We Study Billionaires - The Investor’s Podcast Network - RWH034: The High Road To Riches w/ Peter Keefe

Episode Date: October 15, 2023

In this episode, William Green chats with Peter Keefe, an outstanding investor who’s trounced the market over three decades. Here, Peter discusses his timeless investing principles, what he looks for in a great business, how he evaluates the quality of management, why he loves Microsoft & Markel, why managing money is a high calling, & what investors can learn from apex predators. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 02:55 - How Peter Keefe taught himself to invest intelligently.  07:59 - Why he loathed selling stocks as a broker on commission. 28:12 - How Peter built a dazzling record based on timeless principles. 31:49 - Why he views selling great businesses too early as his costliest mistake. 38:46 - Why he ignores economic predictions. 42:50 - Why he owns a concentrated portfolio of 10-12 stocks. 47:39 - How Microsoft & Markel embody what he looks for in a business 52:28 - How he made hundreds of times his money on American Tower. 1:14:33 - How he evaluates the quality of management. 1:25:52 - What investors should learn from apex predators. 1:43:29 - Why humility is an indispensable virtue for investors. 1:44:22 - Why a money manager’s principal motivation should be to serve others. 1:46:30 - How Peter measures a successful life. 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. Peter Keefe’s investment firm, Avenir Corporation Peter Keefe’s letters to shareholders Hendrik Bessembinder’s study, Do Stocks Outperform Treasury Bills? Clayton Christensen’s book, How Will You Measure Your Life? William Green’s book, “Richer, Wiser, Happier” – read the reviews of this book Follow William Green on X (AKA Twitter) SPONSORS Support our free podcast by supporting our sponsors: River Toyota CI Financial Sun Life AFR The Bitcoin Way Industrious Briggs & Riley Meyka Public Vacasa American Express iFlex Stretch Studios Range Rover Fundrise USPS Shopify 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 there. I'm really delighted to introduce today's guest, Peter Keefe, who's one of the great unsung heroes of the financial world. Since joining an investment firm called Avenir Corporation back in 1991, Peter's racked up a dazzling record trouncing the market by around three percentage points a year. Thanks to the beauty of long-term compounding, that adds up to an enormous margin of outperformance over the last 33 years or so. Peter's a grandmaster at identifying great businesses when they're undervalued and then holding onto them for many years, often decades, in fact. But he isn't just a superb stock picker. He's also one of the wisest and most insightful

people I've encountered in the world of money management, a profession that he regards as a sacred calling. As we discuss in this conversation, when Peter meets or mentors, young money managers, he often says to them, you're serving someone. The question is who. It's a wonderful and slightly unsettling question, I think, and it's been quietly smoldering away in my mind for months since I started thinking about it. I suspect it's something that all of us should ask ourselves, whatever it is we do for a living. What's also fascinating to me is that Peter has flown almost entirely under the radar, drawing very little attention to himself and almost never speaking in public, despite his outstanding record as an

investor. I actually only heard about him because of a very talented and thoughtful friend of my, Sorab Madan, who runs an investment firm called Manvien Asset Management. Sorab wrote to me a few months ago to suggest that I should try to interview Peter and mentioned that he had huge respect to him, both as an investor and as a human being. After listening to this episode of the podcast, I'm sure you'll understand why Peter inspires that kind of admiration. He's a remarkable role model, and I have no doubt at all that he'll deepen and enrich the way you think about investing and business and life. In any case, I hope you enjoy our conversation.

Thanks a lot 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. All right. Hi, folks. It's really a great pleasure to welcome today's guest, Peter Keefe, who's a superb investor who's very quietly and really without any fanfare at all built this superb investment record over more than three decades. It's great to see you, Peter. Thanks so much for joining us. Thank you for having me, William. It's a real pleasure. You have a terrific record of beating the market.

by a mile over the last 33 years. But when you started out in the investment business as a trainee stockbroker back in 1980, I think it's fair to say that you didn't necessarily seem destined for massive success as an investor. And I'm wondering if you could tell us how you stumbled into the profession. And my sense is that there was nothing in your background to suggest that it was a particularly great choice for you. No, I was stumbling around. Washington, D.C. after having graduated from college at Washington and the University in 1978,

I sort of had a dim view that I would work on Capitol Hill for a couple of years and then maybe go to law school and then maybe become a country lawyer. And then as I spend more time in Washington, I saw these 40-year-old lawyers who just looked absolutely miserable. I said, well, I don't want to be 40 years old and miserable. So maybe I'll think about doing something else. And I was working as a gopher boy for a think tank in Washington, not even on Capitol Hill, and literally mean gopher boy. And I said, well, this isn't for me. And, you know, I don't know what I want to do. So I waited tables in Old Town and Alexandria for a period of time. And there was a customer there. We thought that maybe I might be useful in the brokerage business. And I had absolutely

no idea what the brokerage business was about, but it sounded like a high class job that might actually pay me a decent income. So he had... me interview with his firm, which was Bayesian Company at the time, and I didn't get a second callback from them, but sort of the seed had been sewn. I saw an ad in the newspaper and a firm in Virginia hired me, trained me. I was then recruited by Johnston Lemon and company in 1980, and they at the time were a significant regional presence. They had taken in Geico, public, per example, Marriott, Washington Gas, Electric, Potomac Electric, and some others. And so they were well known in D.C.

And so they had a bunch of people from my alma mater working for him, including its president. And so they asked me to come interview. And you might be surprised who interviewed me, but the branch manager of the Alexandria Virginia office, a guy named Chuck Akri. So Chuck took a look at my resume, and he had done a couple of years of my alma mater. and so he recognized that, and he offered me a job with Johnston Lemon. I took it. Not long afterwards, he became the firm's director of research, but before then, we had connected, at least philosophically, on the idea of value creation. Now, let me back up just a little bit. I got

into the business, just as the market was entering a significant downturn. I think I made my very, in very first trade when the Dow closed over 1,000 in 1980, I think it was, and it was on its way to 775 or something like that. So it was about a 25% decline. And I was what they used to call a bleeder. I mean, I would just, I couldn't understand why these businesses were declining in value. I had this wonderful research in my hands. I said it was going up, not down, and gave all the reasons why, but inexorably day after day, these businesses declined in value, and I didn't understand why, and one of them even went bankrupt. And so I had a full head of hair then, and I was tearing it out. So I got on a bus, went up to the local community college, bought a stack of

accounting books, taught myself accounting, and that permitted me to understand financial statements. My firm was kind enough to let me do my own work. By this time, Chuck and I had developed a rapport with regard to how the investment process works. I think we were both exploring how it worked and feeling our way into how the value creation process really unfolded. And he became the director of research at this firm. He left to form his own firm, the eponymous Ockery Capital Management, and in 1990 or thereabouts, and I succeeded him as the director of research. I hadn't been a great success as a stock broker.

I was okay, but I didn't think that these businesses should be sold to people. I thought that the conflict that a broker had of living on commission and transactions was something that I found abhorrent. It was a hindrance to my career. So I knew from early early on, I wanted to land on the by side of the business. And not long after becoming Johnston Laman's director of research, I ran into a gentleman named Charlie Mekle. Charlie had started Avenue Corporation.

You know, we'll get to that in a bit because that's really the second leg of your journey. And I want to keep focusing a little bit on some of the lessons of this first period. because in a way it was a really good introduction to a lot of the things that were wrong with the profession, right? Because notwithstanding the fact that you lucked out and you started to form this lifelong friendship with Chuck Akrae, who's one of the great long-term investors, you were not impressed with the quality of research there when you went, right? And you were not impressed with the conflict of interest. And can you talk a little bit more about what you learned about what was wrong there because you mentioned to me when we chatted a few weeks ago, you were talking about how one of the

most fundamental problems in the industry is the principal agent conflict. Can you talk about that and what you learned about that? Because I think that's one of the most enduring issues that we all have to face as investors. Sure. So this was the early 1980s and your listeners might not be aware that in 1975, the SEC allowed commissions to be negotiated as opposed to fixed, which is how the business had worked forever. And that meant that there was going to be competition for commissions. And that gave rise to the discount shops like Schwab and TD Ameritrade and Fidelity and others who could compete solely on commissions. And that was really shell-shocked a lot of people in the business, some of the old timers who are accustomed to going out and selling a couple

hundred shares in local utility preferred stock and being on the first tee by three o'clock in the afternoon. You know, suddenly it turned into a cutthroat business. And those of you, your listeners, who are seeing the movie Wall Street to understand to what I'm talking about. So I just wasn't going out for that. I mean, I just wasn't emotionally prepared to do the things that you had to do to be successful in the business. So I sort of muddled along and for a decade all the while,

and I'm trying to hone my talents as an investor. I understood intuitively the value was not created by the flickering electrons on the screen or by news, as most of my brokerage colleagues did. I knew something else was going on, but there had to be an organic process under what I had businesses that answered the philosophical question, how does a dollar become more than a dollar or less than a dollar? And how does this happen on a unit basis, and unit being a share of stock? So these were all philosophical questions, and I endeavored to answer by going through this process of teaching myself accounting and then trying to apply the small lessons that I learned on a daily basis to the art of investing,

whether it was my own money or other people's money. It just, it was, you know, the entire industry was undergoing this radical change as a function of May Day. I remember some of the brokers who were holdovers from that period of time, and like I said, they're walked around in a daze, and they were shell-shocked,

because most of them, and they were all men, unfortunately, were of a different, age and different era. And they didn't want to compete and they couldn't compete in this environment where you had to come up with some razzle-dazzle story to sell a stock. Or you had to have the emotional and perhaps ethical indifference to sell a mutual fund with a seven and a half percent front end load, which meant that in an average year, your investor was giving away at least one year's worth of return before they even broke even. You know, another popular investment product, as they call them, by the way, calling somebody's money a product just

just like chewing aluminum foil for me. Do you think, Peter, because you came from a background where you didn't have a lot of money, that kind of upset you even more in a way? Because I remember you saying to me that when you were growing up, like to go to McDonald's once a month was kind of a big deal. So, I mean, how did you react when you saw people having having their? money invested in products like that. Yeah, we weren't four, but, you know, my parents are both children of the depression.

My mother was essentially orphaned when she was quite young. And my father was fortunate enough to go to college, but there just wasn't a ton of money. There was enough for kids through private college. But the idea, these are Depression-era people that I grew up around. And the idea of entrusting your money to someone else, giving them discretion, as we call it, It was just anathema. And you simply didn't do that. And to this day, I still have some deep part of my reptilian brain that says, wait, what?

People are handing their money over to someone else, whether it's an institution or an individual, they'll let somebody else call the shots. That just is not the type of environment in which I grew up. And I didn't know anybody who owns stock. I think there was a couple of shares of some utility stock that was in my parents' safe deposit box. I don't know how they acquired it. I'm looking at some gold company that my great-grandfather invested in that disappeared,

but I framed the certificates and got them on the wall here as a reminder of what can happen. And you also, you came out of Washington and Lee, right, which is the same school, coincidentally, that Bill Miller went to. And I remember when we spoke last, you said that that also had a kind of formative influence on your mindset towards these things. Can you talk a little bit about

how that shaped you in your sense that maybe you should try to behave in a relatively honorable way, despite the profession you landed in? Well, Washington and Lee has a longstanding tradition called the Buttercode, whereby he didn't lie cheap or steel. So if you embraced it, it was a place for you. If you didn't, it was not the place for you. And there was a single sanction, and that was expulsion. So we all bought into it.

At least if you were going to stay there, you bought into it. And so it's something that I think most of its alumni carry forward into their professional lives. And it's formed a bond among the alumni that I think is exceptionally strong. But going back to the environment which I grew up, Anthony Deedon refers to money as irreplaceable capital. And we don't think about it these days. But as to a certain generation, money was not plentiful. and it was irreplaceable, so you were incredibly careful with it. Yeah, I had this discussion with Marty Whitman when I was interviewing him.

I guess in the last few years of his life. And he was always a really wonderful guy to interview and was a brilliant investor and brilliant mind. But he had managed money for my mother at a certain point. I'd introduce them and he ran a separate account for her here and his team. And they ended up kind of doing a terrible job. during the financial crisis. And when I asked him about it, and I sort of said, you know, why, why didn't you,

you know, how come you got whacked so badly by the financial crisis and then didn't take advantage of it when everything fell apart? And he said, well, as I got older and richer, I kind of got lazier. And he's like, I knew in 2007 I should have sold some of those stocks. And I just never really got around to it. And he's like, but what's the difference, you know, if I give charity, you know, like tens of millions of dollars less and my kids, of millions of dollars that. I really didn't have the heart to say to him,

dude, my mother is affected by this. And it really sort of rankled with me. And I was thinking about it this morning. Like that's, I wondering like, you know, should I have been a repressed Englishman and not mentioned it? Or should I sort of said, you know, look, you violated your fiduciary responsibility to my mother and she's paying the price for it. Right. Well, I won't tell you whether you should or shouldn't have, but I'm reminded of the old discount broker commercial where the couple comes in and sits in front of his desk and says, do you have any retirement plans? And the broker says, yeah, I'm going to buy a yacht and I'm going to travel around the world. And they go, no, no, wait a minute, retirement plans for us. The point is, it's clearly Marty should have been

thinking differently about your situation, particularly since it's your mother's money. One of my filtering mechanisms is thinking about investments as though my mother's money is going into this. Buffett talks about writing his letters for his sister. I think about it. My mother is no longer with us but didn't know anything about investing. But is this a business that my mother should be invested in is one of my thresholds? Also, one of the reasons why I ended up wanting to interview you was because our mutual fan, Sorab Madan, who used to host the talks at Google on investing and now runs his own investment

firm, Manvine, having previously worked as Tom Gaynor's Deputy Chief Investment Officer, he said to me, you know, you really got to talk to Peter because he's not only a great investor, but he really regards investing as a calling. And one of the things that Sorab quoted to me that had a big impact on him was he said, do you always ask this question of, you would say you're serving someone, the question is who. Can you talk about that? Because that seems to me such an important insight. Well, look, you know, a lot of what you write about in your book and in your podcasts, people are, you know, one of the things you're really good at William is getting people to open up about what really makes them tick. And I think if you

opened up the minds of a lot of people in this business, you discovered that their motivations may not be exactly what they think they are. And I think money is an incredibly powerful motivator, and people may not be willing to admit just how powerful a motivator it is. I think it was Henry Kissinger, who said money's the ultimate aphrodisiac, and it just can accomplish all kinds of things. And I think we all know that subconsciously. And of course, am I interested in the rewards, the financial rewards,

this business, absolutely. I don't know anybody in this business who isn't. I'd worry about you a little bit if you said that you weren't. But having said that, this business is a calling. And I think that when I'm talking to people about why they want to be in this business or when I'm mentoring younger investors, I do, this is sort of, it's sort of an ominous statement. It says, we're all think that we're in service to others, but sometimes you're serving yourself. So I sort of ask this question that it's gently, you're serving someone, but who are you serving? Make sure you understand who you're serving. So, you know, we're all in service to others, but make sure you understand who you're serving. I wonder if it changes as we get older,

because I often find when I interview great investors, it seems like early in their lives, there's a sort of, I have no factual basis for this. It's more impressionistic. But I have this sense that there's a real hunger often for money, a kind of ill-defined hunger for money, whether it's to get out of straightened circumstances, if you're someone like Bill Miller or Mario Gabelli, who grew up with nothing, or a desire to sort of impress people and get, you know, be noticed, you know, which I think, you know, if you were someone like Bill Ackman who came from a very successful family, you know, you needed to make your mark. And then at a certain point, it shifts, maybe one, at least for a lot of people. I don't know. And then also there's a sense of just

loving the game, right? I remember you, one thing that I heard you would ask the people you were interviewing for jobs was, you would say to them, would you do this on a teacher's salary for five years? And I think that's a really important issue as well. Like, you know, actually having to enjoy the game enough, the actual craft. Sorry, I'm going on. Well, we do you have any thoughts. You've got to enjoy the game, but you've really got to appreciate the craft. And you do have to, the reason I ask that question, would you do this on a teacher's salary?

It's serious, but it's also a trick question. Because anybody who's good at this is not going to have to live on a teacher's salary for very long. But I don't want to be involved professionally with people who are doing this solely for the money, you are serving someone and you should be serving those who need your skills. If you are good at this business, then you have an obligation to give those skills to those who need it. And they're desperately needed. They're desperately needed by hospitals, schools, retirees, poor people, wealthy people who simply don't care about investing. So the need is enormous.

So I think it's important to approach this business from a standpoint of service. If you're any good at it, you know, the money's going to rain down upon you, more money than you ever imagined and more money than you're ever going to need. So you need to take the money out of the equation because if you're any good, you're going to make a lot of it. If you're not, you still might make a lot of it. But I think the principal motivation has to be to serve. Now, when you're a young man, young woman, you know, we've all been.

in there, you just want to go out and slay the world. I think that's just part of the natural deal of being young and moving to a new city like I did and wanting to do something. I mean, I tell people, I had no idea what I wanted to do, but I wanted to do something and I wanted to make an impact on people's lives, a favorable impact on people's lives. I'm not sure I even cared about making a favorable impact. I think I wanted to be noticed, and I wanted my life to amount to something. And, you know, there was just a sort of ill-defined desire, this yearning, this yearning to make some kind of mark.

It was very ego-filled, definitely. I think we're saying exactly the same thing. And I think that over time, my objectives evolved. Yeah. You know, on day one, you've got to pay the rent. You know, on day two, you're thinking about building a family. day three, you're thinking about the legacy. So you're your way you approach your life evolves over time.

And but yeah, I mean, I just like I said, I got here at D.C. And I thought I was going to be a lawyer and decided that that was a really bad idea. And I just wanted to do something. You know, I had a lot of energy and I was curious about everything, you know, which can be a problem. Because if you're curious about everything, it's hard to focus on one thing. And you got lucky, I guess, that. after what probably the best part of a decade in the investment business, then you, well, I guess you'd become director of research at your brokerage firm and then kind of leveraging

the fact that you had that new title, you went off and started to look to join a byside firm, having sense that the sell side was slightly conflicted and unholy and not the place to be. And so you ended up at Avenir in 1991. And you were very lucky, I think, to meet Charlie McCall, who's, name you mentioned before I rudely interrupted you about 15 minutes ago. Can you tell us about Charlie? Because clearly he had a really important role in your life. And this is a guy who, I think he's now about 86, 87, and you worked with him for 22 years at Avenir. And he was obviously a terrific investor. Who was he? And what was he creating at Avenir? And what did you

learn from him? Yeah, I learned a lot from him. And by the way, Before I forget to mention it, you and I have something in common. You know, when I was in college, I never set foot inside of business or an accounting class room. You made up for it in the long run, though, whereas I never became proficient at studying accounting statements. One of my great compliments in my career was when a guy who runs a forensic accounting firm that advises hedge funds and short sales offered me a job, despite the fact that I had zero formal training in accounting. But obviously I turned it down. But going back to Avenue, so I just happened to run into Charlie.

He had someone who was assisting him at the time, and we're both in the CFA class. And he said, you know, the guy who I worked for is in his mid-50s, he's got this low investment management firm. he's concerned about succession and I said well that's interesting I said I was sort of down the road with a large firm in New York

to go up there and run their research department but that would have been an intermediate step for me but so this fella introduced me to Charlie Mekel and I got along instantly he had formed an avenue in 1980

But a background, Charlie graduated from Princeton with a degree in chemistry. And he was a chemist for a couple of years afterwards. And then he went to the Darden School of Business at the University of Virginia where he got his MBA. And then he became a banker. So he was a successful banker and ran the commercial lending unit of the local bank here in D.C. that's now been merged three or four times. But he'd always had an interest in investing and invested his own money

and some of his family's money. Over the years, he'd been successful at it. And I've been a banking client of his said, well, listen, my family has some substantial resources and why don't you just leave the bank and come run our family's investments? Charlie said that sounded like a good idea. So he formed Avenir to do that.

So while the term wasn't in common usage at the time, Avenir was, for all intents and purposes, a family office, you know, with $8 or $9 million under management when it opened up its doors, which back in 1980 was a lot of money. And by 1991, when that rolled around, the assets had swelled to $18 million. And Charlie was in his mid-50s. and having you had to get registered with the SEC because it had a sufficient number of clients Charlie having accumulated this friend, relatives, and some other portfolios because he'd established a reputation as a pretty good stock picker. But Charlie's an interesting guy. He's not, he's quiet, thoughtful, extremely intelligent, and he's wired to understand how business his work. And he's an extremely quick study. And so he was just a natural-born stock picker.

You mentioned Marty Whitman earlier. I'd put him in that camp. He could see value in a lot of different types of business, a lot of different types of industries. But we were both rooted in things like the intelligent investor, Graham and Don, and Buffett. And so we throw in together. And because I saw an opportunity to commercialize what had essentially been just a small, internally operated, shamely office. And Charlie had a succession problem to solve. So scratch both inches is my entrepreneurial itch, and Charlie's need to get a successor. But it wouldn't have worked if we weren't intellectually compatible.

We were different enough so that we had approaches that could complement each other. but the Venn diagram overlapped enough so that we could work together and in fact enhance each other's processes. It seems like the principles on which Avenir's success has been built are pretty simple and pretty timeless in many ways. I mean, you have this fantastic record. I think when I last checked, it was over 13% a year for the last 33 or 34 years, something like that.

So beating the market by a long distance. and yet the principles are kind of timeless, these ironclad truths, as you put it. And I'm wondering, A, whether those have changed over the years, but B, if you could summarize what the essence of it was both then and now, because it seems like you were kind of distilling the core of Buffett and Munger and Graham. Yeah. Now, you know, there's a million people out there who speak fluent. Buffett and Munger, but they don't invest particularly well. I think it was in your book, Zach Sechariah said that the fact that I wrote this down,

so let's permit me to refer to some of my notes. Yeah, thank you. He said articulating this stuff is easy, internalizing it is not. Yeah, that was Nick, I think. Nick Sleep said that. Yeah, and that's true. You can, there's this huge gap between being able to talk, as you said, fluent Buffett among her ease, but actually doing it.

Boy, is that hard. Yeah, so I underlined that in the book about five times because, you know, early on, I think we got extremely lucky Charlie and I threw together. One of the dynamics that made us work was, you know, he was, to use your term, elder statesman, and I was the young guy with the fire in the belly. I think that that kind of economy resonated, and it was great in terms of our relationship, but I think it also appealed externally for some reason. There's a fired ice thing going on there.

But in any event, we had terrific results early on. The markets were roaring, and so we had the wind at our backs, and we got lucky in a handful of businesses. Like I said, I devoured everything that Warren and Charlie. and all the others, all the other grades of the age were seeing, but that does mean that we really knew how to implement it. It doesn't mean we're not implemented today. We wound up by a handful of concentrated businesses that treated us extremely well, particularly early on.

You're right, you know, we're a couple of 300 above the S&T over three decades. It's disproportionately early on in the first 15, 20 years, that that record was achieved. I think we've been more marketish for the last decade. But whether there is because we applied the Buffett and Munger principles, which we were residuously trying to do

or got lucky, we wound up buying a handful of businesses. That simply turned out to be really, really great businesses that compounded for many, many years. And one of my biggest mistakes was cutting back some of those businesses. I don't think I had yet read Warren or Charlie's admonition not to cut flowers and water the weeds.

And I did a fair amount of flower cutting and weed watering in those first 15 or 20 years. But nonetheless, we were able to hang on to enough of these great businesses that we wound up building together a pretty good track record then in 1998 and brought Jim Roney into the business. And the rest is history. 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.

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early sales of great businesses and you described that as the silent killer where you sell compounders too soon and while we're dwelling on your mistakes can I can I cause you heart palpitations by asking you about pool corp which is a pretty good example of this sure yeah I think pool corporations the biggest mistake have ever made my investment career And like you said, selling early is the high blood pressure of the investment business.

It's a silent killer. And, you know, people will always talk about the business they bought that went to zero or the one that went down 50% or 75%. Yes, that's bad. You want to avoid that.

But the business that you sold too early that went on the compound 10-fold or 20-fold after that in my career has been a real killer. And I bought full corp at the right price. Interesting story that I, tell you about going down to visit management in Covington, Louisiana, which is not exactly a business mecca. But in any event, you know, it checked all our boxes.

Manny Perez de la Mesa, who was still the chairman of the board, I think, was the CEO then. He'd been in GE. He had a great background. He was understood capital allocation beautifully. And Full Corp was a terrific business. And for those of your listeners who aren't familiar with it, I'll tell them in a breadth. It's a distributor of pool supplies and equipment, and it gets margins in the mid-single digits. Most distributors, margins in the low single digits, but Pool Corp has this unique franchise

that permits it to get these ridiculously high returns for a distributor, and those ridiculously high returns multiplied by frequent inventory turnover, I mean, they get huge returns on capital and do everything that you want to compound or to do. Well, I bought it right and sold it after it appreciated it four or five times in our portfolio because I allowed some thinking about, erroneous thinking about valuation and probably about the economy to creep into my thinking. A full construction is somewhat linked to the construction cycle.

And so I probably let all these things influence my thinking and went about. selling the position in its entirety and having made, like I said, four or five times our capital on the business. Well, I think it's appreciated about tenfold since then. So what that taught me was that you either have to be an investor or an economist. Not many people can be both, and I don't know any wealthy economists, so I'd rather be an investor. And so I just try to tune out some of this economic stuff that can infect your thinking, usually negatively. Yeah, I was reading your letters to shareholders yesterday, and there was one from, I guess, August 2020, so in the middle of the COVID pandemic. And you wrote, we have no predictions

about the direction of the economy or markets, and certainly not the virus. The trajectory of the virus and its ultimate duration and impact on the economy are unknowable. What is knowable is that on occasionally unthinkable happens. Unforeseen acts of terrorism occur, real estate bubbles burst, or a pandemic emerges. This means we must own businesses with both bulletproof balance sheets and outstanding and durable business models that can withstand unthinkable economic hardship, which are run by ethical managers whom we can trust to act in our best interests. And that strikes me as such an important insight that you, I mean, in a way it gets back to stoicism, right? It's like controlling what we can control and letting go of what we can't control. And just,

recognizing the fact that the direction of the economy and the market and viruses and stuff is just not really knowable unless maybe your Soros or Drucken Miller or someone like that. I don't know. And so just that recognition, having the humility to recognize that that's not knowable strikes me as a really important first step in long-term investment success. Yeah. So one of the things I tell young investors when I'm mentoring them is make a choice. You're either an economist or an investor, unless you're one of those five people you mentioned.

And I just rhetorically say there's probably five people on the planet who can consistently tell you, what if the dollar is going to do, what the price of gypsum is going to be, what oil might be for the price of money. I know none of those things. And I simply don't have enough mental bandwidth to be able to allocate any room at all to these things. So I do my best to invest in a manner where those things are ultimately going to be on, important. And this leads to a real important point that you made in your book, and Howard Marks talks about if you were owned in the market for, you know, what, 44 months out of the last 7,000 months or something like that. You know, you missed 100% of the market return.

Yeah, and sometimes even if you miss a few days, you miss almost all of the market return. And Dr. Hennert Messimbiter at the University of Arizona put a fine point on this. in his study, which is also referenced at some point in your book, that since 1926, 4% of all public companies have accounted for 100% of the return in excess of the five-year treasury. That means the other 96 cumulatively added up to return from the five-year treasury. So that puts a real fine point on how difficult this business is. you know, when 96% of the businesses at which you're going to look are not going to add value and help you justify your fees.

You had a very interesting exchange with Bessonbinder that you shared with me that I think gets at a really central conundrum in the challenge of being a successful long-term investor. So for people who don't know, Hendrik Besson Binder is this Arizona State University professor. And as Peter said, he did this really important study where he got to be a lot of goes back, I think, from 1926 to 2016. And he ends up saying, okay, so basically 4.3% of stocks created all of the net gains in the U.S. market. And so my friend Jason's White wrote a characteristically smart and insightful article about this saying, well, this shows that searching for the next super stocks is like hunting for a few needles in an immense field of haystacks.

And so people like Bessaminder would say, well, so okay, so this is why most active strategies fail, right? Because fund managers aren't diversified enough, and so they miss out on owning those few stocks that actually accounted for all of the gains, like the Amazon's and the apples and the Home Depot's and the like. But you came to another conclusion, which I think is also a really important way to read it. Can you explain your slightly subversive reading of Bessonbinder study? Yeah, I love your characterizing of subversive, because I think that's exactly what it is. but I said, hallelujah, this means someone who's got the ability to figure out what those 4% are is going to kill him. And if you're going to be in this business, I think you have to have internal belief that, yeah, I can find those great businesses.

After all, what are we all doing every day? I mean, most of the people that I know in respect in this business are doing nothing but looking for those 4%ers. And so, yeah, I said, this is really, really good news. this means someone who's got a quality bent and a concentrated portfolio is going to win. Supports, in one sense, the Bulgill argument, which Warren and Charlie endorse that most people ought to be an index funds. But for those few active managers who are good enough to identify the great businesses and buy them in quantity, I thought best in Bidener study was really good news. Yeah, I sort of interpreted it both ways personally.

I mean, I guess intuitively I'd done this a long time ago because I've always owned a couple of index funds. And I always put my wife's money and my kids money in index funds because I thought they shouldn't pay for my delusions in thinking that I could beat the market. But then with my own money, typically, although I do have a couple of index funds, I've tended to own very concentrated funds run by people I trust. because so, you know, one of them has maybe 10 stocks, another has most of its money in about eight or 10 stocks, but probably owns about 20 stocks. And so I do think there's, you can interpret the data in different ways, but there is a really strong argument for saying that you want to, you want to concentrate. But then, but then that's kind of disastrous if you're not good. Yeah, I completely agree with your assessment.

But for the investing community, it means you ought to put your money in an industry. fund, but for the people who are on the other side or in the investment community itself, it means, well, if you're good and you can find those businesses that are going to compound and create above average shale over a long period of time and buy them right, it's good news. So it's got two interpretations. And your view of concentration was also very much influenced by Mason Hawkins, who I interviewed many years ago, not that many years ago, but for the Great Minds Investing book that I wrote, Can you talk about your epiphany that came from listening to Mason talk about concentration?

Yeah, sure. I was in some conference up in New York, and I can't even remember what it was, but I remember the moment like it was yesterday. Again, you know, there's this person, you know, who's trying to form an investment philosophy and, you know, reading Buffett and Monger saying, yeah, that makes sense, but, you know, how do you apply this? And I heard Mason say in his speech to an investment group, why own your 40th best idea? And I said, aha, yes, that's some of the wisdom that I have been searching for.

What is the point of owning your 40th best idea? Let's say it's an equally distributed 40 businesses in a portfolio. If you're lucky enough to have that business double in value, it will add exactly two and a half percentage points to your portfolio, who is smart enough to find 40 businesses that are that good? Well, I'm certainly not one of them. So I figured, well, what's a manageable number? And I said, well, 20 sounds like a lot. 15 sounds okay. 10 sounds even better because, you know, I just can't keep the financial details of 15 businesses in my head with any depth. So, you know, I just have always felt comfortable owning 10 or 12 businesses that I thought I could know well enough to risk

size little amounts of investor capital one in my own capital. And it's worth noting that you also tend to hold them for a long time. So these are businesses that you know very well. But I also, I mean, I was, my math is not great, but I was counting up your holdings on the back from an envelope the other day. And it looked to me like you have about 35% of your portfolio and your top three holdings and maybe 60. or so in your top 10. So it is a pretty concentrated portfolio with long-term,

an emphasis on long-term holdings that are businesses that you regard as really superior that could be part of that 4%. Yeah, there's a lot of clutter at our 13, I think that our top three businesses are at least 30 to 5 to 40% of our assets and the top 10 are easily 75% or 80% of our assets and there's a small farm team above and beyond the core holdings.

So the top three, I think, when I looked, were Microsoft, which I think you bought initially about 10 years ago, I think in 2013, an American Tower Corp, which you've owned for well over 20 years and has been a hundred bagger, I think, and Markell, which you've owned for a long time. And I wonder if you could talk about a couple of those as a kind of illustration of what it is you're looking for when you're looking for these great businesses, the 4% of great businesses that make all the difference. How does a company like Microsoft, for example, embody what it is you're looking for? You know, each of those three businesses illustrates a distinct path to getting to investing. So when we bought Microsoft, a Balmer was still in charge there. And nobody liked him.

Nobody liked Microsoft. It was a technology dinosaur. They had announced that they were going to buy Nokia, which is a cell phone company back then that nobody cares about today, at least from a standpoint. of cell phones, and I think Microsoft agreed to pay something on the order, paying $10 billion for it. The market valuation went down by that amount, by the purchase price, literally when they made the announcement.

So the stock market rode off the entire purchase price of Nokia in 30 seconds. We had been looking at some of the old technology businesses like Microsoft and eBay and some others. and we came up with some simple arithmetic that the Microsoft Outlook business alone, you know, that is your email, your PowerPoint, your Excel and your Word, that was in virtually every office in the United States and mostly around the world and was worth about $1.80 per share in terms of free cash flow. And so the stock price was under 30 at the time.

And so we said, well, you know, we're paying a mid to hide teams multiple for the Outlook business. There's everything else on top of that, you know, whether it's a server business, the Windows business, all the other software businesses that Microsoft owned. I said, we may not understand those. But our moment of epiphany came when my colleague Jim Roney and I were looking at her office window. the building in Pennsylvania Avenue in D.C. And we looked out over the Edward Murrow Park at the World Bank and the International Monetary Fund. And there's probably two or 300 glass windows on these buildings that we can view just from our vantage point.

And we made the observation of every single, behind every single one of those windows is a computer. And that computer probably has Microsoft operating software on it. the outlet business is probably on every single one of those. And it ain't going anywhere for a long time. So we're willing to pay 15, 16, 17 times free cash flow for that business. And maybe something good will happen to the rest. Well, what the rest is is history. You know, Satya came along and we know what he's done with the business since then.

So we thought our margin of safety was modest multiple. we thought we were paying for what we considered to be the most important and understandable part of the business. And of course, had a great balance sheet and buying back stock. And I think Steve Ballmer gets bad rat. He may not have been a Hall of Fame CEO. But she also came in when the stock was extremely high priced. And if you look at his 10-year CEO, pre-cash flow and earnings and all the important stuff and compounded nicely. the returns on capital were nice or good.

And they made some mistakes. And I think they lost style points because of his personal approach to the business. But, you know, he couldn't control the fact that he came in with an extraordinarily high stock price with a, you know, 30 or 40 multiple on it. But, you know, ultimately, Sotja came in and has done just incredible things for the business. He didn't happen to just come in with a stock price. which was so he came in and did magnificent things from a capital allocation standpoint, you know, whether it's putting up the Azure to many of the other things that he's done. But so that's the path to Microsoft.

We were simply at a margin of safety or buying a great business, the outward business, that is, at a discounted price. It also seems like Peter, there's a, there's a common theme which I'd like to explore as well with American Tower, but which also applies to Microsoft, which is that you're always looking for these simple secular tailwinds. And can you talk about that both with Microsoft and with American Tower, where there's a sense that you're, which I also see with your, you have several investments in the automotive business. It seems like you're always looking for something where there's a long secular runway that, to mix metaphor, to make metaphors,

was. Yeah, every mega account batter we've only had a long secular tailwind behind it. And of course, we didn't know that at the time we bought Microsoft, but it was there. But in the case of American Terror, which is an interesting story, I discovered it in, I think, 1998, when it was part of a predecessor company called American Radio Systems. A lot of people don't realize that American Terror was spun off from American radio in the late 1990s. American radio was run by the late Steve Dodge,

who was a fabulous CEO, a great value creator. Another guy who didn't have, you know, the analog path into this business, he was an English major in Yale. I think he might have gone an NBA somewhere, but he didn't let that hurt

him. And he's just a serial value creator and a great guy about which I tell you some wonderful stories. He died tragically a few years ago on a bicycling accident found in the Florida. But he was running American radio systems, which itself was a terrific

business. It was terrestrial radio which until the internet came along was a fabulous business because, you know, if you own the dominant radio station in town, you know, if you own WNAW in New York, you had no choice but to advertise with them. And it

cost nothing except for a small amount of money for content to run a radio station. And, you know, after the Telecom Act of 1996, I think it was, or paved the way for digital communications, after the explosion of digital communications, Steve began to get some calls from people who wanted to hang digital cell phone antennas on his radio towers.

Digital communications require a much denser network of cell sites than the old analog, on because the signal propagation characteristics, which means the distance that the signal will carry are much lower. So you need a lot more cell sites. But people want to hang cell sites or put cell sites on Steve's towers. So you get the idea, well, maybe we can start aggregating these towers into a business. There is a footnote in one of American towers' SEC filings that made reference to a separate

stock option program for the employees of something called the American Tower Systems. That's all it was. It was a single sentence, but I read it. And I called up Steve, with whom I had a great relationship. We talked about the radio business and other businesses and other things for a long time. Well, you would have thought I called, you know, the Defense Intelligence Agency in Fort Reed, Maryland, and then asked an uncomfortable question. he basically hung up on me.

So I knew that there was something here at which to look that required further inquiry. What we figured out then was a sell to our business, and we got some sense for, is it bigger than a bread box type economics? We understood that they were good. So we started to buy, we already had a huge position in American radio, but we bought more American radio because we figured that this business was going to be externalized in one way, shape, or form. That's why they had a separate stock option program for it. So sure enough, they did. They wound up spinning it off. And it went to 44 bucks a share.

Remember, there's a one-issued market, even before it was spun off. People started to get really excited about it. It went to 18 or 20 bucks in the one-issued market, then went to $44 a a share. After people figured out what a great business to sell to our business was, you know, where you're operating costs for $10,000 a year, and your rents might be over $100,000 a year, and anybody can do the map. And the only assumption that you had to make was were digital communications going to grow or not?

And this is long before the iPhone, so we're really talking about voice. And so that was the pillar assumption that you had to make. Or digital communications got to expand. or not. We made the assumption that they were, so we bought a lot of it. And as you probably know, the American Terror got caught up in the land grab when people figured out to sell terror business and the carriers like AT&T and back then, GTE, and others were selling their carrier, their terror portfolios, because the carriers had to figure out whether they wanted to sell service or be.

in the real estate business, and of course, the network of towers and cell sites had to expand dramatically to accommodate the growth in wireless communications combined with the lower propagation characteristics of the digital capable frequencies. So the point is, I mean, the number of cell sites and cell towers had to grow exponentially for a long period of time. People figured this out and they bid up these stocks to really unsustainable prices during the dot-com boom, which helped further fuel the rise in these stocks. Well, American Tower got over levered than like all of the people in the cell tower business did. And they almost had to because there was a land rush. You know, you don't get a second chance to buy a cell tower. You know, once it's bought, it's gone. And so that was

a mistake. And so the stock went from 44 bucks a share to under 80s. sense of share in a fairly short period of time. And you and Chuck Ackrey, as I remember, who was also a very early believer in American Tower, actually went to visit Steve Dodge. And this kind of illustrates an important point, which is that throughout your career, you're really betting on the individual, the quality of the individual. Can you tell us about that meeting with Steve Dodge, the founder and CEO at this moment where he's just been crushed. His stock has gone from 44. to 80 something since and it's probably because of his mistakes.

Yeah, well, you know, businesses are like people. They make mistakes and they have hard times. And so American Terrorhead, it's hard time and it's big mistake, which was getting over levered. The dot-com bust. There are also some adjacent businesses. There's a teleport business that they were trying to boot up at the same time. They were just ditting off a lot more than they could chew,

and they got over levered in the process. And so Steve have agreed to see me and Chuck. And so someone went up to visit with Steve and he said, I'm going to give you an hour. He said, you understand I have a business that I'm trying to save. It requires my full time and attention. But you guys were here early on. You act like my business partners, not like renters of the stock. And so we'll give you an hour.

So we went up to Boston and visit with him. and Steve, who was ordinarily a smart, laid-back guy. He was still smart, but he certainly wasn't laid back. He was ashing-faced, and he was quite grave. And he said, again, give you an hour. I've got a business to fix. I'll answer whatever questions you have to the extent it's legal for me to do so. So have that.

And then I've got to go see if I can fix this business. And he held his hand up, not literally, but rhetorically, and figuratively, and said, This is my fault. I did it. Nobody else is responsible. It's the worst thing that's ever happened to be in my business career. I think I can fix it. But there is no certainty here. And so, by the way, your listeners might be interested. The problem was a $200 million bond maturity that was looming. that during the go-go years of the dot-com stuff, some investment banker had foisted upon them, and it was payable either in cash or in shares of stock at the company's election. But if the company could not come up with cash, they had to come up with stock. So in 2002, nobody who was in this business, an American Tower at that time was sort of considered a telecom stock because of who its tenants were,

even though it was a real estate business, but it was banked on the telecom side. So the telecom bankers were instructed to shrink their plugs. There's not $200 million available to take care of this bond. And so the arbitrageeurers figured out, well, they're going to have to pay it off in stock. So the thing to do is short as much stock as you can, buy the bond and short the stock, because if you drive down the price, they have to deliver

theoretically an infinite number of shares to satisfy the $200 million bond. So you could own the whole business if you own the bond. So they'd buy as much of the bond as it could and short stock against it. But that strategy didn't work out. Steve was able to find $200 million, but by going to the private equity community, satisfied that obligation. And stock since went from as high as $305 a share within the past 18 months. It's down a lot since then. But the point behind that story, William, is that Steve acted honorably. He accepted full responsibility for what he did. And Steve did not do this alone. He had some great people around him because Steve was an honorable, good guy. He had honorable good people around him, not the least of which was Brad Singer, his chief financial officer.

And I'll segue into a brief story about Brian. I was going to some conference up in New York. And I saw him on the other side of the street, dragging a suitcase. And so I crossed the street to join him. I said, it's a hot day in New York. What are you dragging your suitcase? And he said, well, you know, firm needs to save money. he didn't have anybody with him at the time. So he wasn't being watched. So he was saving money. He was doing the right thing when people weren't watching, which is one definition.

I love integrity doing the right thing when people aren't looking. I seem to remember he was the guy also who told you once when you asked him what was the single biggest destroyer of capital. And didn't he say boredom that it was managers deciding they just couldn't sit on their hands? Management boredom. So I asked Brad, what's the biggest destroyer value among public companies? I didn't even get the question up before. He said management boredom, which means they go out and they get some money and they go spend it on something stupid. You know, boards and directors can't sit on their hands. We're getting paid fees for something, right? Let's take a quick break and hear from today's sponsors.

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charges, and expenses. This and other information can be found in the income funds prospectus at fundrise.com slash income. This is a paid advertisement. All right. Back to the show. Which has also been a crucial lesson for you in terms of overcoming your addiction to trimming things like American Tower over the years, right? Because you came out of that meeting with Steve Dodge, I think and tripled your position. And then it just kind of shot to the moon, right? I mean, it went up over a hundredfold over the years. And so trimming that was kind of always a mistake, right?

Yeah. You know, every, yeah, it was a mistake. And it went up over 300 fold at one point. It's now up, still up 200 fold at its current price. But it's like Microsoft, too, which has been public since the early 1980s or something. time in the 1980s. Well, I think it breached an all-time high within the past two weeks, which means in the seven or eight thousand days, it's been a public company.

There's been 10 days of which it was a good time to sell Microsoft. Well, there was that long period where it kind of went nowhere, right? That's true. So my point is a rhetorical one, but you get the idea. Yeah. And this goes back to, you know, Dest and Binders study that 4% of the stocks or account for 100% of the return. If you can find one of those 4%,

and believe you own one of those 4%, it don't want to take a really super convincing argument to get out of them. You know, nobody has a good answer for this because nobody knows where the all-time, forever, top is in a business. You know, Chuck somewhat laconically says,

you know, let them compound until they stop compounding. And I don't know how to have a better answer than that, but I do know that these businesses are scarce, and once you want to hold on to it forever, this best I can come up with. I mean, you've also raised another important point about this, this whole issue of judging the integrity and the quality of the management, which I think is consistent with Satya Nadella at Microsoft, who came in much to your good fortune about a year after you bought the stock. Tom Gainer, a friend of yours and mine, who's the CEO of Markell, which obviously has been

a huge position for you. And also Steve Dodge at American Tower. And this raises a really important question because you've said in the past that investing with CEOs you like and admire is essential. But how the hell do you go about it? I mean, what are you actually doing when you go visit a company or you're assessing their financial statements actually to assess whether they're a good person that you're willing to partner with over the long run? That's incredibly, forward and it's almost a pause what to do and ultimately you have to go by your gut. You know, particularly these days when I think CEOs feel so constrained by Sarbanes Oxley and Dodd-Frank, you know, they're so scripted. There's a lawyer in the room every time that

they're giving a conference call or talking to investors or an investor relations person taking notes. So knocking them off the script is really important. But it's a nice segue. You ask the free, we talked about the three top positions. Microsoft played old-fashioned value. It was a great business, a distressed price for the wrong reasons. Path number one, path number two, American Tower was simply a great business, great managers. We were able to buy it at the right price because as one of your previous interviewees, Christopher Beck pointed out there were some clouds,

not necessarily negative clouds at the original time of purchase, but people simply didn't understand the business. It was married and signed a larger business. So that's path number two. Great business, great managers. Path three to Marquille. Marquille is not

necessarily a great business. We have all due respect to my main friends there. But insurance by its nature, property and counseling, insurance by its nature is not a great business. It can be a very good business. But you can wipe out years of earnings in one day, in one catastrophe.

And so it doesn't fit the characteristic that we seek, which is an inherently superior business. But Marquille is populated by people that we believe are not only excellent capital allocators, but thoughtful people who understand the primacy of their obligation to the owners of the business. And not only that, they think deeply about the relationship with the owners of the business, express their, all their communications for the shareholders, whether it's an SEC filing or an earnings report, are expressed directly in a straightforward, managed manner.

there's very few adjectives. They tell you like it is. In fact, their policy of reserving conservatively extends to the way they report to their shareholders. You know, they have this mantra of more likely redundant than deficient, which are insurance terms or redundancy means you have excess reserves. Deficient is exactly what it sounds like. You don't have enough reserves.

So the monetary is more likely redundant than deficient. So I think it's echoed in the way they report the results to their owners of their business. I remember a few years ago, you know, their earnings came out and, you know, they looked like they didn't compare well to the previous year or the previous quarter or something like that. But if you looked in the 10-Q, the reason was they had taken and accrual for additional earn-out payments to a business that they had bought Markele Ventures. That's good. You want the people in Markele Ventures to be earning, to get their earning up for superior performance.

But of course, you've got to expense that. So that's why the earnings didn't look as good. There was none of this nonsense about, well, adjusted earnings would have been higher, were it not for this accrual for an earn-out. And they just told you exactly like it was and gave their shareholders enough credit for being intelligent enough to figure out what the truth was on their own without being led by the nose. And certainly without being given all this nonsense about it just at this and out or the next. And in one of your podcasts, you said Charlie Munger calls it like it is. And it's a word that begins with B and Mons and T. Yeah.

And he's right. He's absolutely totally right. And is there any CEOs or investor relations people listening to this podcast, stop doing that now? There were two things I love to. You read it the sermon. Yeah. Well, there were a couple of things that I, before we move on from this subject of evaluating the quality of management, which is clearly hugely important.

A couple of things I wanted to mention that you've, you've said in the past because I think they're really worth our listeners bearing in mind. So the first is you once said, I have a quick test, which is, is, would I be happy to introduce this CEO to a group of my investors at a cocktail party? Would he or she fit in? Would they sense that this person is a partner? Or would I worry about my investors getting a whiff of a two for me, one for you kind of person? That seems to me a really valuable insight and a practical insight.

This is ultimately a social business. By that, I don't mean, you know, have a drink, but your friend's kind of social business. but we're reevaluating people as social animals. And that's part of the reason why we sit down and talk to people and try to get a sense for what makes them tick and get them off the IR script. Because we want to find out if they have a sense of how they're going to relate to their shareholders and potential shareholders.

Do they view them as partners? Or do they view them as a constituency? Do they view them as people who are simply going to vote on a compensation package? And once you leave the meeting and the door closed, do they go back to being a purely self-serving people who are trying to extract as much in the form of equity compensation from their shareholders as they can possibly get away with, and I assess will permit? So, you know, this goes back to the Mark Hill story, which I should tell you in a breadth. I originally met with the company shortly after went public in the mid-1980s. And I think I was with the Johnston Lemon Research team. At the time, and I met with Steve Markell, and at that time, they had this huge bump

of equine mortality. I didn't know anything about horses except I was scared of death of them. And I'm thinking equine mortality, does that mean barnfire? Does that mean equine encephalitis? I mean, this sounds like something I can't understand. But it turns out that equine mortality is actually a pre-cund line of business to write. It can bite you, and I hate to know, pun intended or mex metaphor intended. But, you know, I stepped away from it because, you know, as a self-side analyst,

I had this nightmare about the headline saying, you know, equine encephalitis sweeps through Kentucky. Markill broke. And, of course, that wasn't true. That wasn't going to happen. I mean, they had reinsured a bunch of it, and it just happens to be a pretty good line of business, but that's why I didn't get involved on the first visit. And I went back years later, and in the early 1990s, mid-1990s, the stock was many multiples of the IPO price and many multiples of the value when I first visited them, but the book of business had diversified sufficiently, and I knew a little bit more about these different lines of business. And we got involved then, but it was the reason we were able to bend a little bit on the inherent, difficult nature of the business was because we're enamored of the people who ran it.

And we thought that they could run it the way Buffett had run national indemnity and the other insurance businesses and generate an underwriting profit and build something up. And by this time, Tom is with the business. And he had a good story to tell him and a good record. So we got involved more killed purely because of the people. And that's been how many years now, Peter? Since the mid-190s. So this willingness to partner with high-quality people, an ability to stay and put and sit on your hands for a long time,

these are clearly important. And then just on this question of values and character assessment, I just wanted to quote the other line that I really like that I picked up from some of your writings somewhere, where you said, businesses will attract magnetically people who share similar values. We see this all the time. Talented people with good values find each other, whether it's a church, whether it's on the baseball team, whether it's in the corporation, they find each other. And the people who have less attractive values find themselves, and they organize themselves in the businesses sometime. It's a very interesting

insight to me of this idea that there's something that it sort of reminds me of David Hawkins talking about these attractor fields, you know, where a particular level of consciousness, you know, people are trying to be truthful. They attract other people who are trying to be truthful. And I have no idea of what you said is actually empirically provable, but it seems, it seems like there are these cults that form around Markell or that form around Berkshire, where, where people who really value good behavior, integrity, truthfulness, and an alignment of interests and service and the like. It's really striking how there are these ecosystems. systems that form around certain values.

Well, isn't it true in your life that you associating with people of similar values and spiritual beliefs and mindfulness and so? And I just, you know, businesses are just collections of people who are organized around an idea. Yeah, I was also, I was talking to Sarah Madan about this last night because we were, we were chatting in advance of our interview because I was asking what I should talk to about. And I was asking him about another investor. and we were discussing exactly this question of how you also use your ecosystem, as Tom Gain would say,

thinking of himself as a node in a neural network, that when you have this kind of web of mutual trust, you can ask the people in your networks. Is this person honorable? Are they decent? Are they going to screw me? Or are they? And so that's really valuable as well. Yeah, you know, there's some people, and you've interviewed some people who don't think that

it's valuable to visit management or to meet management or they've had to change their mind about, And I understand that because there's no very few managements are going to lead with the bad news. So some of them think it's their job that charm shareholders. And we're a fellow human being. So I mean, I'm prone to being charmed by the charismatic CEO. It's happened to me before. And it may happen again. I hope to think that I get better at this as I go along and am less charmable.

But it happens. I can't remember who it was, whether it was on your podcast or somebody else's, but they said, you know, run away from the charismatic CEO. No, it wasn't that. It was the guy who used to run Medtronic. His name will come to me in a second. Well, Chris Davis said to me recently, he quoted something Munga had said. I have Chris Davis coming on the podcast soon.

Munga talked about avoiding CEOs with a good head of hair. I love that. that there, and you and I talked the other, you know, not long ago about like the danger of very, very slick, charming investment bankers who are really good glad handers, but that doesn't really make for good investors. I mean, there, there, there is a role for people with a good head of hair, but it's, it's kind of dangerous in the investment business. Well, I'm the least qualified person to judge someone based on their head of here. You know, the point is, you've got to be able to Look, you know, if you're going to be in this business for a long time,

if you're either going to make investments or you're going to manage your own business, you better be a decent judge of people and human beings. And you've got to be willing to be skeptical. And because a CEO, first of all, can't tell you everything that he knows. And they can't give you a wink and a nod. But they've got to do what Donge told us in this meeting. 20 years ago, 20 plus years ago, they've got to tell you what they can and, you know, and just give it to you straight on. And you've got to make an assessment whether that person

is telling you the truth or not, whether he's telling you all the truth or whether he's shading something or nouncing something or withholding something. It's hard to do. It's very hard to do. But there are some people for which you can get in an intuitive sense. Yeah, I like this guy. really think that I wouldn't mind the people who entrust capital to me to meet this person because they would come away with a sincere belief that this person is sharing their risk, that there's a seamlessness of risk between the owner of the capital, me, Peter Keith out near the intermediary, and the person of whom I'm outsourcing your capital, who's Tom Gaynor or Steve Dodge or Satya Nadalam.

Seeing the financial... We'll organize ourselves according to our values. I mean, your values wind up showing up in the long run. I have another saying is that there are no secrets. By that, I mean, you might be able to conceal something from someone today, but it's going to come out eventually who you are and which you are and what your values are. Yeah, and also I do think I talked with Tom Gaynor about this on the podcast. He obviously is very good at assessing people's personalities.

And he's like, look, one of the, you can see their behavior in the past. and there's usually a tell from their behavior in the past. People don't change their motorcycle brand a lot. But then also there's obviously the financial incentives, the way they've structured their financial incentives. And so that's pretty key, right? Just seeing, you know, seeing the fact that Tom Garner's compensation is long term. It's based on long term performance or seeing, you know,

how you charge for your separate accounts. It's different than the way you charged back at Johnson Lemon when it was transaction based and there was an incentive to have more transactions. So I do think you need, so some of it is intuitive, but some of it is actually understanding the way incentives are structured. Yeah, and you have to understand business realities as well. You know, when Morekell was a small insurer, I mean, they had no equity compensation at all.

But there's now a business with tens of thousands of employees, they've had to migrate towards a compensation plan that includes equity. and so that's not because there's been a philosophical shift, but it's just a business reality. But if you ask them about it, they've explained it to him. Tom and Steve and Tony and the late Alan Kirchner explained it to you. This is simply a business reality.

It doesn't necessarily. It's a reality that this emanates from being a larger as opposed to a smaller business. I asked Tom yesterday what I should ask you about. and Tom wrote slightly cryptically to me that I should ask you about your farm outside Lexington, Virginia, and what you've learned from that experience. And likewise, Sorab said to me, I should ask you about your cabin in the woods and your farm outside Lexington, Virginia, because there's something, there is something rich that you and I have discussed before about this,

what you can learn as an investor from farming, what you can learn from being out in the wild, from hiking, hunting, observing nature. And I wonder if you could unpack this a little for us, because it's clearly an important part of your life that I think you've drawn lessons from farming and the world of nature that really apply quite deeply to investing success. Yeah, to be clear, it's not a farmer, and I'm not a farmer.

It's a lot of raw land, mountainous lands. It's quite remote. I don't own a tractor, but I have always felt comfortable in the outdoors. It's a great place to cleanse your thinking. It's not just a matter of getting away from the ringing phones. I think it's a way of being alone with your thoughts. I think it was, again, I can't remember which one of your podcasts it was, Morris mentioned that Tom Combs can do quite well, I think, with somewhere between zero and three people helping him run this gigantic portfolio plus a bunch of operating businesses, including Geico.

I think when you're alone in the woods, the view of the mountains, it can inspire in you and understanding that there are timeless things. The mountains don't change, not at least in ways a week are observable over short periods of time. You can see a marketplace is taking place on the floor of the forest. There's competition for resources. There's winners and there's losers. So we see echoes of what we're doing in our business life every day. I mean, in the forest, there's good business models, and there's bad business models. And there's also in one of your podcasts, a very recent one, there was some discussion.

Someone mentioned munger's admonition to be a spear fisherman and to, you know, wait until that big fat salmon comes along. My analogy that I learned from a lifetime in the woods is apex predators hunt rarely. But when they do, they take down big game. I mean, lions sleep or lie around 22 or 23 hours a day. And they don't feed often, but when they do, they feed big. And so I try to apply that analogy to the investment process. We don't feed often, but we try to feed big when we do. That's a really important insight.

And I want to sort of dwell on that because you've said to me before that you have to have a bit of a predatory instinct and to be wired emotionally. so that in these moments when most people are paralyzed and think the world's ending, you're ready to pounce because the hunting is easier. And it seems like over the last 33 years or so, most of your really hugely successful investments have been made, or at least many of them, during very difficult times. So can you elaborate on that? Because this image of the predatory hunter who's very calm,

waiting until the prey is right there in front of you, and other people are fearful. It seems like such an important image and idea to me. Yeah, it is important. And I just finish out the analogy that I was starting with is I've put your coyotes on my place. They don't hunt unless they have an enormous overwhelming advantage. So they're an example of a good business model.

And that's how you ought to invest, which is what do you have an enormous overwhelming advantage and you ought to those opportunities come along in frequently. So I think that clearly our best investments have the name in periods of great extreme market distress. Our very first one company we haven't talked about is occurred in 1991 during the initial reunion conflict. We wound up accumulating 6% of a company called microsystems, which you and your listeners use every day. they're the little cash register you see at Starbucks and other places. It's a cold point of sale, but the real value, and that's the tip of the iceberg,

the real value of the business is the hospitality, IT, and software that runs hotels, restaurants, for the casinos, cruise ships, got sold to Oracle in 2016, I believe it was, for over $5 billion, but we were able to buy it as a net net in 1991. because their EMI office, which happened to be in Kuwait, was shut down by the initial Iraq invasion, and which caused a temporary interruption in their earnings. And the stock literally declined from a literally debt-free, profitable business to a net net. Those things no longer exist. But during that period of time and subsequently, we accumulated a 6% position in the business.

and they turned out to be the necessary piece of software for the hospitality industry. So that's example one. Example two was American Tower during the dot-com bust. Microsoft wasn't bought during a period of market turmoil, but it was when everybody hates, simply hated the stock. So to go back to microsystems as well, that's a really, you know, we were talking about farming and the like. and I remember that Lou Brown, the founder of that company who I think you've remained friends with.

He again was someone who grew up on a farm, right? And there's something, there's something relevant here that I wonder if you could unpack for us. Because you've said to me before that that kind of farm boy ethic is also a really helpful thing to bring into the investment and business world. Nobody's heard of Lou Brown, but that's because he's never needed anybody else's capital, because he's been a private investor most of his life. Only wrote a couple of public companies, but he's got an extraordinary, you know, five-decade or six-decade career compounding capital at extremely high rates. And he's extremely smart, incredibly hardworking, very funny. He's got all the tools, and he's also a decent human being.

he's not in it for the money. I have a better core and a fancier house, despite the fact that I am but just an ant in his world of value creation. He makes it and he gives it away. He gives it away. He's a deeply spiritual person. And I think it's easy to give it away also if you know you can make it. But he can.

He just has the gift of capital allocation. When he was running micros and I'll get back to his origin story in a minute, they made one significant acquisition during the entire life of the company. It was a small German software company called Fidelio. But he pounced. It wasn't done on a predatory basis. It was done on a favorable basis. They were willing sellers.

They didn't have to sell. But they did. And Loubs saw their future in terms of hotel management software. And that helped fuel decades worth of growth at Microsystems. And to this day, I'm sure is an important part of the company's success, although, you know, it's inside Oregon. Let's say it's a mouse inside the or so elephant weed on the hole exactly how well it's doing, but I presume it's still doing well. But Lou grew up on a farm in Maryland with a dirt road running out in front. They'd go out and kill a chicken for dinner.

I mean, is that kind of farm? Not a gentleman's farm by any stretch of the imagination. And Lou is the first one off the farm. knew he was going to get off the farm. In fact, I think he told me there was a dispute with his father when he was stacking hay in a barn in a hot summer day. And, you know, there's all the dust flooded around and, you know, it's just, it's just hard, brutal work. And he's, I think he told his phone and said, you know, I'm going to have a job in an air-conditional office someday. I don't think his father liked that too much because he took it as an insult to farming, which it was not. But the point is

all his ancestors had grown up on this farm. Well, he went to Johns Hopkins on a full ride, got a degree in electrical engineering, knew exactly what he wanted to do afterwards. He knew his glittering personality. He could be a good salesperson, so he became a salesperson first for Armco Steel and then for Hewlett-Backard.

The first Intel microprocessor came out at some point, and he just realized that he could, probably, to use his words, do some damage with one of these things, but wasn't certain how. saying he and some friends saw that, you know, the mechanical cash register business, which really had one participant in National Cash Register, was ripe for disinterradiation by a digital product. And so they effectively put NCR out of the National Cash Register out of the cash register out of the cash register business over the next three decades.

And National Cash for NCR had to buy its way back into the cash register business after Micro's effectively. took all of their market share. Well, Micro's actually started the digital industry that created other participants that eventually took all of NCR's share. But he started this business practically in his garage, when they had small unexceptional quarters in Beltsville, Maryland, but they dealt it into the behemoth of the industry. And it was through shrewd capital allocation,

and put your head down and doing the right thing every day. And like I said, you know, Lou's got that sense of responsibility that comes from growing up on a farm. When you grow up in a farm, you're always thinking, who's going to take care of the animals? What happens if I'm not there? So it's not an obsessive, compulsive desire to control the business. It's just an overwhelming sense of responsibility for what happens. Because on a farm, if something goes wrong, there's only one figure to point, and that's at you. You can't control the weather.

You can't control disease. You can't control anything else, but you can control your effort. So that's the lesson that I learned from Lou, which is to be like a forward-thinking technologist that he is, but also make sure that you've got a plan B, make sure the animals are taken care of, make sure that something is not going to destroy what you work so carefully to build. So it's this combination of farm boy ethic and technologists I think has created a unique character in this terrific capital allocator. Yeah, you gave me this great sentence a few weeks ago,

and I was asking you why farming was a good analogy for investing. And you said, there are no small mistakes on a farm. You said if you stop paying attention, you lose an arm. That's exactly right. And that's why I wouldn't be a good farmer. By the way, Bavinear's founder, Charlie Mekel, is a good farmer. That's it. Probably at this moment, I hope he's on his tractor out of his place in the Plains, Virginia,

where he's most comfortable. But yeah, that's exactly correct. There are no small mistakes. And so that's why I'd be an awful farmer if I were a farmer. Rodman, I'd wind up, you know, cut my leg off of the chain store or something like that. You have to be focused and pay attention. The farmer is the original preservationist of capital because they can't make mistakes, because mistakes are always catastrophic.

So people like Lowe and other farmers that I know are wired to think about and what can go wrong and what do I need to do to scotch the wagon against this type of catastrophe. It's interesting that someone like Lou, who's obviously extraordinary, but nobody has heard of him. I mean, I was trying to read about him yesterday, and there's just nothing on him. I mean, like a few paragraphs here and there. He's kept under the radar. You have this great record. You kept very much under the radar.

There's, you know, very few interviews with you over the years or articles about you, despite how strong your performance is. And I know that humility is kind of really important to you, that it's, something you emphasize over and over. And one of the great dangers, really, with investment success is, you know, falling into, you know, Master of the Universe syndrome where you start to actually think you're incredibly good. And you get caught out by, by hubris and complacency. And like, can you talk about the importance of humility? And there's a wonderful quote of yours that you often use about humility that I'd love you to share with us. If you can figure out what it is.

You're probably talking about, there's only two kinds of people in the investment business. People who are humble and people are about to get humble. Yeah, you know, the endorphins start flowing when your stocks are doing better than everybody else's. And when that happens for a period of years, it can make you think that you're smart. Or we all like to feel good about what we're doing. And we all like having a better batting average than the next person.

But, you know, that can be fleeting in this business. And we're all humans and we're going to make mistakes. And virtually all of us, and I'm sure this applies to you, it certainly applies to me, or the beneficiaries of an enormous amount of luck. And we probably don't realize quite how lucky we've been tomorrow. Buffett's line. You know, if you're born in the United States, you're a male and in your white, you've already hit the genetic lottery. and I explain this to my kids.

You know, that you've been born, if not on third base, you've been born on second base, and it has nothing to do with money. It just happens to do with circumstance. And you need to understand that. And so I have no physical disabilities. I don't think I have any crippling mental disabilities. I had incredibly good parents, good siblings, wonderful people with whom I worked, to great mentors and people who took an interest at me.

And so if you understand these things and believe them, you will be humble. And he also just as a practical matter, need to understand there's probably tens of thousands of people who are smarter than you are who are doing exactly the same thing and they're reading exactly the same stuff. How are you going to have an edge over that? So you better stay humble in this, in life than in business. I don't know if any people of great hubris who didn't wind up squandering their reputations eventually. Maybe Churchill's the exception, but there aren't too many others.

You mentioned your children. I think if I'm right in remembering you have four adult children. And when we were emailing a while back, you were saying, I view investing as simply a part of the woof and warp of living. I tell my four kids that they're investing in competing every day, whether they're aware of it in the moment or not. And I wondered if you could talk a little bit more about the kind of advice that you're drawing from your career in investing in business

and sharing with your own kids, because there is this beautiful intersection of investing in worldly wisdom that I think people like Charlie obviously have tapped into very deeply. Well, I just point out to all young people, you are competing whether you understand it or not, you know, whether you're a barista at Starbucks or an investment manager or a lawyer or a doctor or whatever you do, whether you sweep floors or not, you're competing. And so you might as well be aware of that and do your absolute best, regardless of what your task is, however menial it is. And let me just segue

here for a moment. You had your interview with Arnold Vanderberg a couple weeks ago. One thing I had in common, probably the only thing that I have in common with Arnold is that I was a garbage man for a couple of years. That's the term we used to use. But I did it when I was in college. And one thing I learned from that job, which was actually a great job, by the way, if it's a great summer job, I'm here.

You don't get an internship credit for it, but. It was a lot of fun in some ways. But what I understood was I wasn't going to do that forever. There were guys in that truck for whom this was their employment apex. But I understood that because of my parents or because those were born in good health or had enough intellectual capability to go to college, then I was going to go down a different path. But I understood even back then that that was just pure blind luck. And so Arthur, Arnold and I have that in common.

But regardless, what you're doing, you want to give them 110%. You know, when you towed up the scoreboard, and I am a Christian, and I believe in Christian values, and when I meet my maker, I mean, there's going to be an accounting. And I want to tell the people that I work for, invest for, that they got 110%. I want my kids to know that they should give 110%. I want to give 110% to them and I want to give 110% to my wife, you know, who enables much of what I do from a business standpoint. I was thinking about that book of Clayton Christensen, who obviously, as most our listeners know,

was this legendary management thinker, also a devout Mormon who gave this famous commencement speech at Harvard Business School in 2010 and then wrote this book, How Will You Measure Your Life? And I was wondering on this question of what for you really does constitute a successful and well-lived life when you think about looking back, I mean, you're only 66 at the moment, when you think of looking back in 20, 30, 40 years, hopefully, how do you answer that question of how you measure a successful life, what you think will actually have given you most satisfaction if you do this right? The most satisfaction if I do this right would be found in the values that my children

hold. And if they have values that direct them to serve others before themselves, then try to understand their obligations to the rest of the human race. I think that I will be able to consider myself a successful father, and that's certainly the most important job that I've got on this planet. I try to communicate investment values to them because I think there's a seamlessness of your personal values and your business values. And I try to communicate this to my children. You don't ever have to do anything that's unethical. Now, they live in the Washington, D.C. area.

They go to school with people who are lobbyists and politicians, and so they are talking to people and hanging out with people all the time who aren't telling the truth, and they know they're not telling the truth. I tell them, you never have to do that. And there's someone who are paid not to tell the truth. And I say, you don't ever have to do that. and in my business, one of the wonderful things about this business and one of the unappreciated things about this business, but one of the things you learn having come up

through the brokerage side of the business, you never have to do anything that's wrong. No one's forcing you in this business to do something wrong. No one's forcing you to buy a crummy business. No one's forcing you to buy a business with unethical managers. So these are the things that I try to communicate to my kids. Look, you know, it does emanate from my Christian faith. You know, love the Lord of God with all their heart and all they soul and love their neighbors as they self. You know, and I think that in one of your book, there's a wonderful quote from, I can't remember if it was a Jewish theologian, but I'm going to ask you to help me with this, William.

he said, what is the, he was asked to repeat the Old Testament while standing on one foot. Yeah, this is Hillel. Can you give him? Yeah, it's Hillel, who is a great sage who around the time of Jesus about 2,000 years ago, was asked to sum up the meaning of the Old Testament, the message of the Old Testament while standing on one leg. And he said, basically, do not do to others what you wouldn't have them do to you. So the golden rule.

Yeah, I mean, what better message could you give to your children? And it's funny that that message, you know, the line that you were quoting about, you know, with all your heart, with all your might and with all your soul, I mean, that's, that's Jewish as well, right? I mean, we have that in the Shemar prayer that Jews like me often recite every day. And also, and also actually, it's supposed to be the, I think in the moment of death, it's supposed to be the last, the last thing you recite. I think it begins here, Israel, the Lord, our God, the Lord is one, and you shall love them with all your heart and all your soul and all your might or something like that. And so it's funny the way these values kind of run through so many different faiths and paths. Right.

And why shouldn't in the way you invest love your neighbor as yourself? I mean, there's so many ways you can think about that. It means giving them the portfolio that you would have. you'd be surprised, you may know this, but you'd be surprised at how many people in this business have personal portfolios that don't resemble their actual portfolio that they market to their clients. So are they loving others as they love themselves and the way they build their portfolios? No, I don't think that they are. But, you know, then it comes back to this notion of service and who you're serving

and understanding and being aware of who you're serving and being wholly clinical when you ask yourself that question. you know, if you're not in this business to serve others, what are you going to look back at when you hang up your spikes? You know, how are you going to evaluate yourself? You know, a great thing about this business is there is a scorecard. And it's something like being a lawyer or an accountant or a million other businesses. You've got a scorecard. So, you know, you'll know in the last day exactly how well you did it over the long

period of time. It was really striking to me where you shared me a talk that you given to a group I think called Margin of Safety that Sarah Madan, who I mentioned before hosts, I think once a year. And you talked over dinner to that group. And there was one quote that I wanted to read back that's very much related to this question of service where you said, if you're an above average investor, be thankful for this gift and understand that it is a blessing, not a source of pride, and give. of your gift. Mentor struggling investors young or not so young. Counsel those who may not have access

to competent investment advisors. You would be amazed at how many people don't understand a mortgage. Your kids' schools, your church, your civic organization, the scouts, they all need your help. It's a different feeling to help someone get a good night's sleep as opposed to helping them get the next 10 million. Don't worry about compensation. More money than you deserve will reign upon you. That is not to say your contribution is unimportant. It is vitally important. which is why it needs to be shared widely. I thought that was such an interesting, an interesting quote that in a,

I think often we, you know, even manga calls investing. It's a vocation, but a low vocation. But actually, as Tom Gainer would say, it's actually,

it's a, it's a pretty sacred trust, right, to be able to help people with their retirement savings and to, and their kids' college expenses and all of these things. And it's, it's kind of amazing how much this aspect of the business kind of gets forgotten.

Yeah. I mean, it goes back to Anthony Digness, a replaceable capital. It's an enormous responsibility. And that statement that I make, I think, speaks for itself. Munger's probably right. There's probably 100,000 too many of us in this business. And who knows? I won't be surprised if that changes over the next 10 years.

but and that the number actually shrinks or the size of the fee pool shrinks. But yeah, it's a low calling if you're in this for the money. It's a high calling if you're in it to serve others. And I am insistent on this notion that investment management is a calling. I think that's a beautiful note on which to end, Peter. Thank you so much. It's really been a delight. And I really am grateful to serve because thanks to your modesty, you tend to fly under the radar. And so it's just been a great pleasure getting to read your

letters to shareholders and listen to the very occasional interviews that you've done in the past and to learn more about your way of thinking. So thank you so much for this rare opportunity to learn from the wisdom that you've accumulated over all these decades in the investment business. You're quite welcome, William. Thank you very much for having. me on your podcast. That's a great pleasure. Take care. All right, folks, many thanks for joining me for this conversation with the remarkable Peter

Keith. If you'd like to learn more from Peter, you may want to visit the website for his investment firm, Avenir Corporation, and check out the archive of his letters to clients going back to 2008. I've included a link in the show notes for this episode. Personally, I feel like I need to listen to our conversation several more times and really dwell on some of the ideas he mentioned, including that all-important question we discussed. As he put it, you're serving someone. The question is who. I think one reason why Peter is so impressive is that it's clear that he's not just great at compounding money over the long term,

but is truly dedicated to serving others, not least by sharing his hard-earned wisdom with us today, so I'm very grateful to him. In any case, I'll be back really soon with some more fascinating guests, including a wonderfully enjoyable conversation with Chris Davis, who's not only a very prominent fund manager, but also a director of Berkshire Hathaway. If you want to hear what it's like to be behind closed doors in a board meeting with Warren Buffett and Charlie Munger, you'll definitely want to hear that conversation with Chris. So I hope you'll subscribe to the podcast if you haven't done so already. In the meantime, please feel free to follow me on Twitter at William Green's 72 and do let me know how you're liking the podcast. I'm always delighted

to hear from you and I do try to reply as often as I can though I sometimes get a little behind. Anyway, until next time, take good 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 billionaires 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 any decision consult a professional, this show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.