We Study Billionaires - The Investor’s Podcast Network - TIP277: Intrinsic Value Assessment of Disney - w/ David Trainer (Business Podcast)

Starting point is 00:00:00 You're listening to TIP. On today's show, we have David Traynor, who's the CEO and founder of New Constructs. David's company specializes in reverse accounting distortions on the underlying economics of business performance. This means he assesses the core impact on stocks when accounting rules or corporate actions appear to have an impact on earnings and competitive advantage for the business. And on today's show, we're going to be having an in-depth conversation about a really popular stock, the Walt Disney company.

Starting point is 00:00:29 So without further delay, here's our conversation with David Traynor on Disney. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Welcome to today's show. I'm your host, Stig Brotherson, and as always I'm here with my co-host, Preston Pesh. As we said their introduction, we are very excited to be here. with David Traynor from New Construct. David, thank you so much for being with us here today.

Starting point is 00:01:12 Thanks for having me. David, we're really excited about today because today's topic is Disney. And for you guys out there, I've been watching David on Real Vision here quite a few times, and he has some very interesting thoughts about Disney. My confession before we start is that we should have this interview already back in February,

Starting point is 00:01:32 whenever David was so bold to go on record, whenever Disney was trading around $110 and say there's a lot more value to gain here. So, lo and behold, here we are recording mid-December, and Disney is now trading 147. So today we are looking behind the thesis of Disney and perhaps see if there's still some value there. So, David, whenever we think of Disney, someone might think of the latest Marvel movie or trip to Disneyland. However, as investors, we can't be too emotional and we need to analyze the different segments of the business. So we have media networks, parks and resorts, studio entertainment, and now also consumer products into active media. Now, could you please define the different

Starting point is 00:02:21 business segments for us? Disney's different divisions in terms of profitability have really been consistent. You know, the parks have been less consistent because they have at times not done so well because they're really capital intensive. And so it takes a lot to build an amusement park. And so, and I think there's probably going to be a little bit less in the direct consumer segment as well now because they're investing in Disney Plus. I don't think the capital intensity there is that big. I think a lot of people miss how natural transition it is for Disney to offer content online. online, let's face it, streaming content online is not that hard. YouTube's been around for a long time. You don't need a PhD to create a YouTube channel, and Disney already has this huge library,

Starting point is 00:03:08 this shelf of content that they can just repurpose through another channel. And I think people sometimes I'll think that that's going to be a really hard thing. And I think that what we've seen since the launch of Disney Plus, what are they adding like 10 million people in the first day and a million people a day or something like that to that channel? I mean, it's a slam dunk for them. And I don't think it's You're going to see a little bit of a dip there. On the movies and studios, depending on how they allocate the Fox acquisition, we're definitely going to see a dip there in profitability because that was like $70 billion. That's a debt of profitability in short term for sure.

Starting point is 00:03:42 But track record here for Disney, in terms of earning an adequate return on their investment, is like, it's just really good. Over the years, you can see acquisition, acquisition, acquisition, and returns on capital will take a little bit of a dip, but they come right back. And so, and no, you know, small part due to the fact that executives get paid for earning returns on invested capital, we found that returns on the capital have always been steady. Rare thing these days. And that's part of what sets Disney apart is a really high return on capital business.

Starting point is 00:04:09 In addition to a lot of intellectual property around all that great content. But none of that content matters. They're not smart about how to monetize that versus some of their competitors. Disney just has the upper hand because they have so many multiple channels, whether it's merchandising, whether it's parked, whether it's direct-to-consumer, whether it's movie studios. I mean, they're able to make money from the content just better than everyone else. So, David, these days there's a lot of hype around Disney Plus. This is the new subscription video on demand streaming service.

Starting point is 00:04:40 I've personally subscribed to this. I watched The Mandalorian. It was absolutely awesome. But beyond really that TV series, I haven't captured a whole ton of value out of the app. Could you please put some numbers on this and how much you expect it? generate in revenue and operating income in the years to come. I think Disney Plus is probably going to be not that profitable for them for a while, but I guess it's going to be a whole lot less unprofitable than Netflix.

Starting point is 00:05:08 That'd be right, because Disney can support this new channel. Think about it. Disney Plus is just a new business that already has a core of amazing content. I want to say amazing. There are a few companies in the history of the world who have been able to generate original content profitably over a consistent amount of time like Disney. I mean, how many others can you name? So that's the core asset, right? You know, and you're in the business. You're looking to generate high quality original content. It's not an easy thing to do, especially for it to be good enough to be monetized across millions of people, right? And what is Disney going to do this year? Nothing short of

Starting point is 00:05:46 make more money, what, $10 billion, the first ever $10 billion in revenue from movies company, So they're really, really good at creating high quality content and they're really good at monetizing it. Disney Plus is just another channel. It's another funnel for them to bring people in to the Disney family and start selling them on parks and merchandise. And so, you know, I don't really, I don't hear so much about like the near-term profitability to Disney Plus. I mean, it's going to be better than where Netflix is burning through billions and they don't have these other channels to support business and make money. They've never been able to really monetize the content. All that aside, I think Disney Plus is probably not going to be a hugely profitable company

Starting point is 00:06:28 because I think it's more just about bringing in more customers. And so we're going to see the ripple effect of Disney Plus across all the businesses, merchandising, parks and recreation, because you're going to get more people coming in. More people go into movies, more people go into parks, more people buy merchandise because guess what? Disney is just now using Disney Plus as a way to bring them closer to the target audience. make it easier for the target audience to engage. It's interesting that you would say that, David,

Starting point is 00:06:56 and we talked back and forth here up to this interview. And one of the things that I actually said was they talked too much about Netflix, because I didn't want it to be too much about a comparison of Disney Plus and Netflix, because Disney Plus, it's still and will be a very small part of the whole Disney conglomerate, if you like. Having said that, I wanted to talk a bit about Netflix, even so. So, because it is very interesting some of the points you bring up about, you know, the two very different models. Perhaps, David, I heard you talk about, you know, Netflix that they license a lot of the content, whereas Disney, to a large extent, have their own.

Starting point is 00:07:36 There's a different synergy between Disney's business unions. I don't know if you could share some of your thoughts on that. I think three of the top five shows on Netflix, and that means number one and number two. I think number one, two, and five, that's licensed content. That was stuff that Netflix had to buy from somebody else. I think was like the office and friends. And so it's like, okay, what, they're just a reseller of content? That doesn't compete because guess what?

Starting point is 00:08:01 NBC and Fox, a creator of those two, they took them back. Oh, too bad. We're not going to let you have that anymore Netflix. Even though you paid us something like $100 million a year for that, I mean, we're taking it back. And so their original content, they've got licensed content, and I think they've got some new stuff they're looking to develop, and they're spending enormous amounts of money on that new content so much. That just comes back really to the point about where Disney's advantages lie,

Starting point is 00:08:27 and it's that, hey, they can create this great content, and they can monetize it, and they just do it really well. I mean, how many box office records did they break this year with these other movies, whether it's superheroes or frozen, they have a way of touching people's hearts and minds? And they've done it for so long. It's really remarkable. So, David, let's talk about the competitive landscape here for Disney. Who are the main competitors in the four segments for Disney?

Starting point is 00:08:58 I think they take on a lot of people. One of the reasons that they are successful is that they are able to integrate sort of these different segments really, really well. And therefore, find synergies in these disparate segments where their competitors cannot, right? So when we're talking about the key segments, right, as you mentioned before, media networks, parks, experiences, and products, those generate about the same amount of revenue, $25, $26 billion. Studio entertainment is at $11 billion, directed consumers at $9.35. And there's not really many firms that, or any firms, that compete across all of those, right?

Starting point is 00:09:38 So when you look up Disney competitors, you're going to see mostly big media companies, Biacom, Time Warner, 21st Century Comcast, and none of those guys have anywhere close to the kind of brand that Disney they have any

Starting point is 00:09:50 amusement parks, right? And amusement parks is typically a bad business, right? So they found a way to make money in amusement parks and there's very few.

Starting point is 00:09:58 I mean, I've never seen anything at Six Flags where they're really tying into themes like Star Wars and Frozen and all of sort of of the Disney characters

Starting point is 00:10:06 at Disneyland like Snow Ride, et cetera. The tie-ins that Disney does cross all. all these merchandising. You know, like, for example, no one buys Comcast merchandise, but buys 21st Century Fox merchandise or Viacom. I mean, you just think about these big film giants, really.

Starting point is 00:10:23 And it's a Disney's ability to really compete and integrate across these, those four segments we've been talking about makes them so special. I would like to talk to you more about the mode. I'm realizing that now that I'm inviting my family to Disneyland Paris here in just a few months, I'm in a pickle here because I'm seriously considering whether I should pay $140.40, I'm just going to say that again, $140 for my nieces, her niece to give them the chance to have breakfast with the Disney princess. This pricing power just, well, it might show you how dumb I am, you know, that might be one thing. But I think it also tells you something about the mode of Disney that, I mean, as an economist, I think that's a horrible deal. I mean, $140 bucks for a pancake jam, or whatever, that makes no sense.

Starting point is 00:11:13 But what do you think could make the mode wider or make its strength for Disney, you know, as time goes on? I think that's a great question. And by the way, look, one of the things that get effect about Disney is that in many ways, they define the entertainment experience in some ways, right? Like just, you know, whether it's Michael Jordan when he wins the national, you know, the national championship with the Bulls saying, I'm going to Disneyland. and, you know, it's, Disney's a special thing. And they, they're charging 140 bucks per person for breakfast because people are willing to pay it, right? I'm sure that price would have come

Starting point is 00:11:45 down if they were getting zero takers. I bet you it probably sells out, right? And really, that's speaking to some intelligence, I think, on Disney's part around appearances that you'll take with you for, for years or maybe a lifetime, right? I'm sure the reason you're thinking about it, is because you know, your nieces are going to, like, they're going to love it, you know, and they'll, they'll talk about it and they'll be thrilled. They'll be thrilled about it for days in advance. That's one of the things that makes the moat strong around Disney is their intelligence around how to monetize the content. And think about it like this, too stick, you're spending 140 bucks for this great experience. And so Disney's doing pretty well on that part of the exchange. How much of a better

Starting point is 00:12:26 customer might your niece be of Disney products in the future? 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 got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year bringing together activists, technologists, journalists, investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose

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Starting point is 00:16:43 Why I'm saying this, the first one is the power of moments, which is a book by Dan Heath we did earlier here in the show. We talked all about how to build up great experiences. One of the case studies they did was actually Disney. And the other thing I wanted to talk about was whether or not my job,

Starting point is 00:16:59 generation, the millennial generation, who are having cats and who are just more prone, buy more into experiences that perhaps our parents who are a bit more materialistic with some things. I can see across my generation is all about experiences, which is what Disney is all about. So I just wanted to put that out there in terms of, for the investor themselves listening, if they think that there's a shift there going on as well for the potential buyers. On our show, we multiple times talked about your earnings calls, how important it is to read them, to listen to them, and which key metrics to look out for when analyzing different industries? So, for instance, for airlines, we look at the load factor, we looked at available seed miles.

Starting point is 00:17:44 Now, which key metrics do we look at whenever we're reading or listening to Disney's earnings call? And so I think investors always want to pay attention to the content library, and we saw a big boost to that. at the Fox acquisition, and we're saying what Disney is doing with Star Wars, it's like more Star Wars content that we had in the prior 20 years combined. I mean, you had to wait three years for every new Star Wars movie, and then we didn't have anything new for a long time. Now we've got series, we've got more movies coming out. I mean, people are lining up for that stuff, right?

Starting point is 00:18:16 And it's across so many age groups. So again, I think that's just, that's a smart move, and that's a great example of how good they've been at monetizing that. I think you want to always pay attention to businesses by segment. You want to look at the relationship between how much cash flow the business generates relative to how much capital has gone into it. That's a metric you want to look at. And you want to make sure you look at that metric with integrity.

Starting point is 00:18:40 So it's important to do that analysis with a real rigor, not just trust what you see in a press release or on a website. I think in general I'm going to go to my soapbox here and say press releases in general are not helpful. Conference calls are not helpful. These are effectively commercials for selling stock. This is coming from someone who has been on Wall Street and been in this business for over 20 years. I was at Credit Suisse before, during and after the tech bubble.

Starting point is 00:19:08 Credit Suisse was the number one tech underwriting IPO firm during the tech bubble. And I saw transformation in Wall Street during that time. Then we had Reg FD, which happened in the year 2000. And Reg FD was this new rule where it was no longer legal for companies, call up their buddies on Wall Street and say, oh, by the way, we're going to beat the quarter by a nickel tomorrow. Then the Wall Street buddy take that information out to all their money management clients and say, oh, by the way, you should load up on company XYZ because they're going to beat the number by a nickel. Believe it or not, that was legal for a long time. That's not legal anymore.

Starting point is 00:19:39 And what that means is that what companies disclose publicly, they're disclosing publicly to everybody else. And having been an analyst on the sell side and the buy side, I can tell you, when you meet with management, they're very, very careful that they don't disclose something that hasn't been approved by their compliance department and is not also disclosed to everybody else. So you're not going to get any real nuggets. And so that's the big picture stuff. Also, you know, in the same vein that I say return on the best of capital for the overall company is important. Someone's return on the best capital by segment. So in general, David, what would you say the risks are for investing in Disney right now? I think if they see a setback.

Starting point is 00:20:18 in any of their movies that don't do as well as expected. Anytime you've got a stock that's had a good run, you're going to attract a lot of short-term. Back with money, that money's fickle. And I think if you see something like that, you buy on the dip. Because, you know, look, a lot of investing is about taking advantage of the less rigorous investor. And so if you see fickle investors pushing the stock down, jump in, take advantage. But I'm really not very good at predicting short-term outcomes.

Starting point is 00:20:47 I think we like to focus more on kind of long term and the idea of getting rich slowly. I think it's just something you can hang your hat on and put your head on your pillow at night with a little more comfort. So, David, we talk a lot about cycles here on this show, and there are certainly stocks that are more cyclical than others. You know, car companies, airlines, hotels, you know, they're very vulnerable to cycles. Do you consider Disney a cyclical company and if yes, where are we in the cycle? I don't really see Disney is too cyclical. I think entertainment is kind of year-round. I think the cycles you could potentially point to,

Starting point is 00:21:24 if you wanted to be cyclical, it would be sort of the big content acquisitions, like Lucasfilm and now Fox. And I think in terms of cash flow, it's cyclical in the sense that when you make a 70-plus billion-dollar acquisition, as they did with Fox, you're going to see a dip. And we saw a little bit of it, you know, as we saw a little bit of a dip with Lucasfilm.

Starting point is 00:21:45 And so that part of it's cyclical, but I think, you know, one of the things Disney's doing pretty well, especially this year's, you know, with the movies and the lineup that they've had, I mean, every other month we're getting another great Disney movie. And I don't think that they expect that to fall off. I think theme parks do better in the summer. So you've got some cyclicality there. But, you know, in terms of sort of big cycles like you see with energy and other sort of raw material commodity companies, I don't really put Disney in that category. And, And again, as I mentioned early on, Stig, I think they've got a better track record for consistently creating high quality original content than a few companies in the history of the world. How do you assess the evaluation of Disney with all of this being said and done? I know that you're a big fan of the reverse discounted cash flow. I don't know if you could talk a bit about that and how you see that for Disney. All this comes back to the premise, the underlying principle, that stock is equal to the present value of the future cash flows that will be generated to the owner of that stock.

Starting point is 00:22:48 So there's a stream of cash flows baked into that stock price. What our modeling approach does systematically, consistently, without bias, objectively, is just look at those numbers. What do the future cash flows have to be to justify the price for a given stock? And that's what's led us to be bearish on some companies and bullish on others. Because when the expectations baked into something like Netflix's stock price or for 20% compounded annual growth and profits for over 20 years, you know, you've got to shake your head and say, well, that's a steep bet. And given the fact they've never really made any money, I don't know if I want to make a bet like that, right? On the other hand, where we've seen really consistent

Starting point is 00:23:24 profit growth over its lifetime, and we look at $148 a share, basically that's saying that the market's implying that Disney's profits are going to grow at the rate of about 10% for seven years is what stock price of around $148 a share. So if you believe that Disney can do better than 10% profit growth, seven years, right, if you think that their moat is wider than seven years, then you've got upside. You know, I don't think it's unfair to say that Disney can probably grow profits for at least another 10 or 20 years. If we're talking about 20 years of profit growth, Disney's still going to be able to grow profits.

Starting point is 00:24:01 They do 6% on average for 20 years, $200 stock price. And so, and there's a good chance that they do better. than that, given the history of profit growth is stronger than 6%. So I think the market tends to not arrive at the right price and just stay. Pendulent tends to swing a little too high and a little too low at times. That's what gives investors advantage. But that's the way we would think about valuation for Disney. Having lifted the tech bubble and seeing being on the front lines of really how much of a misinformation machine can go into the business of selling stock, we really like to rally around this reverse DCF because of its empirical, mathematical, and objective nature. Yeah, we think 200 bucks

Starting point is 00:24:46 and the expectations for future cash flows to get to that number are very, very reasonable for Disney. And so, yeah, I think 200 bucks and beyond is what we'd say in terms of target price. I also wanted to give you a chance because you've been so generous with your time here today. Where can the audience learn more about due and new constructs? And could you tell us a bit about but new constructs is all about. Yeah, sure. Newconstructs.com. Do you syndicated on Forbes,

Starting point is 00:25:14 Barrens on a regular basis, Wall Street Journal, et cetera. And really, you know, what new constructs is about is democratizing access to the truth behind the numbers. We make this available to all investors

Starting point is 00:25:28 through partnerships that we have with firms like TD Ameritrade and interactive brokers. So we're giving the world the ability to effectively have their cake and eat it to that is operate with a really high level of diligence without having to read cover to cover, these 250 page plus

Starting point is 00:25:42 annual reports. And the thing I need to make sure I'm clear about is that the research you get from Wall Street and a lot of other places is not based on the entire annual report. Fantastic. Thank you so much for spending time with us here today and to educate our audience, David. My pleasure. I had a great time, Stig. It's always fun to talk about this stuff. And I appreciate you guys giving us the opportunity. All right, guys, so this point in time in the show, we'll play a question from your audience, and this question comes from William.

Starting point is 00:26:14 Hi, Preston, it's Thague. I'm William. I've been a huge fan of her show for a while, and my question is more of a career-oriented one rather than a technical finance one. I've seen people in real estate or venture capital start by syndicating deals, and then use that track record to start a fund. I have sort of an inclination to go to the same route as well, and I have done a a few deals here and there.

Starting point is 00:26:39 This route is sort of the only way I see possible for me to start my own fund, seeing as I come from an untraditional finance background and academic background. However, I do get this heartened when many of the people I do see who do have funds, have finance and BAs, or do come from that traditional finance background, having worked for many years or sometimes decades. It's kind of a broad question, but I think many people who do listen to your podcast are in the same position as me, and I do admire how you guys have gone on your path, despite both coming from seemingly untraditional backgrounds, although I know they did do commodities trading previously. What kind of advice would you give someone who wants to embark on his

Starting point is 00:27:28 own entrepreneurial investing career, but is not from a traditional finance background or education and how would you go about approaching that. Thanks so much. William, I love this question and you are definitely right that a lot of our listeners have the very same question as you have. So you have a two-part question. First about how to start managing money coming from an traditional background. And based on the question, I assume that you refer to an investment fund picking stocks. And then your second part question is how to start managing money for people. So for the first question, please allow me to correct you whenever you talk about both the person and I coming from a traditional background into investing. I have a degree in finance,

Starting point is 00:28:13 which is probably the most common education if you do manage money. But regardless, I don't think that there is a good education going into asset management in the first place, which might be an answer that is surprising to most people. For instance, whenever I was doing my finance degree and later, whenever I taught finance as a college, professor. Most of the curriculum is not applicable to being a money manager. I mean, you get taught concepts like beta, alpha, cabem, efficient market hypothesis. And honestly, that's not that useful. The vast majority of finance courses do not focus at all on how to pick stocks and how to value stocks, for instance. Also, I think you'll be surprised how little accounting you learn

Starting point is 00:29:02 whenever you have an MBA in finance. So while it might be calming to some of your investors at the early stages that you have a degree in finance, in reality, it really shouldn't make a difference. The more important skills for managing money, learning how to read financial statements, which I just said we don't really learn at business goals, and perhaps even more importantly, the right temperament for investing in the first place. Then you have your second question, how to start managing money for other people. What I would recommend to you is to set up an an audited brokerage account, which makes it possible for your potential investors to track your performance. Why you can, of course, try to approach investors without. I think it's much better

Starting point is 00:29:47 the other way around that they see how well you perform and then they come to you. And it really also relates back to what I said before, that if you can prove that you have a great track record over time, investors do not really care if you have a degree in finance or in English literature. It's pure performance because performance at the end of the day is why they invested with you in the first place. And I would also highly recommend to use the same fee structure as Warren Buffett did in his early partnership. And the same structure that Moniz-Prop Ryan Gyspire is now using. And it's the so-called 0-625 model. So you chart 0% unless you make more than 6% in return annually, and this is also cumulative, and any outperformance more than that, you charge 25% for.

Starting point is 00:30:36 What you pay is what you get. It really think that fronting expenses like 110 or 220, which many heads funds are using, is sort of paying the money manager just to have a pulse before they even start working. And you want to team up with investors. You don't want to exploit your investors. And let me just give you one example of someone who's doing a great job. of teaming up with his investors. So Moni's pop right that I talked about before, he spent 10 years not collecting fees from one of his funds because of the high watermark that he has with cumulative needing to make 6%, which was really, really hard after the financial crisis whenever stocks just tumbled. Now, I can easily understand if you're thinking, how is it possible not to

Starting point is 00:31:21 charge an annual fee? The stock market can go down for years and you might not have anything to cover your daily living expenses. So it may be a little controversial what Chalemonga is saying here whenever he was asked about the same question. He said that you shouldn't manage money for other people unless you're already financially independent. And again, I know it sounds a little controversial, but if we think about it, if you're really good with money and you have a good track record, you're probably already financially independent. And that is likely the time whenever you should start taking on investors. Because there are a lot of added benefits, through you and your investors whenever you're in that position. You don't paint yourself into a corner

Starting point is 00:32:02 where it's more the size of the fund you manage that's important and you thereby turn it more into a marketing vehicle than a performance vehicle. Let me just give you one stat here. Two-thirds of the fees American Mutual Funds make is an annual fees and not on performance. So William, I hope I don't discourage you by saying all of this. I really wish you the best of luck starting up your own fund. I just want to make sure that you got all your docs in a row and start up using the right long-term framework to the benefit of both you and your investors. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect

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Starting point is 00:36:02 So, William, great question. From my vantage point, I've really never had a desire to manage a fund. I, you know, early on whenever I first started getting into investing, I was studying Buffett and studying some of the different decisions that Buffett made throughout his career. And one of the decisions that really was a mystery to me very early on was why did Buffett close down his fund and why did he basically buy Berkshire Hathaway and go down that whole path of being a business owner? And so when I looked at it at the start, it really didn't make a lot of sense. But the more that I dug into it, what I found is Buffett was really frustrated with the fact that in a fund model, you're handicapped by your investment. because they give you the money when you don't need it and they take the money away from you when you do need it, which is in a call it a bare market when everything's crashing and when you

Starting point is 00:36:57 need the liquidity, your investors that don't have the understanding of what's happening and how to allocate resources at that or allocate their liquidity at that point in time. They're pulling all that money away from you and so they're actually handicapping you. What's interesting about how Buffett pivoted into Berkshire Hathaway is when you own a business and let's say everybody is overvaluing the business in a similar market dynamic that you would see today where everything has a huge premium to the earnings that businesses are actually producing. That's when everyone is giving you their money in a fund model. But if you own the business and let's say you're the CFO or you're the CEO that can impact the CFO decisions,

Starting point is 00:37:43 you could actually take advantage of that situation instead of an explain. You're an that situation instead of being a victim of that situation. The same could be said on the on the downside. And so let me let me just represent this. So let's say you owned a business and it was extremely overvaluated, sky high. Well, what you could do as the owner of that business is you could just issue more shares and collect that liquidity at the time whenever it's being overvalued. And then you could do the exact opposite after call it a market crash or a liquidity crunch that's due to basically Fed action and macro implications, you could step in and you could buy back that stock at a severe discount and take advantage of that situation. So for me, very early on,

Starting point is 00:38:29 I developed this opinion of not really having an interest to do the fund model and to do more of a business model and create a product or a service that would produce revenue. And then I could not really have to deal with the people that would be giving you the money for a fund. The other thing that I didn't like about the fund model personally was I just didn't want to have that kind of stress put upon me. And a lot of the times when you're running a fund, some of your early people are friends, family, people that you are really kind of using your established goodwill in order to get your own business going, your own self-interest of your business going. That might not be the case for many other people, but from my vantage point,

Starting point is 00:39:15 if I felt like I was going to do a fund, I always felt like that was going to be something that I would have to rely on. And that's not something that I ever wanted to put myself in that position. So I've always just steered away from doing the funds. But if what I'm saying is not discouraging you, and that's not my intent is to discourage you from doing it at all, I'm just telling you more from my point of view of why I chose to not go down that path. But if you are interested in doing something like this, we had a guest on our show, Ted Sides. He has his own podcast. And so he wrote a book and it was called So You Want to Start a Hedge Fund.

Starting point is 00:39:52 And he goes into detail in this book. What he recommend, because he's already done this, on how to go about starting a fund, how to capture clients, all that kind of stuff is in his book. I have not read his book. I've skimmed through on Amazon, the different chapters and things like that. And I know Ted from having him on the show. He's a great guy. In fact, him and Warren Buffett had a very famous bet together.

Starting point is 00:40:19 But Ted is, I think his book is the go-to book on how to go about doing this if you're truly interested in doing it. So, William, for asking such a great question, we're going to give you free access to our intrinsic value course for anyone wanting to check out the course. go to tip intrinsic value.com. That's tip intrinsic value.com. The course also comes with access to our TIP finance tool, which helps you find and filter undervalued stock picks.

Starting point is 00:40:47 If anyone else wants to get a question played on the show, go to AsktheInvesters.com, and you can record your question there. If it gets played on the show, you get a bunch of free and valuable stuff. All right, guys, so at this point and time in the show, we have a very exciting announcement to make. We are introducing a brand new. podcast show under the Investors Podcast Network. And the name of that show is called The Good Life. And with us here today, we have Sean Murray, the host of our new show. Stig, it's great

Starting point is 00:41:16 to be here. I've been a fan of the show for years, and I've got to say, it's pretty exciting to finally be on. I would like to say that we go all the way back. You know, it's like, oh, we've known each other for like a zillions of years. Unfortunately, that is yet not the case. We met up at the Berksa Halloway Annual Shareholds meeting. And I think that was the one in 2018, right, Sean? That's right. I remember that spring I was listening to the Investor's podcast. I'd always wanted to go.

Starting point is 00:41:48 You guys got me over the edge. You pushed me over the edge and I finally just did it. I pushed the button. I bought the ticket. I said, I'm going to go and I want to be a part of this TIP community. It couldn't have worked out better. When I got to Omaha, there was a TIP event. that you hosted. And I met so many wonderful people that in business contacts that have become

Starting point is 00:42:07 friends to this day. I got a chance to meet you. And, you know, I went into the weekend with very few expectations. It just worked out great. I got a chance to learn about Berkshire. But more importantly, I got a chance to meet people that, you know, I truly believe are going to be friends for life. It just also shows you some of the power of meeting great people there, making friends, and then kind of like see where it goes from there. Do you remember, Sean, how we, because I think we stayed in contact and how did we get to talk about sending up a new podcast show

Starting point is 00:42:40 in the first place? Well, you know, about six, eight months later, you had sent out a tweet to the TIP network, just saying if people are interested in podcasting, you know, I'd love to talk to you. And I think at that time you were doing a little market research around, you know, the interest in podcasting out there. and we ended up talking and had a great conversation. I told you a little bit more about my

Starting point is 00:43:04 business, real-time performance. And my background is leadership development. I've been doing leadership development since 1999. And before that, I worked at GE Capital and worked at some startups. But I come from the organization development leadership development world. And I have always been interested in potentially doing a podcast to continue to learn and grow in my career. And that's where we got started around the conversation that sort of led to where we are today. So many of the things that we do and so many of the qualities that we look for as investors. You know, that comes from personal leadership, how you behave yourself, how to have good habits. And there was sort of like where we started from.

Starting point is 00:43:44 But the reason why we decided to call the show The Good Life, we had this idea that we sort of like wanted to start with the end in mind, which was The Good Life and then try to see how we go there. So that was from a very abstract level. But Sean, perhaps you can talk a bit more about what are the thoughts about the show? You bring up a really good point, Stig, which is all of our actions, all of our decisions in life are ultimately pointing towards some aim. And you have to ask yourself at some point, well, what is that aim? And I think we all know in the back of our mind, and we sometimes don't talk about it that much, or we don't bring it front and center. But it's about really having a good life. It's about maximizing our happiness. And it sounds simple, but it can be a

Starting point is 00:44:31 very complicated subject because then it brings up the question, well, what is happiness? How do we attain it? What goes into it? And it involves things like friendship, emotional stability, making good decisions, developing relationships, having good judgment, being a part of society, being social. Wealth plays a part in it, you know, having a certain amount of money to be able to take care of different needs that you have, but also what's your purpose, understanding what your purpose is, what your passion is, and your general activities around getting better. And there's also a role of struggle in the good life.

Starting point is 00:45:06 You know, we often get very complacent when we reach a plateau and we say, I'm going to set another goal. Where am I going to be next year? And we find that through the growth, we struggle and through that struggle, we find purpose and through that purpose, we actually do attain happiness. So it's not that simple. And that's why I'm so excited about this show because no one's totally figured it out. And there's no cookie cutter answer.

Starting point is 00:45:29 There's no silver bullet. My happy life is going to be different than yours, Stig, and different than Preston's. And so, you know, we all have to figure this out. And this show, if you can invest an hour a week, listen in. I'm going to be bringing in the best people I can find to talk about this subject. and we're going to have fascinating discussions about how we can get better, how we can learn, how we can grow, and how we can achieve the good life. I'm just really excited about this dig. And we are very excited too, Sean. Now, The Investor's podcast network has already been spinning

Starting point is 00:46:03 off millennial investing and our other show Silicon Valley. So for the listener out there who might be thinking, the good life, that sounds a little out of place. And we had a discussion about this, and we really feel that the good life, more than anything, is a business show. Why is that, Sean? Well, you know, I'm a value investor, you know, with my own portfolio, and I was introduced many years ago, like many listeners of the TIP network. I was introduced to people like Warren Buffett, Charlie Munger. That got me interested in your podcast.

Starting point is 00:46:37 And the investors' podcast even introduced me to people like Monish Pabrai, Guy Spear. And as I got to know these people, you know, through reading their books and biographies, I started to glean that there's more than just business acumen or financial acumen that I admire in these people. There's something about the way that they lead their life and it has to do with things like character and virtue. Let's take Warren Buffett, for example. He's got this concept of the inner scorecard. You know, he measures himself. by his own scorecard, not an external scorecard. And so that leads to things like, well, he still lives in the same house that he bought in Omaha in the 1950s or whenever that was. And why? Because

Starting point is 00:47:26 he's not trying to impress anyone. He's going about his business and doing the things that he wants to do to really maximize his happiness and his well-being. He's also a very independent thinker. right. And so these kinds of qualities, they sort of, there's many of them. If you look at Charlie Munger, there's so much we can admire about his life as well and how he overcame the death of a child. And it hasn't been easy for Charlie Munger either at times. And so we can learn so much from these value investors. So the idea behind the show was, well, let's dig a little deeper. And if we're going to spend so much time thinking about growing our wealth, which is what investors do, right? we think about how do we grow our money? How do we compound it? Where do we invest it? And there's

Starting point is 00:48:14 obviously a lot of activity and reading and you can get kind of caught up in that. And at some point, you're going to want to take a step back and ask yourself, well, where are we going? What's the end game? And the end game is living a good life. How do we get there? Well, we're going to try to uncover as much as we can in the Good Life podcast. The Good Life already went live. Now, Sean was kind enough to let me co-host the very first episode of The Good Life and we interview the author of The Geometry of Wealth, Brian Portanoi. In this episode, we examine if money can buy happiness. And it's sort of like a big topic and just want to give you guys a spoiler alert. The answer is, sort of. Money sort of can buy happiness. But I'll definitely recommend

Starting point is 00:49:02 everyone to check it out for themselves. Now, the best way to subscribe to the Good Life is to search for the Amherstas Podcast Network on your podcast app, and you just find the Good Life podcast right there. We'll, of course, also make sure to link in the show notes directly to the show. It's very easy to recognize Sean Murray's show because we have a character show that's similar to what I have, what Preston have. So it's very easy to recognize that that is the good life that you need to subscribe to. But guys, that was all that Preston and I had for this week's episode of The Amassas podcast.

Starting point is 00:49:37 We see each other again. Next week. Thank you for listening to TIP. To access our show notes, courses or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decisions, consult a professional. This show is copyrighted by the Investors Podcast Network. Written permissions must be granted before syndication or rebroadcasting.

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