15 January 2022

On today’s show, Stig Brodersen chats with Guy Spier. Guy Spier has had a profound impact on the value investing community. As with Warren Buffett, many investors first find Guy Spier to learn how to invest. But while you might come for the investing lessons, you stay for the life lessons.

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  • How to use envy as a positive force in your life.
  • Which idea that Guy Spier had to let go of in his evolution as a value investor.
  • How to know which habits to clone and which not from heroes like Charlie Munger.
  • Why Guy Spier thinks that Charlie Munger is right and wrong about bitcoin being rat poison.
  • Why you can be a value investor and invest in bitcoin.
  • How to struggle well in life and investing?
  • How does the shorter tenure in the S&P500 change how Guy Spier thinks about compounders.
  • Which investing knowledge Guy Spier would like to acquire if it didn’t require any time.
  • Why the best way to achieve success is to deserve it.
  • How and why you should be authentic and vulnerable.


Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

Stig Brodersen (00:00:02):
Today’s guest has had a profound impact on the value investing community. As with Warren Buffett, many investors, including myself, first find Guy Spier to learn how to invest, and learning from Guy Spier, you learn from one of the greatest. But while you might come for the investing lessons, you stay for the life lessons. Ladies and gentlemen, I hope you enjoy this episode as much as I did. It was a privilege to have this conversation with the always humble and kind Guy Spier.

Intro (00:00:34):
You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected.

Stig Brodersen (00:00:54):
Welcome to The Investors Podcast. I’m your host Stig Brodersen, and I’m excited to welcome back Guy Spier to the show. Guy, thanks for taking the time out of your business schedule to speak with me and the TIP community here today.

Guy Spier (00:01:07):
Well, Stig, your excitement is only exceeded by my excitement. I’m super excited to come back on your show. It’s been a long time. And for the listener, I just want you to know that I just took a while to read through Stig’s notes that he took, and he’s got the most extraordinary set of notes. The reason why this podcast is so great is that Stig does the work, and so thank you for having me, Stig.

Stig Brodersen (00:01:33):
Wow. What an introduction. I don’t even know if I should edit that out. I think it’s going to my head if people hear you say that, Guy.

Guy Spier (00:01:41):
It’s from the bottom of my heart. For the listener or viewer, I had missed the notes. So we were about to start the interview, and then Stig says just before we go live, “Is there anything in the notes that you think you don’t like or give comment on?” And then I didn’t realize that there were questions there. So we just took five minutes, Stig probably made himself a coffee, and I’m just really impressed. So it’s just genuine from the bottom of my heart, and so don’t cut it out.

Stig Brodersen (00:02:09):
Give me an excuse to do the humble brag. So Guy, yes, I won’t take it out. But let’s jump right into the first question here. So I’ve heard you say that envy can be a good feeling to have, and you used it actually whenever you set out your journey learning more about Warren Buffet. And I wanted to mention this not just because of this cheeky comment I can now make about Warren Buffet who has said that you should not feel envy because it’s the only sin you cannot have fun with, but I wanted to start this interview by asking this question, since in investing and in every other walk of life, envy is an emotion we all experience, even though it’s a feeling we might feel as people we shouldn’t be feeling in the first place, how have you used envy as a positive force in your life?

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Guy Spier (00:02:54):
Thank you for a spectacular question, Stig. And I get really excited. So I feel like just about anything I can think of that I learn that’s valuable, I realize at some point that Warren and Charlie already knew it, but I get excited when I think that I’ve discovered something or I’ve come across something that maybe Warren and Charlie don’t know or have not expressed, and for me, I think that this might be one nugget. And so it starts from a really valuable psychological idea for those of us who’ve sat and spent time with psychotherapists, which is that our emotions are a clue to action. And there’s this famous case of Phineas Gage who had this accident where a steel rod went through his head, and it destroyed the part of his brain, it seems, that enabled him to feel emotion. And what happened is that he was pretty normal in spite of recovering from that pretty awful injury and with a certain part of his brain destroyed, but what they discovered over time is that the lack of emotion that he felt made it far more difficult to take important decisions in life.

Guy Spier (00:04:05):
Our emotions are a guide to action. We evolved as we know over millions of years, and so we can look at any particular aspect of our body and say, why is it there? And just to give a mechanical example, I’ve discovered, because I’m here with a healing broken arm that, there are many aspects to the design of our body which are kind of like crumple zones. We evolve to have crumple zones so that if something happens, your head is protected. So the emotions are not just something that sit there separate to our lives and separate to our missions, they’re actually central, and we can kind of discover what their purpose is. So the easiest one to kind of talk about is the emotion of anger.

Guy Spier (00:04:48):
The emotion of anger is in its core, as best I understand it, is my boundaries have been violated and I need to do something to reset this. I either need to deter that violated my boundaries, or I have to protect myself, or I have to do… So there’s kind of like… So when we feel anger now in our complex world, we can do something stupid like punch the person back or engage in vindictive behavior, but if we interpret the emotion of anger right, then we’re going to build our defenses, we’re going to deter in an intelligent way.

Guy Spier (00:05:22):
So envy, I don’t think that it’s… It’s kind of shallow to just dismiss an emotion as a sin. The far better is to say, well, what is actually going on here? Let’s try and understand and uncover this. And so I have a Mexican wife, and so she has often and early in our marriage experienced the emotion of jealousy. And jealousy is far easier to understand in terms of people. It’s like, that’s the person I intend to mate with, or I am mating with, and I don’t want your genes mixing up and muddying the waters, I just want my genes and this person’s genes to mix, very, very protective emotion.

Guy Spier (00:06:03):
I can’t claim, and I certainly am not a qualified psychologist, but if I try and unpick the emotion of envy for myself, the emotion of envy says, that person has something that I deserve to have in my life. I don’t think that we feel the emotion of envy for something that is unreachable. I don’t think that the people who come into the presence of the queen or people who come into the presence of Ronaldinho or another soccer player, they feel envy, because the skills are just so great and they’re so unattainable, you feel awe. You feel awe to be in their presence.

Guy Spier (00:06:42):
But if you’re Djokovic and you’re playing Roger Federer, or you see Federer, now Djokovic might feel envy for Federer. Why? Because he knows he has the capacity for the greatness that Federer has. And so it seems to of me that what we need to do with envy… Now, if you take the Djokovic/Federer rivalry, what does Djokovic do with that envy? Now, if he does what the ice skating woman did… I’m not going to remember the name. She went and stabbed her arrival, Nancy Kerrigan. She went and stabbed Nancy Kerrigan. That is a terrible misdirection of the emotion of envy, but the emotion really that says, wow, I’m feeling this envy actually because I am a genuine rival to this person, and I need to go to work on maybe making that a reality, I think that is a very useful use of envy.

Guy Spier (00:07:35):
The point being that if we take our envy and sweep it under rug, we’re not going to get the benefit. As we all know, there’s no point going to our angry spouses or an angry child and say, you’re angry, but you shouldn’t feel angry, sweep it under the rug, we’re not dealing with it. But if we say, let’s take the anger out, let’s unpack it, let’s understand why you’re angry, and let’s try and think about what the best way to deal with your anger is, is it writing a letter of complaint, is it suing, is it deciding not to have the person in your life ever again, similar with envy.

Stig Brodersen (00:08:07):
From studying your work and from listening to the interviews with you, it always amazes me how you can turn something that is seemly bad into something that’s good, that’s helped you, that helps you grow as a person.

Guy Spier (00:08:23):
When I used to live in Manhattan, I had a place on West 67th Street. At a time when Barnes & Noble still had stores all over New York City, there was a Barnes & Noble store at the end of my street, and I had made very good friends with the self-help section. I would just do kind of a part B to that question. I had the great privilege and opportunity to join a group of students in a lecture that Charlie Munger was giving to the group of students, and he talked about adversity in the lecture and he said something so simple and so powerful. He basically said, “Look, all of you, it is a given, there’s no question you’re going to have to deal with adversity, you’re going to have terrible setbacks, every single one of you, but don’t look on it badly, because each one of those setbacks will be an opportunity for you to behave well, and to engage in the behavior that will enable you later on to deserve your success.”

Guy Spier (00:09:19):
Just such a powerful… And it’s this Carol Dweck idea of a growth mindset, and life isn’t what happens to you, it’s what you do with what happens to you, and we are very much in the driver’s seat. And unfortunately, Stig, it still doesn’t mean that tragedy and adversity won’t befall us, but rather be in the driving seat, and we are in the driving seat, if we can just see that.

Stig Brodersen (00:09:43):
So if I can make a segue, if you allow me, Guy, I would say from one wise person to the next, because I wanted to talk about The Essays of Warren Buffet. This is one of my favorite books. And what is really fascinating about the book is that you can really tell how much Warren Buffet has evolved as an investor, whether it’s his thoughts on investing, governance, acquisitions, or whatever it might be. And if you continue on that train of thought, Warren Buffet and Charlie Munger have said that the difficulty lies not so much in developing new ideas, but escaping the old. So I can’t help but wonder, Guy, which ideas for you, and perhaps more recently, have been the hardest for you to escape as an investor?

Guy Spier (00:10:27):
Just take me to the painful places, Stig. I came from a world of venture investment banking and not a very good end of it, and I discovered Warren Buffet, and I just felt this… It’s very few times that I felt such a powerful motivation to want to become a part of a world that I was not a part of. And I gave an enormous amount of myself to make that happen in terms of energy and desire and willpower. And so I didn’t realize that in doing that, I was pounding some stuff in that should be unlearned more quickly. I genuinely believed that all I had to do for the rest of my life was find one newspaper towns, the way Warren Buffet had in the Washington Post and the Buffalo News and other places, and I’d sit and study [Ginette 00:11:17], but I’d also study companies like Schibstedin Norway and [foreign language 00:11:23] here in Switzerland, and I really thought I had…

Guy Spier (00:11:25):
I owned shares in a company called Edipresse, which was in the west of Switzerland. And then just to go right to your point, I am going to the Berkshire meeting, and there’s this wonderful investor who’s extraordinarily wealthy I suspect at this point, who lives on an island in Madison, Wisconsin called Steve Waldman. Steve, I hope you don’t mind that I’ve called your name out. I hope you’re doing well. And he sits down with me quietly and he says, “I think that…” And this is in 2005/06. He says, “This company, Apple, is really interesting, because Microsoft and Wintel, Windows and Intel are all kind of focused on text and word processing and very simple email, and these guys at Apple, they’re all about graphic design, and they’re all about this beautiful experience.” And he said, “If I think about it, where’s the world going? The world is certainly going towards images and moving images, and they keep bringing out these nice-looking products.”

Guy Spier (00:12:27):
This was way before the iPhone, and this was many thousands of percentage points before now. And what do I do? I go, “Yeah, but that’s tech, and I don’t do tech. And by the way, Warren and Charlie don’t do tech.” I wasn’t willing to investigate. I mean, this is not me reading about it in the newspapers or some guy who’s not from the investing community that I respect who’s talking to me about it, this happened at the Berkshire meeting. I saw Steve Waldman at the Berkshire meeting, and he’s sitting and talking to me about Apple. And he’s not a promotional guy. He’s a quiet, thoughtful… And then there was the Berkshire meeting where we discovered that Berkshire had bought Apple, and it was a very painful meeting for me, because Warren had demonstrated that he had unlearned the lessons of, for example, one newspaper towns, but I had not unlearned the lessons, I was still pursuing a kind of a dogma that was silly and it took me another two or three years to get over it, and I think that I’m still getting over it.

Guy Spier (00:13:27):
So it’s kind of difficult, but we just said nobody said that this is going to be easy. But for me, that’s a huge, huge lesson, and I know that we’re going to get onto it, but that’s why I keep an extremely open mind to crypto, and I’m super curious and interested when members of your team or members of my conference become interested in something that supposedly is not a smart in investment, because where are the good ideas going to come from?

Guy Spier (00:13:55):
They’re not going to come from just continuously pounding out the old ideas. So that was extremely painful for me. I’m still in the process of unlearning those ideas. And when I came to the world of Berkshire Hathaway and value investing or intelligent investing, it already had gone through a transition, because there were people… I forget his name, but the [Mr. Geicer Counter 00:14:19], a very successful investor, but who would only buy net-nets. The world had moved on from net-nets, but the world was still in the place where you would look at cash flows and income statements, but I have not moved on or have a difficulty with moving on to a world in which you have to look at total addressable market, lifetime value of the customer, businesses where you’re going to invest a very high amount in your profitable customers, and appear unprofitable while you’re actually very profitable, but it’s just hidden. So I’m still unlearning those ideas, and I’m kind of… I take my hat off to those people, value investors, smart investors who’ve learned that the cutting edge of smart investing is in that direction.

Stig Brodersen (00:15:03):
Guy, let’s talk perhaps a bit about Bitcoin, and let’s not because… And perhaps we can transition into that later, but you said that you do not agree with Charlie Munger that Bitcoin is rat poison, and you also said that it’s likely not an investible asset for you. I guess one part of the audience might be happy that we’re at least not yet talking about Bitcoin, the other might say, yes, Guy is here, and it’s good, we can talk about real one newspaper towns, but I really wanted to add another layer of reflection on this question, because I remember reading that Charlie Munger didn’t read fiction, and I remember how that made me rethink my own reading habits, I guess in a clumsy attempt to clone one of my great heroes perhaps a bit too much.

Stig Brodersen (00:15:49):
So then I think of you, and I know you’ve been in the space for a long time, and like you mentioned before, you revere Charlie Munger and Warren Buffet for that matter, but I also heard you talking about how reading fiction is right for you. So I guess my question is partly about the value of reading fiction, which I know you have a very interesting take on, but perhaps more importantly about escaping your heroes and how do we know which habits we should clone?

Guy Spier (00:16:17):
Yes. Because we’re not going to become good investors by eating peanut brittle and drinking Coca-Colas or cherry Cokes all day long, even though it’s fun to do. And I think that there is a natural progression when we get a hero. So in a certain way when we get a hero, we don’t really choose them, it’s almost like they choose us, or there’s this two-way thing that happens. And then the first thing that happens is that we do want to clone everything that they do, because we don’t know what we should and what we should not clone. So I think that the early stages of having a hero is that we wear this same clothes as them, we go to the same bars, same restaurants, eat the same food, you name it. And I think that there’s nothing wrong with that, and there’s almost like there’s a period of figuring it out.

Guy Spier (00:17:06):
And then at first… And maybe some of those habits, you try cherry Coke and realize you actually like it, whereas by contrast for me when I had the charity lunch with Warren Buffet and I’d ordered Coca-Cola, diet Coke in my case, but I actually wish I’d ordered a bottle of wine and had a nice wine, but that’s okay. I think the process of figuring out what is it that I should be cloning, and it starts off with discarding the things that are certainly not necessary, like eating the same food. And then over time, it becomes harder, because there’ll be some aspects… And I think that there’s learning that takes place. So wow, Warren Buffet invests in branded goods companies, I’m going to look at all the branded goods companies in the world, and I’m going to try and understand them as well as Warren Buffet.

Guy Spier (00:17:51):
So that’s way far away from, let’s say cloning what Warren Buffet wears, or cloning his food habits. In my case, for example, insurance, I was looking carefully into insurance companies, and I think that at some point I realized I am just not there, and I’m not really going to understand the sector, and so maybe I should not try and clone Warren Buffet in insurance companies. So what am I trying to say? And then we get to a place I think where you just go, I’m not Warren Buffet, and actually I’ve learned so much from him. So there’s kind of the life cycle in the follower of the hero. Long story short, it’s a complex growth process by which we acquire knowledge, and then look at the knowledge we’ve acquired and decide what is important and to keep, and what parts are not important and to discard. And in the process, I think that what happens is that we discover that we wanted to be exactly like our hero, and then as we discard certain things, we realize actually it’s okay not to be exactly like our hero, and actually I’m a different person.

Guy Spier (00:19:01):
So the simple example, I do like red wine, and I know that Warren’s never going to be as interested in red wine as I do, and that’s okay, and that doesn’t mean that I can’t clone him in other ways. And I really respect the investors who say, yeah, we are huge fans of Warren Buffet, but he really doesn’t get the tech space, he really doesn’t get cloud computing, and he doesn’t realize that the Geico of this generation is X, Y, Z cloud computing company. And yes, it appears to have a high valuation in the same way that when he was buying Geico, it appeared to have a high valuation. And that’s okay, because I’m kind of discarding that aspect of my hero.

Guy Spier (00:19:46):
I was too lavishly following Warren Buffet to be able to engage in that kind of independence of thought. And so just to come to Charlie Munger in reading, I think that looking inside, there are clues. So what happened to me with Charlie on reading fiction is that that irked me. I can’t say it really annoyed me, I can’t say I lost sleep over it, but I kind of just said, that does not sit well with me. Now, I think that Charlie’s a far more voracious reader than probably pretty much every other person on the planet, and what I heard on the last call with him is that, when he was young, he read a lot of fiction. It’s not like he’s saying, I’ve never read fiction, and I’m not interested in fiction.

Guy Spier (00:20:33):
He’s saying, I’ve got my fill of fiction. I’ve gone beyond… I know that when I took up swimming, there was this experience curve, like every time you double the distance you’ve swam, you get that little bit better. And initially when you swim a lot and you haven’t swum very much, you’ve got a lot of gains that you can get really quickly, then you go down the experience curve.

Guy Spier (00:20:53):
It’s very possible that Charlie Munger says, I’ve read so much fiction that I just don’t think there are a lot of gains I can get from it. And that’s what I think he’s saying. And I think that the reason why it irked me in part is, there are many fiction books I have just not read, and I’ve actually decided that I don’t want to end my life, but I don’t want to get to the end of my life and not have read certain works of fiction, certain classics which I set myself the task to read. For all I know, Charlie’s read all of those. I’m not going to die without having read David Copperfield, which is what I’m reading right now. I’m not going to die without having read The Magic Mountain. I don’t know how helpful I’ve been, Stig.

Stig Brodersen (00:21:29):
I think you’ve been immensely helpful. Guy, one thing we talked about before we started the recording… And it seems like so many conversations are going in that direction these days, but that was talking about crypto and some of the struggles of having people like Charlie Munger who have been, I guess, even more vocal than Warren Buffet about his dislike for that. And it was something I shared with you that it’s been challenging for Preston and me, and still is to some extent, making that shift. And I don’t know if we’re making a shift. I don’t necessarily think they’re mutually exclusive, but a lot of people do see it as being mutually exclusive, if you do hold Bitcoin, you can’t be a value investor, and vice versa. And one of the things, to throw it over to you, was that you said that you have these conferences, the VALUEx, and you said that a lot of people are talking about it. So I can’t help but ask you, Guy, how do you think about it, and what about the community do you surround yourself with?

Guy Spier (00:22:26):
I think that I would be missing out on one of the biggest benefits of my VALUEx community if I did not pay attention to cryptocurrencies and Bitcoin. And I’m going to name three names that may not be famous, but they’re big names for me, because they’ve taught me so much, and they’re all members of my community. One is a guy called Chris [inaudible 00:22:50], and another guy is called Vitaly [inaudible 00:22:53], and a third one is called Nenad Shinde and we’ve had group calls on crypto. And one of the earlier calls was simply what is crypto, and then there’ve been subsequent calls which is kind of different strategies around crypto. These are some of the smartest members my community, of our community, and they’re all value investors, and they’re all intelligent investors, and they’re all thoughtful people.

Guy Spier (00:23:21):
And I think you’ve heard me say it, but I feel like I want to say it with emphasis. One of the dumbest things in the world would be to take somebody that I know is smart, and not listen to them. And one of the dumbest things in the world would be to say, I’m not going to listen to them because I disagree with them. I have my preconceived idea, or I have my idea about what this thing is, and therefore their opinion doesn’t have any validity. And it would be utterly destructive to say they no longer have “a home” in our community of intelligent investors. So now let’s just go to the other end of it. Let’s just sit for a second with Charlie Munger and rat poison squares, and let’s talk about… I don’t know. One example would be the California gold rush.

Guy Spier (00:24:07):
Imagine that you and I, Stig, are members of the same family, and we have some very successful farm or other traditional business that one might have had around the California gold rush, and vast numbers of our family are running off because they want to find gold in the gold rush, and let’s just imagine that we’re in our 80s and 90s and we have great grandchildren, I don’t think it’s irrational to say the gold rush is rat poison squared. Because if you’re looking… I mean, Charlie must have 30, 40, 50 grandchildren. I don’t know how many. And if you tell him we got a world in which every single one of them is going to dabble in Bitcoin or in crypto in general, I think you’re going to have far more losses there and far more broken lives than good lives.

Guy Spier (00:24:55):
So who is the audience that Charlie Munger is addressing? Charlie Munger is addressing his own grandchildren for sure and a general public, and he’s addressing a general public in which many people are approaching the world of crypto probably in not a very smart way, and he’s probably absolutely right for them that they’re far more likely to lose a lot than they are to make their fortune on a hill. But I don’t think that… I’m certain that Charlie Munger has friends at Sequoia and at other of the leading venture firms, no doubt in my mind, although I can’t confirm it, would he turn to one of those people and say that actually your whole investment area in crypto, that’s rat poison squared and don’t do it and don’t touch it? I don’t think he would say that at all. And so let’s just remember the people in my community talking about crypto are not beam chasers.

Guy Spier (00:25:53):
They are very, very smart people, they understand that many, many games are rigged, they understand that the job of the poker player more than anything else is to [inaudible 00:26:03] play in the right table, and the world of crypto is throwing up so many tables to play at. And maybe there’s only 1% of those tables that are worth playing at, but I think that the people that I know are very likely to find their place. And so it’s completely consistent I think to say that Charlie Munger is right, for the vast majority of his audience, it is rat poison squared, but that for the people in my community, it’s not rat poison squared, it’s an amazingly interesting place to learn and look. And actually, I would go one step farther, it is web 3.0. It is utterly revolutionary what crypto does. And so Charlie Munger’s not wrong, but you and I and others would be very stupid not to pay close attention.

Guy Spier (00:26:55):
For the audience, I feel like it’s a sensitive issue for you because it’s kind of dividing people. I’m not saying to anyone in the audience or to you, Stig, that you need to go and find the latest guy who’s on a Dogecoin craze and debate with him the benefits or the disbenefits of Dogecoin or anything else, but when somebody you respect is saying something that’s very, very different to what you think is true about the world, then that is a time to get very curious and to get very open-minded. And it’s funny, because let’s just go back to my conversation with Steve Waldman about Apple. What did I do? I closed my mind to the idea that he was sharing with me. And just to be clear, I was not talking to some taxi driver in the street who was giving me the tip to buy Apple because everybody’s buying Apple, I was talking to a very, very intelligent, thoughtful guy at the Berkshire meeting, and he’s saying, “I think that this company, Apple, is really interesting.”

Guy Spier (00:27:59):
In 2005/06 is what I remember the timeframe, I closed my mind because I had a very fixed idea about what smart investing was, and I just said, yeah, but I don’t do tech. So now we fast forward to today, in a similar way let’s just name a name that you know well, a guy that I respect enormously for many reasons, your partner Preston Pysh says, Bitcoin. What do I do? Do I close my mind and say, this guy has gone off the deep end, or do I say this is not some taxi driver… Forgive me all taxi drivers, because now I’m lining taxi drivers. He’s somebody who’s friends with Stig Brodersen, he’s somebody who’s interviewed some of the smartest people in the world, he has led groups of people, he is a thoughtful, smart guy.

Guy Spier (00:28:53):
What I need to do is drop my blinkers and pay attention. And I urge the audience to do that. And that does not mean that Preston and I tomorrow are going to see eye to eye and agree on everything about Bitcoin, but he is seeing a slice of reality that I am not seeing, and I need to get super curious to understand what he is seeing. And it shouldn’t divide a community of intelligent investors. We should get super curious and interested in why we’re seeing things from different angles. For me, crypto is uninvestible. And I had one of our investors who asked me a question about whether he should invest in one big chunk or whether he should divide it up into four smaller chunks and time-cost average, and best last time I checked, the evidence shows just put it all in one big chunk, but I said, what that evidence does not take into account is the psychology of the investor doing it.

Guy Spier (00:29:49):
So how do you define your circle of competence? How do you keep yourself on the straight and narrow? And for different people, it’s different things. And I know more than one value investors that I deeply respect who have said around crypto, I am investing in Coinbase, or I am putting 1% of my fund into Bitcoin, and they’re kind of like, have a different approach to how they want to assess risk and how they want to evaluate investments. And where I come from is, I want to restrict myself to assets that generate some kind of cash return to the investment, and I’m only going to live in that world, and I want to live in that world. So I say, I pay close attention, have enormous respect for the people who are engaging in crypto, because I think that if I allow myself to do that, there may be many things that are really quite stupid that I will also allow myself to do.

Guy Spier (00:30:46):
So those are kind of the bowling with curtains that I put up for myself. And that I don’t think I’m inconsistent on the one hand saying crypto’s ultra revolutionary, there are people who are doing crypto who are doing very interesting things, but it’s not investible for me and I don’t plan to invest anytime soon, in the same way that I’m extraordinarily grateful for all the biotechnology research that takes place, for all the biotech companies that are taken public, for all the stuff that’s going on there that I benefit from, or people I know benefit from with new drugs and therapeutics, but is not an investible area for me, and no problem. And I don’t think that those people who are heavily engaged in crypto should feel so upset, Charlie Munger, that he calls it rat poison squared or that he’s not investing in it, in the same way that the guys who are doing biotech are not upset that those of us who want to invest in banking stocks are not looking at biotech. They understand that the world is big and there are plenty of different ways to approach it.

Stig Brodersen (00:31:41):
Guy, thank you for addressing the issue on Bitcoin in the value investing community. And this was something that Guy and I started talking about before we recorded and decided to include in the outline, so let me give you a preface of the story of TIP and Bitcoin. So what happened was that, back in 2015, Preston and I read a book about Bitcoin. None of us really understood what it was all about, because it just sounded so odd. And then what quickly happened around that time was, we read this book about, I think it was called MONEY Master the Game by Tony Robbins, who I also know have been an inspiration for you and someone who’s also divisive to a lot of people, and he kept on talking about this guy named Redalio.

Stig Brodersen (00:32:22):
And I’d never heard about the dude, and he kept talking about how he was the best investor who was fantastic, and the way he thought about money was just… The all weather portfolio, that’s what you needed to do. And I listened to it. And I was flying overseas, so I had plenty of time on my hands. And he had this long talk about how you should invest in gold, a small portion we should invest in gold because monetary systems break down. They always have. All currencies have broken down at a certain point in time, and that’s just what history would tell you. And I remember… And now we’re talking about our heroes. I remember thinking it doesn’t make any sense, because I’ve learned from Warren Buffet himself that you should not invest in gold. And I couldn’t understand how someone like Tony Robbins would endorsed Redalio, and then whenever I finally got wifi, I looked Redalio up, and he seemed as legit as they come.

Stig Brodersen (00:33:09):
And so I was like, why are people talking about it? So the challenge that Preston and I were facing was that we became really, really interested in Bitcoin. We bought into it. And as soon as we started talking about it, we could just see a cascade of bad reviews, and we could see some really, really bad things happening from the community. And I had many long talks with Preston about how do we do it, because at that point in time, it wasn’t just… Like we used to say, it wasn’t just Preston and me sitting in a garage, we had people working for us, and one of my big concerns was that… I’m going too long on this. One of my big concerns was that, do we need to close down? If we believe in this thing, and we both talk about it, we invest in it, does it mean that we’re going to blow up, does it mean that people lose trust in us because we’re taught that it’s rat poison, we can’t talk about it?

Stig Brodersen (00:33:58):
I remember I was rereading The Education of a Value Investor, and you talked a lot about authenticity in that book. I remember having discussions with Preston about it, myself, my wife, and there was something that was very, very… It had a big impact on me in terms of you have to be transparent about you do, and I probably said this 10 or 15 times on the show, that I’m invested, even though I’m not a part of the Bitcoin show, how do you convey that? Could you compromise on being invested in something like that, running a business? Is it a bad business decision to talk about it? Are your principles then for sale if you don’t talk enough about it? It has been a very troubling thing. So back to you now I actually started to cry my heart out.

Guy Spier (00:34:40):
I appreciate those thoughts. And I don’t think that you should feel uncomfortable with them, because I think you are being authentic and you are being real with me, I just want to reassure you of that. And I think that when you do that, you come up against some more powerful constraints, which are the constraints of the way the world works. And so those are far more powerful and far more difficult, probably impossible to overcome. And I think that what comes up for me is that, you were actually faced with a choice of whether you want to be in the investment business or in the publishing business. And it is a problem for anyone who’s an investor who writes that the things that your readers want to read about, are they ideas that are popular at the time.

Guy Spier (00:35:25):
The things that make the best investments are the ideas that are not popular at the time, and so how do you square that circle? And I think it’s very hard. And I think that that’s why many people who’ve dabbled in both have to at some point decide, am I an investor or am I a publisher? You’re not making a compromise, you’re saying, look, we’re publishers, we’re publishing what will make our publication successful, or alternatively you say, we’re investors, that’s where we make our money, and the publishing is a sideline, and we don’t care if it’s successful or not. So I think that you were faced with it. You cannot square that circle, you just have to look and say, which do I want to be?

Stig Brodersen (00:36:05):
Thank you for your take on this, Guy. I think we needed to hear that. And I think perhaps many in the value investing community needed that, especially coming from a top authority in the community such as yourself. And I guess this is also a good segue, because as a teenager, I remember having my heroes, whether it was in sports or in business, and I distinctly remember that I naively thought that I would never have a care in the world if I were that person, and of course as we grow up, we realize that everyone has their own problems. Perhaps Redalio… We talked about him before, perhaps he says it best with his quote, that the best thing you can hope for here in life is to struggle well. I can’t help but ask you, Guy, how do you struggle well in life and in business?

Guy Spier (00:36:51):
Exactly. It’s a wonderful, wonderful question. And one of my children, she’s about to join us later today, she told me that she has become a vegan. But at the same time, we are not a vegan family, and there’s a kind of a Mexican mum expectation that you eat the food that the mother puts on the table for you, and so how is she going to square that circle? And something that I said to my daughter at the end of a long conversation actually texting to each other, because she’s still at school, on WhatsApp, is I said, if you’re 100% percent vegan and alienate your family, you will have lost, if you drop the veganism and just make your family happy, family harmony, you will have also lost, and I think that the happy ground is to struggle with those two contradictions and to just try and find that middle way.

Guy Spier (00:37:45):
And I was kind of telling her, let’s have the struggle, and then we continued in debates over whether animals are slaughtered in a humane way here in Switzerland, and I kind of came out and said, “I actually don’t care if I agree with you or disagree with you, I just care that we continue to have the conversation.” So there’s one struggle. And I would tell you that I found it very interesting through almost 20 years of marriage to my wife, how I think that the places where we see the world differently are actually the places we’re the strongest, because we have stereo vision, we have two different views of the same thing, and if I occupy one position, and my wife occupies another, and now we seek to understand each other, not to move ourselves to the same point, to occupy our two different points, then there’s a power in that.

Guy Spier (00:38:40):
And actually, the biggest problems my wife and I faced is when we see things exactly the same way, because then there’s no stereo vision. So in my relationship with my children, relationship with my wife, so in my family, I think that struggle is a key part. And what came up for me with my daughter as well in this conversation is, there’s this famous story in the old Testament that Jacob struggles with the angel. And in a certain way, it’s a metaphor for life. If you’re not struggling, you’re not alive. And if you’re not… In this case, the angel may be a messenger or representative of God or something like that. And so I just think first of all, it’s a reassurance, because many people want to give the impression of effortless success, or once you succeed, there is no struggle.

Guy Spier (00:39:27):
And I think to reassure the listeners of this program, myself, you, if you’re in a struggle, you’re probably do the right thing. That’s where you should be, and that’s where you get stronger, and that’s where your best life is lived. I think that just to me, myself early on, I struggled a lot with pure absolute numbers as a measure of success, whether it’s return numbers, or assets under management, or measures of net worth, and I think that, again, the answer was not to sweep it under the rug, and the answer was not to make it into an idol and worship it, but to struggle with that, to be able to bring up in conversation when people say, well, do you want to grow, and instead of saying, no, I don’t want to grow, or yes, I do want to grow, say, well, I struggle with that.

Guy Spier (00:40:20):
If you’re under the age of 48, somebody… I think it was [David Perell 00:40:25]. He said that if you’re under 48, then you’re a second billionaire. In terms of the number of seconds you have left in your life based on your life expectancy, you’re a second billionaire. And I’m not a second billionaire, and so one of the things that I struggle with is how do I make the most of my time left on the planet, which is probably less than half of my full lifespan, which is a scary thought. And there’s no chance that I will die the person with the highest rate of return on the planet. And those are stupid things to aim for, because know the famous expression, this rich man died, and how much money did he leave behind? Well, he left all of it behind, is the answer.

Guy Spier (00:41:01):
But I think that what really excites me is this concept of social capital. A big financial balance sheet, but having everybody hate you is a terrible outcome. I’d like to get through the next 20, 30 years of my life having many institutions and individuals who count feel like I’ve been a positive presence in the world, and that means paying my taxes, making sure the companies that I invest in pay their taxes, investing in the communities around us. Interestingly, Stig, I now get less inspired by businesses that hunt super high returns. I was very influenced, Stig, by Milton Friedman. Milton Friedman says, just maximize your profits, the world will take care of everything else, Adam Smith, 2.0, and it’s a beautiful thought. And the way I translated that was, all I got to do as an investor, and all I have to do as an investor in CEOs is look for people who try to make the most money within the laws of the country that they’re in.

Guy Spier (00:42:00):
I’m obviously not looking for people to break the law, but they should just maximize their profits, and the invisible hand takes care of everything else. And the first place I read it was with Klaus Schwab at the WEF where he said, no, that’s not the way business works anymore. Businesses have to look… It’s stakeholder capitalism. Your shareholders are a stakeholder. Shareholders capital’s got to eat, as Tom Gayner says. But your communities of your employees, your suppliers, the places of business, all of those places have to benefit, and business has to exercise far more leadership than it has in the past. So those are the places where I struggle, if you like, today, just going back to your question, which is a question about struggle. But if you’re Ronaldinho, play soccer, if you’re Muhammad Ali, box, but find the struggle that’s worthy to you.

Stig Brodersen (00:42:54):
Well said, Guy. Please allow me to shift gears here. I had the privilege of speaking with a good friend, Mohnish Pabrai, from time to time, and I remember discussing Seritage Growth Properties with him, but my question is not about the investment itself, but something Mohnish said about the investment and about you. I’ll present a quote here. “And so I’m trying to be more like Guy, and the number one skill to be a great investor is extreme patience. If you can derive tremendous pleasure from watching paint dry, you’ll be a very wealthy man. Just be in this meditative state watching that white wall, and once you can do that, then you’re ready to hold Seritage for 20 years.” So it’s amazing what Mohnish can say, but I thought a lot about that, not just because I’m invested myself and with the volatility of Seritage, but what it really led me to was the more profound thing to me at least, which was how much are you wired to be extremely patient, and how much, if anything, is self-taught when it comes to patience?

Guy Spier (00:44:03):
Well, obviously I very much appreciate when anybody compliments me, and I think that he paid me a very nice compliment, and I appreciate it very much, because we all appreciate being complimented. So thank you, Mohnish. Mohnish is a very different personality to my father, but people who have run successful businesses I think have a bias to action. You have to have a bias to action. If you don’t have a bias to action, your business will most likely die. So Mohnish, who’s been unlike me, who’s had at least one very successful business before he became an investor, has had a more significant challenge. The very thing, the bias to action that you have in an operating business is one of the things you absolutely don’t want if you’re thinking about the world the way Charlie and Warren think about the world. Just to take a second for Mohnish, I’ve never seen anybody who has a more powerful, empirical set, meaning that there’s somebody that we were trying to get to recently, and we happened to know that this person wasn’t opening their emails.

Guy Spier (00:45:10):
And so that’s somebody who’s kind of shying away from reality. They don’t want to deal with whatever messages those emails have. And so some people, reality is there, but they just don’t want to see it. They’re in denial of one form or another, or they may not be in denial, they just are not engaging with the reality that’s in front of them. And what I’ve experienced with Mohnish time and again is that, when he experiences ideas that are opposed to what he’s doing, opposed to his furtherly held beliefs, he grasps them. There’s this quick and aggressive avarice for knowledge and avarice for reality, and then when he sees a fact about the world or a fact about himself, he jumps on it.

Guy Spier (00:45:52):
And so what you see there is Mohnish realizing that he has a bias towards action, and that when it comes to investing, he needs to expunge that bias for action, and does not ignore that fact, it does not sit as an unopened email. It’s opened, and it’s been digested. And you see that it’s been digested, because he’s talking to you about it. And so in a certain way, he’s pounding that lesson in for himself. When it comes to me, I think that in that regard, I am extremely fortunate. In many ways, I am not the ideal mindset for an investor. And the reason why I say that is that, I have strong emotions and strong emotions around investing, far stronger than they would have to be to be really, really good. And that’s no problem. I’m happy to deal with that and happy to have my own makeup, but we’re far better when we recognize that.

Guy Spier (00:46:43):
So that is a place… And I don’t think that I’m anywhere near as interested in games of chance as Warren and Charlie have been in their lives. And I think that actually still if I were to just play more Bridge, I would become better as an investor. Bridge is this fascinating combination of knowledge and chance that I don’t play enough of, but I have a very natural bias towards inaction. I have a very natural bias towards inaction because I have a slightly academic mindset, and I love perusing things and thinking about things, and I like reading. And then also because I have maybe ADHD, I’m personally disorganized, and so it’s hard for me to get to action. There’s a book that was written, or at least it was an essay, titled, It’s Hard to Change The World If You Can’t Find Your Keys, and that kind of describes me pretty well.

Guy Spier (00:47:33):
And I feel very lucky, because I’ve got a group of people around me who help me with all of those things. But so I think that I just… A bit like Asterix and Obelix where Obelix fell into the tank of the special potion, so he definitely doesn’t need any more, in that narrow sense of having a strong bias towards inaction, it’s kind of like just I fell into the pot of inaction in my life, and so it’s definitely nature for me. And then if it comes to nurture, what part of patience or inaction and bias towards inaction in your portfolio can be cultivated in those people who have a bias towards action? Well, I think that we will see Mohnish succeed handsomely with that desire to develop a bias towards inaction.

Guy Spier (00:48:21):
And I think that it’s this strange thing in human psychology that a problem well-defined is a problem half-solved. And so what you see in that Mohnish example is that Mohnish has defined the problem, now he’s more than half-solved it because you know that… Just to say, I have a bias for action because I have been an entrepreneur, and that bias is not helpful to me in business, now you’re going to figure out when that bias to action gets triggered, and when it’s an appropriate action, and when it’s not.

Stig Brodersen (00:48:54):
Very insightful. Thank you, Guy. Thank you for sharing your insights. It’s almost like you’re too kind. Every time I or Mohnish would pay you a compliment, you always see how much you can send back. It’s absolutely wonderful, and you make everyone feel so welcome in your presence.

Guy Spier (00:49:12):
I know you’ve got another question, but I might forget this. And I know that it’s valuable, so I’m going to tell it to you, because I’ve learned this from observing… I’m not friends with Charlie Munger. Mohnish has had many meals with Charlie. I’m deeply envious of Mohnish for having those meals, and I think that the right way to play out that envy is, Charlie Munger is not available to me. In observing Mohnish’s close relationship with Charlie Munger, when Charlie Munger decides that you’re his friend… And Mohnish is his friend, he builds you up.

Guy Spier (00:49:48):
One of the most wonderful gifts we can give our friends is a sense of confidence that they’re okay, and they’re doing okay in the world, and they’re making intelligent choices. And I’ve seen Charlie do that not just with Mohnish, but with a couple of other people that he and I know in common. What’s my point to you? I appreciate your thanking me for putting maybe you and Mohnish on a pedestal, but I’m actually trying to channel you actually are great, and you’re actually doing a spectacular job, and you’re doing a spectacular job of interviewing me, and you’re doing a spectacular job for the audience, and why shouldn’t I give you that gift? But it comes from Charlie Munger.

Stig Brodersen (00:50:29):
And just like that, Ladies and Gentlemen, Guy did it once more. I’d like to transition into a new question. So in 1965, accidentally the same year that Warren Buffet took over the management at Berkshire Hathaway, the average tenure of companies in the S&P500 was 33 years, by 1990, it was 20 years, and if you run some of the newer numbers, it might be as low as 14 years by 2026. Now, we all know that the mighty fall, but as the tenure has become shorter and shorter, has it made you rethink how you identify and invest in compounders?

Guy Spier (00:51:10):
Yeah. It’s really interesting. It’s a really good question that. So two things come up for me. The one is perhaps flippant, but might not be, and the other is quite serious. I’ll do the perhaps flippant point first. Just because the tenure of those top companies is becoming shorter and shorter, I mean, there’s nothing that’s saying that that is an inexorable, that we can extrapolate that down to the tenure will be one year at a time. It’s quite possible that we’re at an inflection point now, and actually where it’s going to go is that the tenure of the companies that are at the top of the S&P and the top for the return tables will still be there in 30 years, what we’ll be tracing is a lengthening of that tenure. That’s possible. We cannot rule it out.

Guy Spier (00:51:56):
If you ask me if that’s the case, I think I tend to agree with what you probably think, because if that is the possibility, just because a company’s successful, even more than in the past… Maybe in the past if you bought the NIFTY 50 and just stuck around, even if you’d bought it in the ’70s, you’d do fine, that’s way less true today is I think your point, and I think I tend to agree with it, even though I set up the other point that maybe actually it’s going to become more true. And then I would say, yes, I think that’s probably true, and what that means is that, those of us who are investing who are not the level of wealth of Elon Musk, Jeff Bezos, Warren Buffet and others are not going to do particularly well if we buy the already top companies, and we need to have a good strategy for identifying the future leaders. And actually, it puts a… It’s kind of screaming at us in the face.

Guy Spier (00:52:50):
What that statement of yours says to me is, Guy, if all you’re doing is looking at the leaders in the S&P or other kinds of leaders, you’ve already missed the boat more than ever before, more than in the NIFTY 50 times or other times, and you’ve got to start finding those future champions that have not been uncovered by the world that have a good chance of displacing the current companies. And I think that that’s probably right. And I think that I’m coming to the slow and unfortunate and reluctant realization that that’s the case. In part, it was from listening to this Charlie Munger talk when Charlie says… I realize, Stig, that Sequoia Fund, Andreessen Horowitz, perhaps Index Ventures in Europe, four or five other of those top VC firms, the concentration of talent, insight, future returns that are emerging out of those firms…

Guy Spier (00:53:43):
I mean, Charlie Munger said it. It’s unprecedented historically that they’re concentrated in such a small area. So what’s my job? My job is not to keep looking anywhere but where those VC firms are. Instead, my job is to really try and understand the thinking of these incredibly smart people who are at these VC firms to try and understand how they see the world, why are they including certain investment themes, including crypto, in their investment strategies, why they’re excluding other investment themes, because it’s very likely that those future champions are going to come from somewhere in and around that stable of people and companies.

Guy Spier (00:54:22):
Even if you look at high quality businesses, the more you look at them, every now and then you’re going to find anomalies, and it’s those anomalies that you want to check out on, and hopefully every now and then the anomaly’s going to generate an investible idea, and I have a suspicion that most of the time today, given the environment, the investible ideas, the good investment ideas are going to look very expensive to the untrained eye, and it’s only the past who’s done the work to understand that actually they’re very cheap.

Guy Spier (00:54:49):
And that is not easy work to do, and inevitably every now and then a soft bank is going to say that WeWork is very cheap, and it’s got many ways to grow and to multiply, their investors’ capital is going to turn out to be a dud. So I think somebody said.. I don’t remember who it was, but it was very compelling to me, was the idea that… And here’s a different way of looking at the kind of dyed-in-the-wool value investors praying at the church of Warren and Charlie, is that those of us who pray at the church of Warren and Charlie are looking for something that’s a 95% bet, but actually it was [Nenad Shinde 00:55:28] in the… I’m going to interview him for my little mini podcast over here.

Guy Spier (00:55:32):
Nenad, he said actually none of these things that he was talking about… He’s a participant in VALUEx, are 95% bets, but they’re all 70% bets, and 70$ is pretty damn good, and stop expecting 95%. If you expect 95% likelihood of success, you’re narrowing your universe down too much. And 70% bets is still not venture capital, only one in 20 work out, it means that more than one in two works out, but not nine out of 10. And actually if you have more than one in two and they work out hugely, you’re still going to do extraordinarily well.

Stig Brodersen (00:56:09):
Now that we talk about active investing, I can’t help but ask you, if you could choose to expand your circle of competence and be an expert in a split second… So this is a very theoretical question, but you could be an expert just like that in a given sector, technology, country, whatever it might be, where would you add to your circle of competence?

Guy Spier (00:56:32):
Very easy for me to answer that, Stig. I’d like to have talked to and understood the business models of every single one of Sequoia, Andreessen Horowitz, Index Ventures and NFX, James Currier’s investment firm. I would’ve want to have looked through and understood all of those. And I think that I have a friend who’s a Google engineer who doesn’t have that experience, but I think that he has a deep insight into many of those companies’ investments, and so that is where I’d want to expand my area of knowledge. And I think that the extent that you haven’t, I urge you, Stig and Preston… I actually bet that you have many times. Anybody who hasn’t, find your way to University Avenue in Palo Alto. They are basically expressing the idea of software is eating the world. Silicon Valley, which is no longer just Silicon Valley, it’s Austin, Texas, it’s Tel-Aviv, it’s many different places, really has the world in its sights.

Guy Spier (00:57:27):
Everything is getting disrupted, and it’s getting disrupted by technology, it’s getting disrupted by very, very bright people sitting in that area. And so if I could go back 25 years, I would want to avariciously grab all of that insight and knowledge, and if I didn’t have a family and ties and all sorts of other things, and all I cared about was generating the best financial investment results, I think that I would commit myself to spending a lot of time in that area, attending conferences, meeting CEOs, understanding what was going on. Very, very simple.

Stig Brodersen (00:58:01):
So let’s see if we can tie business and life in together here with the next question. Before you’re investing, I know that you’re increasingly asking yourself, does the company have a noble mission to make society better off. I feel it’s a very profound question you’re asking, so could you please together with the audience walk us through your train of thought on this, and why operating metrics like say return of capital and highest margins, which is of course still important metrics, but they’re no longer your main focus?

Guy Spier (00:58:34):
It’s possible that every company that has high margins is actually ripping somebody off, and we just have to identify who it is. I think it’s a rule, if you cheat on your taxes year in, year out, sooner or later they’re going to find you, and sooner or later they’re going to ding you, so don’t do it. It kind of seems to me to be a universal rule that if you’re kind of drawing more from your environment than you give, then sooner or later it’s going to catch up with you, it seems. I don’t think that people get that kind of free pass or get that easy pass forever. And then we go into the personal domain. And again, the source of so much wisdom is Charlie Munger, and I just love this, and I’m certain that he gets this from talking to his grandchildren.

Guy Spier (00:59:19):
The best way to get successful is to deserve it. And it’s this beautiful idea that, don’t worry about how the universe will reward you, it will reward you if you really deserve that success. And if and when you get that success, you want people to say, well, he really deserves it, and then I think that you can extend that straight to companies. So I think that if you were somebody who loved Philip Morris’s profitability, the enormous cashflow generation they had, but you did not take into account the fact that they were giving people cancer, you were sitting with a giant unrecognized liability that sooner or later society might take it upon itself to make you pay for all the people that you’re giving cancer to, and those tobacco settlement in which effectively they did that and those company’s profitability was severely impacted.

Guy Spier (01:00:15):
I used to have a fascination with the for-profit education sector. And they had the opportunity for endless growth, and they had a strong incentive to restrict on their investments in facilities like libraries and sports fields and student dorms and the like, but they were enormously profitable, and I was very, very enamored with the profitability, of course, but then the Obama administration came along in the United States and dinged them, and then not so long later the Brazilian political system made it very, very hard for profit education companies. And so how do you avoid those kinds of risks? And this concept of a noble mission is the ultimate way to avoid those kinds of risks. Why does Elon Musk get… I don’t want to say he gets a free pass, but I think that many people would say that he gets a free pass for the Chinese, because he’s actually on a noble mission.

Guy Spier (01:01:11):
He’s one of the most incredible noble missions, what one thinks of Tesla of him as an investment partner. So getting your noble mission both as an individual and as a company is one of the sure fire ways to both get you on the path to success, and to mitigate many, many risks. We’re not going to mitigate risk by reading the risk factors in the 10-K, although I’m not saying don’t read it. That’s what a narrow-minded lawyer decided whose going to remove liability for you if these missed risk factors are mentioned, but no amount of intelligence and creative thinking and good analysis is going to enable the analyst or the investor to foresee all the risks in the business. And so if you’re not going to be able to foresee all the risks, and the risk factors in the 10-Q don’t help, what can you do?

Guy Spier (01:02:03):
And I think that if you have a moral mission, then you’re going to use that as a good foot forward when you come into adversity. And not that people will give that company that has that noble mission a free pass, but they’re far more likely to want to engage with it productively. And by the way, that’s why when I talked about charitable donations in my little investment firm here, in a certain way, it’s long-term greedy. To be an investor in your community, for example, is actually just ensuring your survival over the years.

Stig Brodersen (01:02:39):
Let me just get back to one of the things you said there about deserving success. I think it’s very insightful. One of the things I remember reading from Warren Buffet whenever I was younger was, how do you get a good spouse, which is something I think a lot of young men are interested in, and the advice was pretty simple, be a good spouse. And it might sound silly because it’s so simple, but it’s so profound in all walks of life to think like that. I’ve been married 11 years, and of course whenever my wife and I had disagreements, it’s never my fault, it’s always her fault, but-

Guy Spier (01:03:12):
Of course.

Stig Brodersen (01:03:13):
Of course. You know how it is, Guy.

Guy Spier (01:03:15):
What’s your wife’s name, Stig?

Stig Brodersen (01:03:17):

Guy Spier (01:03:18):
Sophie, if you’re listening to this, I just want you to know in any dispute with Stig, I’m on your side.

Stig Brodersen (01:03:22):
Right. Yes. It’s been ordained by Guy now. I can tell that to Sophie. It’s such a valuable thing to think of whenever you become emotional, like emotions run high, something is going on, stop and ask yourself, why do I deserve this? Something as simple as that would just tell you how often you can stop yourself and be like, oh, I deserve this. What my spouse said to me, that is well-deserved, which can be really, really hard to see in the moment of course.

Guy Spier (01:03:53):
We got this place in the mountains to go skiing in. I did not want to spend money on the kitchen, because I thought it was ridiculous, because we had a perfectly decent kitchen. And then I kind of, somewhere those thoughts of Charlie Munger percolated in, how do I be a good husband? She wants a good kitchen. If you can afford it, give her a good kitchen. And then I discovered that by looking to see what my wife wanted, and finding a way to get it to her, made me a lot happier and made my marriage a lot happier. So that idea of, how do I make it so that my wife feels like I’m a good husband, what does she want, and one of the big things my wife wants is just to show up on time for dinner and be attentive to the children.

Guy Spier (01:04:39):
It’s pretty basic. And you’d think that she should be able to take that for granted, and you’d think that I should give that for granted, but in my case, that actually takes a little bit of thoughtfulness and positive effort. I think true of what so many women do… And I said this. Nothing I’m saying to you, I haven’t said to my wife. I feel slightly ashamed that I was a person who did not understand that I just needed to give her more resources with which to create a beautiful life around us. And I’m extraordinarily grateful to her. I feel very lucky to be married to her. Lory, if you’re listening to this, I love you. She likes hearing that.

Stig Brodersen (01:05:21):
Yeah, I can understand why. There’s this wonderful quote… And this interview has been highlights of quotes. Pain plus reflection equals progress. It’s Redalio’s quote, and it’s probably true both for marriage and investing.

Guy Spier (01:05:38):
I think that pain plus reflection, it’s easier to do in a personal sense because you only got yourself to deal with, but this idea of pain plus reflection is, if you take the pain and you sweep it under the rug, you’re not going to get much benefit out of it. It’s that ability to take the pain and stick it in the back seat of the car with you, and take it on a drive with you, and just kind of let it smolder there and learn the lessons of it. I think with the minute you become a couple of husband and wife, that becomes more challenging. I think it’s a bit more like perhaps riding a bicycle, because you have to process that pain, the two of you. And of course processing pain in a couple is fraught with dangers.

Guy Spier (01:06:20):
One member of the couple might accuse the other of being the cause of the pain. And I think that figuring out what part of this pain do I own in this, what part of the pain or causation do you own, what part of it is the external environment that we can’t influence, that is really, really complex, but I can tell you that, to the extent that my wife and I have succeeded at any point in our lives in that process, I think it’s one of the most rewarding things that I’ve done actually. And I would tell you, Stig, with teenage children, that process… And we have three, it becomes ever so more complicated, because you got so many more personalities to deal with who are in different places and thinking different things.

Stig Brodersen (01:07:03):
You come across as so authentic and so genuine, which I think it’s very hard for a lot of us to make ourself vulnerable the same way. I remember speaking with Jesse Itzler years back here also on this show, and Jesse Itzler, he created an airline, founded it, and sold it Buffet, but I don’t know if he might be even slightly more famous for being married to Sara Blakely today. A wonderful person, and so is his wife. And I asked him about a piece of advice he would give to his 20 year old self, and he said it’s very simple, make yourself vulnerable. That was the best piece of advice he could give. Could you talk about your own journey about making yourself vulnerable, making the decision to make yourself vulnerable also in public, and perhaps some of the bruises, but also some of the wonders that it has carried with it?

Guy Spier (01:08:00):
I never heard of Jesse Itzler, and I never heard of somebody who’s well-known and successful and saying, make yourself vulnerable. [inaudible 01:08:11] thrown me back, because it’s such a powerful idea, and so simple to describe, and so hard to do. I think that probably… I know very little about Jesse other than his name and that he said that. I suspect, Stig, that he is, or was deeply loved by his parents and, or is deeply loved, meaning that he has no doubt. And no doubt that it’s not even a question that he ask that he is loved and that he loves himself. The reason why I say that is that, what gives us the strength to be vulnerable is I think the knowledge that, when we come strawberry jam on the Mass Pike type of deal, when life hits us sideways and it feels like we’ve been destroyed, we have the confidence to go out and conquer, even though we know that we’re going to be dealt terrible, terrible setbacks. I’m kind of in awe of the power of that insight.

Guy Spier (01:09:17):
And then I ask myself… So I’m going to go better to how I’ve dealt with vulnerability, how I got to make myself more vulnerable, maybe some learnings from that, and you’ve really kind of stumped me in a certain way. Stumped in a good way, because you’ve just thrown this… It’s kind of a new thought to me that shouldn’t be that new to me. As you were talking, what came up for me was Brene Brown. And she has talked a lot about I think the power of vulnerability. And in my case, it starts with having somebody who loves you deeply, no matter what. And I think that some of us are lucky enough to have gotten that from our parents, and if we didn’t get it from our parents, hopefully we had a soccer coach or maybe now a spouse or a significant other who provides that force for us. If we don’t have that, we don’t have something to go back to when life splats us in the face.

Guy Spier (01:10:16):
The next thing I think that I go to, idea that I go to is, somebody’s listening to this, or I myself say to myself, I need to make myself vulnerable, I think that we need to titrate the vulnerability. So there are many different levels of vulnerable. There is standing out in the snow, there’s going out in the snow and pointing your skis down the steepest slope in history. All of those are different levels of vulnerability. And there’s sitting inside in the warmth and not even putting your skis on. And so I think that this injunction to be vulnerable and make yourself vulnerable to get success, it’s saying, get outside and think about putting your skis on, but it’s not telling you where to point the skis, it’s not telling you whether you ski the blue slope, the red slope or the black slope.

Guy Spier (01:11:04):
And so vulnerable is not on or off. And if you’re a type that is very scared of making yourself vulnerable, make yourself a little bit vulnerable. And if you’re already making yourself vulnerable, check if you should make yourself more or less vulnerable. So I think that in many ways, I would tell you, I mean, the opposite perhaps of making yourself vulnerable is staying in shelter out of fear, and I actually think that there are many aspects of my life, Stig, that actually have been driven by fear. I don’t think that’s a good thing. I think that fear does not help you get anywhere in life. Fear is not a helpful emotion. I think that fear is a helpful emotion when there’s something to be scared of.

Guy Spier (01:11:45):
So if the avalanche is coming down the hill, then definitely be fearful. If you’re walking down a dark alleyway and there’s a guy in the corner with a knife, definitely be fearful, but to be chicken little and to be worried that the sky is going to fall on your head when actually it may never fall, that emotion is very unhelpful. And I think that my example perhaps demonstrates that you can live actually quite a fearful life. And when I say fearful, that’s been expressed in some very conservative investing and unwillingness to take huge risks for gain, or even small risks for gain. But the answer is that even if you do a little bit right, you can have a pretty damn good life and enjoy a certain amount of success. And I do think that the success that I have had is not because I came out of a place of fear, it’s because I came out of a place of being willing to be vulnerable, willing to fail.

Guy Spier (01:12:41):
And then I guess I will just take you to the writing of the first chapter of my book. And so vulnerability comes with this desire of honesty, and I was very heavily influenced by two books, both of them came to me by way of Mohnish Pabrai in this amazing launch that I had with him. One is Power vs. Force by David Hawkins, the other is Mahatma Gandhi’s autobiography. And this Power vs. Force, David Hawkins talks about the power of being truthful and the power of authenticity. And authenticity is not some cute thing that you do to make the world like you because you’re being authentic, authenticity is power. It is power, because people pay attention to authenticity. A leader who is facing some enormously difficult task that he or she is trying to lead people in, who stands up and says, I’m afraid, that’s authenticity which leads people, because now they say that person is afraid, I’m afraid, I’m going to listen.

Guy Spier (01:13:44):
Because they’re identifying with the emotion that I have, and then maybe they say, I’m afraid, here’s what I’m doing about it, is far better and real leadership than saying, don’t be afraid, when everyone’s thinking, yeah, yeah, yeah, easy for you to say, I’m absolutely very, very scared. So as I was writing the first chapter of the book, I understood the power of authenticity, I understood the power of truth. That actually, that capacity that I discovered to make myself vulnerable in the moment when I realized that that chapter was going to form a part of my book, I think set me on a fantastic path. And I’m really saying this not to teach, but just to act as witness to one example of that, is that the decision to make oneself vulnerable… I think I want to reassure the listener. That decision is not something that is forced on us. It’s not like some part of my super ego says, you need to make yourself vulnerable, so now go and do it, as if it’s some school master.

Guy Spier (01:14:42):
It’s something that wells up from inside. When the student is ready, the teacher appears. So I think that the injunction, going back to Jesse Itzler about vulnerability being at the root of success, it’s not about, okay, let me select one of 10 ways that I can make myself vulnerable and find one that is really kind of out there. When I don’t have anything better to do, Stig, I try to read poetry. And there’s this poet T.S. Elliot, who I don’t understand most of his poetry, just to be clear, and I’m not some literary guy who understands everything, but there’s a poem of his called, The Love Song of Sir Alfred Prufrock, and then I want to go and say, Stig, that I don’t understand the poem, but the poem evokes thoughts and feelings in me.

Guy Spier (01:15:32):
And so there is a part of the poem where he says, do I, don’t I, do I dare to ask that question. And I’m not quoting the poem entirely correctly, but he evokes this idea of a guy who’s on the very tip of doing something, he’s on the very tip of asking perhaps a woman in his life whether she should marry him, although it’s not clear that that’s what the poem is about, but he’s just on the cusp of, you have the person standing on that cliff, and will he or won’t he jump with a bungee jump, or will he or won’t he, is he ready to take that leap into the unknown?

Guy Spier (01:16:08):
And I think that there’s an instinctive sense that we need to get around or get better at to say, yes, I’m never going to feel entirely safe, but this is something where I’m willing to make myself vulnerable. And we got to try and titrate the doses of vulnerability we give to ourself. It shouldn’t be so little that it doesn’t have an impact, it shouldn’t be so great that it could destroy ourselves. We’re going to get it wrong, but what an amazing thought. And I’ve rambled a little bit, but you’ve given me something really to chew on. I mean, I’m going to probably dream about vulnerability now.

Stig Brodersen (01:16:44):
I feel with you like I do with Warren Buffet, that I originally found you because I wanted to learn to invest, and while you and Warren Buffet are among the very best when it comes to investing, what really stays with me are the life lessons, so I just wanted to say thank you for that, Guy.

Guy Spier (01:17:03):
Yeah. You’re putting me on a pedestal now, so just let the record show that it wasn’t just me putting Stig and Preston on a pedestal, it goes both ways. And how kind you put me on a pedestal there with Warren Buffet. I think it’s a stretch to say that I am a great investor like Warren Buffet, but I really appreciate the attempt. But when you go on an adventure… And life is an adventure with many small sub-adventures in it, you get the treasure, but actually what is the most valuable is the journey that you got and the lessons that you learned along the way. And I’m more than halfway through my life, so in seconds, I’m no longer a billionaire and have no chance of being a second billionaire, unless Ray Kurzweil and the Singularity University [inaudible 01:17:46] somehow extend our lifespans by another 100 or 200 years.

Guy Spier (01:17:50):
I guess I’m a skeptic that that’s going to happen in my lifetime. I know that I’ve been proven wrong in so many things, and maybe in that as well. But in a certain way, would you not agree that if we don’t devote ourselves to enriching ourselves not through the material wealth, but through the life lessons, then we’re actually throwing the baby out with the bath water, we’re getting rid of the most valuable part? And I’m going to… I pause, because I kind of really want to mention his name, but I’m not going to mention his name. I was in a bachelor party or kind of a bachelor dinner for a guy who at the time was already a billionaire, and is now a billionaire many times over, and I found him… He was a friend of a friend, it was in a place in New York City, and I found this person to be an utterly shallow, uninteresting person to be around, not somebody that I would’ve wanted as a friend.

Guy Spier (01:18:46):
And he was somebody who was extraordinarily focused on just the money, and he just wanted a very, very big number to his name, and he’d figured a way how to do it. And I felt miserable around him, I really did. And so that is not the way you want to live your life. But hanging out with Stig and Preston, figuring out wisdom for the world, that is fricking awesome.

Stig Brodersen (01:19:09):
Wow. Thank you for saying so. And we talked about The Education of a Value Investor many times here on this show, which is a wonderful book, and I guess I would like to put a few words to that for the listeners out there, because the journey I was personally on at the time was in some ways similar to Guy’s and what you did [inaudible 01:19:29]. I think you described it the as The Wolf of Wall Street, even though in that movie, they just turned the volume up a bit compared to the environment you were in, but it was a very toxic environment. The reason why I’m mentioning it, it happened to me simultaneously, but I’ve met so many people in the community who are fascinated by money or that life, what they see, then they get into it and they realize what a horrible world it is with shallow, greedy, terrible people, truly, and then wanting to get out of it.

Stig Brodersen (01:20:04):
And they realize that it’s not mutually exclusive to wanting to be successful, wanting to make money, but still be a good person and do good in the world. And I think that’s one of the reasons why so many people are drawn to your book and learning from you, Guy. So having said that, can I send it over to you and give a hand off to where people can learn more about you. I’m sure after this conversation, people would like to get to know you even more.

Guy Spier (01:20:30):
Yeah. Thank you. Writing that book was the beginning of the most wonderful adventure and journey for me that obviously I’m still on. I should say that I think I did genuinely share valuable knowledge in the book, but I think that my career as somebody who can make a positive impact on the world, to just use a kind of a phrase that seems to be around a lot, I mean, I’m at the very beginnings and I’m just scratching the surface. So I got a lot more to go. And just to be clear, I’m not doing it out of some sense of complete altruism. It’s fun, and I get so much reward and benefit from it. And so I’m on a path. I do like Twitter, and so you can find me on Twitter, and I do respond. And I love Twitter as a serendipity machine.

Guy Spier (01:21:17):
And what I learned very briefly, Stig, in a 1,000 different ways, be authentic, don’t use links, don’t post too many images, and very aggressively mute or block people who are toxic. So just get all of that out. And it’s a tiny corner of Twitter that’s really wonderful. But GSPier, you’re welcome to find me on Twitter. I work quite hard at an email newsletter, again, inspired by David Perell, because I think that… And the idea, Stig, that I’m going to pause and express because I think it’s so powerful is, if we just browse the internet or hang out on YouTube, we are the product and the algorithm is using us, but the minute we create content of one form or another and put it out there, we can use the algorithm to connect to other people who have our very specific form of crazy.

Guy Spier (01:22:13):
So I write an email newsletter, and I have a very small podcast. I do it just for fun, and just to interview people I might not be able to otherwise interview, and to kind of shine a spotlight on people I want to shine a spotlight on. It is a fraction of the audience of The Investor’s Podcast, but it’s kind of like a hobby that kind of supports my desire for a rich and fulfilled life. And so you’re extremely welcome to find that podcast. I hope you like some of the conversations I’ve had on it. I would also share that Stig and Preston are incredible interviewers, and I really should tell you that the research that Stig put into this interview is something that I’d hope to replicate in some of the future interviews that I do. But if you go to www.guyspier.com, you can find the podcast, and you can also get the opportunity to subscribe to my newsletter.

Guy Spier (01:23:13):
I would tell you that I am prohibited by various regulatory authorities about talking about the fund that I manage, but if you find your way to those two places, you’ll certainly find your way to the fund that I manage. I would tell you that there are all sorts of hoops that you have to jump through if you ever decided that you wanted to invest. If you feel like you’re like-minded, and you feel like you want some more of me in your life, and you’re the right kind of person, I would be delighted to meet you.

Guy Spier (01:23:46):
And I would say that I could have run the fund that I run just for friends and family, but I love the associations that I’ve gotten to have. And some of the investors that I’ve gotten to know who invested with me are truly wonderful people, and I’m very grateful to have them as part of the fund. But yeah, thank you so much for having me. And just remember, if people are disparaging an idea, it might actually be pretty good, and I hope that Preston hears that in regards to his interest in crypto, and your interest in cryptocurrencies

Stig Brodersen (01:24:21):
Guy, thank you so much for your time. It’s absolutely amazing to be able to learn directly from you. So thank you for, once again, joining us here on The Investors’ Podcast.

Guy Spier (01:24:31):
And thank you for having me. I have a sense that The Investors’ Podcast is going to go from strength to strength. You’re a incredible force for good yourselves, but I’ll stop, because then you’re going to call me out for doing too much-

Stig Brodersen (01:24:42):
I’m going to call you out and send it back to you, Guy, here at the end and say, if that is indeed what’s going to happen, it’s because we speak to people like you. So-

Guy Spier (01:24:51):
Thank you very much.

Stig Brodersen (01:24:53):
I’ll see if I can end the interview now, but thank you, thank you so much, Guy. It’s been a privilege speaking with you today.

Guy Spier (01:25:02):
And thank you, Stig.

Outro (01:25:03):
Thank you for listening to TIP. Make sure to subscribe Millennial Investing by The Investors Podcast Network, and learn how to achieve financial independence. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.


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