investment portfolio. He's been working at Markell ever since and is now the CEO, overseeing something like 20,000 employees. Over the last three decades, he's played a starring role in transforming Markell from a tiny, somewhat obscure insurance company based in Virginia, into a powerful global conglomerate that now ranks at number 289 on the Fortune 500 list of America's largest corporations. Markell's success story is one of steady incremental progress sustained over a long period

of time. That's also Tom Gaynor's story. When I wrote about him in my book, Richel Weiser Happier, I described Tom as the King of Constancy. He's a person who plugs away day after day, year after year, decade. after decade in a thoughtful, diligent, consistently sensible way. Tom once told me, if you want the secret to great success, it's just to make each day a little bit better than the day before. What's fascinating to me is that this emphasis on steady, constant, doggedly persistent progress has paid off to a spectacular degree over decades. When Markell went public back in 1987,

its stock was valued at a little more than $8 per share. Since then, it's risen to more than $1,200 per share. That gives you a sense of the extraordinary power of long-term compounding. As Tom Gainer sees it, you really don't need to take extreme risks to build significant wealth over time. It's better, in his opinion, to take a more prudent middle-of-the-road approach that's more sustainable. Instead of doing anything so aggressive that you might risk getting knocked out of the game. I remember Tom once describing himself to me as radically moderate. But there's another reason why Tom is one of the most admired investors of his generation. He's not only a grandmaster at building long-term wealth, he's also a terrific human being.

As I think you'll hear in this conversation, he's an extremely likable and good-natured person, full of charm and humor and amusing stories, not to mention a lot of practical wisdom about how to achieve success in an honest and trustworthy and joyful way. I've met a lot of famous investors over the years who lead slightly narrow and stunted lives because they're brilliant at making money, but not so hot when it comes to things like building happy relationships with their families and friends. Tom is very different. He's successful in his professional life, but he's also really successful in his personal life. So I've come to regard him as one of the best role models of all in the investment world. I hope you enjoy our conversation. Thanks so much for joining

us. You're listening to The Richer Wiser, Happier Podcast, where your host, William Green, interviews the world's greatest investors and explores how to win in markets and life. Hi everyone, it's a particular pleasure to welcome our guest, Tom Gaynor, who's one of the great long-term investors of our time. Tom, it's lovely to see you. Thanks so much for joining us. Thank you so much for your hospitality and glad to be with you. It's great to see you always. I wanted to start by asking you about your individual retirement account, which I gather you set up when you were something like 14 years old. Can you tell me what possessed you to do that?

And also what the story of your IRA illustrates about the power of long-term investing? Because I guess this is what? This is 44 years ago now that you set it up? 47 or so by now. It has indeed gotten to the hockey stick stage of things if you were to chart it out. But the backstory, you and I have talked about this before. When I was 14 years old, the law was passed that created individual retirement accounts. And at that point, I was working part-time from time to time in my father's liquor store.

And I remember I made about $750 that year. And I put all of it in the IRA. I don't think the tax burden would have been very much on $750, but I did read the Wall Street Journal, and I was sort of aware of things. And without a second hesitation, it just seemed to me that, well, that's a spectacular thing to do is to put that away. And literally every year since then, for many, many years, the limit was $2,000 a year. And I don't know if I made $2,000 in the subsequent year when I was 15 or whether to be 16 before I was fully able to fund the $2,000, but I did, and that account has been a marvelous sort of tool and teaching device to sort of let

let some winners run. And it's, I mean, at this moment, that IRA, which just had $2,000 a year put into it, is 10% of my net worth. So it's a meaningful thing. Wow. And what was in it? What did you do originally and then how did it change over the years once you actually really knew what you were doing?

Well, I really don't remember what the first stock I bought would have been. but it would have been a stock. And I have no memory of any of the specific investments I made all the way along until such time as we got to the maybe late 80s. And it was the time when interest rates were meaningfully higher than what they are right now. I mean, 16, 17, 18%. And I believe it was Merrill Lynch who started the process of stripping the coupons above government bonds.

And they would create these securities called lions. If I remember that acronym, which was I think an acronym for liquid. old option notes or something along those lines. And so you could buy literally a million dollars worth of these bonds at zero percent interest rates, you know, zero coupon bond that would lock in a 16, 17, 18 percent return for 30 years. So the first memory I have of actually buying something that's in size that worked out very well were those those Lyons bonds. And then about the RJR zero coupon picked bonds the day that Drugsaburnum went bankrupt. up. There was a company here in, and I'm just sort of picking and choosing the favorable memories. I made some mistakes as well. These ones worked out. There was a company here in Richmond, Virginia, called Rich Food, which was a grocery co-op that converted and went public. And it was one of those stocks that started out at 20 and went down to less than a dollar. But I knew the business and visited the company and they had new management come in. So I bought some of that and that ended up being a 100 bagger. And then meaningfully, as I look at it, the little debt account today,

And I sort of had a hint that you might ask me this question because we've talked about it before. Home Depot is probably 35% of the value of the account. And when you look at Home Depot and Cisco and W.W. Granger, those three stocks count for more than 50% of the value in that account. And it's just things, businesses that I had a reasonable amount of confidence in that I thought were reasonably well priced and had the ability to compound and grow for a long period of time. And it's worked out. So in some ways it encapsulates so much of what would happen later in your career, right? It's two of the great themes of your investing career, patient compounding and tax deferral.

And it's also striking, well, I mean, I was looking at a compound interest calculator last night to see, you know, I didn't have the exact numbers, but I was looking and thinking, okay, so if $700 grows at, say, you know, 12% for 44 years, I think it comes out to about $102,000 bucks. And then I was thinking, well, so another 20 years at that, and it's basically going to be about a million bucks, just at 12% a year for that time. That's an extraordinary thing. And remarkable that you appreciated it so early on in your life that you could defer gratification. What a strange kid do you were, Tom? I was a very strange kid. And I joke with people the moment when I became very, very taxed sensitive. I think I was in second grade.

And at that particular point in time, I used to get an allowance of a dollar a week. And I used to love collecting matchbox cars, which were the little tiny cast cars. I just loved them. And it would be seconds between the instant when that dollar hit my hand. And I would dredge down to the local Woolworth store, which was in our small town. And those cars sold for 50 cents apiece. And I would lovingly and dutifully inspect the rack of matchbox. cars and I would select two of them and I would go up to the register and hand my dollar bill over for

the two matchbox cars that I selected. And one day, literally, this was, I think in second grade, I handed the clerk the two matchbox cars and she rang it up and said, that'll be a dollar four. And I said, a dollar four. And I patiently explained to her, now these are only 50 cents a piece. And there are two of them, so two times 50 is a dollar. I'd done this several times before in my life. I was a veteran at buying two matchbox cars for a dollar. And she informed me that the state had just instituted a sales tax and it was 4%. So now instead of a dollar, it was $1.4. And my immediate, just emotional reaction was $1.4.

Sales tax, what do I get for that? And I was not very happy with the answer of what the sales clerk at Woolworth explained that the social purpose and utility of the sales tax was. And I remember a fearful, painful walk back to the rack where I had to put one of those cars back. And I was only able to buy one car that week and walked away with my, I think, 48 cents of change because it would have been 50 cents plus two cents for the tax. So I had 48 cents to apply towards the purchases next week. But that's seared a memory in my mind about tax sensitivity that relates to life in general. Yeah, and it probably helped that you were the son of an accountant and later would become an accountant. I think your daughter, one of your kids, became an accountant eventually or studied accounting for turning to finance, right?

She was a dutiful daughter and did head off to the University of Virginia with the plan of studying accounting. And pretty quickly into that program, she called me one day. And she said, Daddy, would it really disappoint you if I switched from accounting to finance? And I said, no, not at all. You have my complete utter total blessing. So she did start down that path and has enough accounting knowledge to be thoughtful and aware. And it is important, despite the jibes I take into accounting, including most recently in our annual report, that you have awareness of accounting, but use that force for good. And your mindset must very much have been shaped by the fact that you grew up in this fairly

rural, old-fashioned place in Salem, New Jersey, I think, on a, on a, on a, 100-acre farm, living, I think, in a 250-year-old farmhouse, spending a lot of time with your father and your grandmother. Can you talk about how that background shaped this kind of slow-moving patient mindset of yours, which has really been at the heart of your success as an investor? Well, I think to put a word on it, it was probably like osmosis. So just being surrounded by that environment all the time. My father did have his office in our home, and he was an accountant by training, had done a tour of duty with the predecessor firm of Deloitte and Philadelphia, but then pretty quickly went off on his own and pursued entrepreneurial activities such as his own accounting

practice, tax work for people, business consulting, deal work, restructuring, just putting deals together in the owner liquor store. So just a businessman. And with his office, either in our house or the one that he had in the basement of the liquor store. I was at his side a great deal and just hearing him interact with people was an osmosis like process where I'd learned so much just from his conversations. And similarly, from my grandmother who gave me many of the books that were formative and had some of the discussions that were formative. In fact, I don't know if I told you this story before, but when I graduated from eighth grade in Salem, my grandmother gave me five shares of the local bank. And that was the era when before there were bank consolidations and mergers,

most small towns had their own bank that was headquartered there and it was a local bank. And my uncle Dick happened to be the vice president. It wasn't the president of the bank. He was the number two guy at that particular bank. And I can remember after and she would ask me when she gave me those five shares, she said, Tommy, would you rather be a depositor in the bank or an owner of the bank? And again, without ever looking at a financial, state than are looking at the annual reports or thinking financially in any ways. I just instantly said, I'd rather be an owner of the bank. And I think she anticipated that question. So the next time I walked in that bank, I had my shoulders back and the owner's

inspection mode going on. And I thought the ballpoint pens were not attached well enough to the counter where people would endorse their checks and made some comment about, to my uncle Dick, about how he ought to step up his game now that he was working for me or something unwelcome like that, but started at a very old age. I just have no memories of there being a time that I didn't sort of think this way. And you've also said that your grandmother was one of your great investment teachers because she never did anything with the portfolio that she inherited from her late husband. Can you talk about that? Because again, it gets at this idea of hanging on to good stuff for a long time. Well, yes, in fact, the facts of the matter are so. My grandfather died.

in 1966. And he was a small town businessman and small town businessmen of that era often would gather at the local diner and drink coffee and talk about their portfolios. And it was a pretty common thing for people to own individual stocks among that crowd of people that would drink coffee at the diner. And so when he died, that portfolio was left to my grandma. There was a modest portfolio. There was nothing fancy or large. But she was the type of widow who essentially never made another decision in her life. And his suits hung in the closet. His shoes were on the floor. She stayed in the same pump. And she held on to those 12 or 13 stocks that were in his modest portfolio at the time. And what I observed from that is that among those 12 or 13 stocks

were Lockheed Martin and Pepsi. And those two, because they did so well, made the others irrelevant. but the rest of them all could have gone to zero. It just didn't matter. The compounding of the winners, mathematically, the weighted average becomes bigger and bigger and bigger. And she lived a modest but pleasant life for the rest of her life because essentially Pepsi and Lockheed Martin increased their dividend every year for the 25 or 30 years that she lived after he died.

So again, that lesson wasn't taught to me in a formal text. Let's sit down and talk about this. It was observation. And I can remember talking to her. And she would watch Wall Street Week with Lewis Roo Kreiser on Friday night. Sometimes I would watch that with her. She was always a woman of keen interest in what was going on in the world. But either she had some self-confidence issues or doubt or wisdom.

I can't say which parts it was of which that these things that were working well, she left them alone. And they compounded in such a way that it took care of her personal needs. And by the way, so when when she passed, there was a modest inheritance. It's the only inherentance I've ever received. And at that time, that modest inheritance that she designated to me, Markell was selling for $25,000 a share.

And she gave me $25,000. So that was enough to buy 1,000 shares in Markell, which is what I did with that. And by the way, I still am holding on to this. So the path and the legacy continues. Wow. So what year would that have been? That would have been probably

93, 95, something in that era. That's fascinating because we've talked about this a lot, right? Because you went to Markell, I think, in 1990, and Markell went public in 1986. And the stock back then was $8.33, I think. And so now, as I looked at it over the weekend, it was $1,326. So I think that's a compound annual return of about 15% over something like 36 years. I've already displayed my mathematical incompetence on this show, $7,000. times. But so in a way, Markell is kind of the same story, right? A very steady, incremental,

dogged progress over long periods of time. So there's a kind of consistency here between what you grew up with, with your grandmother or hearing local stories. I remember you once telling me this wonderful story of a young, newlywed couple going to ask the richest man in town, the furniture store owner, I think. Like, how do we sell a stock? And he was like, I don't know, I've never sold one. Exactly. So there's a really interesting, consistent thread. Can you talk about that a little bit?

Because it seems so central to the story of your life and also the story of Markell's success, this steady incremental progress over time. Well, I think in many ways you have spoken to it. I'd have very little to add to that couple of pieces around the edges. So that steadiness, you have to know what you're good at and what you can do, that perhaps would distinguish you. And my father, again, one of my great teachers used to say, I can't remember his exact phrasing,

but something along the lines was, there's always somebody smarter than you. There's always somebody taller than you. There's always somebody faster than you. There's always somebody that's more talent than you. So at the end of the day, what you should focus on is your work ethic and showing up and participating in something

that it's not necessarily talent that's going to distinguish you. It's not height. It's not speed. It's not those sort of things. So I just sort of naturally fell into the notion of you can call it an endurance contest, if you want. And to morph that a little bit towards a financial word, think about the idea of duration.

So you talk about Markell and 15% for 37 years. Not only is that record long in terms of its duration, that's actually also a pretty good percentage rate too. So both of those factors are in play. but the endurance of it and the durability and the idea of continuing to be able to do it for a long period of time, that's what's special about it. Someone else recently was asking me about this particular idea, and the thought that occurred to me was that, you know, if I was going to race, Usain Bolt is the fastest man in the world, and that race was going to be 100 yards,

you should take all the money you have and bet it on Usain. he's going to win that race 110 times out of 100. I am never ever going to be the saying bolt at a 100 yard race. If you make the race 200 yards, you probably should still bet all your money on a sane bolt.

If you make it a mile, I would still make a heavy, heavy, heavy back on a saint. If you make it a marathon, well, I don't know what Usain Bolt's marathon endurance would be. And probably you don't know what mine is either. So there at least is a ship.

of uncertainty that is different than the 100-yard race. Well, then make it a foot race, a foot race from Key West Florida to Seattle. Well, on that, I think I have a chance. I think it's still better than you're saying, but it's no longer a race about speed. It's a race about endurance. It's a race about willpower and just the ability to somehow or another to will yourself to continue to put one foot in front of the other,

no matter how you feel, no matter how you might be doing and no matter where your splits, times are. So those are the kind of races that I at least have a chance in. Because I don't have any of the natural skills or abilities or talents or elect to beat the fast money of the world. They're just stronger, better, faster, more talented than I am. So I can get that. But they're playing a different game. They're running a different race.

And the foot race from G.S. to Seattle, that's the kind of race that I at least have a chance. Let's take a quick break and hear from today's sponsors. All right, I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year, bringing together activists, technologists, journalists, investors, and builders from all over the world.

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I don't know if you know. I do not know him. I think he was a lawyer who then became an ultra endurance athlete. And he's very interesting about ultra endurance. And he said something, I'll slightly botched the quote, but he said something along the lines of the person who wins in ultra-endurance is the person who slows down the lease. And I thought that was really interesting, this idea of being able to persevere without disaster, right, without falling out of the race. And I, in some ways, if you think about your story over the last 40 years as an investor, part of it is that you didn't blow up, right? I mean, you had a few periods where things were tough.

I remember in the late 90s you were shorting stocks and you said to me once that I lost more in one year shorting than I'd made in the other 14 years that I'd been shorting. But can you talk about that importance of if you're playing this long distance game, the importance actually of staying in the game of not getting knocked out of the game and not having to slow up so much that you sort of break this long-term compounding process? Well, I think that's exactly right. and just the ability to continue to be there day after day after day after day without getting blown up. So if you want an easier example than having to endure a foot race all the way from Key West to Seattle, think about a Thanksgiving turkey truck where there's going to do this 5K run or something like that. It's just meant to be fun. And you'll see runners of all ages and abilities that just sort of are participating in this turkey trap because it's fun.

Well, inevitably, there'll be a bunch of kids that are there. And inevitably, when the starter's gun goes off, those kids rent away from the starting line because they're kids and it's fun and their adrenaline levels are high and they're going right after it. But after 200, 300, 400, 400, 400 yards, you see them starting to bend over or you see them start to slow down to use the words you did just mention. But the runners who know what they're doing have paced themselves and they know at what rate they can run in such a way that they'll still be running at pretty much. the same rate by the time they crossed that 5K finish line as they would right after the first 100 yards or so. So the analogy is, I think, well crafted and it's applicable. And it's exactly what the gentleman you spoke of said, the ability to just keep going. It's something that differentiates you over time. Yeah, I think about this sometimes with someone like Peter Lynch,

right, who sprinted like crazy for 13 years, I think, and then was done. And there is a kind of athletic feet involved there to run at that pace, never to take a vacation, but just worked on stop. And you know, you in a sense, you've taken the opposite tack, right? It's this slow, steady, dogged approach. But at the same time, I'm very struck, you're, you're kind of humble and self-mocking about your slowness, but in some ways, I look at you and you've, you're actually pretty intense yourself, right? I mean, you do, you keep going. I think I got an email from you this morning at 515 and it's it's a federal holiday today can you talk about that about getting this kind of balance where you're you're managing your energy in a way where you can survive and you can

compete in a very long distance ultra endurance investment race um well i think probably like the ultra athletes they do love it so it's fun i enjoy this and i can remember one time i was i was playing golf with steve markell and i enjoyed playing golf every once in a while And at one point, we were on the 14th hole. And I was not having a good day on the golf course. It was hot. And I looked at Steve and I said, Steve, can we go back to the office where I feel more comfortable? I mean, that literally happened.

And it sort of it encapsulates the sense of the joy that I feel in doing what I do. So the fact of the matter is, so this day, which is a federal holiday, I'm getting to talk to you, one of my friends, we're thinking about investing. or thinking expansively. I get to read stuff that is of interest to me. I get to sit at a nice heated office on a February day. So I get to drink coffee that somebody provided for me. So this is what I do for fun. And I enjoy playing an occasional round of golf

and watching a football game or a basketball game or a baseball game. But I really do enjoy this. This is fun. This is, I think, what I was put on earth to do. So it's like the chariots of fire moving. And there's the scene where the gentleman is having a discussion, shall we say, with his sister, who because of their faith, she suggested that he should not run the Olympic race, which was on a Sunday. And his response, I think Eric Little, if I remember the guy's name, he told his sister, he says, yes,

and I agree with you that God made me, but he also made me fast. And I feel his joy within me when I run. I'm not quoting it exactly, but that's the essence of it. So in doing this, I feel this is what I was made to do, and I feel as joy within me when I am doing it. So that sounds like fun to me. Yeah, no, it's great. And there's a lot of, there's a lot of emphasis in your life, actually, on fun and humor. And I think about this a lot because I feel like when I was a kid, I was a much more facetious, jokey, lighthearted person.

I feel like I've become increasingly earnest. And I've kind of forgotten to lighten up. There was a great piece of advice from Stephen King to another famous novelist who was starting to be successful. And he said, don't forget to enjoy it. And I feel like I sometimes forget that. And when I look at you, I'm kind of reminded that you have fun doing this. And it's actually, it's built into the value system of Markell, this idea of having a sense of humor. Absolutely.

And I think there are several key points to keep in mind there. one, I think a sense of humor is a sign of intelligence because it shows that you're able to look at something and think about it from a different point of view or see the absurdity and things. Boy, if you don't have that, life will beat you down because there are just so many things that you encounter

in life that are just absurd that, for me anyway, having a sense of humor is a way of reframing things and laughing. It is an aspect of humility and not taking yourself too seriously. because if you take yourself too seriously, that can easily slip over into thinking you're right.

And if you think you're right, then you're setting yourself up for a fall. Can I remember whether it's Mark Twain or Will Rogers said something. It's not the things that you don't know. It's the things that you know that aren't so get you in trouble. So a sense of humor acts as a break on that sort of thing. And that's important. And then the last thing, humor slash fun.

And again, these are words that they're not the same words, but they sort of touch one another and how. have some overlap. So I wrote about Kyle Ripkin in the annual report this year. And I had the great pleasure of seeing him give a talk quite recently in the context of his talk and the questions that people asked as to how that streak came to be. One of the things he talked about was that as he was a rookier in his first or second or third year and he would talk to some of the older players on the club who had been there, they made a special point of sort of acknowledging that they were at the end of their career or just finished.

And it was so much fun. And they had forgotten how to have some of the joy that they should have had while playing the game. So that was one of the things that kept Cow Ripkin motivated and dedicated to showing up every single day and continuing to play is that he knew it was not going to last forever. So as a consequence, that helped him frame it in such a way that he appreciated each day at the ballpark. That's joy. It was very interesting reading about Kowrippkin in your latest annual report. Look, I know nothing about American sports, but you said he was known as the Iron Man for playing, I think, 2,632 consecutive games.

And there was a lovely quote from you where you said, his unrelenting presence day after day, year after year, created the ability of his teammates to depend on him. His team knew that they could count on him. The sense of dependability he provided to his team can't be measured. And I was thinking about you many years ago, I think, had said to me that your father talked to you about how the greatest ability is dependability. And I remember you in your office when I hung out with you when I was interviewing you for a couple of days for richer, wiser, happier. You had a posted on your computer that reminded you of Michael Jordan's failure earlier in life as a basketball player and his incredible perseverance after he'd not made it into his high school basketball team, I think. Can you talk about this very central idea of just showing up, of persistence, because it seems, it seems actually so essential to your success. It's kind of a central lesson of your career and your approach to life. I think that's correct. And really, one of the ways you could frame that

or think about it is, for me, it is a force multiplier. Because if the contest and the test is going to be how high you can jump or how quickly you can process something. I'm not going to win those contests. There's somebody better, faster, quicker at those sorts of, almost any task you can imagine. But that ability to persist and endure and stay with it, it magnifies the power of whatever aspect you're talking about. The other thing that I think is relevant, and I think this is a valuable tool for anybody, the idea of writing what I wrote about Cal Ripkin, I don't think you need.

need to be a trained doctorate level psychiatrist to understand. I'm probably writing that as an admonition slash prescription for myself. So those letters that I write, sure, there's an audience, but the most important audience for what I write is me. I'm talking to myself and so much of what I write, and it helps me clarify from my thinking and think about what I want to be and who your heroes are. Buffett and Munger talk about choosing heroes. So like to be all those things just go into the soup of how it all puts together. It's very interesting this idea of writing things down so that you, you clarify your ideas and they're there for you to keep coming back to and to pound the ideas into your head.

And I think of in your case a couple of examples, right? First, the Markell Creed that you have about the culture that's in every single annual report, talking about the values of the company. And then likewise, the four-part investment process that you have, the filters that you have for every investment. There's something about kind of, and you use the word creed in the annual report often or liturgy. There is something almost religious, right, about this way you write down your principles. It's very Ray Dalio-esque as well, right? You write down your principles and then you keep coming back to them.

Can you talk a bit about that? Because I think it's something that it's very easily replicable for the rest of us. And it's actually a really important tool in life. Well, you're absolutely right. And you can approach this from many different places. So, for instance, writing in to work this morning, I was listening to somebody who was talking about the habit, the daily habit of journaling and the importance of journaling.

Well, there was no religious context to that, but this is a person who has the discipline every morning when it gets up to do some journaling. And again, it's an iteration of the same theme and the same way of doing things. To your point about in the Jewish tradition, the notion of saying something, it is written. It is written. When you hear that phrase said and then a reference is made to what it is that has been written, that means take a pause. Think about this. This is serious. In addition to the, clarification of your own thoughts when you write something down. Well, the good news is when it is written, it becomes scalable and savable. So you don't have to repeat what you said 10 minutes, 10 months, 10 years later. It was written. There's a record that is accumulating of what you wrote and more than one person can read it at a time. So that's where the scalability comes through. So I just appreciate the discipline that is involved in framing your conversation, framing the communication, framing anything you want to share with somebody through the written word. That seems like a good process to me. You've had this creed at the heart of Markell, right, since before 1986, which I think Alan Kershner, who recently retired as executive chairman, had been the lead writer of the Markell style, which is very much built on what you refer to as these timeless vassie.

Right? Things like honesty and fairness and hard work and the zealous pursuit of excellence and trust and a mindset of service and a win-win-win culture. And I think people tend to be kind of skeptical of this, right? When corporations talk about, you know, their virtues and the like, but it seems to me truly central to Markell. It doesn't seem like propaganda. Can you talk about this as a kind of competitive advantage, this idea of setting the culture, setting it in stone and having it there for, what is it now, 37 years. Correct. And Alan was indeed the primary author of the Markell style, which was done long before I got here. It was part of the process when Alan and Tony and Steve Markell were about to go public.

It was a time to take a pause and to do some reflection over what the values of this company were. and again, the context of setting these things down in stone, so to speak, so that when they were no longer here and they knew they were mortal, those values would continue to be carried on even when they weren't here day to day to day to supervise that process. And, you know, Alan and Tony and Steve have not been here on a day-to-day basis for over a decade and all of them. Alan retired from the board a couple of years ago. Steve and Tony are obviously still involved at the board level, but they've stepped back from day-to-day. day, but yet the essence of what was communicated in the style still pervades of the company. I do think that that is a competitive advantage. And the way in which it shows up is this,

and the other athlete that I talked about in the annual report this year was Bill Russell. And Bill Russell primarily was a factor on the defensive side of the game. And defense is much harder to quantify and capture in statistical metrics than what offensive contributions are. but his team won when he was on the on the floor. So these unquantifiable type of factors, I think just like the Celtics won when Bill Wallen, I mean, when Bill Russell was on the floor, and by the way, Freudian slipped there,

Bill Walton ended up playing for the Celtics too, and then won when he was around two, but a very different style of player than Bill Russell. But we get to see deals and get exposure to people and get opportunities that come about because people who share the same basic values as what we do, they like doing business with people they know and they trust and they prefer not to do business with somebody that they don't know and they don't trust.

So frankly, I think we see things from the opportunity to build Markell from, you know, what businesses we do. Plus, I think our customers have a sensation that they're dealing with somebody is going to do their best to try to serve them in such a way that they'll want to do business with us again. One of my great friends is a guy named Shad Rowe, who is a money manager down in Dallas, Texas, and also someone I've learned a lot from over the years. And one of his phrases, and again, this goes back 20 years or so, he said he wanted to invest in companies that did things for their customers rather than to their customers.

So you get these snippets of wisdom from all kinds of different sources, but they all, they all line up in the same general direction. And they, I think they support the foundation of how it is you should do business. And by the way, I think life works out better when you follow those rules, certainly in the long run. There was something you said to me when I first interviewed you, I think probably back in 2014 or 15, that I was very struck by that I'll read back to you where you said, sometimes people can build great careers and enjoy great successes for a period of time through bluster and bullying and intimidation and slipperiness, but that always comes unraveled, always. Sometimes it takes a while,

but it does. The people you find that are successful and just keep being successful year after year after year, I think you find those are people of deep integrity. I thought there's a really interesting insight and I've struggled with it for a while. I think partly because I had kind of lost a political battle at a company where I had worked. I was like, well, actually, I think kind of in some ways the snakes won. Maybe that was self-deluding and I was a snake myself. And then I would look at kind of the political situation. I would see, you know, the corruption of politics. by business and big money and the like. And there's a part of me, you know, and then also, I mean, look, Charlie Munger has talked

about how Sumner Redstone was always his example of what I don't want to be in life. And he was like, look, this guy made much more money than me, but even his kids and his wives hated him. And I never met Sumner Redstone. I'm not trying to bad mouth him. But you know what I mean? This question of whether it's actually better to live your life this. way or to do business this way or to look at the counter example of these people who are tremendously

successful while having very sharp elbows and leaving a trail of lawsuits in their wake. Can you talk about that? Because I feel like some people just assume that capitalism is kind of vicious and nasty and self-seeking and that that's the way it goes. And I think you're pointing us towards actually a different system that may actually work better in the long run. Right. And I do think that capitalism is a much better system than what it's given credit for. And I think businessmen oftentimes do a horrible job of communicating the positives of a capitalist system. So Adam Smith, who's given credit for being sort of the father and the intellectual creator of the system of capitalism, I believe his title was professor of moral philosophy at University of Edinburgh

or Glasgow or wherever he was at the time. So he approached the idea of capitalism from a moral lens and thought it was a superior system and wrote books about it in that way. Secondly, success, I think, is something that you shouldn't define along only one variable. It's a complicated equation. There are a lot of things that go into the idea of success. So if you were, again, the realm of athletics, because things just pop into my head from athletic stuff. So if you look at Muhammad Ali and his career is a boxer and his probably reputation well-deserved for being the greatest fighter ever, well, that's probably true.

But if Muhammad Ali needed to be a tennis player or a chess player, he might not have been so successful. So if you're going to define success, make sure you define what arena. you're talking about. So just to say the word success in and of itself is, it's too limited. It's not enough. So I do not know the family structures of Sumner-Red Stone or Charlie Munger, for that matter.

I'm guessing that Charlie Munger's success probably has more dimensions to it than Sondon, but that is just a pure guess on my part. And two points about Charlie Munger was the notion of, you know, if you want to be success, the best way to do that is to do that. deserve it. So he operated with the idea of trying to be someone who deserved the success that he has earned. And I think that's a fundamentally important way of doing these. And there's a business practice. There's a life practice that flows from that. So if I just met you, and we were talking about a deal or a project or some commercial transaction, and I said, William, trust me, trust me, trust me, trust me,

you can't help it. Again, if we don't know one another, that is going to cause 99 times out of 100, just a hint of doubt in you. Because if I say, trust me, trust me, trust me, your natural human reaction is, I can't trust this guy. And the notion of trust is not going to flow immediately

if I started that way. But if instead, I say, William, I'm going to trust you. And I've done some work or some basis for saying, I trust you, I trust you. And I trust you. And I trust you, I trust you, I trust you, I trust you, and offer the gesture of trust first without demanding reciprocation or equality.

I just do that in an unconditional way. What I have observed is that you will do one of two things. You will either honor that trust or you'll violate it. And if you're going to violate the trust, you'll probably do it sooner rather than later. And in so doing, you'll have sorted yourself and we're just not going to do business again. But if you honor that trust and start to trust back, what happens is that starts to cascade. And it's another element of compounding that takes place in your relationship for people. If you trust first, if you offer that service that value first and you initiate that,

the world will sift and sort itself and orient and give you enough people and enough opportunities. We have these compounding trust relationships that it just becomes marvelous over time. Same thing would be said in the word of love. If I say love me, and you're trying to meet somebody, you're trying to develop a relationship, you say love me, love me, love me, I don't think that's going to work. But if you offer love and you offer it unconditionally, is everybody going to love you back?

No, but a lot of people will. And they'll do it in enduring, consistent, systemic ways. So just to orient yourself to be the initiator of trust, to be the initiator of love, and then don't be stupid, reciprocate and compound and grow to trust relationships and the love relationship and filter out the ones where you're not getting reciprocity. If you stay at the game long enough, and I've been out of 40-some years, you'll find you have a wonderful group of people that are enjoyable, fun relationships that keep you coming in the office and doing what you're doing as opposed to wanting to go play golf instead.

Chouts working out for me. You once described yourself to me as a node in a neural network, which I thought was a really interesting image. And the more I observe you, the more I've seen that this is one of your great competitive advantages, that you're surrounded by people in your ecosystem who wish you well and want to help you. And it's a remarkably powerful thing. It's a different way of playing the game.

And I guess it sort of plays to your strengths as well, because you're a sociable, gregarious guy. But I'm wondering, was there somebody you saw, whether it was your father or Buffett or someone at Graham Holdings or whatever that you looked at and you're like, that's a really smart way of operating in the world? Or not just smart, but decent and right and feels good. The answer to your question is, yes, there are people who have managed to somehow be around or bump into or be exposed to. It taught me those lessons and have done it over and over and over and over again. So one of the first ones would have been my father because I was a kid and I was running and I observed him in that way. And the public figures that you speak of somebody like Don Graham or somebody like Warren Buffett. I've observed that in them personally for multiple decades and have learned that as an adult.

But it doesn't grow stale or it doesn't grow old. And as recently as within the last 30 to 60 days, there was a circumstance and a situation in Richmond, Virginia, where there was a gentleman. And I've known this guy, we're not real close, but I've known him reasonably well for probably the better part of 35 or 40 years. And there was a, and he's reasonably well known around Richmond.

He's successful, both in the terms that the world might immediately jump to, as successful, but he's also successful in that I know his children. And they're good people. They're fun to be around that they've not been warped like affluence in the way that, that some are, they are successful as well.

And I think when you see that sort of kindness and love-based and trust-based that is both financially and in human terms successful for multiple generations, you're really looking at something special and you want to pay attention and try to learn something from that. And I was in a conversation with him and somehow it came up that he said, well, he gets up every day and the first thought he has is how can he do something for somebody? How can he help somebody? Now, if somebody who I did not know for 30, for every 40 years and I was meeting on first occasion and I didn't know a single thing about him, there's a natural skepticism that one has when you hear somebody say something like that, because you wonder, you know,

what's their angle or what's going on here really? But as you get to know somebody and you can have some sense personally that that is indeed genuine. And you can see 35 or 40 years of track records of how it's worked out for that person because, yeah, I think he really does mean what he says and he does that over and over and over and over again. Again, I've tried to live this. I've certainly been exposed to it and been taught that from my earliest memory. But yeah, here it is within the last, I'd say, 60 or 90 days. There was an occasion where I had a chance to drink a cup of coffee or talk to somebody who, um, who I knew a little bit of, little bit. And that was his core message. Just getting up in the morning, like, what can I do

today that will help somebody? And I've seen them do it for 40 years. So you learn those kinds of things that are exposed to them on a regular basis. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why Vantza is a game changer. Vanta automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC two or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security

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It's curious how this turns out to be incredibly helpful even in the investment business, which we kind of assume is this ultra-competitive zero-sum game where somebody has to suffer for you to benefit. And to some degree, maybe that's true. But I see in your life and in the life of someone like my great old friend Guy Speer that you guys embody what I call in my book, The Mensha Effect, where you know, your mentors, you're trying to be decent, kind, human beings for lots of people. And I see the world kind of organizing itself around you. So there are lots of people trying to help you. And I was chatting with Josh Tarasoff, a mutual friend of ours the other day, an excellent hedge fund manager who I remember he was talking to you about Amazon years ago,

and you ended up buying Amazon after discussing it with him. And it seems like that's happened to you a lot, right, where people are exchanging information in a way that's kind of, and a selfless, but maybe it's also because at the time he was invested in Markell. But, but you have that to an extraordinary degree and it's, it's instructive for people because I think it, it suggests that there's another way of going about business and investing. That's actually more, it requires a degree of courage, right? Because it's, uh, it's, it's, it's not just guarding everything for yourself. Well, it's both courage and cowardice at the same time. Because if you really, and all these things tie together, and I think the timeframes in which you're talking

dictate so much of how you would frame thing. So if you're talking about a short-term situation where you're trading, I don't know, pick whatever it is, that Bitcoin or pork bellies or options, which tend to be measured on day-to-day, if not moment-to-moment or second-to-second or nanosecond to second kind of measures, those do tend to be win-loss games. And there's zero-sum. And if you win, somebody else loses. But when you stretch those time horizons out over five, ten, fifty lifetime kind of measurements, I think you have the opportunity to play win-win games.

And that's just an entirely different way of thinking. And there's an illustration of that of how this can be so successful from a business point of view. I can remember a couple of years ago at the Berkshire annual meeting and Charles, Charlie Munger, who oftentimes just puts his finger right on it in terms of behavior and just trying to be stand up people and do the right thing and think longer term, he said in response to some question, how do you do it, how do you do it, how do you do it, endless questions of young adjutant types trying to figure out Berkshire. He said, look, we were two guys talking on the

phone and now we are bigger than General Electric. That should not have happened. And he was just trying to illustrate the point that General Electric was a company that in many ways lost its way. It had huge epic advantage. You go back 50 years ago and you look at whatever collection of businesses and whatever place in society, General Electric occupied versus whatever position Berkshire halfway occupied 50 years ago, I think it would have been hard to foresee and bet and predict that Berkshire was going to be the one who would be more successful in many of the measurable metrics that you would think about, but that is indeed what happened. And Munger would suggest the word that he likes to use a lot as rational.

And he would say Buffett and he do their best to make rational decisions day after day after day after day. I would extend that and say rationality looks different when you're playing a finite win-lose game than what it looks like when you're playing an infinite win-win game. And I think it was James Korses, if I'm remember. remembering the name correctly, who wrote about the infinite game. And he talked about, you know, in a finite game, there are rules. There's a period of time.

It's finite. And there's a winner and there's a loser. And that's the definition of a finite game. Infinite games tend to not have so many rules and they don't have a time horizon. And the only prime directive that exists in an infinite game is that all of the players of the game have to feel that they're winning because they don't. They're going to stop playing. And the game is no longer infinite.

So I just want to play an infinite game. And I'm fortunate in so many ways, the advantages I had, the upbringing, the education, the base of never worried about where my next meal was going to come from or getting a good education. And I would send that to me the next most substantive thing that happened to me was getting married to Susan. And I was married to her by age 19. I knew a good thing when I saw it. And she's been a spectacular partner that in so many ways is undergirded so much. much of what I've done.

And I'm because she was gainfully employed and frugal and just always, always took care of 75% of my life that I was really able to concentrate on this piece of my life to know that she had me covered for, for everything else. So that kind of partnership is a crucial component of how these sorts of things unfold and happen over time. Yeah, she's a remarkable woman. And she runs a good business, too.

She doesn't even. for people who don't know Tom's wife, Susan, who he met, I think, when he was 15 and went on his first date at the custard stand in Salem, New Jersey. It now runs a very successful business for Markell as well, and is a remarkable person. So, Tom, the first stock you bought back at Markell where you took charge the investment portfolio in 1990 was Berkshire back when I think the stock was at around 5,750, and now it's, what, 467,000, something like that. Something like that. How does it embody the four filters that you have for looking at a business? Because it's obviously, it's grown to, I think, the best part of a billion dollars your stake in Berkshire. If we're trying to explain to listeners what a good business looks like, what a business that passes these four filters looks like, how is this in some sense the perfect embodiment of that?

Well, it's like the old joke, you know, if you wanted some word definition in the dictionary, you looked it up and there was somebody's picture there. Well, if you want the embodiment of what the four filters of the four lenses that we use to think about investments and you open the book, it would be the picture of Berkshire there. So each of those four filters, first off, a good business that earns good returns on capital without using too much debt to do it. So if you look at the returns on capital that Berkshire has earned in the various businesses they've been in for a long period of time, they are very good. And they've spoken and written and acted in such a way, that they've talked about.

It's not that debt is wrong or there's any moral dimension to it. And it's not that they don't use some debt, but they use very little and comparatively less than most other people would in the same situation or circumstances. And the reason for that is debt introduces fragility into the system that you might be very good

of what you do. You may have a fine business, but if you have an interest bill that comes to at an inopportune time, you may lose the opportunity to continue playing your infinite gain. So step number one, good business, good returns on capital without too much debt. Check, check, check. Lens number two is management teams with equal measures of talent and integrity. And so many of these lenses, I did not make these up myself.

I learned them from people like Buffett and Munger and so many others. But if you look at how they have behaved over so many years, clearly the returns on capital that Burture Zone suggests the talent that they have and the talent that is embedded within. in the entire system of Berkshire and the behavior, the personal integrity. They've always given the shareholders an epically good deal in terms of their cut. They've made the vast, vast, vast majority of their wealth through owning Berkshire shares and enjoying the exact same economics as what a shareholder does. It's not economics that they would have earned as managers rather than shareholders. So that's the test there. Point number three, and this is really where Berkshire,

has distinguished itself and in so many ways set the role model and the example, what we're trying to do at Markell, is does the business have capital discipline and can they find acquisitions to reinvest the cash they make or have capital discipline in terms of being good at acquisitions or share repurchases or dividend payments? Well, Berkshire had a tiny, tiny business 50 years ago and they made money. And up until within the last year or two, they had taken on the challenge of reinvesting that money in their existing businesses or new businesses through acquisitions. So if you think about an Olympic diver and you know, you're judged not only in how well you execute the dive, but the degree of difficulty of that dive. So if you have a very good

business and it makes excellent returns, but you pay the money out in dividends or share of purchases on a pretty regular basis. Well, what you're doing is a dive of only a certain degree of difficulty. If you take, it's, it's a swan dive and you can do it and get a 10.0, but if it's just a swan dive, you will only get but so high a score because the degree of difficulty involved in doing that is not as much as when you introduce the triple axle, reverse, lunge, twist, kind of depth. Those dives are harder to do and to execute them well. And with the same degree, of precision that you can execute a swan dive, that's how you become an Olympic champion. And if you look at Berkshire's behavior and execution of an incredibly difficult dive for 30, 40,

50, 50, 60 years, that's what makes Berkshire special, is that reinvestment lens and that reinvestment aspect of the third leg there. And then the fourth, and it's really the least important is if, is price this will work. Do you buy this? Not such a price that the returns of the business itself are going to roughly match what you as a shareholder received. And that just mean don't pay so ridiculous a high price when you find those three things. The fault is yours in your execution of the purchase decision rather than what intrinsically happened at the business itself. Now, here's where the advantage of being part of the structure at Markell is so helpful. I spent the vast, vast, vast, vast majority of my time on seeing whether those first three lenses are

there. And if they are, and even if I conclude that this thing is way overpriced, I usually make myself buy just a little bit of it. And then three months or six months go by and I sort of revisit my thesis and I think about whether those first three factors are still there. And if they're there in strange, I make myself buy a little bit more. And then sometimes there'll be extreme dislocations in the markets or for some reason or another, the price will change. Well, by virtue already owning a little bit and make myself familiar with it, it emboldens me psychologically to take a bigger swing with something like that comes along. And even if it never gets to the point where you think, wow, this is an incredible price, but you keep thinking this is an incredible

business, if you find yourself buying it every quarter for year after year after year and you're right about your underwriting decision on those first three aspects, you end up with a spectacular investment because the price you pay gets, it's overtaken and swamped by the quality of the business itself. And in a way, it's the same lesson as your IRA, right? As a kid, where you just keep adding to the pot through thick and thin, and then you look back 30, 40 years later and you're like, wow. Right.

And then oftentimes people are kind of confused by, they see the long list of stocks that we own. And they think that, wow, that doesn't seem very disciplined and it seems sort of flattered all about. But that's really the farming process. There are a lot of seeds that are planted to see which things are going to emerge and which of those seeds. To go back to your Peter Lynch idea, he talked about the foolishness of selling your winners. And he called that picking the flowers and watering the weeds and talked in his book, which my grandmother gave me, by the way, or over that. You know, the discipline of not taking a profit prematurely, which is a human tendency you want to do.

that. You celebrate the victory lap, the checkered flag rises and getting back to my IRA story. I remember this vividly. I came this close to doing something truly, truly, truly stupid with my own Home Depot story. And fortunately, I talked to myself out of it or somehow or another Iverted this particular trade. So coming out of the housing crisis, Home Depot was really doing quite well. I mean, they prove that the renovation model as opposed to new construction was more durable, just operated really well. And I thought, I thought for a nanosec, especially because it was in my IRA, I could write covered calls on it to generate a little more cash and have a little more cash to invest.

And fortunately, that thought passed before I did so, because had I done that, those calls would have been exercised. And that Home Depot would have been sold in 2000. 2011 or 12 or something like that, I would have missed the last decade, potentially, of what came from owning Home Depot because I would have taken a short-term win and celebrated a win and had a great trade, but missed an epic sort of moving the needle kind of company that has influenced the investment results, not just for my IRA, but for for Markell in total. That's our third largest holding. So it's a, it matters. When I think about the lessons of your career, in some

ways it's a it's a perfect embodiment of munger's teaching that you want to be focusing on avoiding standard stupidities right it's all the things that you avoided that didn't mess up the compounding journey can you talk about that a bit because there are there are these things you've done like keeping your expenses low living within your means weaning yourself away from shorting stuff not predicting the future moves of interest rates and inflation and the like and and just sort of sticking to your four filters. It seems to me this is replicable. There's actually a lot that you don't do that we can also not do as regular investors if I'm expressing that correctly. Well, I think that's true. And in fact, the comedian Jerry Seinfeld has a great routine

about the involuntary luge and just like, go watch the luge competition. And these people are wearing these micro-bacrometer level clothing and they've trained their muscles and have this sharpened blade to go down the luge. you get to the bottom of Luz at a certain speed and that it's going to be hundreds of a second that determined the difference between the gold medal winner and the fourth place person who was going away from the Olympus with nothing. Well, Jerry Seinfeld has this common machine and I can't do it justice here. What would be the result?

How far behind would be the person that they just sort of grab out of the spectator line and chuck him down the luge? You know, it's not going to win the gold medal, but I think you'll find that the time, as long as you don't get hurled from the Luge trend, it's not going to be massively different than the person who is trained to be a great Olympic caliber luge athlete. And you think about that in terms of investment, in those things you just talked about,

of costs and trading and taxes being such a huge bit of that. So the investment world in and of itself, and if you think about the compounding that takes place within businesses that are successful in earning good returns on capital, that is giving you a downhill luge tube to ride in. You know, when you start investing in major companies and in publicly traded companies, you're not trying to go downhill in an uphill luge.

Just give yourself permission to take advantage of the force that's already there. So then what separates the true amateur of the person who's going to die doing this from the person who ends up posting a pretty good time, it's the ability to minimize friction as much as possible and not get in those curves where the forces overtake you and throw you out of the loose track. So by maintaining this discipline, I'm just trying to ride down that lose track that is there in the context of businesses that are successful at serving their customers and taking care people.

And it's always going back to that notion of a company that makes a positive difference and helps their customers out. You're in a downhill luge. Just stay in the luge and don't get hurled out of it and don't operate it in such a way that you increase the friction that's there or not. I guess one of the best ways of getting thrown out of the luge and messing up disastrously is by partnering with people who are untrustworthy. And you've often talked about money managers as custodians and shepherds of other people's savings. I remember Chris Davis once saying to me that you'd actually freed him from the moral straight jacket of becoming a money manager because you explained this notion of stewardship and being trustworthy and he thought, okay, so maybe as Charlie would say, it's a low vocation, but it is a vocation. And I wonder if I could ask you, like, when you're trying to appraise the talent and integrity of managers or you're trying to appraise the talent and integrity of people to partner with, what are you looking for?

I mean, because obviously we need to partner with people who are going to put our interests first. And in the investment business, there are a hell of a lot of them who are not out to do that, right? They're in survival mode where they're looking out for themselves first. What are the tells? What are the clues when you're trying to assess whether someone is going to look out for you or not? Most people have a trail behind them. There are people that they've done business with that know them that if you spend a little bit of time, and do a little bit of due diligence,

you can kind of get this rough, rough sense of that this is a person who makes the people around them better offs or worse off. I don't think that is as impossible a task as what you think. And you've got to keep your eyes open and be sensitive to if your thesis is confirmed day by day or disconfirmed day by day. Again, getting back to that conversation,

in an earlier point in the conversation, where you offer trust, you trust first. and that trust is either reciprocated or violated. And just through a lifetime of doing that sort of thing, both you build that network of relationships, you become one of the nodes on that web of trust. And to people that you have it, it compounds and becomes bigger and bigger over time.

And by the way, the best way for a new person to come on to that node is for them to be douched for by someone who was already on the node. So I'm sure, again, in the diligence you would have done for the people you've written about over the years, you didn't just talk to the person that you were writing about. You talked to other people who had dealings with that person to kind of see if you were on the right track or not. And I suspect I think your hit ratio is probably pretty good. And if you were setting out to write the book today as compared 10 years ago, I dare to say, I think you might even be better at it today. day because you've been at the process for the last 10 years and you've developed your own filters and spidey sense and ways and methods to think about am I'm on the right track or

now when Buffett and Berkshire made a big acquisition earlier in 2022 I think and bought a stake in Markell I think I'm right in saying they invested a little over over 600 million dollars so a pretty big vote of confidence in Markell and you as the you CEO what did that mean to you knowing, having owned Berkshift since 1990, having served as a director on the board of the Washington Post Company alongside Warren. I mean, there is a, there is a sense in which it's a sort of blessing from the people you greatly admire, them recognizing you as a node in the neural network in the web of, in the web of seamless, deserved mutual trust that Charlie talks about. what did that mean for you?

Well, as Charlie Munger might say after that set up, I have nothing to add. You're exactly right. It was a great day. I found out about it in the same way that everybody else did. I had the filing of their 13F. So it's just through normal public channels. But it's a very affirming, uplifting, happy day in my life when I saw that 13F. Could you see yourself ever, I know it's an unfair question, but could you see yourself

ever ending up at Berkshire? My job is to do the best I can. Markell is a spectacular place. I've been given every opportunity in the world. And if we keep compounding things here, I think everybody's going to be happy. Bercher has a great team. I mean, they have great people in place there. They're very concerned with their own legacy and survival and way of doing things.

And again, I'm rooting for them since that's our largest holding stuff. I think we'll both be okay. I feel, Tom, like I want to bet you a box of double. Donuts that at some point in the next 10 years, you know, Markell is going to end up acquired by Berkshwin. You're going to end up being part of the family. And you don't need to comment on this. But if I want a jelly donut, if that's if I win. I bet I buy you donuts for some different reason.

Okay. I think you shouldn't buy me donuts at all. Then I'll buy you them and I will eat them. My wife will pay you not to buy me donuts. Talking of wives, one of the things that really stands out when I, look at your life, it is that you've managed to a degree that very few ultra successful money managers have managed to have a successful family life. You have three grown up kids that I know you're close to and love and regard as, I think you once described them to me as three normal,

enjoyable adult children. Right. And you've been happily married for a long time to a very decent person. And I often find when I'm when I'm being interviewed by people there asking me, have you met many of these really successful investors who actually are happy and who have good lives? And you're on the short list of people that I tend to cite. And I, I wondered if you could talk a little bit about that, about how you've managed to balance the intensity of your work and the demands on you with actually still managing to have successful relationships with your family and friends. I think that's an important and complicated topic in a lot of ways. There's a lot of ways I could go on that. One thing that I often find myself in conversation with fellow investors

on is the idea of optimizing something versus satisfying something. And I would put myself in the category of a satisfacer as opposed to an optimizer in many ways. And I don't want to make an extreme statement there. But in the realm of investment, a lot of people spend a lot of lot of time and focus on optimizing something. And then that's a great thing as long as it's properly constrained. And there's certain things in this world where it's an imperfect world, it's a finite world. It's only going to get so good. And when you try to optimize something beyond the point at which it can be optimized in this world, I think you've set yourself up for frustration and disappointment. That might be where some of that unhappiness or pressure or

tension manifests itself, is pushing that boundary too far. Now, similarly, at the other end of the extreme, it's a mistake to be satisfied with anything. So, for instance, you raise the issue of jelly donuts, which I love as much as any human being alive. But if it would think of it in a systemic way, if I set my standard and threshold for the degree of satisfaction that a particular jelly donut would, would bring me, I would eat too many jelly donuts and they would not be of good enough quality such that it would end up causing a problem for me of obesity or diabetes or things, things of that nature. So it's important to set the

satisfaction bar high enough that I can enjoy appropriately some number of jelly donuts, which bring me joy and satisfaction in life without thinking that I can only allow myself to eat the best jelly donut that's ever been made on planet Earth. Well, that would result in me eating either one or zero jelly donuts. And that's not a good outcome from my point of view. So I want to set those dials and levers and goalposts in such a way that it's the appropriate zone between optimization and satisfaction. And I think the tendency among type A professional investors is to is to air a little bit too much toward the optimization function as opposed to the satisfaction function. And as a consequence, you have a bit of an unbalanced system that does not produce the outcomes that you're

ultimately looking for in many different dimensions. I like the phrase that I quoted from you in my book where you talked about being radically moderate. And that seems in some ways to sum up your approach, both to eating and exercise and investing and much else, right? This, it There is a sort of golden mean aspect to your approach. I think that's absolutely true. You can give credit to God or Annie Duke, and you'd be right in both dimensions. And people think that might be an odd couple to cite,

but I actually think they both have valuable things to teach you. And I think about books and that Thinking in Betts book that Annie Duke wrote about process and the discipline of your process. And her word that she came up with in that book, which I use a lot for my colleagues are familiar with hearing it, is resulting where you look at the outcome and you make a judgment about whether your process was good or bad based on the outcome. And that's not true. And it's not the way you do it. Now, if you have a good process, it is often the case that, yes, you do have good outcomes. But you can have a good process. And within

that, there are times when you have bad outcomes, but you may still have a good process. So, for instance, getting back to Cal Ripkin, well, I don't know what his lifetime batting average would be, but if I'm guessing, I don't know, 275, 285, something like that, that means that only 27, 28 percent of the time that he stepped up to the plate, did he walk away with the hit? Seven out of ten times he didn't, but in the context of Major League Baseball, whatever process he used to get to where he was successful almost 30 percent of the time, That's an excellent process. And it's time tested even more by the length and durability of his career where he was able to do it for so long.

So you can kind of discern that that process probably was pretty good by the outcome. But oftentimes when you're looking at things, you're looking at an outcome which you're measuring over a much shorter timeframe. And to some degree, you're challenged with the notion of separating out luck from skill or the signal from the noise as the same it would be. So again, long-term horizons help you make better judgments about whether you're dealing with a good process or not. When you're thinking about how to divide your time up between your family and your work and your faith and your love of music and going to concerts and going to sports events and stuff and also reading, which you do a lot of, reading books and philanthropy,

which you're very involved with, do you have some kind of filter for, thinking about how to spend your time, how to decide, like, yeah, I'm going to do this or, no, this is a bridge too far for me. Sure. Well, one of the filters is, can I do that with somebody? So I'm going to go to a ballgame. If I go with Susan, that makes the odds of going to that ballgame much higher. If I can go to that ballgame with Susan and my children, I'm going to go to that ballgame.

So these are not mutually exclusive. And so many times that there's a book. to read. Well, if I really like the book, I'll share that book with my family, with my children, and oftentimes then you can talk about that book over a meal or a cup of coffee or something like that. So the point is try to find things that are not mutually exclusive. When you're mutually exclusive and you're up against the hard boundary of 24 hours a day, then that's a much more limiting factor and you're going to miss and not be able to optimize to use that word in a different sense. what you can do as opposed to ones where there are overlaps and you get a couple of different bites of the apple from the same thing.

One of the things that I guess has changed dramatically over the years that I've known you is you know, you've become more and more important within Markell and wealthier and wealthier as you've gone through compounding. And I remember talking to you and Susan, your wife about your deep, cheap, cheap skatedness, right? you would talk about how it was painful for you to go out for more than one meal a day when you were on vacation or you could never bring yourself to buy food in an airport. And I remember when we went shopping once before dinner, you drove off in your Toyota Prius to Kroger's and you had your membership card that you got you a discount at the supermarket, which is not very sort of master of the universeish, flashy, grandiose behavior. and I'm wondering if now that money has sort of really become less and less and less of an issue now that you're a CEO making millions of dollars a year, whether there's any change at all in your attitude to money or whether you're still as cheap as ever, Tom. And I say this with love and affection. Well, thank you. I appreciate you that. And I do need to stop and be to do on this particular note. The only change that I will admit to is that when you're ordering some Mexican food, and you order the guacamole, and they say, you know, the guacamole is extra. At this point in my life, I have the guacamole.

But there was a point in my life when I didn't. So the biggest change is I am now willing to pay extra for the guacamole. It's worth it, and I enjoy it. So that's almost the only change. You've not bought any sort of huge holiday home or flashy car or private plane or yacht or anything. No, no, no. I did end up giving that Prius away to my daughter in Pasoena. a car, bought a new Toyota hybrid, but not the Prius, but a RAP 4 this time, but I'll try to keep

that for a decade as well. And by one car decade, it's fine. Can I ask you one final question before I let you go? One final question, absolutely. I want to ask you about your suitcase, the missing suitcase. Tell people, because I've been following this saga with such delight on Facebook for months, tell us what happened to your suitcase. Well, I was trained again by my father about many things, and he was in the 7th Army during World War II, which was Patton was in command of that, and was replaced and went to the third army, if I'm getting that correct.

But the idea of traveling light was embedded in me in a very, very early era. And my father used to go away for weeks at a time with a single gym bag, long before that became a sort of popular thing to do. This would have been memories from the 1970s or so. So that was just embedded and ingrained in me. and almost never, never, never check a bag.

But on this particular trip that I was going to be on the road for about a month, had some business meetings and needed a suit or two and different things. I allowed myself to pack sloppily enough that it did not go in one single bag. And I ended up checking it. And it ended up being a once in a generation kind of mistake for me. The luggage was lost and just for fun as a travel log. I don't keep a journal, but sort of writing about where that luggage might be at any given point in time, became amusing to me and perhaps to some of my friends.

And lo and behold, four months later, four months later, I received a phone call and I was out of town. And normally when a phone call comes in that I do not know the name of the number, I don't pick it up. And lo and behold, the caller did indeed leave a message. So I checked the message and he informed me of his name and he was in Frederick, Maryland or something like that, which is three or four hours from Richmond. And he said, I've got your luggage and I'm going to deliver it. So I just wanted to get your home address properly. And lo and behold, he delivered it.

He took a picture of the delivery and got him the next day and there was on my front stoop. And it was just a long lost miracle that that luggage made it back. So for another 30 or 40 years, I promise I will not be checking luggage. I have to wear every item of clothing. I'm going to use on a trip on the road. I'm going to carry on. But it wants every 30-year mistake. And I like the fact that when it got to it had a label that said either urgent or priority on it.

It was like a big cosmic joke that they were messing with your head. Indeed so. Tom, I know you have to go to another meeting. And it's just been a real delight chatting with you. And it's always really a pleasure. So thank you. Thank you. Good fun to see you.

Take care. You will. All right, folks. Thanks so much for joining me for this conversation with the great. Tom Gaynor. I'm sure you can see why he's one of my absolute favorite people in the investment world. He's a top-notch investor, but also such a kind-hearted and decent and good-natured person. If you want to learn more from Tom, you can read about him in some depth in my book, Richer Why's a Happier, which explores how he's built a powerful competitive advantage

by adopting an array of smart habits whose benefits compound over time. I'd also highly recommend reading Tom's annual letters to shareholders, which you can find on the website of the Markell Corporation. They're some of the best investment letters you'll ever read, consistently thoughtful and well written. I'll be back very soon with some more terrific guests. Next up is Samantha Macklemore, who's worked with the legendary fund manager Bill Miller for the last 20 years and recently took over the reins from Bill, as he retired earlier this year.

In the meantime, please feel free to follow me on Twitter at William Green 72, and do let me know how you're liking the podcast. I'm really grateful for all of the warm feedback I've received from you over the last year, so thank you truly. Until next time, take care and stay well. Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by the Investors Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday we study Billion. millionaires and the financial markets. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making

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