We Study Billionaires - The Investor’s Podcast Network - TIP398: Wisdom from the Greatest Investors w/ William Green

Starting point is 00:00:00 You're listening to TIP. In today's episode, I'm speaking with William Green, the author of Richer Wiser Happier, a book that no other than Charlie Munger recently called One of the Best Investment Books Ever Written. Throughout this conversation, we studied the best investors in search of maximizing our odds of long-term success in markets and life. William is one of the most insightful guests we ever had on The Investors' podcast, so sit back and enjoy the always profound William Green.

Starting point is 00:00:30 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 The Investors Podcast. I'm your host, Dick Broterson, and I am here with a very special guest, Mr. William Green. William, we had you on on the show back on episode 345, and it just seems like audience can't get enough of. of learning from you and learning from how the best investors invest and more importantly, how they live their lives. So let's continue where we left off with the previous episode, because I want to talk again about Richard White's a happier, and then we're also going to talk about other things, but it has been profound everything that's been going down in the wake of the book. It has received a lot of praise from well-renowned investors, and there's especially

Starting point is 00:01:32 one person who is very enthusiastic about it, and that is Mr. Charlie Munger, who I think everyone in the audience know everything about. What has Charlie said about your book? I'm very curious about that. Thanks for asking. Yeah, Charlie, I actually said it was one of the best investment books ever written and incredibly kindly said he hadn't read a book that good for a long time. They kind of had a big impact on me in a way because I think when you write a book, you feel so exposed and so vulnerable. And you're sitting in your study hold up for, in my case, four or five years quietly in this vacuum, this void. And you're writing things with no idea whether it's going to resonate with anyone, whether you're misfiring totally. And if you're a writer like me,

Starting point is 00:02:17 I've lived by the pen for basically 30 years, there are enough times when you've actually screwed up and you've failed totally and you've had stories killed that you spent months working on that you actually can never quite relax. You never really know, is this going to work? Are people going to like this. And so the reaction from a lot of readers who've written to me and have said, yeah, this book has kind of changed my life and has had a huge impact, actually has been enormously reassuring and enormously life affirming for someone as sort of sensitive to criticism and fear of failure as I am. And then to have Charlie, who's, what, 97, almost 98, and not known for being a soft and gentle critic, right? He can be tough and brusque and very, very much. He can be tough, and

Starting point is 00:03:01 I'm very candid about stuff, to have him say, yeah, it's one of the best investment books ever written that. In a way, it was kind of like, oh, I can relax now. I can sort of say, no, this actually is kind of worthwhile. And so I walked around in a kind of haze of self-congratulation and pride for a couple of days. And then, of course, all of my old insecurities came flooding back. And then what was funny is, I was reading the first chapter of my book.

Starting point is 00:03:28 I was looking over it again the other day, reminding myself of what? was in it. And I'd written all about Monish Pabright. And one of the great lessons from Monish Pabri that I'd written about when I just hung out with him in Alvine, California, and I was flying back from California to my home. And I write this memo to myself of lessons from Monash. One of the great lessons is, okay, live by an inner scorecard and don't worry about what others think of you, don't be defined by external validation. And what I suddenly realized is, I'm hugely defined by external validation. And I care deeply about what others think of me. And it was just one of those reminders where you can so easily fool yourself into thinking, yeah, I'm wired this way,

Starting point is 00:04:08 or this is what I believe. And I was just kind of thinking, in investing, it's one of these areas where if you lie to yourself, if you're not self-aware, you're so vulnerable. And so for a writer like me, it's kind of a little bit comic that I can fool myself into thinking that actually I live by in a scorecard. And there's not really a price to pay. It's just kind of a human foible. It's just like, you look at yourself and you laugh and you're kind of like, really, I still care so much what other people think of me. But as an investor, I actually think it's hugely important that tendency that we have to deceive ourselves. And I was sort of thinking about this. There's one point in the book where I write about my friend Ken Schubenstein, who's a neurologist,

Starting point is 00:04:48 who was a private equity investor and hedge fund manager, very successful, very, very smart. And so he's really an expert on the brain and biases. And I remember Ken saying to me that one thing that every investor should do is they should actually take Charlie Munger's list of 24 causes of misjudgment, psychological biases and the like. And they should rewrite it and include their own biases and their own failings and their own mental glitches. I remember Ken saying to me that one thing he's vulnerable to is authority bias.

Starting point is 00:05:20 So if he swore that people like Charlie and why, and people he really admired had bought a particular stock. It swayed him. And so he needed to be aware of that vulnerability. And likewise, Howard Mark said to me that he knows he's inclined to worry. So he just has to know that he's filtering things through that particular kind of temperamental bias. So that during the 2008-2009 global financial crisis, he had to sort of say to himself,

Starting point is 00:05:48 well, I can't be a chicken here. This is an amazing opportunity. and the prices are so low that I can't be a chicken. So in some ways, there's a sort of self-congratulatory aspect by celebrating the fact that people like Jolly have said something really nice about me. And then there's also this kind of reminder that I better actually be pretty careful because it shows me just how vulnerable I am to that need to sort of please others feel like, feel like I'm approved of and admired.

Starting point is 00:06:18 And that's a vulnerability. And I think one of the things is you just have to understand your own quirks. So you have to be a kind of great user of the machine called Stig Brotterson, and I have to be a great user of the machine called William Green. And that requires me to understand, you know, that this bit is kind of falling off and this bit needs a little more oil and this bit needs a repair. So, yeah, so this kind of led me to think about a lot of ways in which we're vulnerable, I think. It makes me think of Paul Charles Alman. It's just this amazing book and there's this wonderful quote by Richard Feynman where he's talking about, I'm going to butcher this up, but it's somewhere along the lines

Starting point is 00:06:56 of don't fool yourself and remember you're the easiest one to fool. Whenever you said that, for us in the value investing community, we often heard about the inner scorecard and we also scribe to it. And I think when ever push comes to shove, it's like, no, we just can't. It will almost make us inhuman if we did. And if I had to choose one person aside from Chalamanga, perhaps, who really lives by that in a scorecard, would be someone like Monis Paprai. Absolutely a billion person who now lives true to his values. And it's wonderful. And even he said that whenever Buffett, you know, gave him the knot of how he thought about charity and dachshana.

Starting point is 00:07:34 And he was like, oh, I felt I could die in peace. And that happens even to Monash. Like, even can I say to the best of us, I think that's just how we are wired. And Monash, I think, gets enormous satisfaction out of the fact that Charlie, who he absolutely reveres and rightly has kind of adopted him as a friend and mentee. And I think for Monash, who's always been a bit of an outsider, right? That's an amazing thing to have the resident genius of the investment community say, no, no, you're fantastic. And I think even with Warren, much as we say he lives by an inner scorecard and it's true that

Starting point is 00:08:13 he does live by an inner school card. I do think there's some degree to which Warren enjoys the bright lights of the Omaha annual meeting and 40,000 people flocking to revere him and listen to him and Charlie. And we're just complex characters, right? I mean, I think there's something that's really selfless about Warren and Charlie and they're there as teachers and they love imparting wisdom. There's presumably ego there too. And I, and so I see that in myself as well, like this combination of arrogance and pride and vulnerability and fragility. And I just think it's really useful to have this kind of inner inquiry, especially as an investor, because I think the markets are so brutal that if you have these underlying fault lines in your character, they're going to

Starting point is 00:09:02 get exposed sooner or later. And so if, for example, you're impetuous or you're fearful or you're inclined towards jealousy and envy of other people's returns, it's going to get you in the end, unless you actually take some countermeasures. I'm thinking of this a lot recently because I interviewed Bill Miller recently and he's talking to me about why Bitcoin is so wonderful. And I'm sitting there and I'm thinking, geez, back when I was writing this book, I remember spending a couple of days with him at his home in Maryland and his office in Baltimore. And he was saying to me, look, William, Here's why Bitcoin is so great. And at the time, it was at 8,000.

Starting point is 00:09:44 And I'm like, there's no bloody way. I'm trying to find 8,000 on this thing that has no apparent value. What am I doing? And so here I am now. It's at, what, 60 or 60,000 or something like that? I haven't checked it in the last couple of days. And I feel like such a schmuck. And I can feel the pain of missing out, rising up and just knocking me off course.

Starting point is 00:10:07 I had lunch with Guy Speer a couple of. weeks ago, who I'm close to who runs the Aquamarine Fund, who I know has been on this show as well. And I was saying to him, how do you deal with the whole cryptocurrency thing and how are you thinking about it? And he said to me, look, I'm a farmer. I don't, I can just stay in these fields that I'm plowing. You know, I can just focus on these companies that have good destinations and that are, and I don't need to play other games. And I just thought, it was one of those things around like, God, he has so much better a temperament than I do. Like, for me, it's still, kind of torture, I just keep reminding myself, no, I shouldn't be investing in things I don't

Starting point is 00:10:44 really understand. And so let me understand Bitcoin more. Let me figure it. Let me really get my head around it because I was so distracted by working on my book. I sort of missed it. I just didn't really give it enough thought. I just think this whole area of self-knowledge, self-awareness, of asking yourself how you're wired, where you're vulnerable, where your strengths are temperamentally and emotionally and where your weaknesses are is just really, really helpful. Well said, William. Here on the podcast, I don't think it's any surprise that we're avid readers. And one of the most popular guests we had on here this year, that was business author Jim Collins. That was back on episode 372. And what Jim did with his team was to analyze big sets of data

Starting point is 00:11:26 and then look at the most successful company founders. He concluded that there was no such thing as a right background to have, a right background as an diseducation level or rich or middle class or lower class or whatnot, that was not the determining factor to be a successful company founder because we heard all these stories about like this person, he had this background, so that's why it happened and this person had a different background, which is also why XYC happened. So I'm curious to hear how that translates into the investors you've been speaking to. Is there such a thing in your experience as to have a right background to be a successful investor? There's such a tremendous range in the backgrounds of the people I've interviewed.

Starting point is 00:12:10 But I think what I would say is, I think it's true to say that either temperamentally or figuratively or literally, they're all outsiders. They're all people who diverge from the crowd and question Orthodox opinion. And it makes sense because the only way you can beat the market is if you diverge from the market. So you have to, I think, come from a slightly strange place intellectually or sometimes physically or temperamentally. Maybe, you know, I think of someone like Sir John Templeton, who I interviewed 20 years ago in the Bahamas. And he had physically removed himself from the crowd by moving to the Bahamas. And so he had this kind of detachment.

Starting point is 00:12:54 And he had grown up in this unconventional way in Winchester, Tennessee, in this kind of small town life. then he'd gone to Oxford as a Rhodes Scholar, and then he'd traveled for months to something like 30 countries, if I remember rightly. So he was always an outsider thinking differently, and he had this informational advantage, I think, that came from the fact that he was studying foreign countries and foreign cultures at a time when nobody else really even had passports. I mean, it just wasn't common for people to fly, for example. It was sort of, he was going to Germany before World War II in the run-up. So he was seeing the hysteria over Hitler. So he saw the Olympics there before World War II broke out. And then you think of someone like Monash, who grew up

Starting point is 00:13:43 in, I think it was a $20 a month apartment in the suburbs of Mumbai, which was then Bombay. So again, an outsider coming at things from a different perspective. Or you think of Bill Miller, who was studying in a PhD philosophy program instead of an MBA program. And then when he became a military intelligence officer, and I was talking to him recently about the extent to which studying philosophy instead of business had helped him. And he's like, well, look, that's why you gave $75 million to my old philosophy department as a gift because I wouldn't have been so successful if it hadn't been for them.

Starting point is 00:14:18 So they're all people coming from these weird backgrounds and slightly offbeat. That's not to say you can't just go to Wharton or either. business school. There are plenty of people like Joel Greenblatt and Howard Marks and like who've gone that part. But they're also quirky in their own special way. And then in some ways, think of someone like Nick Slee, who I write about at great length in the book, who's also the ultimate outsider, both in the way that he invests and in his background. So Nick and for your listeners who don't know them, Nick and his partner, Zach, called Case Sikaria, but goes by their nickname Zach, they set up.

Starting point is 00:14:55 this fun nomad, right, that I think in 13 years, I've returned 921% and beat the market by something like 804 percentage points. And they regarded it as what they called a rebellion against the sin and folly of Wall Street. So the whole thing was incredibly idiosyncratic. You look at where they came from and it kind of makes sense that they were so offbeat. I remember asking Nick about his childhood and he said, well, look, I went to this private school, this boarding school, Wellington, which I think was set up by Queen Victoria in England. And it had something like 450 acres of land, one of these beautiful old English private schools.

Starting point is 00:15:34 And he was one of the only kids who wasn't a border. So at the weekend, while all these other kids were playing at school, playing rugby and cricket and stuff like that, he was literally working in a pub. And so he said, I just was happy being outside the group. And so he got used to very early on not being a part of the group. And then goes off to university. I think he went to the University of Edinburgh, starts off studying geology and then switches

Starting point is 00:16:02 to geography. So again, nothing like the conventional route that most people have in studying business and finance and accounting and all of that. And then didn't have any intention at all of becoming a fund manager. He actually wanted to be a landscape architect. And he had this kind of fantasy that he was going to be building these beautiful parks, designing gorgeous parks where people could. He's a bit of an estate.

Starting point is 00:16:24 and he's kind of spiritual and philosophical. And he thought, people are going to be able to retreat from the noise and ugliness and busyness of life. And they're going to be in these beautiful parts. And instead, he goes to work for this landscape architecture firm and discovers that he's just designing parking lots and dormer windows. And then after a few months, they lay him off. And he had an apartment in Edinburgh that he and his future wife, Sarita, had bought.

Starting point is 00:16:51 And so he wasn't thinking, let me become a fun manager. He literally is just looking around thinking, oh, geez, how am we going to stay in Edinburgh? Well, let me think about what Edinburgh is good at. So he's like, well, they do IT. There are lots of IT companies. So he's thinking of doing that. And then he reads a book about the investment business, some obscure book on unit trusts. And he's like, oh, that sounds cool because it's kind of like an intellectual inquiry.

Starting point is 00:17:14 So he ends up going to work at this tiny Scottish investment firm and discovers that he's really good at it. So he's just like this weird intellectual who's landed in this profession by accident. And so while other investors are reading accounting tones and stuff like that, he was reading Zen and the art of motorcycle maintenance by Robert Persig, which he became absolutely obsessed by. And the whole thing is this inquiry into values. And so Persig, who is his very eccentric guy, was fascinated by the idea of quality and what quality

Starting point is 00:17:49 constitutes. So when Nick set up Nomad with Zach, it was really a kind of spiritual and philosophical exercise to see if you could create a fund that was all about quality. So would you treat your partners in a way that was high quality? Or would you squeeze them as much as you could to get as much money out of them? Could you be truly aligned with them? So for example, they literally set up a fee structure, for example. So I think they had a tiny, tiny annual management fee to cover their costs.

Starting point is 00:18:19 And then they took, I think it was 20% of the profits, but after a 6% annual hurdle. And then they were like, so let's make it even harder for ourselves. So after a few years, they put their profits, their incentive fee in a holding bucket. And they said, well, if we screw up, we'll give back the profits. So they kept making it worse for themselves and better for their shareholders. And I remember Nick saying that at one point during the financial crisis when they had this kind of emergency meeting in McDonald's to see if Nomad was going to survive. I didn't write about this in the book. He said, we were so deep in the hole. We were down so much. So I think Amazon

Starting point is 00:19:00 was down about 50% that year, 46% for the fund, I think they were down. And he said, we actually owed years worth of fees. Like, we were going to have to work for free for years. And then it just happened that they bounced back so unbelievably that made about 400% over the next three or four years. They ended up doing incredibly. But so here, I read about this in the book. I say these were these two odd ducks who landed by mistake in the investment business. A total outsider, Zach wanted to be a meteorologist. And he used to read weather reports as a kid. And his parents just said, no, you can't do that. And so he was just this very eccentric, brilliant mathematician, went to Cambridge, wanted to work for his family's company. But his father got cheated, basically, and went bankrupt. He invested in a whole

Starting point is 00:19:44 of his father had fled from Iraq where they'd been purged, where Zach was born. And the father invests in all of these companies that were run by unscrupulous people on Wall Street, who were basically Ponzi schemes, I think. And he just lost everything. He was leveraged, he invested borrowed money, and he got taken advantage off by unscrupulous people and lost everything. So Zach, far from wanting to be an investor, wanted to be a meteorologist and was disgusted by what he called the casino aspect of Wall Street, this tendency to line your own pockets at other people's expense. And so for him as well, Nomad became this exercise in quality. He loved the fact that you could say, well, this isn't about the money. We're just going to focus on long-term returns,

Starting point is 00:20:30 on getting the best long-term returns we can. So everything is going to be super rational. We're just going to own about 10 stocks, and we're going to focus on companies that have great long-term destinations. We're not going to read any Wall Street research. We're going to think totally independently. We're just going to travel and see as many companies as we can, study the best business models and think about what businesses are likely to reach a great destination in 10, 15, 20 years. And that led them to have this very concentrated portfolio that was full of these companies that embodied this model of scale economists shared. So companies like Costco and Amazon that grew by driving down.

Starting point is 00:21:09 costs massively, creating an incredible deal for their customers and just giving them more and more and more value. And so as they grew, they gained this kind of competitive advantage that these economists are scale. They just kept sharing. And so Nick and Zach were just totally independent of Wall Street, just thinking about these questions of what's the best business model of all. And so in a sense, they're the perfect example of people who didn't go the conventional

Starting point is 00:21:35 route in terms of studying business and investing. They were thinking about these weird questions from Zen and the Art of Motorcycle Maintenance about how to build a quality fund, how to lead a quality life, how to treat your shareholders with quality, how to live in an honorable way. And then having cracked the investment problem, they retire from the business at the age of 45 and they say, well, we'll spend the second half of our lives giving back the money to society because we don't want the money to bend us out of shape. We want the joy of giving back and seeing our money go to work and help other people. And so there's something so wonderfully eccentric and idiosyncratic about the whole thing.

Starting point is 00:22:17 And I think that's just a really extreme example of this unorthodoxy, this willingness to question the conventional way of doing things. I don't want to depress people who are going the regular route and are saying, no, I want to go to Wharton and I want to go to Harvard Business School. I think that has tremendous value as well. But even if you look at someone like Joe Greenblatt, who I write about at length, Joe went to Wharton, and he was just appalled by the fact that they kept telling him that the markets were efficient. And he said, I just didn't believe it. I didn't buy it.

Starting point is 00:22:50 I could see that it wasn't true. And so the thing that actually changed him was reading an article in Forbes about Ben Graham. And he's like, that makes more sense. The market is bipolar. I can see that. And so that changed his life. So even someone who went this kind of conventional path like Joe ended up questioning it and veering from it. I think, again, one of the things you have to ask yourself as an investor is how am I wired?

Starting point is 00:23:18 Am I someone who's comfortable being outside the hood or do I need to be inside the hood? And again, it's not that one is better or worse. It's that you need to understand yourself so you know what game to play. And Howard Mark said to me, most people should index most of their money, which is a great path where you're exploiting the wisdom of crowds. But if you want to be someone who outperforms over the long term, I think you've got to be a little weird. You've got to be a little strange.

Starting point is 00:23:50 You've got to be comfortable outside the crowd. And maybe that's one reason why I was so drawn to these people that I'm writing about is because I'm an English writer living in New York. I'm a Jew who went to Eaton the poshest, oldest English school pretty much. So I'm kind of a weird outsider. And so when I saw all these maverick, free-thinking iconoclasts like Nick and Zach and Joe Greenblatt, Monish Pabri, I sort of recognize them as my weird tribe of misfits. They're much better investors than I am.

Starting point is 00:24:25 But there is something temperamentally similar, I think, between a writer and, and a weird maverick contrarian value investor, certainly. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering

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Starting point is 00:28:38 That's Shopify.com slash WSB. All right. Back to the show. I think that's a great segue to my next question for you, William. There's this saying that concentration, makes you rich, but diversification makes sure that you stay rich. You know the best investors in the world and you follow their portfolios up close. Do you think that statement is true? It's a fascinating point. I think there's clearly a tremendous tension between the benefits

Starting point is 00:29:12 of concentration where you see people like Joel Greenblatt in his early career having maybe 80% of his money in six to eight stocks. And he has a lot of the end of his money. And he ends up making 40% a year over 20 years at Gotham, his original hedge fund, incredible performance by buying weird little stocks off the beaten path that he said other people would have bought if they'd done the work. So there's that path. That's also the path that Nick Sleep and Kaye Ciccaria took, where when I chatted with Nick recently, he still basically just owned four stocks. His personal portfolio was just Amazon, Costco, ASOS, and Berkshire. And that's it, four stocks in his entire portfolio.

Starting point is 00:29:57 And Zach, who's never sold a share of Amazon, when I spoke to him last, had 70% of his portfolio in Amazon. And so, I mean, amazing concentration. So there's this lure of concentration where you look at it and you're like, wow, if you want to outperform, this is the way to go. And yet, it's also, they've done incredibly well because, A, they were really smart, B, they were kind of lucky. I mean, I remember Joe Greenblatt saying to me once when I asked him to explain how that original fund had done so brilliantly, he said, look, we stayed small.

Starting point is 00:30:32 I think they had something like $300 million in assets when they closed it to outside investors and returned all the outside money. It remained really small. And he said, we concentrated our bets and we got lucky. He said, for some reason, we just didn't have any major disasters. And he said, part of it was I had a very high hurdle. I had to be absolutely certain before I invested in something because he said it tortured him to lose money. So it wasn't an accident, but there was an element of luck.

Starting point is 00:30:57 I'd say there's probably an element of luck with Nick and Zach, despite the fact that they were brilliant. And they figured out this one great business model of scale economists shared that dominated their portfolio in the end. But then, as I was saying, there's this tension because if you're concentrated and something goes wrong, you may not survive. And so look, say, at the Sequoia Fund, Bill Ruein ran. I remember many years ago, for your listeners who don't know Bill Rueyne, he's the guy who went Buffett shut down his limited partnerships in the 60s. And the market was massively overvalued.

Starting point is 00:31:35 He said, well, if you still want to invest, invest with my friend Bill Rewain, who's great. And Ruin proceeded to have this unbelievable record beating the market by thousands of percentage points over decades. And I had this kind of rare interview with him, I think, in 2001, where I was asking him the secret of his success. And he again said, look, I have, I want to really concentrate. I have, I want to know everything I can at seven or eight ideas. And he said, if you find something really cheap, why not put 15% of your assets in it?

Starting point is 00:32:04 And so at the time, this was 2001. And so it was still, I think it was still the tech bubble at the time, the dot-com bubble that hadn't yet burst in around March of that year. He had, I think, 35% of his portfolio in Berkshire Hathaway, which was totally out of favor. And he said, look, you have the smartest guy in the country running this undervalued business that nobody loves. Everyone is saying Buffet has lost his touch. And so he was totally happy to do that. And I was hugely impressed with that. And I thought, well, that's brilliant.

Starting point is 00:32:33 But then you look at his successor, Bob Goldfarb. I remember Bill Ruin telling me it was absolutely brilliant. I've never met Goldfab, but I've heard wonderful things about him and that he's a really terrific and faster. Goldfab had this kind of stunning record and was hugely admired. And then had basically a third of the Sequoia Fund in valiant pharmaceuticals, which imploded. And I don't know, did it go down 90 something percent? And it basically ended this illustrious career, this great investor, this one huge mistake.

Starting point is 00:33:11 And so I think that gives you a sense of the double-edged sword of concentration. It's a beautiful idea when it works. And if you're right and you're lucky, it's fantastic. But if someone as smart as goldfab can get blown up by Valiant, that's a really, really good lesson for the rest of us just to be a little humble and a little wary. And I think of someone like Templeton telling me all those years ago when I interviewed him, I guess around 2000, saying to me, look, for a regular investor, a regular investor ought to own five mutual funds probably, and they should be giving you exposure to different parts of the market. And I've thought

Starting point is 00:33:55 about that a lot over the years because he said to me, why would you be so arrogant as to believe that you can pick the best fund, the best advisor, the best country. It's tricky because Templeton was brilliant and came to his class at Yale and it's a Rhodes Scholar and all of that. And so he was able to do things like at the time that I was interviewing him, it was the Asian financial crisis. And he made this enormous bet on a Korean fund that had been the single worst performer of the last year. And he puts on like $10 million in it and been an absolutely fortunate it became, it was the number one fund over the next year. It was just a brilliant contrarian bet. So he could pick the single best country. I mean, he had the intelligence and the temperament

Starting point is 00:34:40 and he was so on top of it that I think he could pull off that stuff. But I'm constantly reminding myself, because I'm a slightly fearful, personal, I'm slightly skeptical of myself and worried that I'm full of hubris and arrogance and pride and self-deceit. I'm always saying to myself, well, yeah, what if I'm wrong? What if this person I trust who, who a great fund manager, turns out to be a con man. Or what if I have all of my money in one brokerage firm and there's a cyber attack, God forbid, and it falls apart? So there's a part of me temperamentally that's very drawn to these highly concentrated investors. I have huge admiration for the people who just own four stocks, 10 stocks, 12 stocks. I mean, I think that's

Starting point is 00:35:26 wonderful, but I think you've got you've got to be wired in a particular way where it's not painful for you when the market gets killed. And I remember Greenblatt saying to me that there were times where in a matter of days his portfolio would go down 20, 30 percent. And he said, that's fine for me because I understand what I own. But he said, there's no way that he could have outside shareholders who could cope with that kind of volatility. So yeah, I just think there's a real tension between the need to survive and the yearning to outperform. And you have to find some comfortable balance that suits your temperament. You look at someone like Fred Martin, who I write about it,

Starting point is 00:36:09 and he just has this rule where he says, at the time of purchase, I'm never going to put more than 3% of my portfolio in any stock. He owns about 45 stock. And he lets them run. So he owns them for at least a decade on the whole. So if something performs really well, great. it becomes a big part of his portfolio. But he said that strict adherence to that rule has enabled him to survive for decades

Starting point is 00:36:34 and yet outperform. You look at Tom Gaynor as well, where he owns about 100 stocks, which seems absurdly diversified in some ways. And yet, if you look more closely at his portfolio, actually two-thirds of the portfolio in the top 20 holdings. So Tom describes himself as radically moderate. it. And I think that's an interesting balance that suits his personality, this kind of balance between concentration and diversification, outperformance and survival. So yeah, that's a sort of

Starting point is 00:37:04 a long and complicated answer to a very difficult question. I really like that, William. At the end of the day, it's all about learning, becoming a better version of yourself. Whenever I look at the value investing community, I know it's hard to read the label from inside the box, but it seems like we have a unique culture in the value investing community. And I do think a lot of that comes from most of us having learned directly from Warren Buffett himself. If not in person, then through his letters and through everything that he's interviews and whatnot, Buffett has said himself that he wants his legacy to be as a teacher. Or he was asked during one of the annual shareholders meeting, like, what do you want your legacy to be? And I kind of found that to be

Starting point is 00:37:50 very insightful. It wasn't like the best investor all time or whatnot. It was to be a teacher. And whenever you study Buffett's relationship with his old professor, boss, and mentor, Benjamin Graham, I do think it explains a lot of how the value investing community got started and where we are now. So from your perspective, as an educator in the value investing community, what do you think that will happen to the community when Buffett and Munger are no longer among us? I think they're irreplaceable. I don't see, I may be totally wrong, but I don't see 40,000 people a year flocking to Omaha to hear Greg Abel, Ajit Jane, Ted Weshler and Todd Combs talk if those are the successes. And that's not in any way a dis on them. I mean, I remember walking on the floor in Omaha at the annual meeting with Monash and Guy Spee. here and running into Greg Abel. And he sort of just comes and chats to this and he's standing there with posing for photos

Starting point is 00:38:56 with us. Couldn't have been more humble, modest, smart, amiable. I mean, you know, you just look at him as this kind of, you can exactly see why Warren would like him, like not arrogant and yet really smart and just totally capable. But not charismatic in the way that Warren and Charlie are. I mean, Charlie has a strange kind of charisma, right? Like the I Have Nothing to Add kind of commodgently brilliance. But there's something, I remember it feeling like a comedy show.

Starting point is 00:39:29 Like it was like you were watching Walter Mattoe and Jack Lemon when you see these two old guys quipping on the stage. And I remember once hearing Charlie say something about how, you know, when you mix turds with raisins, you've still got turds. And Warren just sort of says, now you see why I do all of the talking. And it's just funny. You just, you watch them and you think they're not only really clever and really successful and really honest about their mistakes and stuff, but they're funny. They're entertaining. And so it's kind of this gag show as well where you're learning.

Starting point is 00:40:05 I don't see that that can survive. I may be totally wrong. But then I think one of the things that's extraordinary about the value investing community is, as you mentioned, is that these guys are teachers. And I think Ben Graham was extraordinarily generous in sharing his ideas. And Warren has taken that habit of being extraordinarily generous in sharing his ideas. Same with Charlie. They're teachers.

Starting point is 00:40:30 It's a kind of didactic exercise, the whole company, right? It's like, this is how you run things. And I remember Nick Sleep and Zach saying that when they went to Berkshire to the annual meeting the first time, it was like the scales. fell from their eyes because Zach had been working at, I think, Deutsche Bank during the tech bubble. And he was just appalled by the willingness of Wall Street to sell any old crap to any credulous investor who'd buy it. And then all of these kinds, and he was a broker and it just killed him because he would, you know, he'd seen how his father had been ripped off by unscrupulous brokers and have been bankrupt. And suddenly it's like this cosmic joke that he sees that he has to

Starting point is 00:41:13 become a salesman himself of crappy ideas. And he just couldn't do it. He was terrible broker and couldn't sell anything. And then he goes to work for Marathon, the company, where Nick was working before they set up Nomad. And they go to Berkshire together, I think, in 2000 or 2001. And he's like, wow, Warren and Charlie, they're talking about businesses and businesses we love and businesses that are going to do great over the long term. And he was like, there's no element of the casino here. It was just the most fabulous thing. And so Nomad grew out of that idea of like, no, no, this is, we're not just lining our own pockets. We're not selling crap to people. We're studying great businesses and collecting them for the long time. And so that

Starting point is 00:41:52 role model, it wasn't just that they were hearing the ideas from Warren and Charlie. It was they were actually seeing the behavior being modeled by them. One of the things that had a huge impact, I think, was seeing that Warren and Charlie were getting salaries of, I think, $100,000 a year to run this company that now has, what, a market value of $600 billion, something like that, $650 billion. I mean, it's an extraordinary thing. They had set themselves up to make money as your partner. They weren't making money off fees, of screwing you, squeezing fees out of you, regardless of how well or badly they performed.

Starting point is 00:42:29 They were making money alongside you. And when they messed up, they would tell you. I always loved it when I went to one of the meetings. And Charlie said, yeah, we should have bought Google. We totally failed you. And then as if that's not enough to have told 40,000 people, we totally failed you with Google. He says, yeah, we totally screwed up Walmart as well. And we should have owned that.

Starting point is 00:42:50 I mean, it's a wonderful thing, that honesty and integrity. And so I think one of the great lessons, it's not just what they write that's been so helpful, or what they say that's so helpful. It's the behavior that they model. And you see that and it makes you want to be a better person. This isn't to say they're ideal. I mean, they have their foibles and flaws just as all of us do. But you look at this kind of enlightened capitalism that they embody where they're trying to be

Starting point is 00:43:19 honorable, they're trying to be transparent, they're trying to treat you as partners. And it gives you a sense of, well, there's a better way to do this. We don't need just to be selfish and just to look out for ourselves. And you think of someone like Charlie saying, when I asked him about what the secret of a happy life was and what we could learn from him and Warren about a happy life, he immediately starts talking about partnerships. And he said, Warren has been a marvelous partner to me and I've been a good partner to him, which I think is also a very interesting way to phrase it, that he's, he's diminishing his own, his praise for Warren is higher than his praise for himself. And then he said,

Starting point is 00:43:56 we have a really simple model, a really simple system, which is if you want to have a good partner, be a good partner. So to me, when you see that behavior, that has an enormous impact on you. It makes you there's this better way of doing business. And so I assume that culture is going to go on because I assume that in picking people like Greg Abel and Ajit Jane, those guys embody that same mindset and that culture will survive for a while. But without those two charismatic guys there to teach you, something will change, something. But then you think about Charlie's phrase that he's always been hanging out with the eminent dead. So he's also drawing great guidance and insight from people like Ben Franklin and Darwin, Einstein.

Starting point is 00:44:45 And so there is something about the way that great behavior endures or great insights endure. We're just very lucky that they've left us with so many transcripts of their talks and so many interviews and things like poor Charles Almanac. So you'll always be able to study their lessons in the same way that Charlie can study Van Franklin. But I don't know. It's like with Jack Bogle not around. There's something different, right? Like, did Vanguard ever find a real replacement for Jack Bogle?

Starting point is 00:45:21 I mean, I'm sure they were extraordinary business people and the company has continued to grow incredibly. But Bogle is a kind of moral force fighting for the rights of shareholders. So that, you have to go to the books that he lived. left us with. And so, I don't know. So part of what I was doing in my own book, I think, was trying to celebrate and honor these people who I think embody a more enlightened way of doing capitalism. So I could try to preserve some of those ideas. So I do think the fact that we can study these people who are great role models is immensely helpful, whatever you're studying, whether it's spirituality or philosophy or investing. You want to, as Charlie would say,

Starting point is 00:46:03 out with the eminent dead, hang out with the people who were the best in previous generations. One of my favorite parts in Richelweiser-Wise is actually where I think it was an obscure part that almost nobody will notice that I think I tucked away in the notes on sources and resources where I talked about Jack Bogle peering up in a conversation that I had with him. It was on the phone. I thought the phone had gone dead and I'd lost him. And then I realized he was choking up because he was talking about his. mentor, Walter Morgan, who was one of the pioneers of the investment business. And he said,

Starting point is 00:46:39 Walter Morgan just had this idea that the shareholder is king. And he said, my God, once one of the shareholders wrote to him and said, Mr. Morgan, I don't have a good suit. Do you have a suit? And he said, and Mr. Morgan sent him one of his own suits. And that spirit pervades Vanguard, I think. So it's something that Bogle got from his mentor, Walter Morgan. And when Van Gogh got, God was driving down fees and treating shareholders well. That was because Bogle had learned that the shareholder is king from Walter Morgan. And so in a sense, I was trying to preserve this lineage of decent, honorable, shareholder-oriented thinking that had come to us from Walter Morgan through Bogle, even though both of these guys were no longer alive.

Starting point is 00:47:24 Let's talk about the next generation of value investors. Let's specifically talk about first eagles, Matthew McLennan. Depending on which generation. you are, you might think of him differently, not in any kind of bad way, but I guess to some generation it might be the person who took over from the legendary show Marie Villan, just one week before the Lehman Brother collapse. But in any case, you have the privilege of having to speak with both of them. Back on episode 345, last time you're on the show, we talked about Shao Marie Viyadh, and I'll definitely recommend everyone to go back and listen to that. But today, I would like to talk about the new generation. I would like to talk about Matthew

Starting point is 00:48:02 McClennon. Perhaps some in our audience are not as familiar with him. So for those of us who are not, could you please introduce him to our audience and also tell us about his untraditional background? It's a fascinating background. And first, I should tell you, I've actually been hired as a strategic advisor for First Eagle just recently. So part of the pleasure of that is actually that I've got to spend more and more time with Matthew McClellan. He does have one of the most unusual backgrounds of any investor I've come across. It makes Monish's background and Templeton's background seem more conventional. I mean, literally, Matthew McClain grew up, I think, the first six years of his life in

Starting point is 00:48:41 Papua New Guinea. I once joked him, I said, you're the greatest investor from Papua New Guinea. And he said, sample size of one. It's true. It's a very unlikely background. And his parents were these kind of, I guess, adventurous. I think his mother was an artist and physiotherapist and his father was a land surveyor. And so they start off, they just go to Papua New Guinea as a kind of adventure.

Starting point is 00:49:04 And then they end up buying a property in Australia that was this beautiful place bordered by rainforest. And they were planning to get these permits to connect to the electricity grid. They couldn't get the permits. So McLennan literally grew up in this house that had no electricity, no hot running water. So I remember telling me that when he wanted to take a shower, for example, they would take a black plastic bag and they would fill it with water and they would hang it outside in the afternoon sun. And then he would shower under a tree with this warm water that had been heated

Starting point is 00:49:39 up in the black plastic bag. And he said throughout his childhood, basically, they didn't have a TV. And then finally his dad decides to get a TV. And because they don't have electricity, they rigged the TV up to the car battery. And then one day his dad forgets that it's rigged up to the car battery. And so he pulls out of the driveway and drags this TV through the front door so they never had a TV again. The TV was destroyed. So he basically spends his childhood in this very eccentric way removed from what he called the literal buzz of existence.

Starting point is 00:50:14 And so he just was reading and literally reading a lot of the time by gas lamp. And he had this grandfather who he described as a kind of true intellectual, who I think he'd been a doctor on a geophysical expedition to Antarctica, and he bought stocks, and he collected wine and cultivated roses. And so there was this sense in which McClennan came from this kind of family of intellectual explorers and kind of oddballs who were totally outside the conventional path of life. And so there's something deeply intellectual about him. He said to me once, he collects these kind of mental models, these ideas, and he collects them in his in his iPhone, I think. And he said he just goes over and over them, like, his image for it was

Starting point is 00:51:00 like, like, raking my Zen garden. And so he's thinking kind of really seriously about the lessons of history, for example. So he would be deeply influenced by something like Cucydides' history of the Peloponnesian War, where he would see, well, the reason that Sparta and Athens went to war was because they had all of this hubris and this rush to judgment. And so he's like, so you want to have the opposite qualities from that. You want to have humility and you want to move slowly. So he's literally, so he's taking lessons on how to live and how to invest. You know, one of the first history books ever written, an account of Sparta's War

Starting point is 00:51:37 with Athens, thousands of years ago, I guess. And so one of the things that he learns from all of these studies, these kind of free-thinking studies of history and science and various other disciplines, is to have this tremendous respect for uncertainty. And so what he said to me is, if you look back at history, you start to realize that the world is intrinsically uncertain and unpredictable. You need to position yourself as an investor and in life to participate in the march of mankind, but to survive the dips, to survive these periods of episodic disruption where everything goes to hell. COVID is a perfect example of it, right? Something where no economists were saying, yeah, there's going to be this massive,

Starting point is 00:52:24 economic disruption and disruption to the way we work and the way we live from COVID. Nobody predicted that. We knew there could be a pandemic, but nobody said at the end of 2019, this is going to change our lives over the next couple of years. One of the mistakes that investors make all of the time, as McClennan pointed out to me, is that we assumed that the next period is going to resemble the current period or the last period. And this is something that Buffett warned about after 9-11 where Buffett said, look, I screwed up because I didn't realize just how exposed we were to the threat of terrorism. And he said, what it shows you is you need to think about your exposure rather than your experience. You need to ask yourself, where am I

Starting point is 00:53:11 exposed to risk, rather than what have I just experienced that makes me think that the world is going to continue this way. And this is a really, really important idea, because if you look at a period like now, we've just had, what, 10, 12 years of a bull market, we're all feeling pretty good, at least if we're investors. Okay, so the world is in turmoil in terms of the pandemic and there are all sorts of political woes and difficulties. I'm not diminishing that. But if you're an investor, there's a tremendous temptation to be complacent and to assume that the future will look good because this is our experience in the past. And what McClennan said to me I think is an incredibly helpful lesson from history is he said, think about what the world looked

Starting point is 00:53:57 like, say from 1908 to 1911, where you just come through this period where everything was golden, the world was going well, the economy was doing great, it was a period of expansion. And so he said, if you learned the lessons of your recent experience, it was the things are going to continue to be great. And then you look at what happened over the next few years. everything fell apart. So the first sign of this really was in 1912, I guess, when the Titanic sinks. And so the Titanic is this kind of emblem of man's triumph over nature. We can conquer everything because we're so smart. We can build an unsinkable ship. And then the unsinkable ship sinks in 1912, a reminder that nature, whether it's a pandemic or an iceberg, tends to

Starting point is 00:54:45 have to last laugh. So you want to be a little more humble about your feelings that you've conquered nature. Then World War I breaks out in 1914, a couple of years later. Then 1918 to 1990. You have the Spanish flu epidemic, which I think killed 50 million people. Then you have the crash of 1929. And you have the Great Depression. Then you have the rise of Hitler that grows out of massive inflation, tearaway inflation in Nazi Germany. And then you have World War Two breaks out in 1939 to 1945. So you think you go back to 1908. to 1911, this period of calm. And you think, well, we live in a benevolent, benign world where everything kind of expands and goes well. And then it's followed by three decades of

Starting point is 00:55:32 disaster. So one of the lessons from those decades of disaster is that you don't really want to invest in stocks because stocks gave you terrible returns and were incredibly volatile. And yet, then right after World War II from 1945 on, we have this golden era. for investors, where the world is calm, there's expansion. So you need it once again to say, no, no, this is a very Howard Marx kind of observation. There are these pendulum. It's helpful to view the world as a kind of pendulum where it's cyclical. The pendulum just keeps swinging. And so you have this period of tremendous calm, followed by a period of chaos and volatility, then a period of calm, then a period of chaos and volatility. And so one of the great lessons, I think,

Starting point is 00:56:20 is that you want to position yourself to survive these periods of episodic disruption and also to exploit these periods of episodic disruption. It's not just about being fearful and saying, oh my God, the world can go to hell. It's about saying during these periods where things get crazy, that's when tremendous opportunity comes about, whether it's the early period of COVID or 2008, 2009, when the market was being crushed, or when the tech bubble blew up in March 2000, these periods of disruption, if you have your wits about you and you've positioned yourself carefully to survive them and to exploit them are actually the greatest gift for an investor. But you need to position yourself so that you're going to survive those

Starting point is 00:57:10 periods of uncertainty of trauma. So what does that actually mean in practical terms for you and me and our listeners here. I think it means you want to start by saying to yourself, where am I fragile? Where am I exposed? And what if the next period doesn't resemble this current? Would I survive? And so one of the things Howard Mark said to me is, is the real question is, do you push the limits? And so you want to just make sure that you're not overreaching, especially in these periods that are conducive to complacency. You don't want to be investing borrowed money, I think. You don't want to have a lot of leverage. You don't want to have a lot of debt. You want to keep some dry gum powder. And you don't want to add a tremendous amount of complexity to your life where you

Starting point is 00:57:57 position yourself in a way that you have too many responsibilities that could come back and haunt you if suddenly things fall apart. You want to try to keep your life fairly simple, develop good habits like meditation and exercise and stuff that are conducive to equanimity before things go wrong and become chaotic, you're already bedded down these good habits, rather than waiting till there's turmoil. And so I think it's partly just learning the lessons of history, knowing that things are cyclical, knowing that we have this behavioral defect, this tendency to assume that the future will resemble the current period. There's another wonderful practical idea from MacLennon, where he just looks at the markets as a kind of,

Starting point is 00:58:43 the global markets as kind of a block of marble. And then like a sculpture, he's just chipping away everything that he thinks brings fragility to the portfolio. So, for example, he would chip away companies that have very expeditionary management that are taking crazy risks or companies that have opaque balance sheets. Or you look at countries that don't respect property rights. And you say, well, yeah, maybe I can make a fortune in Russia, but I should at least be wary because maybe they don't respect property rights. And you want to chip away your behavioral defects as well. So you know that most people rent stocks for the short term and trade in and out.

Starting point is 00:59:23 And they think that they can predict the market and time the market, which we know that we can't. Maybe Soros can, I don't know, or Dracomiller or Jim Simons. I don't know. But the rest of us can't. So you're chipping away all of these sources of fragility and you're focusing on error elimination, rather than just assuming that everything is always going to be golden. And then likewise, when the pendulum shifts direction and suddenly all of those unresilient investors are reeling and are frightened, you're in a position to step in calmly as Howard

Starting point is 00:59:59 Marx did in 2008-2009 and say, well, yeah, things are so cheap now that actually this is a tremendous opportunity. So it's a different way of operating in the world where instead of being a heat-seeking missile and chasing whatever's hot at that moment, you're positioning yourself so that you're detached from the crowd and you're just observing it and you're saying, when is risk priced attractively, when is it not priced attractively, and how can I just behave in a more dispassionate and rational way? That's hard to do. You see it with someone like Buffett, Buffett gets criticized for sitting on $140 billion in cash or whatever. It's very difficult.

Starting point is 01:00:43 And you look like a fool for long periods when everything's going right. I was talking to a friend of mine the other day. It's a very good investor. And as part of his, he bought a Tesla three years ago. And he has a sort of play portion of his portfolio, like a tiny portion of his portfolio. And he said to me, yeah, I put $2,000 in Tesla stock at the time, which is nothing, right? And he's like, it's $50,000 now, three years later. And there's a part of me that hears that. I'm like, I can't believe, you know, that I didn't

Starting point is 01:01:11 buy Bitcoin when Miller told me it was $8,000 a coin and I, and I didn't buy Tesla. And so actually to have that emotional distance, that detachment is very, very hard in real life. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up. And customers now expect proof of security just to do business. That's why Vanceyancey. VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving.

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Starting point is 01:04:43 This is a paid advertisement. All right. Back to the show. I like that example, William. And it sort of like takes me to the next question because I would like to talk about how you invest. Because you've been on the show quite a few times and it's clear from the conversation. that you're a very humble person, and you even said today that you don't feel like you were

Starting point is 01:05:05 wired the same way as the greatest investors. And I think that's something a lot of our listeners can resonate with. We hear all these things. We have some of it as a bit anecdotal, and we think we should do the same thing, but pulling a trigger, that's just hard. But then the big difference is that you have access to these investors, which is not the case for our listeners. And so, with all of your knowledge with the access that you have, I'm curious to hear how you decided to invest with three active money managers. You also have two passive index funds, ETFs, and you also still do a few individual stock picks. How did you come up with that was the right strategy for you? What was your process? And it may not be the right strategy. But yeah,

Starting point is 01:05:49 hopefully the way that I've thought through this issue is at least instructive, at least it highlight some of the issues I think we have to grapple with. So I've owned two index funds, two Vanguard index funds, just the international index and the US total market index fund that I've owned for decades, basically. Whenever my wife is putting money in a 401k or an IRA or I'm putting money into a 529 plan for my two kids, for example, it would always go into index funds like that, basically. And the reason for that, I've owned index funds in my own account as well. I still do. reason for that is that I'm kind of hedging against my own fallibility and my own hubris. And I'm aware that over the very long term, the chances of my outperforming after expenses

Starting point is 01:06:36 and after taxes are not great historically. And so I think I have a competitive advantage that comes from the fact that I know a lot of great fund managers. And I think I can pick some of them. But on the other hand, I'm aware of my powers of self-deception and self-delusion and hubris. And so I'm hedging against that. And the fact that I'm investing my wife's money or my kid's money that way is in a sense what I'm doing is I'm saying they shouldn't pay the price for my hubris, for my self-deception. And so if I'm wrong and I'm not that good, then they'll be fine. That's how I thought through that issue. And then at the same time, clearly one of the most important determinants of whether you're a successful investor is just keeping costs down. I remember Jack Bogle

Starting point is 01:07:22 saying to me many years ago, he said that the math of investing was so obvious, it was so elementary, it was just so clear that on average index funds were going to outperform actively managed funds because the costs were just so much lower. And people just accused him in the early days of it being an exercise in mediocrity, but it turned out to be true. So I know that keeping costs down overall and not trading in and out of the market and just consistently adding to that part of index funds is going to be a smart thing to do over the long term. And so I've done that. That's one bucket of the portfolio. And I've also owned Birch Hathaway for not nearly as long as I should, but for a while. And I thought they were past their peak many years ago. And so I was like,

Starting point is 01:08:10 no, I missed it already. My same instinct with Bitcoin or Tesla, you know, I always think I've missed it. And it goes like, I remember when I was like 17 years old at boarding school and the Rolling Stones were doing a reunion tour. And I was like, no, I missed it. I missed the golden years. They're like 50 now. And I was like, why would anyone go see them when they're 50? They were probably in their late 40s when I just thought I'd missed it so I didn't go see them play at Wembley. And so it's kind of the same sense that you always kind of missed the vote already. So here I have it with investing as well. But again, with Berkshire, one of the things that I'm thinking, I'm not thinking, okay, so it's going to massively beat the market over many years. I think it'll do

Starting point is 01:08:49 well. I think it's resilient. It's set up to be the last man standing. It's very conservative. And I like that. So that suits my temperament. But it's also that you're not paying a management fee. So again, it's a way of saying, yeah, you have the float working for you and you have no management fee. So you add that to my index funds. And I've got low costs working for me. So I think that's a really important part of thinking about how you're going to succeed over the long term. The other really prosaic, banal thing to say, is that one of the great lessons of investing that I think we probably don't talk about enough is that if you just get this mundane thing right of taking full advantage of your IRA, your 401k plan, your 529, whatever tax-deferred

Starting point is 01:09:34 vehicles are available to you, you're so far ahead of the game. So if you just keep putting money in low-cost funds in tax-advantaged vehicles, you kind of won already. Those are two smart things that I think I've done. We'll see if they turn out to be smart. But so far, over the last 30 years, they've been smart. And they're easy to do. But then once in a while, what happens to me is I get carried away because I see, so I vowed that I'm not going to buy individual stocks.

Starting point is 01:10:03 And then I do something like I go to India for five days with Monish Paprai, and we're traveling around. I see that things are getting killed and he's buying stuff that's cheap. And it's really hard for me not to say, I can see what he's doing. I see that it's really smart. And so there's a part of me that also, I guess it's a form of authority bias, as we were talking about before with Ken Schuensign, that when I see people that I admire and who I think are really smart and who've done the work, there's a part of me that wants a piece of that.

Starting point is 01:10:32 I think in a way, there's an idiosyncrasy here to my wiring, which is I'm kind of an empathetic person and I interview these people and I get into their heads and I get into their lives. And I think. buying a stock that they bought very cheap in a contrarian way that nobody else liked. There's a sense in which I'm aligning myself with them temperamentally and emotionally. It's a weird vulnerability of mine, I think, because it's kind of like, this is my team. These are people I like and admire.

Starting point is 01:11:03 And so when COVID started to ravage the markets in early 2020, I saw that Monash had bought, He hadn't really owned any US stocks for a while, one or two maybe, but he hadn't bought anything, really. He couldn't find a single stock to buy out of 3,700 public companies in the US. So he'd been buying stuff in Korea and China and places like that. And then when the market got slammed by COVID, he bought 13% of Ceritage growth properties, this mall operator. And to me, there's something kind of beautiful about that, right? It's a consumer contrarian thing to do.

Starting point is 01:11:43 The last thing you want to buy, when nobody is allowed to leave their homes and go shop in a mall, is a mall operator. And I see that and I'm like, well, he's bought 13% of it. So this is not like Monash dabbling. This is Monash. And I remember talking to him about it. And he's like, yeah, I think I'm going to make 10 times my money over the next 10 years. And so there's something that's irresistibly seductive about something like that for me. It's someone I like and admire, a massive bet,

Starting point is 01:12:10 them. It's contrarian, which appeals to me because I'm naturally not part of the herd. It makes abundant sense because it's like, you know how we always hear those stories where someone says, yeah, I bought a brownstone in the heart of Manhattan in the 1970s when New York was going bankrupt? And so there are these periods of episodic disruption where you can take advantage, you can buy a prime asset that you then tuck away for many years. So around, around June and July 2020, when the market was still getting killed, I bought seretitia as as it kept going down and kept buying more. And so I did that. And then I think around September 2020 when Berkshire was massively out of favor, I was thinking, well, I'm going to be happy

Starting point is 01:12:57 to own Berkshire pretty much forever, I think. So let me just keep adding to that. So I bought that about four times as well as the market was getting killed. Those were a couple of moves where I was just, I was tucking away something for the very long term that was out of favor that I thought I'd like to own for the long term. And I think that's rational and I think it's sensible. But the problem is that A, I hadn't really done the work. So I don't have the conviction that Monash has. So I don't really understand Saratig. And so one thing Guy Speer, who owns Seretich as well, said to me, is he's like, yeah, but Monash may have been underestimating just how vulnerable Seritage was at the time. Yeah, they own great properties. But what if, you know, Monash has always,

Starting point is 01:13:41 I think, been happier with leverage and risks, say, than Guy. It's just a, you know, that quirks of character. He's just, you know, he's more, more optimistic, more aggressive. And Guy was like, well, you know, Berkshathaway owns Seret's debt. Buffett had a huge personal investment in Saratage. So we were cloning Buffett at a much lower price. And the chances were, knowing that Berkshire is a very honorable, long-term thinking business, that they weren't going to make Seritage go bankrupt. But Guy's point to me is, you couldn't really know that. And so maybe I'm misquoting him, but that was, he was just saying it wasn't quite as risk-free

Starting point is 01:14:21 as Monash seemed to think. And so Guy was sort of a little trepidacious during that period. He was, I don't think he bought more, I think, but I don't think he was aggressive about it. Whereas Monash was like, there's no risk here. I'm going to make 10 times my money. And so I'm looking at that and I'm just like, well, I don't really know. I don't have the conviction. And so if everything goes wrong, will I be able to stick with it?

Starting point is 01:14:46 And so I'm just kind of aware of the fact that I'm a little bit too emotional, a little bit too fearful and a little bit too anxious. I'm a little impatient as well. And so even though I think I'm going to own Cerritage for 10 years, and I think I'm going to own Boucher indefinitely, In actuality, who knows if I'll have that patience? So one of the things that I've done over the years is just to outsource these decisions to people like Guy Speer, his aquamarine fund I've just been invested in for whatever, 22 years or something like that. Because I feel like even though he's slightly fearful too, which matches my temperament, and he's cautious and he's long term.

Starting point is 01:15:29 So he's similar to me in his temperament. but he's much more rational, I think, and he's got much deeper knowledge, studied this stuff more, he cares about it more, he has more, you know, he has accounting skills and mathematical skills and he's focused on it, whereas I'm just not. And so, so I think, again, it goes back to this question of self-awareness of just knowing, are you playing a game that you can win? Are you set up, I mean, this is something that Munga talks about a lot, right? Like Manga, Manga said, if you're five foot three, you probably don't want to have. have a career as a basketball player, you know, play games that you can win. And so to some extent, I think the investing game is a game I can win because I know some really good investors. But to some extent, I'm also deeply aware that my temperament is bad. Not bad, but not good,

Starting point is 01:16:19 either. It's a mix. And so I also invested, there was one point where I got kicked out of a hedge fund that I've been invested in for, like, 14 years because they changed the structure of it. And so I was no longer allowed to invest in it. And I remember saying to, Guy Spear, so I don't want to invest more with you because I'm worried too exposed to you. So, who should I be looking at? And he told me to meet Josh Tarasoff, who I met, who's become a friend, who I like a lot. And again, and I'm not saying this is an advertisement for either Guy or Josh. I'm just trying to kind of take you through my thinking process. And so I ended up investing with Josh Tarasov, who runs a concentrated portfolio. And I think it's closed to new investors,

Starting point is 01:16:56 which I also really liked because like Guy, neither of them were asset gatherers. They were both people who ran small, pretty concentrated funds. Josh's is more concentrated and more aggressive than guys, I would say. And one of the things I really liked when I met Josh, which again sounds idiosyncratic, is he meditates really seriously. So he has this kind of calmness. So he's a very bright guy. He'd come out of Goldman Sachs.

Starting point is 01:17:21 And he's also a real iconoclast, a kind of maverick. And he just, so he has a portfolio of about 12 stocks. And he's very long term. He doesn't care what the market is doing. and he lets them ride, he lets his winners ride. And I can just see he's much more rational than I am. I don't know, I had this at lunch with him a few weeks ago. And I remember asking him about his parents.

Starting point is 01:17:45 And I was saying, so who do you take after more? And his father had been in the investment business, so you would expect it as it was his father. And he said, no, I'd probably take after my mother more. And I said, what's she like? And he said, chill. And I thought that was a wonderful word. And when I look at Josh, I'm like, yeah, he's chill. and I'm not.

Starting point is 01:18:03 And that's a disadvantage for an investor. It's probably great as a writer. The fact that my emotions are kind of tempestuous and my mind is all over the place and I'm constantly kind of reading weird stuff because my intellect is kind of like undisciplined and roving all over the place. Those are really good characteristics for a writer. And the fact that I'm kind of empathetic and emotional and can get inside the minds and emotions of the people I'm interviewing is really helpful.

Starting point is 01:18:30 But the intensity of my emotional life is great for that particular game of writing and interviewing. It's not great for investing. So, again, it's just, so sorry if all of this sounds really self-referential, but I actually think it's kind of important in terms of the takeaways for your listeners of just saying, you've got to know yourself and say, am I playing a game that I'm equipped to win? And if Howard Marks is right and Joel Greenblad is right and Buffett is right, that most of us should be indexing. That's a pretty good default position. I at least think a chunk of what I invest should be an index funds. And then if I want to play around with other

Starting point is 01:19:09 stuff, okay. But don't delude myself into thinking that I'm equipped to win a game that I'm not necessarily equipped to win. Very good advice, William. I just want to give one quick handoff before we continue with the outline, because back on the Berkshire weekend, for those of who have been following the show. They would know the Brexit weekend. That's the first weekend of May. I spoke with Monish and we specifically talked about his investment in Ceritage growth properties. So I just wanted to give the handoff to that episode, 347. We'll make sure to link to that in the show notes. And you can make up for yourself whether you think that Moniz and William are right or wrong. And just full disclosure. And I think I mentioned this before. I'm an investor in Seretitist as well.

Starting point is 01:19:50 But it's a very popular stock in the value investing community also because of Monish and because it was Warren Buffett as the very first one made a large investment. I think at the time it was at a price of 35. He's trading in 15 now. Money's bought it around 6 to 9 as far as I remember. Someone along those lines. Another investor in Saratage and a person you mentioned quite a few times, that's Guy Speer. How can you not just love Guy? We're speaking him later this year and it's always great hearing from him. But more than just speaking with Guy, I actually think it's interesting to speak to you about Guy because you have a very clear. close relationship. And I also just want to say, for the record, both you and Guy stand out

Starting point is 01:20:30 to me and some of the kindest people in the value investing community in just in general, who are all shaped by experiences. And have we know you, being lucky enough to know you for quite some time, I know you shared that perhaps being Jewish and have refugees in your family, that's something that has impacted you. Perhaps not, you can say the same thing for Guy, but could you talk to us about your relationship with Guy and also how you avoid biases whenever you are investing alongside him in Akramurian capital, given that you might be kindred spirits too. How do you separate that?

Starting point is 01:21:04 One thing I'm actually doing is I'm exploiting a bias and a quirk in my personality. So because I'm a relatively loyal friend, I think, I don't want to betray my friendship with Guy. I use that to keep myself patient. And so I've invested in the fund for over two decades already. And I've said to him, this is a 40-year investment. And so I know that I need to be a long-term investor in order to compound. I know that I should make fewer decisions.

Starting point is 01:21:34 And so part of what I'm exploiting is this quirk in my character to keep me patient. I don't want to disappoint Guy and embarrass him by saying, yeah, I'm cashing out of your fund. And so it just keeps me patient. And Guy, I remember him buying Berkshire Hathaway, I think in around 1999, 2000. when Buffett was massively out of favor. He put something like a quarter of the Aquamarine Fund in Buckch-Hathaway at the time when everyone felt that Buffett had lost it. And the same time as Bill Ruehain was making that huge investment,

Starting point is 01:22:08 or had 35 or 37% of the Sequoia Fund in Buckch-Hathaway. Guy has just held Berkshire ever since. He's just incredibly patient. And I could never have done that. I don't have the temperament to sit on something and do nothing for 20 years. whereas Guy default is to do nothing. He's got this extraordinary ability just to sit on his hands. And I remember going to him a couple of years ago and saying that I interviewed some

Starting point is 01:22:35 famous investor who was telling me that Buffett and Munga had aged out. They just weren't good anymore. They didn't know what they were doing and we should get out of Berkshire. And I went to Guy and I was like, what did you think? And I was like, yeah, I don't know. And he only just did nothing and kept owning in Berkshire. And I remember going to Nick's sleep. And Nick was just like, yeah, no, it just has a great culture.

Starting point is 01:22:55 It's a very long term, got a great culture. And so he did nothing. And since then, Berkshire has done tremendously well. And if I got panic out of the situation because one brilliant guy had told me that they'd aged out, I would have got washed out of it. And so part of what I'm doing in, in this case, I don't think my bias is actually a problem. I actually think I'm exploiting the fact that I'm friends with Guy to be long term and to be patient. and he's exploiting his ability to sit on his hands and do nothing to just ride companies like

Starting point is 01:23:26 Berkshire and Nestle and stuff like that and some more obscure companies that are maybe a little racier to ride them for the long term. To go back to this question of my friendship with Guy, it really began. We were actually at Oxford together, but he was a couple of years above me. I didn't really know him at all there. I have this vague memory of him as this kind of dashing young guy with a red cashmere scarf dating some very attractive woman and me being slightly resentful of him. And then a few years later, we met in New York because I was trying to join this club in New York.

Starting point is 01:24:00 But traditionally, it's a very posh club where you play various racket sports. And I play this game of real tennis or court tennis, which is sort of the old version of tennis that Henry VIII played at Hampton Court, which has a drooping net in the middle and these handmade balls. It's a very beautiful game. And I played seriously at Oxford. I played pretty much every day while it was at opposite. So this was the one place you could play in New York.

Starting point is 01:24:24 And so I was kind of waging this military campaign to get into this very exclusive kind of waspy club that traditionally was known as being anti-Semitic. They had never really allowed Jews for a long time. It's no longer anti-Semitic, but it certainly was in historically. And Guy was a member. And so I remember going around and meeting all of these members who could help me get in. And I met Guy. and I got into this club because I went to Eaton in Oxford and I sounded like a posh Englishman.

Starting point is 01:24:52 I remember going out with Guy after he had helped me get in. He was one of the seven people or whatever who wrote letters for me and introduced me and vouched me. And I felt kind of guilty that I concealed the fact that I was Jewish. And I said to him, would they have let me in if they had known that I was Jewish? And he went kind of pale and he was like, you're Jewish. And I said, yeah. And he said, I thought I was the only one.

Starting point is 01:25:16 So I think that was the moment where we both realized that we were these kind of posh seeming Englishmen, but who actually were secretly getting into these very posh environments where they didn't realize that we were Jews and that they wouldn't traditionally have let us in. And in some strange way, that created this really strong bond between us. Because I think, as I was saying before, with a lot of great investors but also with writers, we are outsiders. And there's something about being both on the inside, but also always feeling. that you're on the outside, that's very powerful. I see that very much in Guy, that he's,

Starting point is 01:25:52 in some senses, he's a consummate insider. He's liked by lots of people. He was a tutorial partner of David Cameron, the former British Prime Minister at Oxford. I mean, what could be more insight than that? But in his own mind, he's an outsider. And in my mind, I'm an outsider, even though the appearance of it may be different, that I seem like an insider, but I don't feel that way. So over the years, we became friends. We used to meet up for lunch. in New York, and we would chat about investing and stuff. And I was a young journalist. I invested very early in his fund.

Starting point is 01:26:22 I didn't realize that he had kind of tarnished his reputation by working for D.H. Blair, after leaving Harvard Business School, I just wasn't really aware of it. This only really came out when we wrote about it in his memoir, the education of a value investor. I just saw this guy who was really smart. And I thought, yeah, I'd like to invest with him. And so in a way, it wasn't very good due diligence. It was much more about trusting the person's intelligence. But I think what I saw also very early on is he had structured it in a way where most of the money was his family's money.

Starting point is 01:26:58 A lot of the money originally came from his father, who was a successful Israeli businessman. Then Guy had all of his own money in it. And he set it up with this fee structure that was very fair. So you were totally aligned. So I thought, if I'm wrong, at least he's going to be wrong on a massive. scale as well. He's going to hurt, too, if I'm wrong. And so there was a real alignment of interests. And he's intensified that alignment of interests over the years. So the share class that I'm invested in, it has a five-year lock-up, but there's a zero percent management for each

Starting point is 01:27:30 year. And it's based on Buffett's limited partnerships in the 50s. It takes 15 percent of the profits over a 6 percent annual hurdle. And that 6 percent annual hurdle compounds. So he doesn't go back to zero each year. It's like he's made it so that it keeps compounding against him. If he underperforms, he's got to get himself out of this hole in order to get paid. I just thought that was a very interesting insight into his personality, that he'd actually, he's structured the fees to hurt himself if he underperformed. And I remember someone saying to him, are you sure you want to do that? You could be working for many years without earning any money. And he said, welcome to the world of aligned interests. I thought that was really interesting. And it's the same with Josh Tarasoff

Starting point is 01:28:16 with the way he structures his funds. And it's the same with Nick Sleep and Zach with the way they structured Nomad. It's the same with Buffett Amonga with the way they structured Berkshire. They're profiting with you, not off you. And I'm not saying any of this as an avertisement for Guy or for Josh Tarasov or any of these people. But I think it's a really valuable filter to look at the expenses, to look at the fee structure of a fund and say, are these people behaving in a way that's looking out for my interests? Are they eating their own cooking? Is their family's fortune in their fund? Are they going to get paid well regardless of how they perform? And then, I'll tell you one other thing about Guy that I thought was really revealing when I had lunch with him

Starting point is 01:29:05 a few weeks ago. Guy has been on this long mission, right? Over 24 years, I think, of running the Aquamarine Fund of basically trying to recover his family's fortune that was lost during the Holocaust, right? So his grandparents had a successful millionaire company, a factory, I think, in Berlin and Germany. And all of their assets were confiscated by the Nazis. And so he's been on this mission to recover that lost fortune. And he said to me a few weeks ago, he's like, well, I've kind of done it. Like, we're back. Like, it's actually worked. And so he's So what do I do now? What's my mission now? And he said to me, well, I think my mission is to make my shareholders' lives and the CEOs of the companies that I invest with, their lives, as extraordinary as I can. I thought that's a really interesting reframing of what his mission in life is, right? It's no longer to get back his personal fortune, his family's fortune. It's to make other people's lives as extraordinary as he can make them. I think that gives you a sense of why he's such an important figure in my life. There aren't many people that you meet in life who you feel they're looking out for you and they want the best for you.

Starting point is 01:30:16 And remember there was that wonderful thing in the biography of the Janet Lowe wrote of Munger, Damn Right, where there's a forward by Buffett. And he says something about how Charlie is generous in the deepest sense of the word. And that he said many times I've seen Charlie take the worst end of the deal with me and with other people, knowingly take the worst end of the deal. deal. And I slightly feel that with Guy, the way he's structured the fees or the way that he's focused now on making his shareholders lives as extraordinary as possible, not just with returns, but in other ways. He'll sort of say things like, well, I have this kind of timeshare thing in New York. If you want to go, if any of you want to go stay there, just let me know. If you want a subscription to this, let me know, we've got a corporate subscription. You know, there's something really lovely

Starting point is 01:31:04 about that. And that's had a big impact on me, seeing that. I've seen him change. and become more and more selfless over the years. I went to a wedding a few weeks ago where a hedge fund manager friend of ours got married to another close friend of us, mutual friends of guys and mine. And Guy had actually introduced them to each other. They asked Guy to marry them. So instead of having a rabbi or anything else, they had Guy do it. And it was this beautiful kind of rooftop wedding.

Starting point is 01:31:33 So I'm watching Guy from kind of a, you know, the second row or third row or whatever, a performer saying, I could just see this sort of deep joy that he took out of the happiness of this couple, like really deep joy. And he said to me afterwards, he said, I think that may have been one of the most important and meaningful things I've ever done. And he took his role of marrying them and helping them with the service, like so seriously. I mean, he prepared so much for this thing. You know, he kept wanting to work in God and they kept being like, no, we don't want, we don't want any mention of God. And so he was trying to kind of provide some sort of spiritual aspect to this thing without, you know, in a way that really respected everyone. And it was just a kind of kindness

Starting point is 01:32:15 and goodwill to it. I think, again, like we were saying before with when Nick Sleep and Zach went to Omaha and they saw the kind of behavior that Warren and Charlie embodied and their focus on businesses and business molds rather than trading in and out and lining their own pockets and taking advantage of people, that it had a massive effect. I think when you see people behave in that way over the years, it has an effect on you because it's not. So seeing Guy and the amount of joy that he takes in other people's successes or trying to help other people, that's had a big effect on me over the years.

Starting point is 01:32:52 And I've benefited from it myself because he's helped me in all sorts of ways. And I'm not trying to hold him up as a saint. It's not like he's perfect in every way. Not in any way saying that. We're all deeply, deeply flawed. But I see that goodwill and what I think the Buddhists would call sympathetic joy or empathetic joy that his ability to take pleasure in other people's successes. It reminds me of that that instruction from Buffett that you want to hang out with people who are better than you because you can't help but improve. And so I think when I hang out with people like Guy or Nick Slee or a lot of the other people I write about it, I hope that some of it rubs off on me because it gives me a sense of a different,

Starting point is 01:33:31 way to operate. It's very helpful. It's very helpful. It gives you an alternate model instead of the sort of sharp elbowed model of let me just look out for myself. That's been a great unfolding pleasure in my life has been to have that friendship with Guy and just to see to see him behave that way. It's lovely to see. William, I had the privilege to speak to you quite a few times, not just on recordings like this, but in general. And it's often we have on the agenda that we want to talk about business. But I often find that we talk about living according to your own values, whether that is professionally or privately, and sometimes you have those two intersect, of course.

Starting point is 01:34:17 I think what I'm most impressed about is how deep you've been thinking about this and and how vulnerable you also make yourself in terms of the struggles that we all have as we go through life. Would you be willing to share some of your reflections of how to live according to her values? Thank you. First, that's very kind of you to say. I think one of the things that you can see from my book and probably also from this conversation is that I'm always wrestling with these questions of what does it mean to live a meaningful life and to live a life that's aligned with who you are. your deepest nature. When I was interviewing people like Charlie Munger or Howard Marks or Joe Greenblatt or Monash, any of the people in the book, I'm not just thinking about how do we get rich. What can we learn from these people about how to get rich? I'm really thinking about what

Starting point is 01:35:09 constitutes a successful and happy and truly abundant life. And so there's an element in the book and in our conversation here of me searching to answer this question of how to live. that's also a huge aspect of my reading. I spent an enormous amount of time reading peculiar, esoteric books about Kabbalah, which is this ancient sort of mystical for wisdom that's very, very exquisitely beautiful. Tibetan Buddhism, I've spent a ridiculous amount of time over the last year reading obscure books about Tibetan Buddhism. And I spent a ridiculous amount of time reading David Hawkins' books. And it was actually originally Monish term me on to reading Power versus Force, which I think is a very important book. But I ended up reading a lot of his more obscure books

Starting point is 01:35:58 with titles like I, subjectivity and reality and things like that. I just read them over and over again. I'm really trying to figure out how to live and how to think. Maybe that's one reason why Richard Wise are Happiest resonated with people is that it's not me coming in saying, I figure this all out. It's me actually groping towards something and taking advantage of the fact that have access to people like Bill Miller talking about how he's drawn on stoicism or Howard Marks on how he's drawn from Zen Buddhism. And it all seems totally interconnected to me. Remember that great quote that Charlie would often quote from a biologist about how everything is one damn relatedness after another? It's all related. And so it strikes me that how you run your business, how you treat your part,

Starting point is 01:36:46 totally related to your relationships or everything else. So you think, say, about something like Munga saying, if you want to have a good partner, be a good partner. Then think about what he said about marriage, where he said, if you want to have a good spouse, be a good spouse. Deserve one. That's totally interconnected. There's a total link between the way he's running his business life,

Starting point is 01:37:11 his investment career, and his attitude to relationships with his, with his friends, his partners, his wife. And again, this is not to say that he's perfect, but it's understanding that there's a link that the way you conduct yourself in one area radiates out in all of these other ways. And so think of something, I write about this in the chapter on manga, where I came to this revelation that what really mattered to him was not just the scale of his victory, but it was the manner of his victory. It was the fact that he'd done it in an honorable way. There was this beautiful story that he told about how the best company that

Starting point is 01:37:48 he and Warren ever saw, the best business that he and Warren ever saw, was a snuff company. So I guess this was tobacco that you would, I don't know much about how you do this, but he said it was clear that going in, that it was a killing product. And so he said, they look at this business and they're like, yeah, it's unbelievable. And they didn't buy it because it was a killing product and it was clearly causing cancer. You know, this other kind of famous family buys the company and makes $3 billion off it. And Charlie said, why would I have any regret about not having that $3 billion? He said, my life would be worse for having that $3 billion.

Starting point is 01:38:28 And I just think that's really fascinating. That's a really fascinating insight into how you want to live your life. And so when I was talking to Ed Thorpe, for example, who I know you, you've interviewed, again, is one of the few people in the investment business who's as smart as Charlie, right? I mean, it's one of the great geniuses of the investment business. And I talked to him about his regrets in life. And he said, I don't regret any of the principled decisions that I made. I just think that's really interesting. That gives you a sense of how do you want to conduct your life? When someone like Ed thought looks back in his eighties, now in his late eight years

Starting point is 01:39:03 at his wife, he's proud of the way that he behaved, not just of the fact that he had a hedge fund that didn't have a loser in 20 years. He's proud of his behavior, of the quality of his decisions. And I look at Nick's sleep, for example. I had this wonderful interview with Nick and Zach in their office on the King's Road in London. It's this beautiful kind of sunny room in the least likely setting. I mean, it's on the top floor of a house on Kings Road, and they have like their beekeeper suits there, they're matching beekeeper suits. You know, this is several years after they closed the fund, and they still share this office. And they weren't going in very often, but they still share the office because there were still friends after all these years of being

Starting point is 01:39:46 partners. Nick said to me, it's a partnership built on kindness. He said, for example, that when they were setting up the company, when they're setting up Nomad, he wanted to have it be 50-50, which was also interesting because Nick was kind of the alpha dog. Like he was, he was, this very confident, very successful, good-looking guy who already had a really good record at marathon where he'd been working. And Zach had been working at Deutsche Bank as a sales analyst and had less of a clear record of success. And Nick immediately was like, no, no, let's make it 50-50. And he says, you know, Zach is hugely intelligent and he wanted him as his partner. And Zach was like, no, you should own 51% and I'll own 49%. And that way, if we ever have a dispute

Starting point is 01:40:30 about anything, you'll decide what the right way is to go. And Nick said to me, when someone has loaded a revolver and handed it to you across the table and said, here, shoot me if you like, said, how can you mistreat them? And so their partnership was built on trust and kindness. So when I see people like Nick and Zach behaving that way or Guy Speer behaving that way with his shareholders or Munger talking about his relationship with Buffett that way, or Thorpe talking about making principal decisions or saying to me, look, the single most important thing in your life is who you spend your time with. That's way more important than your money.

Starting point is 01:41:13 It's who you spend your time with. When I see things like this, when I'm interviewing people about these subjects and I'm hearing these lessons about how to live and how to behave, I just find it immensely helpful. And it's not that I've nailed any of this. There's an enormous gap between the behavior I espouse and appreciate and admire and the way I actually behave. There are many occasions when I fall short. So I'm not trying to be kind of self-righteous and self-congratulatory here. But I think it's really useful to study the great investors with this sense of what constitutes a truly successful and abundant life.

Starting point is 01:41:52 I remember Molly Munger, Charlie's daughter, saying he was never interested, you know, he wanted to be financially independent, secure, but he wasn't interested in doing it and losing the game of life. That's a really important nuance. I would just encourage your listeners to think about it, is that the reason we go to Omaha, year after year, is not because of how rich they are. It's because they embody a certain type of behavior and principles and manner. And it just gives you a sense of direction in life. It gives you a sense of, let me try to be a little bit more like that. You said something very profound there. Well, all of what you said, William was very profound.

Starting point is 01:42:32 And you talked about these outstanding people and how it's not only about learning from them, about achieving financial success, but there's this extra layer of living by the right values, being there, being useful for other people, for the community. I have selfish reasons to ask you this question, William, so I just want to preface the question by saying so. But it's easy, if I can use that word, to study amazing people who are not only smart, but who also live by wonderful values. It can be a bit more challenging if there are really smart people, financial successful people, but where you might not agree with the way they live there. lives or you might even find them despicable or whatever kind of work you would use for that.

Starting point is 01:43:21 Because as you said, like, how have you spent your time that is your life? How do you wrestle with that that you come across many financial successful people, but also perhaps you don't feel emotionally that it's nice to not just interview because that might be for X hours, but also you have to recall that interview and go all your notes and spend weeks on sort of like mentally with that other person. How do you wrestle with that? That was a very powerful process when I was writing the chapter about Sir John Templeton, who as I admit in the book, I didn't particularly like or warm to. And I felt kind of guilty about that because everyone always makes out that Templeton is kind of this saint and was

Starting point is 01:44:05 hugely moral and was brilliant. And so I was wrestling. with the fact that there was something cold and austere and judgmental. We talked about this the last time I was on your show, but I was trying to explain here's what I got wrong, here's what I failed to understand, and that I think I now understand about why he was extraordinary and what he was trying to teach me. That wrestling process was incredibly helpful and fruitful for me.

Starting point is 01:44:30 But on the whole, in this book, I've actually kind of made a point of not writing about people unless I admire and like them, which is a very idiosyncratic thing to do for a journalist. Because when I was coming up in the world as a journalist, I was perfectly happy to write attacks of famous people. I worked at Forbes for example. I loved taking down. The very first story that I did for Forbes was a story called Mining the Suckers, which was about a mining billionaire who I just thought was a total scoundrel and unethical. That was great fun for a young, aggressive journalist with a chip on his shoulder wanting to show the world how smart he was and how fearless.

Starting point is 01:45:15 I was able to take those flaws in my character and harness them to do some really good investigative stories. And I did a story for Money Magazine, a long piece many years ago. It was about the Kelfman Fund, which had this terrible fee structure where they were just making a fortune, regardless of how poorly they performed. My story was headlined, do these guys deserve $65 million a year or something like that? It was basically about how they'd set up this thing where they didn't have their own money in it. They had underperformed the market by something like 50 percentage points of the last three years while making $180 million between them. And so I think there's a real place for that kind of aggressive journalism about people. And in that case, I actually did like them.

Starting point is 01:46:02 And I thought they were really good investors. I just think they were kind of screwing their shareholders. And so they were kind of poster boys for this kind of less savory, more self-serving area of Wall Street. But in this book, I just didn't want to write about people that I didn't admire. And so it's just an idiosyncrasy to focus on people who I think are kind of admirable and instructive. I think there are some people, some journalists would look at it and would be like,

Starting point is 01:46:27 you're too close to the people you're writing about, you like them too much. And I think that's a perfectly fair criticism. I think the upside of it is that because I'm writing about people I know well and who I can empathize with, they open up in a way that they wouldn't if I was out to get them. And so there's a kind of intimacy to the kind of writing that I'm doing where someone like Bill Miller will actually tell you what it was like to go through an incredibly painful period of underperformance. And so that's partly the reason he's doing that is because he senses that I'm not out to get him. Because I'm also telling him about the periods in my life that have been very difficult. And so this is the way I've come to deal with it myself, is just to focus on people who I think you can learn, you can learn from not only about how to get rich, but about how to think better

Starting point is 01:47:18 and how to live more wisely. Because ultimately, just the ability to make enormous sums of money by playing this game really intelligently. There's nothing hugely redeeming about that. There is an element of this game that's tremendous fun and tremendously interesting. But the fact that you managed to make billions of dollars by beating the market or by charging obscene fees doesn't make you inherently admirable. And so why celebrate those people if they're not admirable or insightful in how they conduct their lives? Wonderful, William. It's always such a pleasure. Speak with you. Like I mentioned last time you won the show, like your book, Richard Weiser Happier,

Starting point is 01:48:00 that's the best book I've read here in 2021. It's just a wonderful book. And I think people can just tell from listening to you that it's a wonderful book read by a wonderful person. Before I let you go, I'd like to give you an opportunity to share with the audience where they can learn more about you, but also Richard Weiser, Happier. I have a website, which is Williamgreen writes.com, and I'm on Twitter. I'm reasonably active on Twitter where I'm William Green 72. I'm on LinkedIn. And I'm really happy to hear from people.

Starting point is 01:48:30 I'm perennially aware of the fact that I'm getting behind on replying to people. And I feel guilty about it as messages come in on Twitter and LinkedIn and at my website and stuff. I really like hearing from people because I feel like we're all kind of on this journey together of trying to figure out how to invest better, but actually how to think better and how to live. better. And so it's lovely when I hear from people who've been studying the same sort of stuff as me, who've read my book and I'm like, yeah, yeah, that really helped me. I love that. So please feel free to reach out, but don't be offended if it takes me a while to get back to you. Do it and know that. William, again, thank you so much for taking time to speak with us again.

Starting point is 01:49:09 All right, guys, if you listen to this on your podcast app, make sure to follow if you don't already. And if you like it, make sure to write a review. That helps other people find the content. I'm sorry we have to let you go now. It's been absolutely wonderful. Have a wonderful day. Thank you so much. Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by the Investors Podcast Network and learn how to achieve financial independence. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only.

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We Study Billionaires - The Investor’s Podcast Network - TIP398: Wisdom from the Greatest Investors w/ William Green

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