We Study Billionaires - The Investor’s Podcast Network - TIP538: Richer, Wiser, Happier, Q1 2023 w/ William Green & Stig Brodersen

Episode Date: March 26, 2023

On today’s show, Stig Brodersen talks with co-host William Green, the author of “Richer, Wiser, Happier.” They discuss what has made them Richer, Wiser, or Happier in the past quarter. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 02:31 - How to think about investing with an asset manager that yields a lower return and has good values, or an asset manager with a higher return and bad values. 27:35 - The role of money vs. happiness for billionaires. 48:55 - What Stig and William learned from Ray Dalio. 54:51 - Why pain + reflection = progress. 1:25:16 - What Stig and William learned from Charlie Munger. 1:44:22 - Why William bought Alibaba and Seritage Growth Properties.  1:53:09 - Which investing books made it to the top 5 for Stig and William for Q1 2023, and why. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Listen to Stig Brodersen and William Green’s episode on Money and Happiness or watch the video. Listen to William Green’s interview with Ray Dalio or watch the video. Tune in to William Green’s interview with Fred Martin about being a disciplined growth investor or watch the video. William Green’s book Richer, Wiser, Happier – read reviews of this book. Fred Martin’s book, Benjamin Graham and the Power of Growth Stocks – read reviews of this book. Bruce Greenwald’s book, Competition Demystified – read reviews of this book. Joel Tillinghast’s book, Big Money Thinks Small – read reviews of this book. Ray Dalio’s book, Your Guided Journal – read reviews of this book. Aswath Damodaran’s book, The Little Book of Valuation – read reviews of this book. Gautam Baid’s book, The Joys of Compounding – read reviews of this book. Q&A with Charlie Munger from the DIJO meeting.  Watch the trailer for Free Solo. NEW TO THE SHOW? Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts.  SPONSORS Support our free podcast by supporting our sponsors: Bluehost Fintool PrizePicks Vanta Onramp SimpleMining Fundrise TurboTax HELP US OUT! Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. In today's episode, I'm joined by my co-host and good friend William Green. Starting today, we'll every quarter percent to our listeners what has made us richer, wiser, and happier. And William and I are excited to test out our new format. We'll be talking about what we recently learned from billionaires such as Ritalio and Chaliermonger and reflect on the ever-relevant question of money and happiness. All right, enough talk. Let's get to it.

You are listening to The Investors Podcast, where we're 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 Bruterson, and I'm joined by my co-host William Green today. William, how are you? I'm very well. I'm delighted to see you.

I sound a bit raspy because it's earlier in America, and I'm just on my third cup of coffee, so I'm still waking up. All right, so as I was saying there in the introduction, so William and I will be hosting a new quarterly series, and we're calling it Richard Weiser Happier, which is a tribute to William's book, but it's also just because it's just a fantastic title. So the idea is that we are going to talk about every quarter, well, let's see how the first one goes, but every quarter we're going to talk about what have we experienced over the past, well, quarter that had made us either richer, wiser, or happier. So that's sort of like the premise of this format that might be a bit of a bit of a bit of

bit more informal than what you as a listener are usually tuning into. We will be playing different audio clips with guests from Williams' wonderful podcast, Richard Wiseer Happier, that you can also find in this feed. For example, late on this episode, we'll play a clip from Williams' episode with the Redalio, but we won't constrain ourselves only to play an order clip for our own podcast. We're also going to play a clip, for example, from Charlie Munger and the Q&A he did at the Daily Journal meeting here we had recently. So we have five segments.

The first one, values or money, we're going to go right into that here in 30 seconds or whatnot. Then we have one called Money and Happiness. We have one called what we learned from Redalue, another segment then what we learned from Charlie Munger. And then by the very end of this episode, we're going to talk about our top five books from this recent quarter, Q1, 2023. So let's just go right into the first part. That won't be an audio clip, but something that I pondered on for quite some time.

I spoke with Guy Speer here on We Study Billioness 414, and he talks about investing in companies or not investing in companies that destroy value for society. And I guess I don't have to say it's evident that Guy is a fantastic, wonderful person, terrific investor. So I also think you get the both of both worlds investing with him. But I also kind of feel it raises the question, what if you had to choose? And so we're trying to like to about a bit go up in the helicopter. and talk about some of the more ethical things.

And William, if I can give you an unreasonable premise here for my question. So you've told in another episode that you invest with high-quality people such as Guy Spear and Matthew McClellan. So let's say that I could guarantee, for whatever reason, I could guarantee that if you invested with Guy, you would get 9%. Completely stable. I know I'm going to make it sound like a Bernie Mado kind of thing. I want to say it was around 9%. But it's not a Bernie Mado thing. You could get 9% no matter what.

Great person, terrific investor, wonderful human being. But you can also invest with another fund manager, guaranteed 11%. But you knew that that asset manager had bad values. Who would you invest with? And how do you think about this values or money dilemma? I'm deeply idiosyncratic. So I'm not saying anyone else should do what I do. But I sort of surprised myself with my answer, which is I wouldn't hesitate to take the lower

return to invest with the person I trust and like and to avoid the person that I think is kind of shady or unpleasant or selfish or just out for themselves. That's a pretty idiosyncratic answer. But I think you have to really think hard about who's in your ecosystem. Who, I mean, I remember, look, I'm totally biased on this front as well because Guy is a very old friend. He's someone not only who I've invested with for over 20 years, but he's one of my closest friends. I just spent a week with him in Switzerland. So I'm totally biased here. But I feel like I want to have people in my ecosystem that I like and that I trust and who I feel have their interests aligned with me. And so when I look at someone like Guy, when I first invested with Guy many

years ago, probably 21, 22 years ago, one of the reasons why I invested was not just because I thought he was very smart, which he clearly is, it was actually, it was partly because if I remember correctly, he had just got an incentive fee for having really good returns in some period. And then immediately the fund had gone down. And much to his lawyer's annoyance, he returned the incentive fee because he said, well, I didn't really earn it. You know, it's unfair for me to take And I thought, that's such an eccentric thing to do. And so I want to be partnering with someone who's willing to go against their own interests. And then at the same time, he also had basically half of the money in the fund was his family's money, his father, his sister, uncles, aunts, lots

of family members, and then friends and partners of his fathers. And I just thought, okay, So there's an alignment here where if he messes up, he's going to suffer more than I do. And I think those two instincts were actually correct to align with people who are prepared to go against their own interests in your favor and who are eating their own cooking. This is something that Nassim Taleb talks about, right? You want to have skin in the game. You want a money manager who is going to get hurt alongside you or benefit alongside you. And so if there's some kind of takeaway for our listeners, I think it's really to think hard

about whether the person you're investing with has your back or whether they're just out for themselves. And I think one of the easiest ways to tell is just by looking at the fee structure. So I look at, say, guys, fee structure and the share class that I'm in, there's no annual management fee. And so he gets a percentage of the profits if he gets good performance. But if he doesn't perform, he doesn't get paid anything. And Monish Pabrai, who I think you invested with at one point, has a very similar structure.

And it's cloned from Buffett's structure in the 1950s partnerships that he had. And actually, Buffett cloned it from Ben Graham. And it's something that most people can't afford to do, right? Most hedge fund managers are just, they'd rather have a structure where they get 2% of the assets in a management fee, regardless of whether they do lously. not and then 20% of the profits. And so as Monish would say, it's heads, I win, tails you lose. And I want to be partnering with people who are looking out for me.

And for the same reason, I invest in Berkshire Hathaway, not because I think it's going to have the greatest returns on earth. There's no fee. You're not paying them expenses. They're Munger and Buffett are making $100,000 a year to run this enormous business. you're getting the benefits of the float and all of their expertise and brilliance and the competent, honorable people they've got working for them. And so I don't really know how Guy's going to do. I don't really know how Berkshire's going to do. But at least I feel like they've

stacked it in my favor, that they're treating me as a partner and they're trying to make money with me, not off me. And so that's critical. But then you have to kind of also hedge against your own blindness. So what if I'm wrong in my assessment of those people? And so even though I'm trusting certain people to behave in an honorable way, I'm still diversifying in case I'm wrong. So I remember John Templeton telling me many years ago that for regular investors, you should probably own five or six funds that give you exposure to different parts of the market. And so anytime I get carried away and I fall in love with some investor or some fund or some stock and I think I should pile into this, I just remind myself, well, I've been wrong before.

Why should I assume, as Templeton would say, why should I have the arrogance of believing that I found the one fund, the one money manager, the one asset class? And so, yeah, I want to invest with people who I think are honorable and decent and have aligned interests with my interests, but I still want, I still want to, want to diversify in case I'm wrong. I think that's super, super smart. And just to just to one thing about like investing with the right people, what you said before about this ethics, and it really makes me think of the episode you did with Fred Martin not too long ago. And he talked about how money management, at least for him, was about foregoing money to help clients get better returns. Because if I find

is big enough, you can't get the same returns if you can whenever it's smaller. And think about that as a managers are generally, they're incentivized to manage as much money as it possibly can because whether it's a two or 20 model, whatever it is, generally you make more money if you manage more money, even though it's not to the benefit of your investors. Yeah, and I think there are clues in someone's past behavior. I was discussing this with Tom Gaynor on an episode that will come out shortly where I was saying, how can you tell whether the person you're dealing with has integrity? And he said, well, look, there are clues in their past behavior. And so you look at Fred Martin, and many years ago, he closed his small cap strategy to new investors when it had

something like $400 million in assets. And so in the 15 or 18 or whatever years since then, he could have made tens of millions of dollars in fees that he was willing to forego. because he wanted to keep it small because he said it was really impossible to manage a huge fund that invested in small cap stocks. So there's someone who actually has demonstrated in his past behavior that he cares really a great deal about his investors. So look for the clues, look for the past behavior, look for the fee structure. You don't just want to believe someone because they say the right things. I think there's usually, it sounds like an odd analogy, but it's like when you see someone who's committed a crime, if they're a rapist, for example,

sorry to use a sort of dark example, you tend to see that they had the same modus operandi multiple times. And so I think when you see people behaving poorly, they behaved poorly multiple times. And when you see people behaving well, you know, I've seen it with Guy multiple times where that same instinct that he had with returning the incentive fee early on, he did something something recently where he and you have to accept the fact that I'm totally biased on this because he's a good friend. I'm not trying to say this as a shill for guy. But they did something recently where they figured out that basically because the fund had

had a bad year last year, they could actually offer existing investors or new investors the opportunity to invest at a previous high watermark, which I'm not explaining well, but it basically meant that, you know, you got the benefits of the fact that it had done. poorly so that you would, you'd be investing with lower expenses, lower fees going forward. And so they basically figured out a way to take money out of Guy's pocket and give it to the investors. And I remember once Guy was talking to Mark Chapman, I think it was, who works sort of, I guess is like the CFO Aquamarine guy's company.

And it said they were talking about the new fee structure where, you know, you could be in a five-year share class where you would get no, no. Guy would get no money at all if he didn't perform well. And Mark was like, are you sure you want to do this? You might make no money for the next five years. And guy was like, yeah, welcome to the world of aligned interests. And I think that's really interesting when someone's prepared to do that. That just makes me feel good.

I don't know how good his performance will be, but there's a record of behaving in an honorable way that I like. Yeah, I like that. And very few people, very few people just does that. You know, they promise a lot, but they're not ready to take the pain together with you. One quick example, before we got our own sales team here on the podcast network, we got constantly asked whether or not someone could do it for us. And they guaranteed, like we could say, I don't know, do $1 million.

I was like, that's great. But do we have a guarantee that if you don't, you supplement up to a million dollars? And we're like, no, no, no, no, we can't do that. but you use the word guaranteed. So what does that mean? That means we're going to do our absolute best. Okay. So you take the upside with us.

That's great, but you also take the downside because we could also do XYC. Like, no, no, no, no. We only want to take, they didn't use the word. We're only going to take the upside with you. But that is how most people are wired.

And, you know, that's the way it is. And that's also why it's so wonderful whenever you meet with people like Guy or Manish or, I come from a very normal, if I can use that word, because it's always dangerous to use words like normal, but a typical Danish middle class background. And I wouldn't say that I was taught that people in the financial industry was bad people, not like that, but they were definitely not good people. And I think there's a part of me who are really, really happy to, and don't get me wrong, I definitely met bad people. I've started in a financial industry.

I've seen bad people there. Don't get me wrong, but you also meet wonderful people, just like you're doing all walks of life. We'll also stay, remember that thing that Buffett said to Monish and Guy at their charity lunch back in, I think, 2008 it was, where they paid $650,100 to have a charity lunch with Buffett. And Buffett said to them during that lunch, I don't want to be in debt because I don't want to see what I'm capable of doing. And Guy has said to me, look, if even Warren is vulnerable under certain circumstances where

he thinks he could behave poorly if he were under pressure financially. What about the rest of us? The rest of us are that much more vulnerable. And so I think it's not just a matter of partnering with honest and honorable people. It's also that even decent people can do terrible stuff when they're in vulnerable situations. And I see that with myself where when I'm stressed out, I'm much more unpleasant. than when I'm unstressed. And so I think you want to structure your life in ways that are more likely to tilt the odds

of your behaving decently. And so that means living within your means, not having an excess of debt, so you'll panic, not having such an expensive lifestyle that you need to take advantage of other people. Guy once said to me, look, you have to move the candy away from. you, which is metaphorical because in both of our cases, we've not been very good at moving the chocolate and the cap chinos away from us. But I think it's true. You want to structure your life so that there's not as much temptation to behave poorly. And so if you're investing with somebody who, you know, when I went to stay with Guy recently in Switzerland, he lives

very nicely. But it's really interesting. We drove back from Clostas in the mountains to his home in Zurich, we were in his old Porsche, which is the same Porsche he picked me up in from the airport all those years ago when we were working on his book, The Educational Value Investor, and it's now 16, 17 years old. And so still a really nice car. But it's not kind of glamorous to drive a 16 or 17-year-old car. And so I think he's structured his life. So he's not put himself in a situation of jeopardy where he needs to behave in an unethical way. And that's important for me. I need to think about how to structure my finances so that I'm not going to panic,

but also how to structure other aspects of my ecosystem so that I'm likely to behave well. And so this gets who you invest with, who you hang out with, who your friends are, even what you're reading. Think of manga talking about hanging out with the eminent dead by reading certain things. And so you want to structure your entire ecosystem so that you're less likely to succumb to the less noble side of your character, I think. Perhaps one very small example of that. Now we just talked about the imminent death. So that's a top act to follow William.

But, you know, I think a lot about how to design my life in a way to optimize for happiness. I'm sort of like going straight to the source whenever I say optimize for happiness. I remember that Preston and I read a book, I don't know, it was probably five, seven years ago. It was called Delivering Happiness by a gentleman called Tony Shea, who's unfortunately not with us anymore. And he said that if you continue asking a person why, like if they do XYC, like continue to ask why the fifth time or before they're going to say, because it makes me happy or they think it makes them happy. And you could then argue that, you know, it's not making him happy. But

that's not so much the point. The point is that they're doing it because they think it makes them happy, even people doing terrible things. So I thought a lot about that. I've tried going back to the original topic about how to optimize for happiness and how does that relate to investing. And so I remember we had John Huber on the show a long time ago and he was talking about Facebook, which is called Meta Today. And he talked about why it was such a great investment and why you could expect equity in return. And he was completely right, by the way.

But I remember thinking about it. And I'm like, I understand the business. I used to use the product. I can see the business case. It was very easy to analyze. But I did not want to invest in it. Meta makes me sad. I know it probably comes across and I have a good friend who works there and they're probably

wonderful people working at Meta and they're making a lot of people happy. Don't get them wrong, but for different reasons, the company Meta makes me sad. And I also think that they, to some extent, do some not so good things for society. I could be completely wrong or right about that. That's not so much the point. But I remember thinking, I could be making money on meta. Of course, you could also argue I could have been wrong, but I could make money. I just don't want to make that bet because that means I have to read their annual reports. every time I hear something about it in the news, I have to think about the company. I just don't want that life, even if it came with a profit because I optimize for happiness.

I know it probably comes across as naive, but it's one of the things I'm thinking a lot about, which sort of like goes back to this unreasonable thing I said to you before about William, like, okay, so you can invest with a wonderful person with a lower return. How do you think about that? So it was just a different way of going to that topic. No, I think it's a really important insight. And look, we're not being totally naive here because it's not like we would invest in a lousy company or with a lousy fund manager who we thought was lazy and incompetent just because we thought they were a nice guy or that the company was a really ethical company that treated its employees fabulously. You want to invest with talented, capable, driven people and in good businesses. But I think, you know, you're not just optimizing for profits. I mean, I,

that's not the most important thing for me. When I think about my financial goals, I want to be financially independent and free and able to do whatever I want to do. I don't need to drive a Ferrari. I don't need to have the fanciest house. That's not interesting to me. And so it's not uninteresting, but actually, no, I mean, without wanting to sound judgmental, I would be slightly embarrassed to drive a Ferrari. And it's not a judgment on the people who do. I just think it would be kind of, it wouldn't suit my personality. So for me, when I think of my goals and my financial ambitions, which are sort of basically to live the way I want to live without being answerable to anybody, to be in charge

my own schedule, my own time, where I go on vacation, whether I stay in a really nice hotel, I'm a sucker for a really nice hotel. So it's not like I've taken a vow of poverty. You know what I'm a sucker for really good food and stuff like that and inexpensive clothes. They're not flashy, but they're really well made. So it's not like I'm some kind of monk. But to get that sort of lifestyle, if I were to make 10% a year, that would be amazing. I'd double every seven years.

And I don't know, is that before tax? Is it after tax? I don't know. Does it mean I actually have to supplement it by continuing to add to the pot myself by saving more? Maybe. Maybe there are years where you make minus 10. percent, but you add 20 percent, you know, so you just keep beefing up what you're investing.

But if I act in that way, investing in a sustainable way, trying to get a decent return, I'll be fine. So I actually don't need to make huge compromises where I take wild risk or invest with someone who's kind of scummy, but we'll probably do really well. So I think part of it Actually, Stig just requires you to know what the destination is that you're heading for, that you're aiming for, and then you work backwards from there, which is something I write about when I write about Nick's sleep in my book, this idea of starting with a desirable destination and then working backwards to figure out, well, what are the inputs that will get you there? And the inputs that'll get us to being financially independent and secure, I think a saving,

living within our means, investing responsibly, diversifying so that we don't blow ourselves up, not trusting one person or one country or one bank or one brokerage firm or something to an absurd degree so that then if you're wrong, you get blown up. So I think start with the destination and then work backwards to figure out the inputs that are likely to get you there. 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

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That's Shopify. com slash WSB. All right. Back to the show. So if we say that the destination is to be happy, I sort of like want to want to have a discussion about what kind of role does money play in that? And it's just, it's just a, I've always been fascinated by that question. I remember, again, like, growing up, I hope you don't bill me for like a shrink kind of session after William. But I, I remember

having this a background where I was taught that it wasn't because anything in my family had anything against rich people, but it was definitely like, it's not like rich people or like happier. they just had different problems. I remember there was one thing we talked about, but at the same time, I also was in a community where it seemed like everyone wanted to have more money. And I remember as a kid, I was like, that makes no sense. We just talked about how money doesn't make you happy.

And then everyone still wants more money. You know, as a kid growing up, you're like, that doesn't make any sense. And so whenever I read like articles or see something in the media and, you know, I kind of feel sometimes whenever there's a billionaire who have problems, you know, it's, there's almost like an element of gloating in a way where it's, it's not fair that this person is a billionaire and has a great life, you know, it's almost like we need to be some kind of, it should be some kind of universal

comma or something around that. And so I know that you have spent a lot of time with billionaires and high net worth individuals. And you can say that, you know, we've done that here on the show also, but I know you really know many of those people well, you've flown arrived in their private jets and, like, really, really gotten to know them. What kind of role does money play in the happiness of the richest people? Yeah. Well, I'll give you a couple of very specific examples of people I've talked to about this sort of thing or people I've observed. So I got to spend a bunch of time with Bill Miller the other day, and I've spent a lot of time with Bill over the years. And Bill, as most of our listeners will know, is one of the great investors of our time. He had this incredible, unprecedented streak of beating the market for 15 years running,

then had a terrible period during 2008, 2009, and then has had this unbelievable recovery rebound where his fund was like in the top 1% of all funds over the next decade or 12 years or something like that. And he just retired at the end of the year and is now at the end of 2022 and is now handing over the reins to his son, Bill the 4th, and to Samantha McElmore, who I'll have on the podcast very shortly. And so I've interviewed Bill many times of the last 22 years for the best part of 100 hours, I think.

And so I've really seen him in all of these periods, like during the glory days when he was like totally on top of the world during that 15 year streak, then during the, you know, in the aftermath of the really difficult time when he got crushed during the global financial crisis, then during the rebound where he got kind of vindicated. And now again, I'm seeing him now that he's probably about 71, 72, something like that. And I was really struck when I saw him the other day, just how happy he was. And I think there are some observations about what I think makes him happy that might be kind of, to some degree, universal. So the first thing is, A, he just got remarried to a really lovely woman who I met who's just great.

So he's got great relationships, right? And he's worked with Samantha McElmore for 20 years. He's worked with his son, Bill the Fourth for all these years. So he's worked with great people. He's got the same assistant, Darlene Orange, that he had, when I first was writing about him, when I was writing a profile for fortune of him back after 9-11. So he's got people he really likes around him. who are really decent and who he trusts and who trust him.

So that's really key. So the relationship part is really important. Then he has tremendous autonomy increasingly. So there was a period when he worked at Leg Mason where it was a public company and he had all of the accountability to a board and even writing shareholder letters. There would be like a big process, right? There were things you had to say or couldn't say or whatever, you know, lots of oversight. And I think part of what I've seen with Bill over the years is he's become more and more

autonomous. There's this sense in which it's Bill unbound. And now, even more so, now he's not responsible for managing anyone else's money. And he basically, you know, he's the biggest investor in the funds that his company manages and he still has an ownership stake in the company. But he's basically responsible now for his own portfolio, which basically consists for the most part of three investments. And so he's able to concentrate massively in a way that he couldn't for regular shareholders. I mean, he's got an enormous stake in Amazon that he's owned for more than

20 years, an enormous stake in Bitcoin. And so most people would be like, that's crazy to have all of your money, to have, you know, 70, 90% at times of your money and two assets that are fairly risky. But his cost basis for both is tiny, right? Like $200 a coin he started buying Bitcoin at and bought much of his stake at $500 around there. And Amazon, you know, basically his cost basis now that after the split is under a dollar a share. So he's made so much money off them and he's owned them for long enough that, you know, his cost basis is almost zero.

But so he's investing in a way that's totally true to himself, total autonomy. And I think there's a real clue there to what actually makes for happiness. It's living in a way that suits you with all. of your idiosyncrasies. And so there was a, I think I've told you this story before. There was a time when I was interviewing Bill at his home in Maryland a few years ago when I was working on my book, Richard Weiser Happier. I spent about a day and a half or two days with him in Maryland where he has a home.

And he would come in wearing the same black t-shirt or the same type of black t-shirt and jeans every day and he had kind of a hole in his cashmere socks. And he's like, you know, he's dressed the way he wants. He's in charge of his time. And he said somebody had asked him to be the keynote speaker at a gala event. And he said, well, what's the dress code? And they said, well, it's black tie. You have to wear a tuxedo.

And he's like, no, I threw out my tuxedo and I'm never buying another one. And so he's structured his life in a way that he's got rid of a lot of the stuff that he doesn't like to do. And so I was talking to his wife the other day. And she was like, well, it's amazing. Now he can really just read and do the things that read and invest and take advantage of the fact that he's got this really brilliant brain. And it's just great. It is like Miller unbound. So I think, you know, when I look at things like that, that's clonable for me, right? It's not like I have the wealth of Bill Miller, even a fraction of it. But I can say I want to I want to structure my life as much as I can in a way that's true to my own weirdness, my own idiosyncrasy, my own idiosyncrasy, my own own values, my own sense of what's enriching. And so for me to be able to spend my morning chatting with you as a friend talking about interesting subjects to you and me, that's a real joy. That's a source of pleasure. I mean, as I was coming into my office here, I sort of started beaming and I was like, this is great. You know, I get to chat with Stig. I get to be

in this beautiful office space that I share with this friend of my Matt Ludma, who's a really lovely guy. And, you know, I'm in charge of my own structure and there's my own time. There's no one really to tell me that I can't drink coffee as I'm on the podcast, even though it looks unprofessional. And you know, I'm kind of wearing a semi-clean shirt or whatever. You know, it's like I'm sort of in charge. And for me, as somebody who really values autonomy, who really values not being told what to do, that's incredibly valuable. I value that more than the money. And so I think Bill, similarly, when I look at Bill, he's structured his life in a way that suits him. And I see that again and again with the happiest investors that I've seen, that they're doing what they want, right?

So he's doing intellectually enriching work, working with people he likes, totally independent, true to himself. And then also, he's doing a lot of charitable stuff, right? So Bill has given, I think he gave $75 million to Johns Hopkins to the philosophy department. So he's a philosopher himself. He came out of the PhD program at Johns Hopkins, couldn't complete his studies and then because he couldn't really afford to because he came from a very modest family. His father was a taxi driver among other things. And so he didn't come from money.

And studying philosophy has had a profound impact on his success. So he's given back to the philosophy department. at Johns Hopkins. He's on the investment committee at Johns Hopkins. So he's helping his alma mater. He's learned an enormous amount from the Santa Fe Institute where they study complexity science. And so that helped him to invest very early in things like AOL and Google and Dell and Amazon. So he's given them, I think, a gift of $50 million. And so it's not just that he's got a yacht and a private plane and stuff, which he does have, which is nice. And he's got a really nice house in Maryland and a really nice house in Florida. I haven't seen the house in Florida, but I know it's

on an island. And I think, you know, it's, I'm sure it's pretty luxurious. He's got an amazing book collection. So he's got the toys and bobbles, but he's also giving money away to things that have helped him and that he thinks are going to help others, right? You know, the study of complexity science has all sorts of implications in terms of climate change, AI, things like that. So I think that's another really important component of happiness. There's got to be some element of sharing built in, some bigger purpose. It's not that the yacht and the plane are not enjoyable, right? Those are fun things to have for him.

But he's sharing stuff. He's giving back. So I hope that gives a few clues as to the role of, money in the lives of these people. It's not, it's not, it's not, it's not enough just to be rich. Yeah, they're very competitive. There is a sense in which the money is a kind of scorecard. It's a marker of success. But it's much more than that. I mean, Howard Marks once said to me that, that being a billionaire had made him less fearful. So there was a psychological benefit for him. But it's not, I don't know. I mean, Howard, Howard had, I know at one point he bought,

a home in New York for $52 million or something. So he lives very luxuriously. But really, I think, again, he's somebody who really loves ideas. In my book, I said his real drug is ideas, not money. And I think that's true. He's someone who loves to read, loves to think. And he gets great pleasure out of teaching people's stuff, out of sharing ideas. So again, he's structured his life in such a way that he's, you know, I think he has probably about a thousand people. people working at Oak Tree, but they're not really reporting to him. So he's not got any management responsibility. He's really like the philosopher king at Oak Tree, whose job is to think about things like risk and uncertainty and write about it in a way that's helpful to his clients

and to regular people who read his memos. So again, structuring his life in a way that's true to him, which if we have to boil it down to one thing, if I can just say, like, that autonomy is just so important regardless of what fancies you. And it's easier to have that autonomy if you have money. So whenever we started the podcast a long time ago, there's one book in particular that really, really make an impact on how I saw this good life for the like a better words. And it's a book called Call Me Ted. It's not a good book, by the way. So that was not why it made a big impact on me.

But it's about Ted Turner. And I don't know what he's most famous for today, perhaps because he gave a billion dollars to United Nations. I'm not completely sure what- He founded CNN, right? Yes, he founded CNN. That's a pretty good contribution to the world. That's probably what he is.

Yeah, so he founded CNN, you know, Turner Broadcasting System, merged with Time Warner, and then later at the biggest corporate murder, $160 billion at the time with AOL, which was an interesting case in itself. But it was really that merger that was, to me, it was just really interesting because he, for intents of purposes, had all the money in the world. At least whenever you're looking from my vanous point, whether you have $100 billion, Warren Buffett money, or you have a billion dollars,

called me Ted money, it's the same. It's probably not the same if you have a billion dollars, but at least to me it's the same if you have a hundred, or one of them. And he talked about his personal struggles in that book and how proud he was at CNN, how he invented a new type of reporting. It was actually because of the Iraq War and how everything was covered, how they played in role in that war. But he was so proud at so many things, which was wonderful. Don't get me wrong. And then he talked about this painful period of his life where he was doing the merger, he was like now a minority shareholder,

minority in voting rights, he couldn't really do what he wanted to do. He had to like have this famous press conference where like he had to say things he didn't want to say. And you would be thinking like this guy, he can do anything in the world. He's a billionaire. But he felt so constrained. To your point before about Bill, Bill Miller, like all the different tasks that you now have being one of the guys in this public company, one of the faces of that, He just had, he felt he didn't have any autonomy. Like, it was clear that he had a big ego and there was, that was hurt. Because now he was like, I don't know, the second most important guy in this company with tens of thousands.

And the rest of us might be like, wow, you're the second most important. But to him, you know, he was the first loser. You know, that's one winner and then he's the first loser. And so the reason why I want to bring up that book is I remember thinking a lot about it and thinking if I would ever to be so lucky, I would never ever put myself in such a situation where you have everything in the world and you're just miserable because you don't have the right yacht stick. Yeah, I'll tell you a great phrase that I spent a lot of time with a multi-billionaire who I helped him write his memoir that hasn't been published yet and I have no idea whether it will be. But he's a very, very interesting guy.

and he said to me at one point, he talked about, you know, he knows a lot of the richest people in the world and knows how miserable many of them are. And he said to me, he used the phrase poor rich people and rich poor people. And I thought that was really revealing that there are people who are incredibly rich externally, but actually are incredibly poor. And that's, it's difficult because there's some part of us, as you were saying before, people like to gloat about the problems of the rich. And I don't think this is a, this is about that. It's about understanding that if your life is empty in certain ways, for example, in terms of peace of mind or friendship and great family relationships, it's pretty barren. And this was one of the

interesting things that I learned from interviewing someone like Ed Thorpe, right, who as we've talked about Ed before on the show, right? This is a guy who's probably the greatest game player in the history of investing. He's a guy who beat the market at Blackjack, beat the market, at so many different games, right? Even at roulette. Yes, I was just about to say, even at roulette, and people might be thinking, how is that possible?

Well, meet Ed Thorpe. He had to use a bit of different techniques, but he would swear to this day it was not illegal at the time. It is now what he did, but what he technically did at the time wasn't illegal. Yeah, he's a true genius and an amazing game player. And so I said to him, look, if you were approaching life as a game, how do you stack the odds in your favor? So you win.

And one of the things he said to me is, well, look, who you spend your time with is probably the most important thing of all. And Munger once, I think Munger gave Ed Thorpe's book, Man, for all markets to Monish at one point. And he said to Monish, you'll notice it's actually a love story. And it's not really a love story, but there is an element in there of Ed's love for his wife of more than 50 years who passed away and now he's remarried. But I think of Ed as somebody who never underestimated the importance of relationships. And so when you're thinking about what you want to clone from the greatest investors or the richest most successful people in the

world. You don't want to clone the wrong thing, right? So you don't want to assume that enormous amounts of money are going to make you happy because then finally you'll be independent and autonomous and can do everything you want and don't have to fly on commercial planes and stuff. Yeah, that stuff's true. But what I think is much more important is the relationships. It's who you're hanging out with. And Munger said this great thing where he was talking about Sumner Redstone, right, who I've never met and he passed away now. But Munger said that he went to Harvard Law School, I think, with Sumner Redstone. And he said, you know, he was a tough tomato and he ended up richer than I was. So some people would say he's more successful. But he said, when I think of

Sumner Redstone, all my life, he's an example of what I didn't want to be. And he said, even his wives and kids hated him. And I have no idea if that's true. But when I asked Munga what we could learn from him and Warren about how to have a happy life, he immediately started talking about relationships. He was talking about the people in their lives, the people they'd partnered with, how they had so many honorable, decent people in his life. And he said, look, I've been a, I've been a good partner to Warren and he's been a marvelous partner to me. And so his entire success is built, not just on his intellectual brilliance, but actually on his partnership with Warren.

So I think that gives you a clue. And so when you're thinking of the desirable destination that you're working towards in your life and you're thinking, okay, I want to look back at the end of my life and think, I had a happy and rich and truly abundant life, not just a financially abundant life, but a truly abundant life, what does that consist of for you? And I'm pretty sure that an enormous part of that is actually about relationships. And so then you have to really ask yourself, what are the inputs in order for me to get good relationships? I have to behave better. I have to have to show up for my friends. I have to try to be more decent. I have to invest time in those relationships. And there have

certainly been times in my life where I got off track and I was so busy working that I didn't invest much time at all or much energy in my relationships. It felt like they were kind of a distraction. And maybe it was necessary at the time, but I look back and I'm sort of trying to make up for lost time because I think it made for a poorer life, even though externally, it probably felt more successful. But I don't think it made me happy because you know, you need people on the path with you who are sort of fellow travelers. And who can support you when you're miserable and down and who enjoy your successes and who, you know, you can celebrate their successes. So I think, I don't know, that to me is an absolutely

central aspect of a happy and truly abundant life, good relationships. And peace of mind. That's the, that's the other thing. And so you've got to figure out how are you going to get peace of mind. And so you've got to structure your investments in a way that gives you peace of mind, right? If you're, I mean, in my interview with Bill Miller on the podcast a few months back, I was asking how do you deal with stress as a regular investor deal with attention? And he said, you know, follow the advice. I think it was from J.P. Morgan himself where he said, invest down to your sleeping point. You know, you've got to invest in a way that allows you to sleep. And so having peace of mind in your investments, in your schedule, in your things like exercise and meditation, you know,

you have to really think about how they're going to help you build equanimity. Whenever we are in the investing world and we're talking about meditation, we have to talk about Ray Dalio. One of the billionaires we had here on the show that have impressed me the most for sure. And you recently spoke with Ray on episode 22 on the Rich and Wise a Happier show. I would like to play this clip for you, William, and together with the audience, we can listen in here. So let's go back, say, to that example, from 1982, where I think there was a debt crisis where Mexico defaults on its debt. We have the worst debt crisis since the Great Depression. And you bet, I think, that the stock market and the

economy would be battered by this, and instead it actually strengthened. And it was sufficiently disastrous that you had to fire almost everyone at Bridgewater and ended up borrowing four grand from your father. When you think of that process in that case, how you went through this process of reflection on what went wrong, what happened, what flaws of yours this exposed, or what misperceptions of yours, and how you develop principles based on that. How would that be a good microcosm of what we should do when we screw up? Oh, that's, it was so good. It was such a painful experience. I think, and then I really learned pain plus reflection equals progress. That's one of the principles.

I learned that every time I have an encounter, that it's like a puzzle, that if I can solve the puzzle, you know, what should I do differently or how should I deal with it, I would get a gem. And the gem would be a new principle and a learning that would improve my life. And so in that particular case, I learned to fear and deal well with the, the possibility of being wrong. It gave me a humility I needed to balance with my audacity. In other words, it made me think, how do I know I'm right? And then through that process, to try to find out of curiosity, the smartest people I could

who disagreed with me and to study their reasoning. And it made me learn really how to diversify my bets so that I could, by diversifying my bets, I could radically reduce my risk without reducing my returns. And it let me also reflect on life. Like I was at a juncture. I was broke. And I'm, you know, it was, do I go get a job? Do I put on a jacket and tie and take the, you know, the railroad into the city and

work at Wall Street or something? Or do I not? And it was like I was sitting on one side of a jungle. and I could have this safe life by sitting on the one side of the jungle and not going into the jungle. But I knew that if I wanted to have a great life, I had to cross this jungle of all these threats in the jungle and survive. And then I sort of said, okay, what am I going to do? Am I going to live this safe life? And then it won't be as terrific or am I going to go into the jungle?

And how would I go into the jungle? And then I realized, I learned, okay, let me go into the jungle with people who would be on the mission with me and could see things I couldn't see. And we would protect each other as we went into this jungle. And I found out from that experience that I didn't want to get to the other side of the jungle to the success and sit on the success because I found being in the jungle with these people or being on the mission with those people, even through the ups and downs and the threats was rewarding. that all came from reflections of that terrible mistake, that terrible mistake. We learn a lot from pain. You know, life, I think, is it's almost a trick that what happens is the second order consequences are so often the opposite of the first order consequences. In other words, the things that are really good for us don't feel good. and the things that are bad for us feel good.

You know, okay, you eat, you know, the tasty stuff is the stuff that is not probably good for you. The exercise that might be painful is the thing that you don't want to do and you want to do the painful. So quite often pain or that is the opposite. It's a trick. Can you do the things that are really good for you? And so those kinds of reflections, I think, were very powerful.

powerful and how an experience really brought a lot of those. And from those lessons that I learned, that was the bottom. In other words, from that point, while there have been some up as and downs, it was almost totally up, almost all the way. There have been, of course, twists and turns and bumps and personal things, of course, terrible personal things that have happened. I lost to the sun. I, you know, all of those things. But to reflect on reality, okay, what does it teach you about reality and whatever and how do you approach that? All of those reflections, I've learned a lot from those reflections. And so it's that, you know, that instance, but, you know, many since. So this is just one of my favorite book of all times, Redellius book Principles. So, well,

just to be clear, you were talking about his book, like the interactive book principles, and then there's the other book called Principles. I don't know if I... Yeah, the new one is called Your Personal Journal. I think it's Principles, colon, your personal journal. And it's about how to develop your own principles. Just this clip here in itself is just there's so many things to talk about. And of course, I would encourage everyone to actually go and listen to the entire episode. But he talks about pain plus reflection equals progress. I mean, that's just so powerful.

And I see the lack of that all the time, not the pain part. We see pain everywhere, but the reflection part. You know, I meet so many people in investing. And whenever they make a really good investment, it's because of their skills. Of course, because of their skills. And then if they lose money, it's bad luck. Like, oh, my God, how could I foresee that XYC happened? So it's just bad luck.

So it's so refreshing to hear Dahlia talk about how you reflect it. and grew as a person from being wiped out in 1982. You specifically asked him about it and that experience. And the first thing he said was, it was wonderful. Or I might not have my according correctly, but it wasn't like, oh, it was terrible. Like, no, of course it was terrible. Oh, it was so good. Yes.

Yes. Yeah. And you would be like, what? Really? But yes, like, that was a gift. And a gift that really changed his life onward. And I'd like to use this example where I want to explain the reason for it. So the brain is 2, 3% of your body mass but consumes 25% of your energy.

And what that means is that your brain is wired to be lazy. It doesn't really want to work unless you force it to work. It's a very interesting topic in itself. And if you want to learn more about that, Dan Kahneman's wonderful book, Thinking Fast and Slow, it's definitely the source to go to. But most people choose not to reflect. A matter of fact, in 1925, Bertrand Russell, he had this wonderful quote in his book, The ABC of Relativity. Most people would die sooner than think. In fact, they do so, unquote. I just kind of feel

that that was wonderful. And so we all know that if you're easy on your habits, life will be hard on you. And if you're hot on your habits, life will be easy on you. And this is not easy. We're not prone to think like that. I mean, I don't know how you feel, William, but whenever something hurts in my life, the first thing I want to do is to get away from it. I mean, I like to talk about it from an intellectual perspective. Oh, we should learn from it and we should reflect.

But that's not the first thing that goes. At least through my mind, is just I just don't want it to hurt anymore. But I want to throw it over to you, William. What did you take away from an interview with Delio? Let's start there and then perhaps break it down. Well, so much. I mean, I think start with that idea of him saying when he looks back on this incredibly painful failure in 1982, where basically almost loses his career as an investor right

at the start and has to borrow four grand from his father, who was a jazz musician. I mean, wasn't like a rich guy. So it was a very humiliating and painful thing. And so Ray's response of saying, oh, it was so good, it was such a painful experience is incredibly revealing because what you're saying is you actually want to lean into your pain and not bury your own mistakes, your flaws, your failures from sight. So most of us want to hide from the things that went wrong or that feel wrong with us. And so there was a moment in that interview where I sort of, I said to him, look,

When I look at your new book, this thing, your personal journal, you talk about how to find the biggest obstacle to your success. And I look in my own life and I feel kind of ashamed to admit it, but I'm not systematic. I'm not process driven. I'm scattered. And I felt kind of flushed as I said this to him. And his response is, is like, no, no, that's great. And so he's not looking at my embarrassment about this floor in my wiring and my personality or whatever it is.

He's looking at it and saying, what a fantastic thing. You've identified this enormous thing that's an obstacle for you. And now that you've identified it and unearthed it and not been ashamed of it and buried it from view, you can actually deal with it. that's an immensely important idea and that's something I've been thinking about really intensively in recent weeks, both before the interview because I was preparing for it and thinking about what my biggest obstacles are in life. And since then, and one of the great lessons from Dallio is that you need this self-reflection. You need to stop by looking at your own wiring, looking at your own values, looking at what's important to you,

looking at your strengths and weaknesses in a really honest way. And so instead of being ashamed of it, look directly at it. So then you know what you're dealing with. You know the hand that you've been dealt. And so one of the things that Ray said to me in that interview is, look, I have a terrible rope memory. I couldn't remember things. I did badly at school when it was about rope memory.

And so I started writing down principles because it helped me deal with my encounters with reality. And so one of the things that he did was develop this habit of writing down principles to, I think in a way to guide him because maybe he couldn't remember certain things. I don't know. It gave him a way to force him to reflect on what had gone wrong. Another thing that he did is he would see, for example, that he'd messed up in 1982 because he was too audacious.

He was too bold, too arrogant. There was too much hubris, too much self-confidence. And so his workaround, once he knew that that was a flaw in his character or a vulnerability rather than a flaw, his workaround was to surround himself with incredibly smart people who were not afraid to say that he was wrong. And in a way, you think about Buffett and Munger, and they've done the same thing, right? Buffett has said that Munger is the abominable no man because Munger is smart enough and difficult enough and opinionated enough and feisty enough, that he can say to Warren,

no, I think you're totally wrong about that. And so part of the power of that relationship is that they've structured it so that you can be challenged by someone who's really, really smart. So when I'm kind of self-referential about this, and I think, okay, so what do I take away? How do I apply these lessons from Dalia? One of the things that I did is I went away and I did the principles you character assessment test, personality assessment test that he developed with people like Adam Grant. And it's in the show notes for the episode with Dallio. And so you answer all of these questions.

You start to get a sense of your wiring. And so I'm looking at this and it's kind of shocking. I know you've done personality assessment tests before and are a big believer in them. When I do it, I come up, there are all of these archetypes that describe different personalities. So mine not surprisingly tends towards creativity, right? So excited by novelty, intuitive, curious, original thinker, all of that stuff, fascinated by new ideas, comfortable in a chaotic and disorganized environment.

So on creativity, I'm like way up there. And then I think on the thing, on the measurement for organization, I don't know, I think I came, it was something like 2%. I mean, it was so embarrassingly low. Like the lack of the lack of systematization, it's just not part of my wiring, right? And similarly, you know, there are other people, you know, who have these archetypes of technician or implementer, which are the archetypes I'm least like. And so they're really organized. They really like structure, processes, they're methodical,

they're orderly. I'm just not built that way. So if I'm prepared to look honestly at that wiring, not necessarily as a shameful flaw, but as just the reality, it's part of who I am. It's part of the gift. That's how my creator made me. I'm sorry. And then I can start to say, okay, so what are the solutions? And so what Ray Dalio said in that episode is part of the solution is you work with people who make up for your own weaknesses, who are strong where you're weak. So that's been kind of a revelation to me. And this may sound really obvious to other people, but I can now see that my my deficiencies in areas like efficiency, orderliness, systematization, practicality. It's not because I'm recalcitrant.

It's not because I'm not trying hard. It's actually how I'm wired. And so I have to find people to partner with who are more systematic. So even, you know, look, working with the Investors Podcast Network, the fact that you have this amazing team in the Philippines who have all of these structures and processes in place is incredibly helpful for me. That's a structure that gives me the space to do what I need to do creatively, where I'm thinking who should I interview, what questions should I ask, how can I be present and intuitive

about what they're really telling me and going a different direction. So that all plays to my strengths. But then, you know, for me to figure out the deadlines, I've never really figured out the deadline for my episodes. I don't know. I sort of have some sense of it. but it's really hard for me. Does any of that make sense, stick? Yeah, it makes a lot of sense. And I could, yeah, I could just say like here in the company,

that that's true. You know, actually, we, everyone here on the team have done a personality test. And we actually did that after read Radalia's book principles. And he talked about how important it was. And, you know, a lot of people don't like that because it kind of failed they put into boxes and it's called personality types and sort of like had a bad connotation. but you're actually doing it as a kindness because you want to treat people the best possible way, but in a larger organization, it's hard to treat people well if you don't really know them.

And of course, those closest to them would know them, but then there are some people, another place in the organization, they might not know how to speak with them the best possible way and what their strengths and weaknesses are. So everyone on the team here have been asked to take a personality test. And the only person who hasn't handed that in yet, that's you, William,

which probably based on this conversation isn't too surprising. But I'm not trying to throw you under the bus when I was saying this, but there's, you know, when we're talking about like this structure and that part. And it is something that we are using. It's something we learn from Redalia. Like everyone here on the team have read the book and we applied a lot of his principles to our organization because it is an act of kindness. We want to be a kind, kind company.

And, you know, there are some people that want things a certain way, but, you know, it's easier to help people with what they need help with if they tell you. So it comes from that. It comes from a good place. Well, it's also funny when I looked at the scores that I had for things like doing things my own way, breaking rules, stuff like that, being independent, being a conceptual thinker, I was like 98%, 99%. I mean, like, sort of the degree to which I want autonomy is kind of extraordinary.

Like the thing about not wanting guidance, I think I was 99%. And so that totally makes sense with the way that I went about my book, for example, where I just hold off for five years. I missed my deadline by two years. And I just was obsessed with trying to make it as good as I possibly could. So if it failed, it wasn't because I hadn't put heart or soul into it. I was going to put everything into it. It was all about quality.

And I couldn't really explain why I did it that way. And then when I look at my personality assessment, I can see how much I dislike rules and routines, how rebellious, how independent I am, how little I want guidance, but also how obsessed with quality I am. It sort of makes sense. And so none of this is either good or bad. It just is. And so I don't want to look at my being scattered or unstructured as a sort of shameful weakness,

even though I kind of am ashamed of it and I regard it as a weakness and it makes me feel vulnerable to admit it to you and the world. I need to actually look at it in the same way that Dahlio looked at his flaws and weaknesses and say, okay, this is the hand I was dealt. How do I structure my life so that I'm playing the right games for me? I'm playing games that I can win. And so when I look, for example, at Guy Spear, I can see he's got this extraordinary woman, Chantal, who used to run a prison for war criminals, then was basically sort of semi-retired, and then came in and a sort of organized guy's life.

And that is such an amazing thing to have a hugely organized person come in and organize someone like Guy who says, look, I have ADHD, I'm all over the place. It's easy for me to, I mean, he said to her when he was first interviewing her, he said, look, I can leave the door of our office open in Zurich because, you know, I just forgot. And then I'll go to the airport and maybe I've forgotten my ticket or my, or my passport. How would you deal with that? And she's like, oh, that's fine. I got one of those at home.

You know, like, she's used to dealing with very brilliant people who don't have that sense of organization. And when I mentioned this that I'd done the test of Bill Miller the other day, he's like, oh, man, I bet I would do really badly on the organization stuff. And so Bill has got really lucky, I suspect, that he's structured his life. So he has this incredible assistant, Darlene, who's been keeping him on track for the last 25 years or so, so that he's free to think. And so I think part of, part of what's a frustration to me is that I think as someone who's, who's been writing books and doing podcast and

writing articles and stuff over the last decade or so and ghost writing books, I haven't really had a structure, a formal structure that I used to have when, say, I edited the Asian edition of Time magazine or the European, Middle East and African edition of Time. So there, because there were people who were very, very organized and systematic, I was free to do the stuff that I was better suited to. And I think part of the realization that I've had personally is that I've sort of set myself up in this independent way where I don't necessarily have the infrastructure that I would have if I were working for another company.

So I've somehow got to set that up and bear the cost for it myself. And so things like, you know, I have a, I do some public speaking and so I have a speaker's agency that represents me. And they take a big slug of my speaking fees. And I'm like, well, you know, couldn't I do it myself? And I'm like, no, like to be able to hand that off to someone. So I don't have to actually create an invoice or figure out, you know, like I need to just accept the fact that the cards I've been dealt when it when it comes. to organization and structure are the worst possible cards. And the cards that I've been dealt when it comes to thinking of new ideas or exploring concepts are weirdly high. And then there are

idiosyncrasies. Like one of the things that I'm sort of embarrassed about when I look at my assessment is it's really clear to me that I care what people think of me to a really high degree. I really care about being liked and respected. And so I can write as much as much. as I want about Buffett's idea of the inner scorecard, living by an inner scorecard, and only judging yourself by your standards. But the reality is, I really care what people think of me. I can't, I can deny that and pretend to be something. But I'm also in this peculiar position that now I know from this assessment that I care what people think of me, but not enough that I'm going to do what they say. I'm still going to do, I'm still going to do it my way and break the rules.

and then I'm in this tortured position, but I still want them to love me. And so being aware of your own flaws and foibles and idiosyncrasies, I think is a hugely valuable thing. And so I'm not trying to be self-referential here. I'm actually trying to sort of say, I think our listeners would do really well to study what Ray said in that episode, but also really to go through the process of doing that personality test, go through that book, your personal journal, and really try to figure out, like, what do you care about? What are your values? What's a priority for you? And then you look

back and you're like, well, how can I possibly have taken that job with those people? Like, why would I ever have thought that would work? Of course it wouldn't work. Whereas I look at my partnership with you Stig and the Investor Podcast Network. And I'm like, this actually is kind of a great partnership with me. It's like people I like who are honorable. who are trying to teach stuff, share valuable information, interested in concepts. I have a lot of independence. Whenever I've asked you for advice on stuff, you sort of say, well, yeah, here's my view, but just do it, you know, trust your own instinct.

So you're giving me tremendous support and autonomy at the same time. And so one of the things that Ray said to me in that interview is life is really all about understanding your own personality and preferences and talents and then picking, as he put it, suitable paths. I had great trouble pronouncing paths because to me it's paths. But that's a really important insight. And like many of the great truths in life, it's actually a really banal and platitudinous insight. It's not that profound. But as Munga would say about investing, it's simple, not easy. And so when you come across a truth like that, you need to take a it really seriously, I think, if it resonates with you. And so you need to say, okay, let me figure

out who I am, what I'm like, how I'm wired, what I care about, what my priorities are, what a truly abundant life means for me. And then let me try to pick a profession, structure my day, structure my activities, as much as I can to play to those strengths. Because if I'm playing somebody else's game that really doesn't suit me, I'm going to be absolutely miserable. 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 VANTA is a game changer.

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total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income fund fund fund's prospectus at fundrise.com slash income. This is a paid advertisement. All right, back to the show. So many things to unpack there, William. And it's so true. They've given an example.

I was speaking with a guy the other day and talked about how much nonfiction a person should read. And a tall guy that sometimes I feel, I'm not saying guilty is the right word here, but there's some things I want to be smarter about, including investing, and there's an opportunity cost. I only have 24 hours a day like everyone else. So if I sit reading one of the classics,

I'm not reading non-fiction or, you know, I'm not reading about investing or whatnot. And he talked about how he went through a phase of wanting to clone Buffett. And I think he also mentioned this in one of your books, William, where he was so relieved from meeting Buffett that, oh, he's just playing such a different game than I'm playing. So I shouldn't be stressed about not being Warren Buffett because I'm guy. So, you know, I should be the best version of myself. and be very, very aware of that. It's just so profound to have that type of insight.

And I could just, you know, let me give you an example. Like, whenever we started working together, William, that was the most pleasant way of starting a partnership. The only other time I've done something similar when I started working with Preston, I would imagine that we probably wrote a contract because it would sound weird if we didn't. I don't really remember,

which probably also makes me sound a bit disorganized, but I remember you're like, this is the type of relationship I have with this person, and it's like, I trust you, you trust me, I'm going to say yes to whatever you want to offer me and offer X, Y, C, and you're like, sure, true to your word. You're like, that's, that's fine. And then you sent me, like, I sent you the ending report, and you said like, oh, if you think it should be paid more or less, that's also fine. We can always talk about it, but I rely on your better judgment. And I sent you, like, yeah, you know, we had a great 2022, you know, I think we had like $2.2 million in free cash flow. And then I was saying, but we're also running a deficit right now.

And for the foreseeable future, you know, advertising being a boom-bust cycle, I'm paying to go to work. And it's not like 10 bucks. It's like serious money. I'm paying to go to work. So I'm taking money from my own account and putting into TEP. And that's perfectly fine. That's the nature of how this type of business is. And so, and you're like, okay.

And how wonderful is that to have that type of relationship? So we also did this nutty thing when we were first structuring our contract. I hope I'm not speaking out of school by saying this where you were saying, well, so we'll see how many downloads you get in the first month because that's when you get most of the downloads for an episode and then you'll get paid based on that. And I was like, nah, no, we should build in deferred gratification. So let's see how it does after a year. And so I basically structured it so that I wouldn't get paid a penny for a year, over a year.

That's kind of nuts, but it's sort of, but there's, but it built in, it built in a principle that I think is really valuable, which is the deferral of gratification, thinking more long term. And so, I don't know, there was something very, very characteristic of both of us in the way that we handled these negotiations, that it was, it was an act of personal trust. and it was long term and you were transparent. So when I asked you whether I should be getting paid more money recently, you were totally transparent about the situation. And I was like, okay, great.

And I don't know, I think that requires you, that requires you to be partnering with people who are honorable and decent. And so this gets back to something that Nick Sleep said in my book, where Nick and Nick and Kay Sakaria, who goes by the name Zach, had this extraordinary partnership that Nick said, look, it was built on kindness. And he said that originally they were going to structure it so that there would be 50-50 shareholders in their hedge fund business. And that was what Nick wanted to do.

Even though in many ways, he was kind of the alpha dog and was on top of the world and had been in the investment business successfully for years, managed. money, whereas Zach was being tortured working at Deutsche Bank in an institutional sales job that he detested. And so in some ways, Nick could easily have demanded a better deal. And he's like, no, no, no, it'll be 50-50. And then Zach says, no, I want you to have 51%, and me to have 49%. So that if we ever disagree about anything, you'll make the final decision.

And then Nick said, when somebody hands you a loaded revolver like that and says, here, shoot me if you want. How can you possibly take advantage of them? And so because they were both right in their judgment of the other person's decency and kindness and sense of honor, it's really worked out. And I don't know, I think it's such an interesting model for how to do business. You know, Buffett says the same thing about Munger, where he says in the introduction in the forward, I think it is to Janet Lowe's biography of Munger, he says, I've never seen Charlie take advantage of anyone in 41 years. And I've seen him knowingly take the worst end of a deal with me and others. And he takes more of the more of his share of the blame than he deserves.

And I don't know. So if you go back to what we were saying before about the importance of relationships and you think, okay, so a successful and happy and abundant life is going to have really good relationships with the people you work with your family, with your friends, that sort of thing. How do you get that? What Munga says is, look, we have. have a really simple system. He says, if you want to have a good partner, be a good partner. And so that's a really helpful distillation of wisdom from a 99-year-old polymathic genius. When Munger is saying, if you want to have a good partner, be a good partner, so then I have to think, well, what's Stig going through? What are the pressures on him of running a business?

What are the pressures on the team in the Philippines if I can't remember my deadlines? And so I try despite my lack of efficiency or structure, at least to be kind and polite and respectful and thankful. And that's sincere, right? I mean, I do feel respect and gratitude. And at the same time, I'm also aware of the fact that, you know, I have this vulnerability and the lack of structure and the lack of systems. And it's not really my fault.

Like, it just is kind of the way I was built. But I have to try to develop systems to overcome it. That's so well said, William. And I want to say, speaking of this, and perhaps we can use this transition into talking about Chalemonger. A person, we referenced quite a few times here on this episode already. And of course, throughout the story of our podcast. So this question or this clip I'm going to play for you here is from the Jane's Journal

Q&A that he's doing together with Biggie Quick. And it's sort of like going back and forth. So let's just play it. Then perhaps we can talk about later what we took away from it. Here we go. This one comes in from Matt and he says throughout your experience with Berkshire Hathaway, what are a few of the things that have surprised you most based upon some of your previous rational thoughts and ideas?

also how have you used some of those surprises in your quest to become a better learning machine? Well, I would say some of the things that surprised me the most was how much dies. The business world is very much like the physical world where all the animals die in the course of improving all the species so they can live in niches and so forth. All the animals die and eventually all the species die. That's the system. And when I was young, I didn't realize that same system applied to what happens in capitalism to all the businesses. They're all on their way to dying, as the answer, so that other things can replace them and live.

And it causes some remarkable death. Imagine having Kodak die. It was one of the great trademarks of the world. There was nobody that didn't use film. They dominated film. They knew more about the chemistry of film than anybody else on Earth. And, of course, the whole damn business went to zero. And look at Xerox was once on the world.

It's just a pale shrinkage. It's just nothing compared to what it once was. So practically everything dies. If you, yeah, on a big enough time scale. When I was young enough, that was just as obvious then, I didn't see it for a while. You know, things that looked eternal and had been around for a long time, I thought likely be that way when I was old.

But a lot of them have disappeared. practically everything dies in business. None of the eminence lasts forever. Think of all the great department stores. Think of how long they were the most important thing in their little community. They were way ahead of everybody in furnishing credit,

convenience in all seasons, you know, convenience back and forth, use the same banks of elevators and so forth, multiple floors. It looked like they were eternal. They're basically all dying. or dead. Once I understood that better, I think it made me a better investor, I think. I mean, the same can be said for managers. I've talked with Doug McMillan of Walmart,

who carries around in his wallet, like on him. He carries around a list of the top retailers over the decades, and nobody's ever the same. You know, you could... Yes, we're gone. Yes, yes. Of course, retailers live in terror because you can die. Some get it's a better way of doing it, and you just die, like those department stores did. The ones that you invested in early on,

you mean? Is it Baltimore? Well, no, most of the, think of the department stores that are gone, just chain after chain after chain and big downtown. They're not weakened. They're gone dead.

And to have IBM have the huge position it once had in terms of utter dominance, and now it's just one of the alt-over-ends. And it's still an admirable place. I'm sure they have a lot of talent left in IBM. It doesn't help you. You die even though you're talented and hardworking. So I really like Charlie Munger's response here.

Perhaps I could actually have to another clip that he's also doing. We're going to make sure to link to this. I want to say it's like two hours and 30 minutes or something like that. You can find it on YouTube for free and just watch it. But if I can just jump to an actually another thing, and then perhaps go back to what he talked about here in the clip. Becky asked Munger how many asset managers that were worth their fees. And he said, 5% or less.

It sort of like goes back to what we talked about here in the clip where capitalism is just so brutal. And, you know, great businesses come and go. You know, he talked about Syrux and Intel and other companies. Well, Syrac is gone now, Intel's deal here, but in a very different shape than they used to be. And it's hard not to think about for an active investor like me, whether I should invest passively whenever you hear that even Munger talks about how difficult things are now. And I'm sure many of the listeners have thought the same. You know, the tenure in the S&P 500 is just getting shorter and shorter. Everything moves faster and faster. And you have more and more evidence about

why passive investing is such a persuasive strategy. Also, because you're fighting against your own instinct. So even if you were, quote, unquote, as good as the market, you might still do some silly stuff because you cannot control your own emotions. And it's one of those things where you can have an intellectual discussion and say, I don't become emotional. And then something like COVID happens and the stock market is down 12% in the day and you're like, this doesn't feel that well. And it's not the same whenever it's play money on a, or, you know, fictitious portfolio. It's different. If it's like, yeah, my kids and this. school and I need to, you know, save up for college and I have hospital bills. Like, it's just,

it's just very different. So anyways, all of that being said, I'm still investing passively. Sorry, yeah, well, actually, I have a few index funds too, but I am investing actively despite what Mongor is talking about here. And I wanted to talk about that decision before I threw it over to William here a bit, because it's something I reflected on quite a few times here over the past quarter, I was looking at my brokerage account here the other day, and it turned out that I was marginally upperforming the market over the past five years. And so, whenever I first saw it, you know, it got me excited, you know, I patted myself on the back for a few seconds, like, oh my God, you're that amazing. But then I thought to myself, Stake, you're the most ridiculous

person in the world. Think about this marginal outperformance. You can have bought a passive index and say, thousands of hours not reading investing books and 10 k's and 10 k's like you you do not appreciate your own time like that's ridiculous and you could be down tomorrow why why are you celebrating that and so i thought a lot about that and i had this discussion with some of my friends here the other day so i have one friend who is financial independent after selling his company and now he now has this quote-unquote problem what to do with his with his time now because he's his mid-30s, retired, like, what do you do? Like, you have all this time all of a sudden.

So he's very creative and sees investing as a way to preserve his purchasing power. Like, he read a ton of investing books, so he definitely had the interest. But he would really like to spend as much as little time as possible actually investing and just live off that income if he can. He wanted to spend his time on something else, which I completely respect. Perhaps that approach resonates with quite a few our listeners. And then you have the other approach which might resonate with very fewer listeners. And I kind of felt that was interesting too.

So I have another friend who is also entrepreneur quite well off, making close to seven figures a year. And he's been asking me, like, what should I invest in? And I said that he should probably invest in an index fund, like track the world market. Done. Boom. And he said that he kind of felt uncomfortable doing that because he likes the hustle. Like he likes to work.

and just like, oh, I'm going to get my expected 5% or whatever, however you want to make that multiple. But like, it doesn't sit well with him because he was used to doing the hustle. And he said to me, and I don't know if this sounds ridiculous, but if he could still get 5%, but just work hard for it, he would almost prefer it to not having to work for it and still get the same return. And so whenever he said that, I was laughing, but I was like, wait, stick, you were doing the same thing.

You were getting a market return, but you're putting a bunch of time into it. And why are you doing it? It sounds so ridiculous. So I want to paint a bit more called around it because in case there are some people out there who feel the same kind of conflicting emotions. So I love watching football. I absolutely love watching football. I do not get paid to watch football.

I'm sitting in my couch watching my favorite team. I have a lot of fun. This is soccer. Yes. Sorry, for the American listeners. Yes. You call it,

soccer. Yes. We call it football here. Real football. Real football. Yes. So, and I was like,

I'm sort of like trying to defend my own silliness by using the same analogy for investing, because I love the process so much. I love reading 10 Ks and 10 cues. Like, it's as much fun. for me as watching football, I know it's going to sound ridiculous, but like, if you're told me like, yeah, you're not going to beat the market and you're probably long term be absolutely

right about it, I'll probably still do it. Because it's, why would I not do something, again, optimizing for happiness? Why would I not do something that really, really makes me happy? If you turn out to be really good and you make money, then it'll pay off. But if not, it's a little, it's a bad analogy in some way to say it's like going to a casino. but losing only a very small amount. Say you went to a casino and you said, okay, I'm going to gamble, but I'm not going to gamble more than a hundred bucks.

I'm going to get to eat in these really good restaurants at the wind casino or whatever it is. I went to say at the win casino once because I was working on a book project and saying in a beautiful room there. And so I didn't gamble at all, but I got to enjoy the food. And, you know,

I went to a great show and stuff like that. So I don't know. you could say it's a little bit like that. You're prepared to lose a little bit of money to support a hobby that you really enjoy. But there's upside here if you're right. The danger is that we delude ourselves, right? So it's like people thinking they're good drivers. And so you have to, you have to, it all starts, I think, with self-honesty and self-awareness, you know, to look at yourself and say, do I actually have any kind of competitive advantage? And when I said to Ed Thorpe, how can I tell, if I have any competitive advantage.

He said, well, if you're having to ask that, you don't really have a good answer, then you probably don't. And it's very deeply unsepling. And I mean, I have some competitive advantage potentially in that I know a lot of great investors. And so you could see, you know, so look, like I talked to Bill Miller for a couple of hours the other day.

I know how Bill Miller's invested. It would be easy for me to say, well, Bill really likes this stock. this stock and this cryptocurrency, and I should do that. But that's really hard for me as well, because my situation is different than bills and my temperament is different than bills. So I'm not playing the same game. It would be hard for me to load up on Bitcoin. Whereas for him, he's perfectly happy with situations where there's an asymmetry, where he could lose everything, but if he's right, he'll make enormous returns. For me, I'm less comfortable with that because of my

personality. So I think a lot of this stuff, a lot of this stuff really stems from self-awareness. And so one of the things that I've done in terms of sort of resolving this conflict between passive and active investing is because I'm kind of torn and I have the delusion that I can probably probably do well by investing with two or three really good active investors. There's a portion of my portfolio in, I think it's three different active funds that are all managed by honorable people who are very smart and very driven. And then I've owned forever two index funds. So I have the, and I'm not telling anyone they should do what I do. I'm just telling you how I'm trying to resolve my ambivalence about this question.

So I own a Vanguard Total International stock fund and a Vanguard total stock market index fund. And I think one of them that the U.S. fund has a 0.04 expense ratio. And the international one is 0.17%. So incredibly low expenses. And I pretty much split it 50, 50 between those two. And then I just keep adding to it. And it's in an IRA or a 401k or something, you know, a personal 401K. And so it's structured in a way that's tax efficient.

it's somewhat diversified. I'm not, you know, very low expenses. I keep adding to the pot and I'm not making a big bet where I say I'm sure the U.S. is going to continue to do better than foreign stocks. I'm happy to take the hit in recent years of investing equally in foreign markets, which turned out to be better last year. And then I remember this, I wrote about this briefly in the chapter that I wrote in my book on simplicity and Joe Greenblatt, and I talked about this interview that I had with Jack Bogle, the founder of Vanguard, which now manages what, $7,8, $9 trillion, some outrageous sum. And so many years ago, I talked to the late Jack Bogle, maybe 20 something years ago. And one of the things that he said to me is, look, the ultimate in simplicity is to get

a balanced index fund. You just get one fund that has bonds and stocks in it. And so while I was writing that chapter, I actually did that for my wife's retirement account. And I said, okay, there's a series of Vanguard funds where you get, I think, I think it's a mix of a US index, a stock index fund and a foreign stock index fund and a US bond fund and a foreign bond fund. And so you've got four funds within this one thing and it's really low expenses. And so I bought that for my wife.

And I was like, that's a really elegant solution. And it seemed kind of stupid for a couple of years because bonds were paying nothing. And but I've been too lazy to change anything with it. And now bonds are paying something and also stocks did terribly. And so over the last year, so, you know, I think it'll probably do fine over the long run. And so I just remembered this thing that the Bogle had said to me where he said, look, all of these star fund managers proved to be comets. And he said, they light up the firm for a moment in time. And he said, then they burn out and their ashes float gently down to earth.

And Bogle was a great writer and speaker. He was very eloquent. And I just loved that line. And he said, look, this happens almost all the time. And so it's not all the time. It's not like nobody can beat the market. But you look at the people who beat the market. Look at someone like Joel Greenblatt, who had these extraordinary returns where he

average 40% a year for 20 years. It's just outrageous. And I've spent a fair amount of time with Joel over the years and wrote about him at length in my book. And he has a behavioral advantage, right? He's very calm. He's very even. input. He's super rational, very, very patient, very analytical. And he's also incredibly competitive.

And that's another thing that I see with all of the greatest investors is they're super competitive. And so it's not just that they're intellectually strong, that they have some kind of intellectual advantage, or they do. I mean, you know, you look at someone like Munger or Bill Miller or Ed Thorpe. I mean, these are supremely smart humans. There's also a temperamental. advantage. They tend to be calm and rational, analytical, very disciplined. I'm not really built that way. I mean, when I look at that personality assessment, my way of making decisions is almost totally intuitive. I mean, I didn't make a super rational decision about whether to partner with you and the investors' podcast network. I did some research and some studies, and we talked at some length. But basically, I look at you and I'm like, I, I like, I like, I

like steak, is a really nice guy, honorable person. And that's an intuitive judgment. And that serves me in certain ways in life. I don't think it necessarily serves me in investing. Because, you know, one of the things I found the other day after I spent a couple of hours with Bill Miller is I really wanted to buy Bitcoin. And I was saying to this other friend of mine who's a well-known fund manager, part of the reason why I wanted to buy it is that I love Bill. And I feel like this sense of gratitude to him and appreciation for him. And in a way, there's this sort of this tribal sense of allegiance. And so there's this un, there's this sort of emotional, irrational desire to buy something,

almost as a way of declaring my psychological and emotional allegiance to him. That's a weird quirk in my character that probably allows me to interview people in a good way because I'm empathetic. I get into their minds. I understand how they view the world. There's a certain degree of intuition and rapport. It's really good for an interviewer. But it's not very rational when it comes to picking stocks or cryptocurrencies. You're probably right about that.

I thought a lot about it myself. For example, investing with Mnish. I felt that Mnish was the right way of merging a person with good values, but also someone who could outperform the market. I'm very humble about my own skill set and do not have any illusions that I can beat the market and what happened was probably more luck than anything else. And so whenever I invested with him last year,

I couldn't help but consider what kind of bias do I have to do this? Is it because of some kind of tribal thing that you were talking about before? Now I can look back and say that the market was down and then Moniz's fund was up 35% or the last three quarters of 2022 too, because Moniz is just super smart, but I think it's also important not to be prone to what

Enidu calls resulting. I think I could have been too hard on myself with things have gone bad, and I'd be like, oh my God, that's only because, you know, there's some kind of, I don't know what you want to call that, but going back to the word tribal again of like having invested with one of a person like Monash, is there something emotional there? I remember you talked on the episode with Enidug about how you invested in a Baba after having a discussion with Chalya Munger, like a virtual bronze type thing. And there was something about that type of, I'm not saying same approval because that was not the specific case, but like the, yeah, you're in the same tribes. Yeah, I had Munger and Lou Simpson telling me how much they loved my book and telling me that they'd both been investing in Alibaba. So I have two of the greatest investors telling me that I'm great.

are we know from my personality assessment that I really crave respect and liking and admiration, right? So I'm very vulnerable to this. And I look up tremendously to Munger as like one of the smartest, most brilliant guys around. And so here's Munga saying, you know, yeah, books one of the best investing books ever written. So I'm like, this is like amazing for me, right? And then Lou Simpson says something really nice about it as well and Lou is one of the great investors of all time. And so this is like this banner day for me, right? Like, I'm just like floating on air. And so how do I memorialize this day? Partly by buying Alibaba, that's an act of allegiance to these two great investors who just told me how wonderful I am, at least in my interpretation

of it. I mean, Munga probably doesn't remember my name at this point. But, you know, for this brief moment, I felt this flush of importance. And so there's an irrationality in that purchase of Alibaba that's come back to haunt me. But at the same time, you know, I think it's down about 50, 55% since I bought it. But at the same time, I didn't put that much in it, so it doesn't really matter. And it wasn't that stupid an investment because it's a long-term investment in China, which is very beaten up. Everybody hated it in a sector that everybody hated. And it had been bought by two of the greatest investors,

and I knew that they had done a lot of work and understood it. And I knew that Munga is very close to Lee Liu, who's an expert on China. And so there were rational reasons to do it, and if I was wrong, it wasn't really going to hurt me. And as a diversifier, it's not a bad thing for me to have a long-term bet on a centrally important company in China. And, you know, so I'm down by half. It doesn't mean I can't send my kids to college or retire.

It's okay. So I think you have to, you have to be aware of your own flaws and vulnerabilities and irrationalities and hedge against them in some way. So I was talking to a friend the other day about my mistake with Alibaba and then my desire to buy Bitcoin after my conversation with Bill. My friend said, yeah, we had a rule at this investment firm where I used to work where there was a cooling off period for a week after you met with management of a company. And I thought that was really smart, right? Because you're very easily sold on stuff. You have all of these hypesters who are a great, great salesman who believe in the future of their company and they can sell you anything. So to have a cooling off period, it's not a bad thing.

And so for me to calm down, look back with a glow of affection on my meeting with Bill Miller, but not be so grateful for the fact that he treats me nicely and that I need to be treated nicely and appreciated, that it skews my judgment. So part of what I'm doing is I'm hedging against my own fallibility and idiosyncrasy. And so I'm trying partly not to buy individual stocks. I only own three individual stocks. And one of them is one of them's Berkshire, which I regard kind of almost as a fund. And one of them is Seritage, which again, I bought after hanging out with Monash.

And so it's the same floor in a way. It's like I fall in love with Monash, who's an old friend and someone I like and admire a great deal. And then I buy this stock because he'd bought 13% of the company at a time when it was hated. And what I was realizing in my conversation with Annie Duke is as I talked about Monash and as I talked about Charlie, I start to smile. And I'm like, oh my God, I'm so vulnerable. Like I love these people. I really admire these outsiders who are rebels, free thinkers, going against the crowd. And so it's a tremendous vulnerability for me.

And so it's smarter for me on the whole to try to outsource the environment. decisions and also to try to index because and sort of systematize. But at the same time, given that I'm writing and talking so much about investing, I also think it's a pretty good thing for me to have some skin in the game and to understand in a very visceral sense the emotions and the irrationality that go with making mistakes or doing well. And even with something like Seritage, it was so cheap that it's actually done pretty well anyway. So it's sort of made up for, you know, there was a margin of safety built in because it was so cheap. And so that's made up for my stupidity and irrationality. You know, I can't help not to bring up

the bats here, William, but later in this Q&A with Munger, he was asked about his Eddie Bauer position and he said that he kind of felt he was, I'm going to paraphrase this, this is not exactly what he said. People can watch it themselves. But he was saying that he was so, fascinated about this story of the Chinese internet and the e-commerce rising in in China, that he forgot that Baba was just another damn retailer. So as someone who also bought Eddie Baba, perhaps for the same reasons as Hugh William, that did not make me feel good. And it was just screaming in me to sell after I heard that. Then one of the things that had been really been being good to me was I spoke already with Guy on one of the first episodes we ever did here

on the show, which is a very nice of Guy to make himself available. And he talked about the two-year rule and about he wanted to, there could be exceptions, but generally the rule was not to sell anything the first two years after you made the position. And I made the position what a year and nine months ago or something like that. So I was like, no, that's not the two-year a role, a two-year rule, which has been good because, as you said, you have to manage your own, your own biases. And I have a five-year rule. So I'm really trying to prevent myself from doing stupid stuff because I sort of have to live

with my stupidity if I mess up. But maybe that's a bad idea. I don't know. I really don't know. But I think it, I mean, Annie Duke had a good discussion of this in our conversation. It's worth people going back to. She was sort of making the point that you need to relitigate the situation. Like go back and see, well, what's changed here?

But I think there's something useful about having the five-year rule because it makes you less willing to make bets going in. If you know you're going to have to live with it, you'll make fewer bets. And so, look, I'm living with my Berkshire Hathaway bet. And I think of it, you know, I hope that I own it more or less indefinitely. I'm living with my bet on guy. I've invested with him for, you know, whatever it is, 22 years so far. And I've said to him, I regard it as a 40-year investment. And so we'll see if I'm wrong, fair enough. But I think in a world where most people are very short term, if you can push yourself towards being long term and patient, that's a, that's a tremendous advantage. And so I think having a few Simple rules in life is hard. Like when I just decide, for example, that I'm not going to eat in the morning. I won't eat before noon. That's pretty helpful.

And then when I decided I wasn't going to eat any sugar this year, that was pretty helpful. So when I was in zero concoasters and stuff, dinner would come with dessert and I'd be like, now I'm not eating any sugar. And it was very simple. It clarified things because there was a rule. And then I think I was at some dinner. I can't remember where it was, where there was a, oh, I think I think, I think, I went to my sister-in-laws and she cooked a really nice meal and there was dessert and I would have

felt rude if I hadn't eaten it. And once that rule was broken, it was like the floodgates were open. And so I think sometimes giving yourself a simple rule that you can't break is actually a really helpful thing. Well said, William. Well, William, we're a bit long on time here as you always are, but I really want to go to the last part here of our discussion today where we talk about the best books we read the past quarter. Q1 is always a great quarter to read books, and at least where I live, it's dark, and it's cold, windy, you don't want to go outside, so you can just curl up with a book or a 10Q or 10K, whatever cuts your fancy. And I want to give an honorable mention to principles, your guided journal by Redalio. I did not put it on the list, the top five list,

because it's not really an investment book. And I sort of wanted to focus on that. So, This is my curated, no particular order of the best five books I read in business over the past quarter. So competition demystified by Bruce Greenwald, wonderful book, the little book evaluation by Asvato de Moteron, Benjamin Graham and the Power of Growth stocks by Frit Martin, big money things small by Joel Tillingham, and The Joyous of Compounding by Gotham Bade, all wonderful books. Joe Tillinghast, right? Yes, sorry, what did I say?

Tillingham. Yeah, Joe Tillinghamast. Sorry, yes. Wonderful book. So perhaps let's start with the joys of compounding here. This was a book that our co-host, Clay Fink, recommended it to me. He said to me, like, I feel I could do four episodes in this book alone. So I sort of like had to pick it up.

And I received it in the mail and I, you know, I flipped to the back. And lo and behold, there's a gentleman called William Green. Who knows that? So. And handsome. Handsome. I'm pretty sure, too. Yes.

So it says here, Gautum is a marvelous role model because he's such a joyful and passionate student of worldly wisdom. In this book, he gives us a powerful reminder of how enriching it is to dedicate ourselves to the pursuit of continuous lifelong learning. So with that, William wanted to throw over to you and talk perhaps a bit about this wonderful book, The Joyous of Compounding. Oh, sure. I was thinking as you were going through your list. I'm lucky that I actually know all five of those authors. So I'm totally, I'm totally biased because of personal relationships or interviews that I've done with these people in the past. And so Gortem is someone, is a very nice guy, really nice, really thoughtful, someone who came from a kind of modest background and was applied for so many jobs in investing. And, you know, he's been really open about how difficult

it was him to get hired and how persistent he was in launching himself as an investor. And he's kind of indomitable in the way that he persists and in the way that he's become a learning machine. And so he's someone who's just really systematically gone about teaching himself the principles of investing. And so there's something just very admirable about that as a role model, the sort of person who sets about synthesizing everything that he's learned from Buffett and Munger and Howard Marx and Kahneman and all of these great minds. And so I don't think it's not that it's a trailblazingly

new book where he's gone and interviewed all of these people. It's that he's been incredibly committed about learning what all of these great minds have figured out and then synthesizing it. So you open the book, and I remember just at the very start, for example, it would have a line from Munga, the line where Munga said that best thing a human being can do is to help another human being no more. And so it's full of things like that where he's just distilled and synthesized so much wisdom about everything from living by and in a scorecard to delaying gratification. So I think there's something really, really central to learn from Gortem about, I never quite know how to pronounce it, Gautum, Gortem, so I'm sorry if I'm getting it wrong, but there's something really admirable about the way he set himself up to be a continuous learning machine.

And then at the same time, he lives in this kind of humble way. He's not, he's not money obsessed. He's, you know, he set aside a certain amount of money. He's made a certain amount of money off his investing, and he's kind of happy with that. So he lives modestly and is just sort of playing the game that he really loves playing. And so I kind of admire him because of those qualities. And then, you know, the book is published by Columbia University Business Press, which picked up on the fact that he had written this self-published book.

And Miles Thompson, who's this terrific editor there, who I've become friends with over the years, I think saw that there was something really good here. And Kim did a new addition of it that was sort of new, improved, polished. And so I also think it reflects the fact that Miles Thompson is kind of a terrific editor that he put out this great book. So definitely highly recommended the joys of compounding, not just by our friend William Green, forward by Guy Spear. Fantastic, fantastic book. I wanted to highlight Joel Tillinghast book, Big Money. being small. There were so many key takeaways. And if you are interested in learning a bit more,

it's going to be a very quick run through here. William, you had him on your podcast, Ritz or Wiser, a Haber podcast not too long ago. Super, super smart person. And if possible, as kind and thoughtful as he is smart. It was really a wonderful episode you did with him. I want to say, one of the favorite points that I had from Joel's book was how he reminded us that advertising spending can be an investment more than an expense. And even management themselves can't always distinguish between economic goodwill or just cast out the door. Future sales on the contract, you know, gap rules tells us that, you know, it's all expense as a cost through the income statement. And then, of course, you can ask like

a company or brand like Louis Vuitton, whether they feel that advertising is. money up the door, but that is just how it's being treated. And so I kind of felt it would be an interesting segue to talk about the richest man in the world. I don't know if people listen to this, if they think of who they think the richest person is, and I would imagine a lot of people would say Elon Musk, perhaps, or Jeff Bezos. They're, by the way, two and three respectively on that list. It's a gentleman named Bertangano.

His net worth is more than $200 billion. dollars. His founder, chairman, and chief, executive officer, LVMH. So he owns, that's the company that owns Louis Vu Tong, Don Pingyong, a Tiffany and company, and many other very well-known brands. And so Ano famously referred this conversation he had with Steve Jobs, now the late Steve Jobs, and asked him if he thought he being Steve Jobs, people would still use iPhones 30 years from now. And Jobs said that he didn't know. And whenever Jobs then turned the tables on, like, question, Anno said that, Steve, I think people will still be drinking Don Piyong in 30 years. We are selling part of history.

And so I don't know if that, if there was actually a real conversation, that's how the story goes and that's what Anu has been quoted to say. And I think it's important to understand that a brand is like any other asset. They produce income, but they both require initial investment and continuance spending to sustain their established status. And you can even compare it to PPE in that regard. And I also want to highlight, kind of like use that a segue to highlight Bruce Greenwald's book, Competition Demystified. It's just a wonderful, wonderful book. And he talks about how you have to distinguish between brand value, which is the premium customers will pay for a product from a particular brand. Could be Louis

Vuitton, for example. And then economic value, which is the additional return on investment that brand helped generate. For example, Coca-Cola is a value brand, and here we're talking about economic value in a different way than Louis Vuitton. No one will pay thousands of dollars to be identified as a Coca-Cola drinker. But it's a valuable brand because it's very habit-forming. Let me just give you one simple example that he writes about in this book. When you got for Mexican food, you might order Mexican beer, but you don't order Mexican cola. And I could also mention that we like to eat different types of meals, but we often drink the same, whether it's your Starbucks, coffee, whatever it is. So that was very brief. I went through those two books.

Perhaps another time when you have a bit more time, we can go more with the books. I tell you one thing that I learned from Joel Tillinghouse's book is his tremendous focus on not doing dumb stuff. So yeah, so he's focused on brands, he's focused on companies that a durable. So I think he's made a thousand times his money on Monster Beverage, which I talked to him about in the episode. So he's made money off enduring brands, but although Monster Beverage is probably about as far from Don Perignon as could be imagined. But yeah, a durable brand that he bought cheap many years ago and has held on to. But for me, the most powerful lesson I've learned from Joel Tillinghast, I think, is avoiding what Munger calls standard stupidities.

And so when I first went to interview Joel Tillinghast at Fidelity's office in Boston several years back, I was trying to figure out like, how is this guy beaten the market by such an enormous margin over so many years? I mean, Peter Lynch said he's basically one of the greatest investors of all time. He's been extraordinarily successful. And the more that I talked to Joel about how he's done it, the more clear it became that it's partly by avoiding so many dumb. things that blow up so many regular investors and professional investors. And so one thing he said to me

is, look, he said, don't pay too much for any stock. Don't go for businesses that are prone to obsolescence and destruction. Don't invest with crooks and idiots. Don't invest in things you don't understand. So just think about that list of standard stupidities, as Munga would call them, that get us in trouble again and again, right? Think of the number of people who overpaid for hot tech stocks in the last year where they got just eviscerated because they paid 10, 20, 30, 50, 100 times sales. And so there's this irrationality that creeps in, especially during bull markets, where you see other people making money and it becomes kind of intoxicating. And you lose your connection to reality, to the underlying reality of the economic reality of the business.

So even with something like LVMH, you know, I had a long discussion with Guy Speer about this when I was in Clostas and guys fascinated by LVMH and by the luxury brand business. And he's like, look, it's an incredible business. And there are certain benefits that you get when you have their scale because you can you can kind of bully your way into the best stores and the, you know, and you get your second and third brands in there because you've got such powerful brands. So there are definite advantages. But then he said, but I just can't pay that much for it.

It's just too expensive. And so that's one of the things that's keeping Guy tethered to reality. It's just his sense of the valuations. And then this question of what businesses are prone to obstilessence and destruction. So you think of Munger his revelation during the Daily Journal annual meeting where he's just saying everything dies, everything is impermanent. And so it's really important just to go into investing and life with a sense that things are impermanent. And so, you know, a company that seems very powerful today may not be five years, 10 years from now. And so, and likewise, the conditions

that exist at the moment economically or in the market are not likely to prevail for several years, right? One of the things that Howard Marks talks about is that there's this kind of pendulum effect where the market goes from fear to greed or complacency to terror, overprice to underpriced. And you see the same thing with the credit cycle. It goes from they'll lend money for anything, and then suddenly they'll lend money for nothing. And so once you understand that we live in a world where everything is prone to change, everything is prone to die, and there's creative destruction, you have to set yourself up to survive an uncertain future. And this is one of the great lessons from Howard Marx, I think. And from Joel Tillinghaus and Joel Greenblatt, Charlie Munger,

Buffett, all of these great investors, you need to build in some margin of safety when you invest because the future is so unstable. It's so uncertain. Things that are, things that are powerful and dominant now will not be in five, ten years. I mean, you know, we have no idea whether Tesla is going to live up to its promise. And so should you pay a very rich multiple for Tesla? I don't know. I couldn't bring myself to do it, but maybe I'm totally wrong. But at least you have to be aware of the danger that things that are ascendant now are likely not to be in future. And the things that are undervalued now are likely to have their day in the sun one day. And then I think Tilling has idea of don't invest with crooks and idiots, that again gets back to the thing we're talking about right at the start of the conversation, which is it goes back to Buffett's point that you can't do a good deal with a bad person.

You want to partner with good people. And then Tilling has the idea that you don't invest in things you don't understand. Gets back to something that John Templeton told me 20 something years ago where he said, stay away from your own ignorance. And so investing is really difficult. As we've discussed in this conversation, it's really hard to beat the market. But at least you can give yourself an advantage by avoiding standard stupidities. So don't overpay.

Don't assume that the future will look like the past. you know, diversify. Don't invest in things you don't understand. Like be a learning machine where you're constantly building your circle of competence. But at the same time, trying not to delude yourself into thinking that you're better than you are and no more than you actually do. Well, to quote Charlie Monger, it's simple but not easy. That's for sure. And I saw Bruce Greenwald the other day Stig and Bruce said to me that he was talking.

about exactly that. He was saying that one of the things people feel when they listen to Buffett speak is, you know, he makes it sound so simple. And he's like, boy, is this not simple. This is not easy. It's really hard. And I think that's a worthy message for people to be aware of that, yeah, you can beat the market. Yeah, you can do incredibly well. But you got to be good. You've got to really take it seriously. To be a kind of mental athlete to win at this game, you need to be really good and you need to be driven and devote the time to it. And just on that note, Competition Demystified, this book is a few years old. So I think it's from 2005-ish.

So Bruce goes through wonderful examples of different industries. And it's so interesting to read about these companies that today are not performing well. And the premise I also want to say in Greenwald's defense, because I don't want to make a sound like he's making any kind of stock recommendations at all. That's not the point of his book. He's talking about different industries, barrier of entry, using that as your framework of picking stocks. And it's just interesting to hear someone as smart as Bruce Greenwald talking about different industries 18 years ago and then thinking about how those industries look today. Whenever you read the book, it can seem like the barriers of entry is just impossible to penetrate.

Again, not that it's Bruce's premise, but it can't seem like that way whenever it's been explained. And then you read it and you're like, but that company doesn't exist anymore. Wasn't it supposed to be close to impossible? And yeah, like you said before, Willing, that goes back to what, to what Munga said, the one of the things that he've learned throughout his life is just how the only thing constant is change. Yeah. And Bruce is profoundly brilliant. Bruce is someone, I was trying to seduce him into coming on to my podcast later in the year. And I think he's going to. And he doesn't talk often in public. So it would be great to talk to him. He's a, he's a brilliant mind. Again, thank you for making time to speak with me here today, William. It's always

a lot of fun. Any concluding remarks, anything you kind of feel we should touch on before we end the episode? I guess, you know, you gave your five recommendations for books. I would add one recommendation that's not a book, but which is something I talked to Fred Martin about, which is, I think people should watch this movie Free Solo, this documentary that I talked about at length with Fred Martin, which it's about someone trying to climb El Capitan, which is basically 3,000 feet straight of granite. And this guy decides to do it without ropes, without any equipment. He's just going to do it, free solo.

And Fred's point is that it's a brilliant example of risk mitigation, what this guy does. And I think it's all about survival. It's all about risk. It's all about trying to take considered risk, intelligent risk, so that you'll actually survive. And I would just really encourage people to watch it. I think it's on Disney Plus or Hulu or both. And you can also get it on Amazon Prime. And so for those of us who have short attention spans and find it difficult to sit and read long books,

you can treat yourself to watching Free Solo and can listen to my discussion with Fred about it, who's very, very thoughtful about what it actually means, what you can learn about how to how to survive as an investor based on, based on studying this great free solo climber, Alex Honnold. Wonderful. We'll definitely make sure to link to that in the show notes. William, on that note, let's end the episode here. It was a lot of fun chatting with you, as always, William. So, thank you for making yourself available. Thank you. It's always a delight stick. I really appreciate it. 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.

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