We Study Billionaires - The Investor’s Podcast Network - TIP661: Lessons from Bear Markets w/ Richard Lawrence

Starting point is 00:00:00 You're listening to TIP. On today's episode, I'm joined by Richard Lawrence. Richard is the founder and executive chairman of Overlook Investments, a leading value-oriented investment firm in Asia that he founded in 1991. Over a 30-year time period, Overluck compounded capital at 14.3% per year by betting on Asia's best companies. Over that same time period, the S&P 500 grew by around 10.4%, representing roughly 3.9% percentage points in Alpha per year. At that rate, $10,000 invested in Overlook at the beginning of 1992

Starting point is 00:00:37 would have compounded to roughly $551,000 versus just $194,000 had you invested in the S&P 500. Even David Swenson recognized the talent in Richard as he invested a portion of the Yale Endowment Fund in Overlook early on. Richard has a fascinating story and I'm very excited to shed light on it during this episode. During our conversation, we cover why the 1980s was the most transformative period in Asia's history, why Richard prefers to invest in the most simple businesses, what Richard learned from having his apartment ransacked after publicly calling out a management team his firm invested in, what was happening during the Asian financial crisis that made it nothing short of an economic nightmare for businesses all throughout Asia, why Richard regrets

Starting point is 00:01:23 ever listening to Buffett's advice on ignoring the broader macro environment when investing in great companies. What led Richard to recommending Taiwan semiconductor stock to Warren Buffett? Why Overlook has started to bet big on China, Richard's view on the current macro situation in China, and much more. Without further delay, I bring you today's chat with Richard Lawrence. Celebrating 10 years and more than 150 million downloads. You are listening to the Investors Podcast Network. Since 2014, we studied the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Now, for your host, Clay Fink. Welcome to the Investors Podcast. I'm your host, Clay Fink, and today I'm

Starting point is 00:02:19 thrilled to be joined by Richard Lawrence. Richard, I greatly appreciate you joining me here today. Oh, Clay, it's fantastic. I thank you for the invite. I'm delighted to have a chance to sit for an hour and talk with you. I am as well. So for those in the audience, who might not be familiar with Richard, he's put up these exceptional returns at his firm Overlook investments. Over a 30-year time period, Overlook has compounded at 14.3% by taking a concentrated approach investing in Asian markets since the early 1990s. And achieving this level of returns for over 30 years is certainly an impressive achievement. And it's been done by just so, so few in the investment industry, but it didn't come without its fair share of difficulties, which we'll

Starting point is 00:03:05 be getting into in today's conversation. So, Richard, I thought a good place to start was in one of the most pivotal moments in your investment career. It was in 1985, you landed in Hong Kong during what you called the most transformative period in Asia's history. You wrote in your book titled The Model, I would often say I would rather be lucky than smart. And in Hong Kong, in 1985, I got lucky beyond my wildest dreams. So I was curious if you could talk about what was so special about this particular period in Asia's history that ultimately made you want to spend your investment career there. Yeah, so I arrived in 1985, late 85. I'd traveled around Asia for a year and landed basically I was bankrupt and got a small apartment with my girlfriend at the time, now my wife, of 37 years.

Starting point is 00:03:56 I had been an analyst on Wall Street, so I knew about research analysts and researching companies and I went to work for a small investment firm and I started wandering around Hong Kong talking to CFOs and CEOs of public companies. And very early in that process, I went along to the southern part of Hong Kong where there's no manufacturing today, but in those days they were manufacturing toys. And I went along to a company called Cater Industrial. And Dennis Ting was the CEO and I met him and went through all my questions and everything else. And then as we were standing, in this industrial building outside the elevator waiting for the elevator to come take me downstairs. He said, and you know something, Richard, for the last six months, nine months,

Starting point is 00:04:40 we've been doing some subcontracting up in Guangdong province, where particularly in villages where we have some family members. And, you know, they work really hard up there, and it's really cheap. And that was, of course, the beginning of the special economic zones that Deng Xiaoping had put in place. And that was the beginning of the manufacturing. boom and it lit a light bulb in my head that I was just smart enough, Clay, not to have missed. Hong Kong at the time was a manufacturing center that was going to become a large financial center, one of the global financial centers. And all that manufacturing was first going to move into Shenzhen and then going into Guangdong and Dongguan and then up north, up Shanghai and outside

Starting point is 00:05:26 of Shanghai. And the boom was on and it was driven by a number of things. Number one, the Chinese are incredibly hardworking. They just work. And it was really cheap. And that combination made China really, really super competitive globally. And these manufacturing stocks at the time were all at three or four times earnings, which was just the benefit that Richard got. One of my favorite industrial companies was selling at six times earnings.

Starting point is 00:05:53 And I never bought it because why would I buy something at six when I could buy the same thing at three or four? So I buy them at three or four and then sell them out at five or six and then go around and see some more companies. And on we went. We went from low end manufacturing to mid-end manufacturing to highways, to bridges, to, you know, we just kept moving. And that was now almost 40 years ago.

Starting point is 00:06:19 Yeah, that was 1985. If we take another step back, you were studying international economics at Brown University in the late 1970s. And at this time, you would discuss and debate economics with your father who actually owned an investment firm in New York. So it's funny how maybe growing up in New York, you eventually made your way to Hong Kong and wanted to spend your life there. So I find that fascinating in itself. Going back to your father, what were some of the key lessons that you learned from him early on learning about investing? A couple of things about dad.

Starting point is 00:06:51 Number one, he was a very fundamental investor. A little bit different from me in that he was a classic growth stock investor. So a little bit different. But, you know, he had companies with no debt that were growing and then in the late 70s were cheap because he'd been in his own bear market by that point for a number of years. But there were a couple things that my dad shared also with John Bush, who was my boss in New York in the early 80s, he was the younger brother of President Bush 1. John, my dad, Peter Connell, and others of that generation, they came in to work every day and they worked for the clients. and I saw it. I saw it with my dad. I saw it with John. I saw it with Peter Cannell. And I learned that.

Starting point is 00:07:31 And that was just fundamental to me. And you can do that if, as it was the case with my dad and John and others, they just loved investing. They loved it. My dad would come home and said, boys, this is the greatest business because I get to go in and learn something new every day. And when you invest for a living because you love the process, not because of the money. It fundamentally changes so much of your approach. We're lacking that. That generation has now left us in most cases. And the world is not better because of it, I would say. And I've been one of the fortunate people to have been surrounded that at a young age and that is an early research analyst in New York. And when was it, did you decide that you wanted to spend your career as an investment manager?

Starting point is 00:08:17 Was it the influence of your father or was it learning about Buffett and other value investors? I believe you started reading Buffett in 1982. Yeah, I got Buffett early, but it was really serendipity. I had worked as an intern with John Bush. And in 1981, I came back after spending three years in Latin America. And John's head of research had just quit like the week before. And I walked in. And John said, yeah, you want a job?

Starting point is 00:08:45 He offered me the sum total of 30,000. $30, Clay, and I went back to my dad's office in Rockefeller Center, and I said, dad, I think I've been bought. And he leans back. He says, how much? I say, $30,000. He says, yeah, you've been bought. And so, once I got into it, I just read Value Lines book on companies. I just started doing it all and really at a company level.

Starting point is 00:09:10 I've really been a company person, not a macro investor. As my partner likes to say, we're macro aware, but we're really driven. by companies and management and figuring out the puzzle of research analysis. So I think it was pretty much loved for a site once I got going. One of the things that your father told to you was look for simple businesses that could take a really focused approach. So many people nowadays, I feel like they get sucked into these very complex businesses they don't really understand. So some examples that you outline of your book is Unisteele, which was a screw manufacturer that generated a 37% IRA for Overlook over four years, or Cafe de Coral, which was a Chinese

Starting point is 00:09:51 fast food operator, that generated a 23% return over 14-year period. So based on your experience, do you believe that this was sound advice from him? Well, what was really funny was what dad would always say, you just want to invest in a good screw company. And then 15 years later or something, here I am in Singapore, meaning Bernard Toe, and he makes screws. And so I remember calling up my dad. I finally found the screw company, Dad. But simple businesses that you can understand, there are enough risks in the world play that we deal with, enough volatility that we deal with. And leveraging complicated, unfocused businesses, leveraging debt on

Starting point is 00:10:31 top, leveraging unhaged dollar debt, leveraging businesses that don't really understand corporate governance and capital management. That's just complicating your life. It's hard enough as it is. So we've always been very straightforward. And I think looking back in the early 1980s when I was in New York, we're a lot of complicated businesses back then. It was kind of natural that I was going to gravitate to focus businesses. So the Screw Company in Singapore was one of the first companies I met, one of the first executives I met in Asia was a guy by name Michael Chan.

Starting point is 00:11:03 Michael ran Cafette Corral. And I didn't invest for a long time. And then in late 1998, when Asia was absolutely obliterated, absolutely obliterated. I had a week where I went out to an area in the new territories of Hong Kong and I met Michael Chan again, and who I'd known, and his stock was at five or six times earnings at the time. And then later that week, I came back out to Photon and I met the executives at Kingboard Chemical. They were at about three times earnings. They were about half a mile apart from each other, both lasted in their portfolio for a decade or longer, and both enormously successful, very different

Starting point is 00:11:41 types of companies, but that's the joy of stock picking, particularly during bare markets. Another story I wanted to ask you about was one from the mid-1980s, three years before you founded Overlook. You worked as an investment analyst at FP Special Assets in Hong Kong. I was curious if you could also tell our audience about the story of a company called TienTech Land and what you learned from that investment. I was really new in Hong Kong at the time. And my friends always kept thing. You know, it's not like the United States here, Richard. It's different. My boss invested a lot of money into Tintech land. Tintech through a pyramid holding structure owned a company called Associated International Hotels, which owned the Hyatt Hotel on Nathan Road, which was, you know, so ground zero of

Starting point is 00:12:31 the tourist business in Hong Kong. It's a really exceptionally valuable asset. But it was held through this pyramid structure. And a whistleblower came to us and said that the owners, a Malaysian group, of brothers were doing stuff they shouldn't have done, you know, let's leave it there. We called up the management and said that, look, we had some concerns and we wanted to talk to him about it. And I said, well, we're not really interested in talking to you. And you got to remember, the Chung's owned 50% of Tintech land, 50.1% of Tintech land, which owned 50.1% of associate in national hotels, which owned the Hyatt. So they could tell everybody to bugger off. And we said, well, we really want to talk to you.

Starting point is 00:13:11 And they said, no. And I said, well, we're going to talk to you privately, which we would prefer, or publicly. They said, talk to us publicly. We don't care. And we took out a full-page ad in the South China Morning Post, which is the main newspaper in Hong Kong. And we detailed all their errors column, you know, the bordering on criminality, really. And we took it out and we called an extraordinary general meeting of shareholders. The night before the EGM, I came home to my apartment and I arrived home a little bit before my wife, which was good, and my apartment had been ransacked. They hadn't taken anything, and this was before kids,

Starting point is 00:13:49 but they ransacked the whole place, and it was clearly a message that they were sending us. You can talk to us publicly, but we really don't like that either. And still to this day, that pyramid structure exists in Hong Kong, and it just exists for the Chong brothers and no minority shareholders. And so the lesson in that was, you've got to be very careful about public disputes in Asia. The concept of face. It's a real thing, and it took me a while to learn it. But overlook, we've been as active as anybody in Asia over the last 30

Starting point is 00:14:22 years, but very few people know about it. And it's all done privately and confidentially. And the executives have to have the confidence that it is handled privately and confidentially so they can get their own house in order. And on their timeline, not your timeline. So I think It's an important lesson. We learned it the hard way. So is that a lesson of being more critical of the management teams you partner with? Did that help kind of hone in that side of the process? Well, I think that, number one, pyramid structures like that are out of bounds for any investor. Should never invest in a pyramid structure like that.

Starting point is 00:14:58 For those who aren't familiar, what is the pyramid structure? Well, the pyramid structure is the family owns 50.1% of a public company that then in turn and owns 50.1% of another company, and they own the asset. And the value of that asset is transferred to the owners of the top company, and shareholders down below basically get nothing. And they do it through any number of mechanisms, but paying dividends to minority shareholders, they're generally not very big on. So you do it through excessive salaries, fees, costs. And so we learn, don't invest in certain things. Let's transition here to chat about the Asian financial crisis, Many in our audience are likely aware of the crisis that occurred in Asia in 1997 and 98,

Starting point is 00:15:43 but it's not something we've covered too much on the show here. I should also mention that many of our listeners are based in Asia as well. So you referred to this time period as nothing less than an economic nightmare, and there was really nowhere to hide for investors in these markets. How about you give us a sense of what was happening during this crisis that just made it so difficult for Asian economies? Yeah, well, Clay, I was having a nice time here talking to you, and now you have to bring up memories of 1997-98. It churns my stomach still today with everything that went on.

Starting point is 00:16:18 And really, with the passage of time, there are fewer people that really understand the extent of the obliteration of value. There was the inception of 97-98 went back years, that basically Asian economies were not able to self-finance their growth. They were running what economists called current account deficits. And so they were having to borrow U.S. dollars to fund their growth. And that U.S. dollar debt built up, built up, built up. And at the same time, they had fixed currencies to the U.S. dollars. So all the companies were saying, well, if I can borrow dollars at the same price as my Korean won or my Thai bot or my Indonesian rupea, I'm just going to do that. And so companies borrowed dollars, governments borrowed dollars, everybody was borrowing dollars,

Starting point is 00:17:08 and no one was hedging the currencies. And then on July 2nd, 1997, the bot broke. And it went from 25, eventually hitting 55 or 60. And it obliterated balance sheets. If you had 100 million of equity and 100 million of unhedge dollar debt, all of a sudden your debt grew four times in size and you needed four times the business. to repay that debt. And of course, you didn't have it, particularly when the economies were in recessions. To me, looking back, the dollar debt was really the biggest mistake. Current account

Starting point is 00:17:44 deficits were a reflection of that. And the rupee in Indonesia went from 3,000 to 15,000. The wand got obliterated. Within six months of July 2, 1997, the International Monetary Fund was called in to bailout, Korea, Thailand, Malaysia, and Indonesia, which were the main markets at the time. China was still a closed economy at the time. So they handled their own problems kind of internally out of sight. The stock markets in various countries like Thailand, Indonesia, went down nearly 90%. The real estate index in Thailand, which was a composite index, went down something like 98%. To do that, I calculated you go down 80%, and then you go down another 80%, and then you go down another 80%. That's what going down 97, 98% is like. And so it was just a

Starting point is 00:18:37 complete obliteration. We bottomed at Overlook. We went down from top to bottom about 65%. We really put a herd on our fledging investment management fund at the time. And we bottomed at about 4.6 times earnings, about 0.7 times book. Interest rates rose because they had to protect their currencies. In Indonesia, the interest rates rose to 99% and it didn't stop the currency from declining. But the Indonesians couldn't raise the interest rates higher

Starting point is 00:19:08 because their banking system couldn't accommodate three digits for interest rates. And so interest rates meant nothing in Hong Kong, which had no dollar debt. It had a fixed currency to the dollar, but it was backed by the pay. of the Hong Kong Monetary Authority and the government of Hong Kong, interest rates went to 36% and they had no debt.

Starting point is 00:19:29 So you can just see the massive exodus. It was a one-way street out of Asia, and there I was left. And eventually, 17 months later, I went out to Photon and went in and met my friend Michael Chan and went in and met the guys at Kingboard Chemical, and we survived by the chin of our chin-y-chin-chin, as they say. But it was really something.

Starting point is 00:19:51 It was a lot of calls at night to my investors. You know, it was pre-Zoom calls. It was pre-Internet. I'd call them up. And I'd say, this is Richard Lawrence calling from Hong Kong. And I'd get right through to the executive because calling from Hong Kong, it must be really expensive phone call. It was morning for the executives, the investors, and I'd totally wrecked their day. We went down 10% five straight months, maybe six straight months.

Starting point is 00:20:14 Now you know why I feel so miserable answering talking about 97-98. But of course, like all bare markets, bare markets self-correct. And today, Asia runs current account surpluses. Today, Asia has really good balance with their government budgets. And we don't have unhedged dollar debt. We have huge Forex reserves. All of that, high savings rate, all of that's come. The inception of that, all of it has come from 97, 98.

Starting point is 00:20:42 We all, everybody, any government official, corporate official, investor, we all learn those lessons. That's why I think 97-98 is such a pivotal time. We've had other bare markets, but they're like water on ducks back. Yeah, and I think when you say an exodus out of Asian markets was occurring, that might even be an understatement. I was reading some of the companies you were buying for well under P.E.s of five during this time period, just like so unbelievable reading it. And what's also worth mentioning is that during this time period, this was 97-98,

Starting point is 00:21:14 U.S. markets were essentially just going straight up, just rising quarter after quarter, And so how were you able to keep faith in the Asian market, especially for your investors, keep them bought into the longer term outlook of Asia? Well, there was a lot of those phone calls. Yeah, it was hard, you know. We kept them partly, I think, Clay, because the U.S. market was rising at the time. One of the guys I really diced and quartered was a guy by name of David Swenson, who was running at that point, just beginning to really develop his representation. at Yale, David was a fantastic partner. And David saw the world as in many ways, particularly on public equity side, just the way I did. We just had a real meeting of the minds. And David came out to Hong Kong and it was a Sunday. I remember I was pissed off because I had to pay for AirCon because June in the summer is really hot. And I didn't want to pay the building for AirCon,

Starting point is 00:22:14 but I did. David came and David sat down. He said, want to talk to you, Richard. And I said, well, that's great, David, but I want to tell you what I'm going through. And I laid out all the evils that I was confronting. And David, after 20 minutes or something, turned to his colleague, Dean Takahashi, and said, Dean, have you heard enough? And I said, yeah, you heard enough. And I said, no, I'm not finished yet. I'm not finished. I have rattled off some more problems I was having. And then exactly when I was exhausted, David said to me, Richard, we'd like to talk about adding some more capital. And of course, he was averaging down, but he wasn't scared by the by the bare market. And David was one of the great investors of his generation, my generation as well,

Starting point is 00:22:55 for a good reason. That really launched us because by that time, late 98, it was August, September, when the money came in, we were through the worst because, as I said earlier, Clay, bare markets are the discovery process. Buffett's comments that you find out who's swimming naked, we knew. And Asia was adjusting so quickly. And what was cheap manufacturing got even cheaper. So no one really could compete with Asia at that point. So we never talked about it with other investors. We didn't use his name at all until I wrote the book three years ago. I mentioned the story.

Starting point is 00:23:29 Yeah. And in your book, it seemed that that meeting with David was really critical. I believe it was a $30 million capital injection he gave you. And you sort of anticipated he was another investor that was going to pull their money. And you were very relieved to get that. And that seemed to be sort of the part where things started to turn for you. fund at that time, it was down 59% from its peak. And a lot of that was just due to the currency trading against you. So it's not even your positions getting hammered by 59%. The currency itself,

Starting point is 00:23:59 which largely you just really can't control is something you just sort of ride with. Well, there you go again, coming back to 97, 98 again, and the currencies, if I could roll back my whole entire investment career, I would have hedged those currencies on June 30th of 1997, this is why when we said at the beginning that we're macro aware, well, what we're really aware of are current account deficits. And when current accounts go into deficit, you've got to get out of Dodge. With one exception of one country in the whole entire universe, and that's the United States, they run current account deficits, and they have the dollar so they can do it. But other countries around the world are not able to run current account deficits for any prolonged

Starting point is 00:24:40 period of time because it's really a reflection of their inherent competitiveness or their excessive growth appetite that can't be funded. Both of those are bad. And you even mentioned in your book that you regretted ever listening to Buffett when it came to paying attention to macro. Is there anything else besides the current account deficits that you've implemented into your approach where you say you're macro aware? Is there anything else to that process? Yeah, there are. We had five and then we added one and then sort of in my Chinese way, I called them the five evils, and then the five evils plus one. But these are current account deficits, government deficits, fast loan growth. In my experience, banks can grow maybe 7% a year and not run into all kinds of trouble.

Starting point is 00:25:24 So if they're growing faster than that, they're going to outgrow their ability to make good loans and know what they're really lending. Loan to deposit ratios, forks reserves, those are all things that we're very aware of. We track them religiously twice a year. and we communicate them to our investors. And in today's world, we're in another bear market in Asia, not as severe. But we don't have a macroeconomic bear market. We have a geopolitical bear market, which is different. It has its severities.

Starting point is 00:25:52 But Asia today is still running current account deficits, modest loan growth, very acceptable loan to deposit ratios, very acceptable government deficits, particularly compared to Europe or the U.S. So Asia is still very, very competitive, I think. 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,

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Starting point is 00:30:14 All right. Back to the show. As you mentioned earlier, all great bear markets do a. eventually come to an end. So after the 9798 bear market, Overlook had an eight-year run of success generating returns of 20% per annum for investors. What were some of the things that you did that helped position Overlook for such a great run? Oh, we just had a bunch of great managers that we got into. I mean, you think along the way in that 10-year period, besides Cavity Crowell and Kingboard Chemical, Unisteele. We made our first investment in Taiwan Semiconductor. We owned a company called CPL, which

Starting point is 00:30:54 owned the 7-Eleven franchise in Thailand. And you just find these remarkable businesses and remarkable ones, what we call top of the pyramid tier one businesses, they stay in your portfolio because they're so damn good. We were just looking around and buying more and more, you know. I hadn't realized it was 20%. I'd long since forgotten that number. So you seem to think differently about the margins. of safety concept. You wrote in your book that the Overlook margin of Safety is the ability to consistently and reliably deliver superior investment returns to investors through the confluence of our investment philosophy and our business practices. This is the final result of the

Starting point is 00:31:35 overlooked model. I was curious if you could talk more about this seemingly different definition of the margin of safety. Well, I've always been confused about what margin of safety really has ever meant. Okay, people use it. They throw it out there like pricing power. People throw it out there and they don't really know what it means. It means different things. So for me, after 33 years, we have our investment philosophy and the investment process and we combine that with business practices. And our view is that you have to have both of those. It's not enough to have a really good investment team, investment philosophy, value added, investment management. It's not enough to have that Because you've got to have the business practices that are aimed at delivering those returns

Starting point is 00:32:20 that the investment process generates, deliver those returns to the investors through capital weighted returns. And if you measure success as a fund manager, it should always be capital weight of returns on individual investors and the investor group as a whole, because that's how they've done. All over Wall Street, you see they'll promote the time way to return up here, and they won't release the capital weight of returns, and that's down here. You know, I tried to get the capital weight of returns for Bridgewater 15 years ago. Everyone said, oh, that's all under NDA. You can't get that. Well, that right there is a huge red flag because what we all should be doing as investors is delivering capital weight of returns to our

Starting point is 00:33:02 investors. And that's the IRAs for the investors. And to me, if you can get the right investment process and then have the business practices like controlling your assets under management, controlling the number of fund you'll, control your fees, control the conflicts of interest, deal successfully with generational transition of ownership. If you can do all those things from a business perspective, that is the margin of safety, because you're delivering both. You're getting the outperformance through the investment process, and you're delivering that outperformance to the investors.

Starting point is 00:33:35 So to me, the major success is not a time-weighted return number of the fund. it's really the capital-weighted return of the investors. And when we've done that through outperforming and delivering that outperformance, I think even today in this bare market, we're still outperform the index by over five percentage points per year for 33 years. That's the margin of safety as I see it. So I should also mention that the 14.3% number that I mentioned at the top, that was the time-weighted return. And if we look at the capital rate rate of return, which is what the investors actually got,

Starting point is 00:34:09 That was 14.2%. So it's practically the same number of what the fund is doing and what the investors are actually getting in the end. And that happens very purposely. When Richard Lawrence was a hero after growing 10 years at 20%, we legally restricted the amount of money that could come into the fund. And when Richard Lawrence is a jerk and everybody hates them, we go back out to our investors and say, now's the time when you want to consider adding money. whether they do or they don't, like David Swenson did. But the legal cap on subscription is a real hero of the story. That's been fantastic. And it just takes the devil out of Richard Lawrence. I really try to be an ethical guy, and we address aggressively by outlawing a lot of behavior

Starting point is 00:34:56 that's prevalent on Wall Street. But making it legal, lets me tell great investors that I'm sorry, I can't do it. We'll put you on a wait list. We'll get you in. We just got to wait a while. One other point I wanted to mention in relation to the ethical side of things is how you cut your fees over time. What led you to want to cut the fees, which seems like the opposite of what a lot of fund managers are looking to do? Well, I thought our fees at the beginning were really, really high.

Starting point is 00:35:28 And we weren't in the two and 20 crowd at all. But we were high. And I said, that two and 20, no way that's lasting. So I got to get ahead of it. And I figured out early on that after good years, we cut our fees. And after bad years, we don't. Because I never wanted to cut my fees because my investors demanding me to do it. And thankfully, we've had more good years than bad and we've cut our fees, 21, 22, whatever it is.

Starting point is 00:35:53 But that put me in control of it. And I didn't want to be forced to cut. But if I had thought that 2 and 20 was going to last, I probably could have kept my fees higher. But I'm so happy that we've shared the benefits of our growth. with our investors because it's delivered, even marginally, it's delivered more capital way to returns to them. And that at the end of the day has to be the objective. In addition to the margin of safety, you also put a huge emphasis on pricing power. I was curious if you could share a bit about how you identify pricing power and stay away

Starting point is 00:36:28 from what you call fake pricing power. Pricing power, if you could wish for one thing to have in your portfolio, it would be pricing power. People talk about it, but it never made any sense that how do you actually quantify pricing power? And so we, in the midst of 0708, in that bare market, we spent about six months debating internally, how do you quantify pricing power? And there's a pretty simple process you go through. It's like, just think about where corporations make their pricing decision. Where is that manifested on the income statement?

Starting point is 00:37:04 And I'm not going to give you my equation because otherwise I'd have to kill you. But if you just think about it and put real time into thinking about where does the pricing happen, then you'll get to really focusing on pricing power. And then pricing power is really important in bad times. Because some companies gain pricing power in bull markets in bull times, but then they lose it in bare markets. And that really high value pricing power is in good times and bad. And I remember at one point, and this is in some of the things I've talked about, TSM in, it would have been 0708, went from 103% utilization to 32% utilization. And their cash gross profit margin was absolutely flat, which they said, guys, you can all cancel your orders,

Starting point is 00:37:52 but I'm not giving you discounts. And people like TSMC, China Yanksy power and others we've had are the gold standard for pricing power. And it's the, as they say, it's the gift that keeps on giving. But you have to understand that there is fake pricing power. People got lucky. People got pricing power in really high growth periods. And when it turns down, they lose it. There are a lot of false pricing power. But if you take 50 companies with good pricing power, for sure, you're going to find three that are really good. So that's not a bad way to pick stocks. Let's talk more about Taiwan's semiconductor. So you had a whole section in your book dedicated to this company.

Starting point is 00:38:33 And you first purchased your shares in 2000. And you were ready to part ways with this company in 2004 if they didn't start to change some of their capital allocation decisions. Talk more about what they were doing wrong in your review and how Overlook helped address that situation. Well, to set the stage, they were about a $40 billion market. cap company at the time. I was probably a couple hundred million dollar asset under management fund manager. And we bought TSMC. And then two or three years on, I was really annoyed. They were doing three things in particular and I was ready to sell. And I said, well, I'm going to purge my anger. I'm going to write Morris Chang, who today is the absolute father of the electronics business in Asia,

Starting point is 00:39:21 by far the most influential businessman over the last 40 years in Asia, just the king of all kings, really. And I wrote more as a private and confidential letter, learning from my Tintech days, and I isolated three things, that they were giving free shares to their employees. The insiders, meaning Phillips and the Taiwan government, were selling shares at a premium in New York, and that wasn't available to a guy like me, and they weren't paying dividends. and I wrote him a letter, sent it off, and I think in that letter, I actually said, I thought that this was going to put his reputation and the reputation of TSM at risk long term. And I was back in California one evening, and the phone rang, and my son answered the call and came in and said, Dad, there's some guy from Taiwan calling you. And it was Morris.

Starting point is 00:40:11 It wasn't the CEO, it wasn't the CFO, it wasn't the IR, it wasn't his secretary, he was Morris. and he said, I got your letter, Richard. I got your letter. I distributed it to the directors and the senior management. I gave a copy of it to the government of Taiwan, and I can tell you they were not happy with the letter. But I hear you, Richard, work with me. Let's solve these problems.

Starting point is 00:40:34 And right then, Morris Chang, in my book, became the king that we all recognize him to be today. And he was the real McCoy, and I spent a year working with him and his team, and of course we solve those problems. They pay huge dividends. They self-finance their growth. They haven't issued a share since the date of that letter to employees or anyone else.

Starting point is 00:40:56 It's just absolutely the model. That's why we call it the poster boy. It's a big company today. It's geopolitically important. I mean, what we've seen, they have an unassailable lead over Intel in high-end manufacturing, a moat that the only way to attack the mode is to attack them geopolitically, which is happening.

Starting point is 00:41:15 So at that time, presumably shares were trading at an attractive price, especially at the time you were purchasing shares. And it seemed that you didn't like that they were favoring share buybacks over dividends. Why is that a capital allocation mistake in your view? Well, in America, let's just put buybacks where they belong. In America, there is a tax advantage to individual investors from buybacks, not dividends. Okay? So they have changed standards practice over the last 43 years.

Starting point is 00:41:47 What you're asking companies to do with buybacks is to buy them correctly at the right time. And I think guys like Morris Chang, they run a hell of a good business, which is a very complicated business. But you're asking him also to be really smart on knowing valuation of securities. And he's not a financial guy. And so what I dislike is the high level of failure. where executives pay the wrong price for the wrong reason for buybacks. And it's prevalent here in the United States.

Starting point is 00:42:19 I don't invest in the United States. So I don't really want to give examples of it. But in Asia, there's no tax on dividend. Asians believe, for the most part, that when you earn money a salary, you pay taxes. And what you do after that is your business. And we're not going to heavily tax you. So there hasn't been the tax incentive. And so our companies are all paying dividends.

Starting point is 00:42:41 we don't have a company in our portfolio that doesn't pay dividends, high dividends, you know, 55, 60% payout ratios with 14% normalized growth. And so when we push buybacks on companies, we're asking the executives to really understand valuation. Now, we will today,

Starting point is 00:42:58 because buybacks are increasing in Asia, we talk very clearly to our executives about buybacks and when they're appropriate and when they're not appropriate, okay, and what they can achieve and what they can achieve, Okay, they're not panacea. And in my view, today, I'm a U.S. taxpayer. I pay taxes on those dividends, but I'd rather have my equity priced at a minimum on a dividend

Starting point is 00:43:22 yield plus growth. So it wasn't just TSM where you were active in working with the management team. This is a part of who Overlook really is. And you talked about in your book how when you're sitting across from the CEO and the CEO in these small meetings, you really figure out if they're the real. deal or not, or if they're willing to work with you, what are some of the things you're looking for in these one-on-one meetings with the managers and the CEO? Well, we put an umbrella out about what we're qualified to talk about. I'm not qualified

Starting point is 00:43:56 to talk about how much TSMC should pay for a semiconductor fab. I'm just not qualified. But I am qualified to talk about corporate governance and capital management. And that's a pretty big umbrella. Okay, there are a lot of things underneath that that we can talk about. And we move underneath that umbrella to wherever we have to be in the specific situations that arise in corporations. And some people listen to us and some don't. But if you're not going to listen to me, I got other places I could put my money because capital management corporate governance is important to us. How are you reinvesting? What are you doing with your free cash flow? How are you handling shareholder issues? How are you handling transportation?

Starting point is 00:44:38 transparency, succession, all those things. That's all corporate governance and capital management. And so if we fundamentally don't meet, it's a great way to discover the guys that I don't think our investors want us to be with. So Warren Buffett purchased shares in TSM in recent years, but it was many years ago you actually wrote to Buffett recommending TSM as an investment. What led you to write to Buffett and recommend this investment to him? As you mentioned at the beginning, I came across Buffett early. I loved his early pre-Ber Hathaway letters. I loved his early letters at Berkshire Hathaway. In the last 15 years, they don't really teach me much. But in the early days, it was making me think a lot of the share-by-back

Starting point is 00:45:24 stuff comes from Buffett. And I always kind of felt I owed him. I don't know if you've ever read the CFA collection of the anthologies that they put out, which were chapters, written by great investors over the course of probably 20 years. It was put out probably 20 years ago. Investors anthology is what's called. I found when I read that, like John Trains books also, I had a chance to read about investors. I was finding my cousins. And they weren't cousins in all aspects, but I was picking up nuggets that were helping me. And so I didn't invent anything at Overlook, but I had picked up little pieces from various people. And one of them I picked up from was Warren Buffett. And so to me, to write to him and say, look, this is the real deal here.

Starting point is 00:46:11 You know, I was kind of repaying my debt because it allowed me to, for the last 20 years or whatever it's been, it's allowed me also to criticize Buffett and be open and honest about that. I don't believe you can ignore macroeconomic conditions. That was a horrible piece of advice to me. And that came from him. And so there are other things that I disagree with Buffett. But there was a lot I agreed with and sending him the letter and advising him to buy TSM, sort of purged that. And then he bought it and then sold it. You know, and I think that just he got scared off by geopolitical risk of Taiwan. And I think that was deeply misplaced.

Starting point is 00:46:50 But there you have it. Everyone's got their own view. And he's a very, has been traditionally very U.S. centric. So I wouldn't have expected him to understand much about Taiwan. I also wanted to touch on China. So the major Chinese index, the CSI 300, it peaked just prior to the great financial crisis in October of 2007. And then it took seven years to bottom in 2014.

Starting point is 00:47:16 And Overlook determined that it was what you referred to as a stock pickers paradise. So your allocation in China and your fund went from 6% in 2010 to 55% in 2020. and that really scaled up around the mid-2010s. You wrote in your 2016 letter to shareholders, Overlook's history will eventually show that the 2013-2015 rotation into China was one of the most insightful allocation shifts in our 25-year existence. In Q2 and Q3 of 2014, Tiny Overlook was probably the largest foreign buyer of A-shares in the world. This accomplishment was a result of a total team effort at Overlook.

Starting point is 00:47:57 So other than the valuations getting super attractive in China, what were some of the things that changed at the time that led you to shift from these other parts of Asia into the Chinese stock market? Well, first, it was kind of a push. You know, things like our CPL, the 7-Eleven franchise in Thailand got up to 35 times earnings. And I never made money going from 35 to 45. I didn't know how you do. I still don't know how you do that. So we had cash building up and we were wandering around Asia. and we started going into the A shares.

Starting point is 00:48:28 And literally, in a lot of cases, we were the first foreign investor to walk in the door. In a lot of cases, they didn't know how to deal with us. In a lot of cases, they've just been waiting years for guys like me to show up and express interest in their companies. You have to understand, in 2013, there were no role models. Even today, they're very limited role models

Starting point is 00:48:48 for Chinese investors and Chinese public companies. Role models like TSM or CPL or Cabinet Corral, or caffatatatat, they're limited role models. And so everyone's kind of inventing this on the fly. And there were some successes and some massive failures as a result. And that bifurcation was not well understood by Chinese investors and it was really a domestic market. And so we had sort of the pick of the litter. There was a great story early on. We went into an auto parts company in Shanghai and I was meeting the CFO and I don't even think he was in IR. I don't think they had IR in those days. but there were two guys that I was meeting with,

Starting point is 00:49:25 and then down to the other end of the table, there's a guy that's massively, rapidly scribbling notes. It was all done. I can't remember whether that meeting was translated or not, but a lot were translated. But that was okay. I'm okay with that. Particularly when stocks are cheap and attractive.

Starting point is 00:49:40 And after the meeting, I said, what was that guy doing down the end of the table? Well, he was the Communist Party member, and he was writing notes for the file. So I thought, oh, this is different. But that's okay. I mean, everyone's got their system. I'm not one to judge.

Starting point is 00:49:53 political systems. I think they're all terrible. And so we just went from one to another to another. And along the way, I knew just enough to realize that the Three Gorges Dam along the Yangtze River was perhaps the greatest free cash flow asset that I had ever encountered in my life. And I don't say that lightly because I've been around the block. And they had some challenges ahead of them, which we can talk about at another time, but that free cash flow was just off the table, absolutely off the table. You go into the control room at the Three Gorges Dam,

Starting point is 00:50:29 and there are two people operating the dam. Two, it's the largest hydroelectric facility in the world. And so we just went one to another to another, and we very, a little bit unfairly, we really tried to keep it from our investors because we didn't want anybody knowing this is what we were doing, and we tried to get, at those point,

Starting point is 00:50:49 you could apply for a Q-fee, I don't even qualified investor status or something, and they'd give you an allocation. So we applied for like $800 million, and the Chinese government gave us $100 million. So we had to pay other fund managers who were selling their A shares. We paid them to get their Q-fee allocation. So we were borrowing Q-fee all over the place, trying to be as quiet as we could. And no one really knew overlook at the time. So it wasn't that hard to stay quiet. But it was fun days for everybody, for everybody, because we knew we were on to something. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect

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Starting point is 00:54:42 All right. Back to the show. And to just give a sense of the sentiment and where things were out in China, can you give a sense of your entry point in that hydroelectric investment and what sort of returns that's delivered for you if you're able to recall some of the numbers? We start around 7, Renminbi a share. Today, it's about 29 Renmi B a share, and we've gotten, oh, probably four or five dollars in dividend, four or five renm MB per share in dividends, if not more. So it's been good.

Starting point is 00:55:10 At the time, we bought it at 23,000 megawatts of renewable energy on the Three Gorge's Dam. Today, it owns five of the 12 largest hydroelectric dams in the world. They have 72,000 megawatts of renewable energy. It's the largest renewable energy company in the world, and it's also the lowest cost electricity provider in China. And those two things are really a hell of a franchise. Last year, they generated gross free cash flow of about $7 billion U.S. dollars. And their capex, their maintenance capx was about $250 million. And that free cash flow has allowed them to make $70 billion of acquisitions over the last 10 years of additional hydroelectric dams that were constructed by their parent company. And so we helped them. We were, in terms of activism,

Starting point is 00:55:58 we were enormously active in helping them understand financially how to make those asset injections. That was a mountain of work, but these guys are really smart. The Chinese are super, super smart. They weren't sophisticated financially, and so we taught them how to do it. And as a result, the last acquisition, which was done about a year and a half ago, the first 12 months after making the acquisition clay, the net free cash flow per share was up over 40%. After a $40 billion acquisition, you just don't see those. kinds of numbers in most places. But it was because they did it really intelligently, utilizing their

Starting point is 00:56:34 free cash flow and being very judicious with issuance of equity. Since your team is looking at the macro situation or being macro aware and overlaying that on your very micro approach to picking stocks, how would you describe the current macro situation in China? Well, let's start off with the stuff that really matters, which is things like balance sheets. Okay. They got a, $3 trillion of Forex reserves. The household bank deposits are double the size of the market capitalization of the stock markets. And it nearly tripled the size of annual retail sales. So the individual Chinese consumer has a lot of firepower in their bank deposit.

Starting point is 00:57:17 Okay, so balance sheets are strong. Loan to deposit ratio is a conservative. The capital acquisition ratio at the banks is okay. So, you know, those balance sheet items are all in. very good order, current account, surplus, small government deficit. That's not the problem. The problem is really a lack of confidence. They've lost confidence. As you do in bare markets, as you do in recessions, you've lost confidence. And it was triggered by the declines in an overbuilt real estate market. The real estate guys had kind of a heads-eye win, tails-you-lose kind of approach to

Starting point is 00:57:50 real estate development, particularly the private guys. They've all been gone bankrupt and all been flushed. But their residual is that real estate prices probably really have gone down 25% if you speak widely. You know, their pockets where it's stronger and pockets where it's weaker. And that was the major asset of Chinese people. That's what the citizens own. They own some equities, but not a lot. And so they're a bit shell-shocked and they get sort of really mixed signals on capitalism from the government. And so their animal spirits have really been doubly repressed by lack of confidence and a concern over the commitment, both growth and capitalism in the country. So that's kind of where we are at the current time. And then you lever that on top

Starting point is 00:58:35 with geopolitical situation with the U.S. where both sides are at fault. Both sides have brought out the worst in each other. And there's a lot of sort of ganging on. It's a bit like 10-year-olds on a playground. They're kind of ganging up on each other. It's not really, really great leadership for the world. This is probably the most important economic relationship in the world today. And the amount of discussion going on between governments is almost minimal. And we don't have a big base in the United States of diplomats who are really well versed in China. China for the last 40 years has not been the problem. And so the diplomats went to Afghanistan, went to Iraq, went to Syria, went to Ukraine and dealing with all those messes and largely

Starting point is 00:59:21 sort of ignored China, while China needed attention to address some of the fundamental problems. And so we don't have the great outlook that we should have that we historically had, starting with Kissinger, on really creating a real relationship with China. And so it's going to take the better part of the rest of this decade to turn that around. Now, having said that, my investments in China and in Asia are not predicated on U.S. investors moving those stock prices up. They're just not going to come back. The sentiment towards Asia is so negative. But like I said, there's plenty of gunpowder in banks and household bank deposits. And so I think that's what will eventually turn it around. But we need more commitment to reform than we've had. There'll probably

Starting point is 01:00:06 be more rounds of stimulus. You have to understand that the Chinese do stimulus differently. We don't open the helicopter and throw the money out. They're very tactical on how they stimulate, they'll do tests, they'll test it in a bunch of provinces, and if it's successful, then they'll roll it out. We're seeing big reforms. They're just offering refinance of all the mortgages, for example, because the interest rates have gone down. Things like that will really help the Chinese citizen, and that'll bring back animal spirits. It's a long bear market. We've been three and a half years, almost three and three quarter years, and no upward momentum to speak of. So it'll just take time. That's the way life is sometimes.

Starting point is 01:00:44 China is certainly a very hot topic, both inside and outside the investing world. Some like Overlook have been finding bargains within the Chinese market while others see China as uninvestable to some extent. What do you think is the biggest misconception when it comes to investing in China? Well, if you think back to this, eight-year-olds on the playground, in the U.S., there's a certain arrogance that China's weak and has been brought to its knees and, doesn't have technology and is massively over levered and whatnot. I think that's not really realistic. If you look carefully at the semiconductor, which is something I've been tracking for nearly 24 years,

Starting point is 01:01:26 we can try to restrict advanced semiconductors from China, but China takes a very long view of this stuff. And I guess in eight, ten years, they're going to have similar level of technology. And that will have happened faster than if we had really sat down and talked about what are the uses in China, China for the advanced technology, for the advanced chips, how to keep them out of the military. Well, if we ask them to keep the advanced chips out of the military, well, then they're going

Starting point is 01:01:55 to ask us to keep our chips out of our advanced military. And so that just hits loggerheads because our military is, in the U.S. There's a certain arrogance that comes with it. And so those are complicated problems that need to be resolved. But to me, I would say that there are five semiconductor markets. and the advanced one that goes into military equipment is really probably the smallest of all of them. And so let's talk about the other four markets and see what we can do on that. But there's basically no talking at this point.

Starting point is 01:02:25 Transitioning here to our final topic today, namely ESG. So recently I interviewed Jeremy Grantham on our podcast, who is always just amazing to speak with. In your book, you touched on your relationship with Jeremy and how he helped open your eyes to the environmental issues that lies ahead. So you wrote, without my experience with Jeremy, Overlook might well be like many other fund managers, blind to the risks and opportunities that investors will confront in the coming decade. Thankfully, we're not the blind. I was curious if you could share more about your relationship with Jeremy and how he's influenced you over the years. Well, Jeremy and I probably go back 18 years. I met him when I started to build fuel efficient

Starting point is 01:03:09 cook stoves in rural poor communities in Honduras. A large institutional investor who knew Jeremy was talking to me after one meeting and I was explaining to him that I was building stoves. And he said, you should meet Jeremy. And I went up and I met Jeremy probably two or three times. And I was just talking about how I built his stoves. I need some money to help me build more stoves. And then one afternoon, it was a slow afternoon for Jeremy, which I don't think happens very often. And we sat in his office overlooking Boston Harbor, and we discovered that we had so many commonalities of running investment management firms, dealing with clients, investing, China, whatnot. And over the period of time that I really got to know, Jeremy, he was just rolling out in his own really magical way, the impact of climate change. And he was the first person in the finance industry to raise the flag on climate change.

Starting point is 01:04:02 And including, he told me one time he was going down that weekend to go chain himself to the fan. at the White House to raise the issue of climate change and that the government was doing nothing about it. Jeremy eventually became my partner in building stoves and we built, I think, 350,000 stoves in Guatemala and Honduras. We have the biggest cook stove project in Central America and we're funded it all with gold standard carbon credits, high quality, high integrity carbon credits, which led us to the importance of the voluntary carbon market as a market mechanism for climate. But Jeremy also would say, you know, have you read Lord Stern's book? on the economics of climate change, and, you know, it's a 700-page book. I read it one summer. I read

Starting point is 01:04:41 the whole thing. I traveled around the world enough. I know that if we don't get on this, water literally in the Nile River is not going to read Egypt. And that's going to be a war. And I learned about the west coast of Antarctica and that glacier that's at such a peril. And I learned about Greenland. I learned about all these aspects of climate change. And so we started 15, 16 years ago. We've been carbon neutral at Overlook. We started outlawing certain industries, and we outlawed all the major ones, and then we really started looking more at companies and which companies were part of the solution, which companies were part of the problem. We started really pushing this through the portfolio

Starting point is 01:05:21 because I believe, and people can disagree, but go read John Holdren's annual PowerPoint on climate change, where you go through all the aspects of climate change. You go there, read that, and say, come back to me and say, it's a hoax, Richard. And so I think, think portfolios need to be prepared, particularly for the environmental. I mean, the governance and the social, we've been dealing with that forever. But the climate is changing. We need to be prepared, and it's going to have an impact. And so we're prepared. And I owe an enormous debt of gratitude to Jeremy for that. And then later in life, as I became a philanthropist, my wife and I committed all our philanthropy is going to climate change. And Jeremy taught me again that with philanthropy,

Starting point is 01:06:03 you have to be aggressive. Philanthropic capital is the highest risk capital that we have in our economic system. So if they don't take risks, who's going to? So we've adopted Jeremy's model. We're one of the most aggressive funders of high-risk, high-impact projects on climate change specifically because of Jeremy.

Starting point is 01:06:24 In Asia, you know, Morris Chang is my king. In the United States, my dad and Jeremy are my kings. And then in my personal life, I better mention my wife and kids. That's amazing to hear. Thank you for sharing that. I had one more point here on the environmental side. So you talked about your book, how you believed that being part of the problem is going

Starting point is 01:06:45 to be expensive for investors who own, say, coal stocks or some of these environmentally unfriendly types of companies. And you think that investors who own the stocks that are part of the solution are going to be rewarded financially. And you call this the climate bifurcation. And I found this somewhat ironic because lately I see a number of investors talk about how ESG has just become so prevalent that it's presented opportunities in areas such as coal, making it a potentially lucrative investment opportunity if the free cash flow is just so strong. I was curious if you could talk about in what ways investors will pay the price or maybe these companies are going to pay the price if they have all these carbon emissions and toxic waste and whatnot. That's a good question.

Starting point is 01:07:30 First of all, I'd say with regard to your coal company, let's check back in 10 years. Okay? And if someone can pick up a cigar butt and make money for 10 years by doing damage to the planet, so be it. That's not a business that overlook's going to be involved with. And it's not money that I would like my investors to make. And so we're not doing that. I think wider, you know, ESG got politicized in the United States as almost everything gets politicized.

Starting point is 01:07:55 And so really, if you think about it, ESG aren't really related. So governance is one fight, you know, social is another, but the environmental is what particularly we're focused on because it's really going to impact cash flows and valuations and value of assets going forward. I think, you know, there are cycles through markets and Wall Street is inevitably incredibly inventive. So the fact that they put coal companies into ESG funds is just a sign that there's money to be made in doing that. And that's fine. I think smart investors shouldn't look at that. And if we're really going to allocate capital correctly, we have to take into account the environment. So if you're in funds with coal, you should get out because there are

Starting point is 01:08:36 other funds that don't have it. So I think that with regard to the philanthropy where, you know, there are very few victories in this. You know, a lot of politicized opposition that's very well funded because of their deep pockets in this business. They don't want environmental movement or the climate change movement to exist. They don't want transparency on their methane emissions or they don't want transparency on their carbon credits because they're getting away with it. But I always come back. Have we solved climate change? No, we haven't. And it's not going away. And so inevitably, the issues that we're talking about today are only going to get more serious. And we're going to confront mass immigration, mass migration for environmental reasons.

Starting point is 01:09:20 Probably 30% of the migrants from Latin America from Central America are coming simply for environmental reasons, that the hurricanes keep going through Honduras and Guatemala, and the droughts keep going through those communities. And they're just, where do they go? So we can have bumps on coal stocks for a while, but let's check back. We'll be around, hopefully, touchwood, Clay, in 10 years, and give me a call and see how we're doing. Well, certainly, Richard, I really, really appreciate you joining me on the show. It's truly an honor to have you on. And I feel like we should have had you on years ago with this amazing investing record you've had. I'd like to give a final handoff. Please let the audience know how they can learn more about you and the work that you're doing

Starting point is 01:10:02 today if they'd like. I've given a bunch of speeches at times that you can find on the internet and they talk about the overlooked model. I mean, the best source of information on us is really the book that I wrote with my partners three years ago, I guess now. It's called the model 37 years of investing in Asian equities. For your Asian listeners, it's now been translated into Mandarin, and later this fall, it's going to be published in China on all the major platforms and all the major bookstores in China. So if you want to read it in Chinese, we'll see. I'm not sure how much is going to get censored. It may take a 280-page book and turn it into a 25-page manual, but there'll be something left. And so that's going to be available. I think a lot of what we've

Starting point is 01:10:44 talked about here today, Clay, is excerpts from some of our stories and that's the best way. And then you can reach out. We have a website that's private, but there's a contact point there. So if you're interested, we need professional investors of million dollars plus, but we're happy to engage with professional investors. We don't take net new money in, so we're just replaced redemptions, but there's a bit of a wait list, but it's not forever. And we accommodate people. And we're just going to keep doing what we're doing. There's no, no real reason for us to change. I go back, my dad was a stock picker, John Bush was a stock picker, stock picker, my younger colleagues are stock pickers. In 20 years, the world is going to need stock

Starting point is 01:11:22 pickers. The financial market, Wall Street might want to turn us all into obsolete things with AI and ETFs and whatnot, but I can tell you it's not going to happen. On that note, I'll turn it back to you, Clay, but thank you. Yeah, wonderful, Richard. I mean, I would highly recommend your book, the model to all of our listeners. I'll be sure to get that linked in the show notes. And it really gives a masterclass into really the model, your business approach, your value investing approach and your journey and all the lessons you've learned from the great bear market of Asian financial crisis and the transitions you've made into different markets throughout Asia. So, Richard, I really can't thank you enough.

Starting point is 01:11:59 Thank you for joining me on the show. I appreciate that, Clay. It's been very fun. Except for the part where you brought up 97, 98, I enjoyed the whole conversation. Thank you for listening to TIP. Make sure to follow We Study Billionaires on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional.

Starting point is 01:12:28 This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - TIP661: Lessons from Bear Markets w/ Richard Lawrence

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