25 March 2023

On today’s show, Stig Brodersen talks with co-host William Green, the author of “Richer, Wiser, Happier.” They discuss what has made them Richer, Wiser, or Happier in the past quarter.

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  • How to think about investing with an asset manager that yields a lower return and has good values, or an asset manager with a higher return and bad values.
  • The role of money vs. happiness for billionaires.
  • What Stig and William learned from Ray Dalio.
  • Why pain + reflection = progress.
  • What Stig and William learned from Charlie Munger.
  • Why William bought Alibaba and Seritage Growth Properties.
  • Which investing books made it to the top 5 for Stig and William for Q1 2023, and why.


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.

[00:00:00] Stig Brodersen: In today’s episode, I am joined by my co-host and good friend William Green. Starting today we will at every quarter present to our listeners what has made us richer, wiser, and happier. And William and I are excited to test out our new format. We’ll be talking about what we recently learned from Billionaires such as Ray Dalio and Charlie Munger and reflect on the ever-relevant question of money and happiness.

[00:00:21] Stig Brodersen: Alright, enough talk. Let’s get to it.

[00:00:27] Intro: You are listening to The Investor’s 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.

[00:00:47] Stig Brodersen: Welcome to The Investor’s Podcast. I’m your host Stig Brodersen and I’m joined by my co-host William Green today. William, how are you?

[00:00:55] William Green: I’m very well. I’m delighted to see you. I sound a bit raspy cause it’s earlier in America and I’m just on my third cup of coffee, so I’m still waking up.

[00:01:06] Stig Brodersen: Alright, so as I was saying there in the introduction, William and I will be hosting a new quarterly series and we are calling it Richer, Wiser, Happier, which is a tribute to William’s book, but it’s also just because it’s just a fantastic title, you know, so the idea is that we are going to talk about every quarter.

[00:01:21] Stig Brodersen: Well, let’s see how the first one goes. But every quarter we are going to talk about what have we experienced over the past well quarter that has made us either richer, wiser, or happier. So that’s sort of like the premise of this format that might be a bit more informal than what the US listener are usually tuning into.

[00:01:40] Stig Brodersen: We will be playing different audio clips with guests from William’s wonderful podcast, Richer, Wiser, Happier that you can also find at this feed. For example, later in this episode, we’ll play a clip from William’s episode with Ray Dalio but we won’t constrain ourselves only to play an audio clip from our own podcast.

[00:01:57] Stig Brodersen: We are also going to play a clip, for example, from Charlie Munger in the Q and A he did with the at the Daily Journal meeting here we had recently. So we have five segments. The first one, values or money, we are going to go right into that here in 30 seconds or whatnot. Then we have one called money and happiness.

[00:02:13] Stig Brodersen: We have one called, what we learned from Ray Dalio, another segment, then what we learned from Charlie Munger, and then at the very end of this episode, we’re going to talk about our top five books from this recent quarter, Q1 2023. So let’s just go right into the first part. That won’t be an audio clip, but something that I ponded on for quite some time.

[00:02:32] Stig Brodersen: I spoke with Guy Spier here on We Study Billionaires 414, and he talks about investing in companies or not investing in companies that destroy value for society. And I guess I don’t have to say it’s evident that Guy is a fantastic, wonderful person, terrific investor. So I also think you get the best of both worlds investing with him.

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[00:02:54] Stig Brodersen: But I also kind of feel it raises the question, what if you had to choose? And so we are trying to like zoom out a bit, go up in the helicopter and talk about some of the more ethical things. And William, if I can give you an unreasonable premise here for my question. So I think you’ve told in another episode that you invest with high-quality people such as Guy Spier and Matthew McClennan.

[00:03:17] Stig Brodersen: So let’s say that I could guarantee, for whatever reason, I could guarantee if that if you invested with Guy you would get 9% completely stable. I know I’m going to make it sound like a Bernie Madoff kind of thing. I want to say it was around 9%, but it’s not a Bernie Madoff thing. You could get 9% no matter what.

[00:03:34] Stig Brodersen: Great person, terrific investor, wonderful human being, but you can also invest with another fund manager, guaranteed 11%. But you knew that asset managers had bad values. Who would you invest with and how do you think about this values or money dilemma?

[00:03:52] William Green: I’m deeply idiosyncratic, so I’m not saying anyone else should do what I do, but I sort of surprise myself with my answer, which is I wouldn’t hesitate to take the lower return to invest with the person I trust and like, and to avoid the person that I think is kind of shady or unpleasant or selfish or just out for themselves.

[00:04:12] William Green: That’s a pretty idiosyncratic answer, but I think you have to really think hard about who’s in your ecosystem. Who, I mean, I remember, look, I’m totally biased on this front as well because Guy is a very old friend. He’s someone not only who I’ve invested with for over 20 years, but he’s one of my closest friends and I just spent a week with him in Switzerland.

[00:04:31] William Green: So I’m totally biased here, but I feel like I want to have people in my ecosystem that I like and that I trust and who I feel have their interests aligned with me. And so when I look at someone like Guy, when I first invested with Guy many years ago, probably 21, or 22 years ago, one of the reasons why I invested was not just cause I thought he was very smart, which he clearly is.

[00:04:55] William Green: It was actually, it was partly because, if I remember correctly, he had just got an incentive fee for having really good returns in some period. And then immediately the fund had gone down. And much to his lawyer’s annoyance, he returned the incentive fee because he said, well, I didn’t really earn it. You know, like it’s unfair for me to take it.

[00:05:19] William Green: And I thought that’s such an eccentric thing to do. And so I want to be partnering with someone who’s willing to go against their own interests. And then at the same time, he also had basically half of the money in the fund was his family’s money, his father, his sister, uncles, aunts, lots of family members, and then friends and partners of his fathers.

[00:05:44] William Green: And I just thought, okay, so there’s an alignment here where if he messes up, he’s going to suffer more than I do. And I think those two instincts were actually correct to align with people who are prepared to go against their own interests in your favor and who have, who are eating their own cooking.

[00:06:02] William Green: This is something that Nasim Taleb talks about, right? You want to have skin in the game. You want a money manager who is going to get hurt alongside you or benefit alongside you. And so if there’s some kind of takeaway for our listeners, I think it’s really to think hard about whether the person you’re investing with has your back or whether they’re just out for themselves.

[00:06:24] William Green: And I think one of the easiest ways to tell is just by looking at the fee structure. So I look at say, Guy’s fee structure and the fee, the share class that I’m in, there’s no annual management fee. And so he gets a percentage of the profits if he gets good performance but if he doesn’t perform, he doesn’t get paid anything.

[00:06:44] William Green: And Mohnish Pabrai, who I think you invested with at one point has a very similar structure, and it’s cloned from Buffett’s structure in the 1950s partnerships that he had. And actually, Buffett cloned it from Ben Graham. And it’s something that most people can’t afford to do, right? Most hedge fund managers are just, they’d rather have a structure where they get 2% of the assets in a management fee, regardless of whether they do lousily or not, add than 20% of the profits. And so as Mohnish would say, it’s heads I win, tails you lose. And I just I want to be partnering with people who are looking out for me. And for the same reason I invest in Berkshire Hathaway, not because I think it’s going to have the greatest returns on earth. There’s no fee.

[00:07:26] William Green: You’re not paying them expenses. Munger and Buffett are making a hundred thousand dollars a year to run this enormous business. And you’re getting the benefits of the float and all of their expertise and brilliance and the competent, honorable people they’ve got working for them. And so, I don’t really know how Guy’s going to do, I don’t really know how Berkshire’s going to do, but at least I feel like they’ve stacked it in my favor that they’re treating me as a partner and they’re trying to make money with me, not off me.

[00:07:55] William Green: And so that’s critical. But then you have to kind of also hedge against your own blindness. So what if I’m, what if I’m wrong in my assessment of those people? And so even though I’m trusting certain people to behave in an honorable way, I’m still diversifying in case I’m wrong. So I remember John Templeton telling me many years, For regular investors, you should probably own five or six funds that give you exposure to different parts of the market.

[00:08:24] William Green: And so anytime I get carried away and I fall in love with some investor or some fund or some stock, and I think I should pile into this, I just remind myself, well, I’ve been wrong before. Why should I assume, as Templeton would say, why should I have the arrogance of believing that I found the one fund, the one money manager, the one asset class?

[00:08:43] William Green: And so yeah, I want to invest with people who I think are honorable and decent and have aligned interests with my interests. But I still want to want to diversify in case I’m wrong.

[00:08:55] Stig Brodersen: I think that’s super, super smart. And William, just to just one thing about like investing with the right people, what you said before about this ethics and it really makes me think of the episode you did with Fred Martin not too long ago when he talked about how money manage management, at least for him, was about forgoing money to help clients get better returns.

[00:09:16] Stig Brodersen: Because if a fund is big enough, it, you can’t get the same returns if you can whenever it’s smaller and think about that. Asset managers are incentivized to manage as much money as they possibly can because whether it’s a two or 20 model, whatever it is, generally you make more money if you manage more money, even though it’s not to the benefit of your investors.

[00:09:37] William Green: Yeah, and I think there are clues in someone’s past behavior. I was discussing this with Tom Gayner on an episode that’ll come out shortly where I was saying, how can you tell whether the person you are dealing with has integrity? And he said, well, look, there are clues in their past behavior. And so you look at Fred Martin and many years ago, he closed his small cap strategy to new investors when it was, it had something like 400 million in assets.

[00:10:02] William Green: And so in the 15 or 18 or whatever years since then, he could have made tens of millions of dollars in fees that he was willing to forego because he wanted to keep it small because he said it was really impossible to manage a huge fund that invested in small-cap stocks. So there’s someone who actually has demonstrated in his past behavior that he cares really a great deal about his investors.

[00:10:28] William Green: So, so look for the clues. Look for the past behavior. Look for the fee structure. You don’t just want to believe someone because they say the right things. I think there’s usually it’s, it sounds like an odd analogy, but it’s like when you see someone who’s committed a crime, if they’re a rapist, for example, sorry to use this sort of dark example, you tend to see that they had the same modus operandi multiple times.

[00:10:52] William Green: And so I think when you see people behaving poorly, they behaved poorly multiple times, and when you see people behaving? Well, you know, I’ve seen it with Guy multiple times where that same instinct that he had with returning the incentive fee early on, he did something recently where he and you have to accept the fact that I’m totally biased on this cause he’s a good friend.

[00:11:15] William Green: So I’m not trying to say this as a shill for Guy, but they did something recently where they figured out that basically because the fund had a bad year last year, they could actually offer existing investors or new investors the opportunity to invest at a previous high watermark. Which I’m not explaining well, but it basically meant that, you know, you got the benefits of the fact that it had done poorly so that you would, you’d be investing with lower expenses, lower fees going forward.

[00:11:44] William Green: And so they’d basically figured out a way to take money out of Guy’s pocket and give it to the investors. And I remember once Guy was talking to Mark Chapman, I think it was, who works sort of, I guess like the CFO at Aquamarine Guy’s Company and had said they were talking about the new fee structure where, you know, you could be in a five year share class where you would get no,

[00:12:06] William Green: Guy would get no money at all if he didn’t perform well. And Mark was like, are you sure you want to do this? Like, you might make no money for the next five years. And Guy was like, yeah, welcome to the world of aligned interests. I think that’s really interesting when someone’s prepared to do that, it’s that just makes me feel good.

[00:12:24] William Green: I don’t know how good his performance will be, but there’s a record of behaving in an honorable way that I like.

[00:12:34] Stig Brodersen: Yeah I like that. And very few people just do that, you know, they promise a lot, but they’re not ready to take the pain together with you. One quick example, before we got our own sales team here on the podcast network, we got constantly asked whether or not someone could do it for us.

[00:12:48] Stig Brodersen: And they guaranteed as we could say, I don’t know, do $1 million. I was like, that’s great, but do we have a guarantee that if you don’t, you supplement up to a million dollars and you’re like no, we can’t do that. But you used the word guaranteed. So what does that mean? That means we’re got to do our absolute best.

[00:13:05] Stig Brodersen: Okay. So you take the upside with us, that’s great, but you also take the downside cause we could also do X, Y, Z. No, no no. We only want to take, they didn’t use the word, we only going to take the upside with you. But that is how most people are wired and you know, that’s the way it is and that’s also why it’s so wonderful whenever you meet with people like Guy or Mohnish. I come from a very normal, if I can use that word, cause it’s, it is always dangerous to use words like normal, but a typical Danish middle-class background.

[00:13:31] Stig Brodersen: And I wouldn’t say that I was taught that people in the foreign industry were bad people not like that but they were definitely not good people. And the thing there is a part of me who I’d be really happy to, and don’t get me wrong, I definitely met bad people. I’ve started in the financial industry.

[00:13:46] Stig Brodersen: I’ve seen bad people there, don’t get me wrong. But you also meet wonderful people just like you. You do all walks of life.

[00:13:53] William Green: We’ll also Stig, remember that thing that Buffett said to Mohnish Shin Gai at their charity lunch back in I think 2008 it was where they paid $650,100 to have a charity lunch with Buffett.

[00:14:05] William Green: And Buffett said to them during that lunch, I don’t want to be in debt cause I don’t want to see what I’m capable of doing. And Guy has said to me, look, if even Warren is vulnerable under certain circumstances where he could behave, he thinks he could behave poorly if he were under pressure financially. What about the rest of us?

[00:14:27] William Green: The rest of us are that much more vulnerable. And so I think it’s not just a matter of partnering with honest and honorable people, it’s also that even decent people can do terrible stuff when they’re in vulnerable situations. And I see that with myself where when I’m stressed out, I’m much more unpleasant than when I’m unstressed.

[00:14:49] William Green: And so I think you want to structure your life. In ways that are more likely to tilt the odds of your behaving decently. And so that means living within your means, not having excessive debt. So you’ll panic not being so, not having such an expensive lifestyle that you need to take advantage of other people.

[00:15:12] William Green: Guy once said to me, look, you have to move the candy away from you, and which is metaphorical. Because in both of our cases, we’ve not been very good at moving the chocolate and the cappuccinos away from us. But I think it’s true, you want to structure your life so that there’s not as much temptation to behave poorly.

[00:15:30] William Green: And so if you are investing with somebody who, you know, when I went to stay with Guy recently in Switzerland, he lives very nicely but it was really interesting. We drove back from Klosters in the mountains to his home in Zurich. We were in his old Porsche, which is the same Porsche he picked me up in from the airport all those years ago when we were working on his book, The Educational Value Investor.

[00:15:52] William Green: And it’s now 16, 17 years old. And so still a really nice car, but it’s not kind of glamorous to drive a 16 or 17 year old car. And so I think he’s structured his life, so he’s not put himself in a situation of jeopardy where he needs to behave in an unethical way. And that’s important for me. I need to think about how to structure my finances so that I’m not going to panic. But also how to structure other aspects of my ecosystem so that I’m likely to behave well. And so this gets at who you invest with, who you hang out with, who your friends are, and even what you’re reading. Think of Munger talking about hanging out with the eminent dead by reading certain things.

[00:16:35] William Green: And so you want to structure your entire ecosystem so that you’re less likely to succumb to the less noble side of your character.

[00:16:43] Stig Brodersen: I think perhaps one very small example of that. Now we just talked about the imminent death. So, that’s a tough act too, to follow William. But, you know, I think a lot about how to design my life in a way to optimize for happiness.

[00:16:58] Stig Brodersen: And I’m sort of like going straight to the source whenever I say optimize for happiness. I remember that Preston and I read a book, I don’t know, it was probably five, seven years ago. It was called Delivering Happiness by a gentleman called Tony Hsieh who’s unfortunately not with us anymore. And he said that if you continue asking a person why if they do X, Y, or Z like continue to ask why the fifth time or before they’re going to say because it makes me happy.

[00:17:25] Stig Brodersen: Or they think it makes them happy. And you could then argue that you know, it’s not making happy but that’s not so much the part is that they’re doing it because they think it makes them happy. Even people doing terrible things. I thought a lot about that, and I’ve tried going back to the original topic about how to optimize for happiness and how that relate to investing.

[00:17:46] Stig Brodersen: And so I remember we had John Huber on the show a long time ago and he was talking about Facebook which is called Meta today and he talked about why it was such a great investment and why you could expect something in return. And he was completely right by the way but I remember thinking about it and I’m like, I understand the business.

[00:18:05] Stig Brodersen: I used to use the product. I can see the business case. It was very easy to analyze but I did not want to invest in it. Meta makes me sad. I know probably comes across and yeah, I have a good friend who works there and there are probably wonderful people working at Meta and they’re making a lot of people happy.

[00:18:23] Stig Brodersen: Don’t get me wrong, but like for different reasons. The company Meta makes me sad and I also think that they to some extent do some not-so-good things for society. I could be completely wrong or right about that. That’s not so much the point. But I remember thinking I could be making money for me. Of course, you could also argue, I could be wrong, but I could make money.

[00:18:45] Stig Brodersen: I just don’t want to make that bet because that means I have to read their annual reports. Every time I hear something about it in the news, I have to think about the company. I just don’t want that life. Even if it came with a prophet, because I optimize for happiness. I know it probably comes across as naive.

[00:19:02] Stig Brodersen: But it’s one of the things I’m thinking a lot about, which goes back to this unreasonable thing I said to you before about willing, like, okay, so you can invest with a wonderful person with a lower return, and how do you think about that? So it was just a different way of going to that topic.

[00:19:14] William Green: No, I think it’s a really important insight and look, we are not being totally naive here because it’s not like we would invest in a lousy company or with a lousy fund manager who we thought was lazy and incompetent just because we thought they were a nice guy, or that the company was a really ethical company that treated its employees fabulously.

[00:19:35] William Green: You want to invest with talented, capable, driven people and in good businesses, but I think you, I, you know, you are not just optimizing for profits. I mean that’s not the most important thing for me. When I think about my financial goals, I want to be financially independent and free and able to do whatever I want to do.

[00:19:58] William Green: I don’t need to drive a Ferrari, I don’t need to have the fanciest house. It just, that’s not interesting to me. And so it’s not uninteresting. But actually no I mean, without wanting to sound judgmental I would be slightly embarrassed to drive a Ferrari and it’s not, that’s not a judgment on the people who do, I just think it would be kind of, it wouldn’t suit my personality.

[00:20:20] William Green: So for me, when I think of. my goals and my financial ambitions, which are sort of basically to live the way I want to live without being honorable to anybody. To be in charge of my own schedule, my own time when I go on vacation. Whether I stay in a really nice hotel, I’m a sucker for a really nice hotel.

[00:20:39] William Green: So it’s not like I’ve taken a vow of poverty, you know what, I’m a sucker for really good food and stuff like that. And expensive clothes like that are, they’re not flashy, but they’re really well made. So it’s not like I’m some kind of monk, but to get that sort of lifestyle, if I were to make 10% a year, that would be amazing.

[00:20:57] William Green: I’d double every seven years. And I don’t know is that before tax? Is it after tax? I don’t know. Is it, does it mean I actually have to supplement it by continuing to add to the pot myself by saving more? Maybe. Maybe there are years where you make minus 10%, but you add 20% you, you know, so you just keep beefing up what you’re investing.

[00:21:17] William Green: But if I act in that way, in an act, investing in a sustainable way, trying to get a decent return, I’ll be fine. So I actually don’t need to make huge compromises where I take wild risks or invest with someone who’s kind of scummy, but will probably do really well. So I think part of it, actually Stig just requires you to know what the destination is that you’re heading for, that you are aiming for, and then you work backward from there, which is something I write about when I write about Nick Sleep in my book.

[00:21:50] William Green: This idea of starting with a desirable destination and then working backward to figure out, well, what are the inputs that’ll get you there and the inputs that’ll get us to be financially independent and secure. I think saving, living within our means, investing responsibly, diversifying so that we don’t blow ourselves up.

[00:22:11] William Green: Not trusting one person or one country, or one bank, or one brokerage firm or something to an absurd degree so that then if you’re wrong, you get blown up. So I think to start with the destination and then work backward to figure out the inputs that are likely to get you there.

[00:22:29] Stig Brodersen: So if we say that the destination is to be happy, I want to have a discussion about what kind of role does money play in that?

[00:22:38] Stig Brodersen: And it’s just a, I’ve always been fascinated by that question. I remember again, like growing up I hope you don’t bail me for like a string uh, kind of session after William, but I remember having the, having this background where I was taught that it wasn’t because anything in my family had anything against rich people, but it was definitely like, it’s not like rich people or like happier.

[00:22:58] Stig Brodersen: They just had different problems. I remember there, there was one thing we talked about, but at the same time, I also was in a community where it seemed like everyone wanted to have more money. And I remember as a kid, I was like, that makes no sense. We just talked about how money doesn’t make you happy and then everyone still wants more money.

[00:23:16] Stig Brodersen: You know, as a kid growing up, you’re like, that doesn’t make any sense. And so whenever I read like articles or see something in the media and you know, it, I kind of feel sometimes whenever there’s a million, a billionaire who have problems, you know, it’s, there’s almost like an element of gloating in a way where it’s not fair that this person is a billionaire and has a great life.

[00:23:37] Stig Brodersen: You know, it’s almost like we need to be some kind of, it should be some kind of universal calmer or something around that. And so I know that you have spent a lot of time with billionaires and high net worth in vi individuals. And you can say that you know, we’ve done that here on the show also.

[00:23:53] Stig Brodersen: But I know you, you really know the many of those people, well, you’ve flown, arrived in a private jet and like really gotten to know them. What kind of role does money play in the happiness of the richest people?

[00:24:06] William Green: Yeah. I, well, to give you a couple of very specific examples of people I’ve talked to about this sort of thing or people I’ve observed.

[00:24:14] William Green: So, so I got to spend a bunch of time with Bill Miller the other day, and I’ve spent a lot of time with Bill over the years. And Bill, as most of our listeners will know, is one of the, one of the great investors of our time. He had this incredible, unprecedented streak of beating the market for 15 years running, then had a terrible period during 2008, 2009, and then has had this unbelievable recovery rebound where his fund was like in the top 1% war funds of the next decade or 12 years or something like that.

[00:24:41] William Green: And he just retired at the end of the year and is now at the end of 2022 and is now handing over the reins to his son, bill La fourth, and to Samantha McLemore, who I’ll have on the podcast very shortly. And so I’ve interviewed Bill many times over the last 22 years for the best part of a hundred hours, I think.

[00:24:58] William Green: And so I’ve really seen him in all of these periods, like during the glory days when he was like totally on top of the world during that 15 year streak. Then during the, you know, in the aftermath of the really difficult time when he got crushed during the global financial crisis, then during the rebound where he got kind of vindicated.

[00:25:16] William Green: And now again, I’m seeing him now that he’s probably about 71, 72, something like that. And I was really struck when I saw him the other day, just how happy he was. And I think there are some observations. [00:25:30] About what I think makes him happy. That might be kind of to some degree universal. So, the first thing is he just got remarried to a really lovely woman who I met who’s just great.

[00:25:42] William Green: So he is, got great relationships, right? And he’s worked with Samantha McLemore for 20 years. He’s worked with his son Bill the fourth for all these years. So he is worked with great people. He’s got the same assistant, Darlene Orange that he had when I first was writing about him when I was writing a profile for Fortune of him back after nine 11.

[00:26:01] William Green: So he’s got people he really likes around him who are really decent and who he trusts and who trusts him. So that’s really key. So the relationship part is really important. Then he has tremendous autonomy, increasingly so. There was a period when he worked at Leg Mason where it was a public company and he had all of the accountability to a board and you know, even writing shareholder letters, there would be like a big process, right?

[00:26:27] William Green: There were things you had to say or couldn’t say, or whatever, you know, lots of oversight. And I think part of what I’ve seen with Bill over the years is he’s become more and more autonomous. There’s this sense in which it’s Bill unbound and now even more so now, he’s not responsible for managing anyone else’s money and he basically, you know, he’s the biggest investor in the funds that his company manages and he still has an ownership stake in the company. But he’s basically responsible now for his own portfolio, which basically consists for the most part of three investments. And so he is able to concentrate massively in a way that he couldn’t for regular shareholders. I mean, he’s got an enormous stake in Amazon that he’s owned for more than 20 years, an enormous stake in Bitcoin.

[00:27:12] William Green: And so most people would be like, that’s crazy to have all of your money to have, you know, 70, 80, 90% at times of your money and two assets that are fairly risky. But his cost base for both is tiny, right? Like $200 a coin. He started buying Bitcoin and bought much of his stake at $500 around there.

[00:27:30] William Green: And Amazon, you know, basically his cost basis now that after the split is some under a dollar a share. So he’s made so much money off them and he has owned them for long enough that, you know, his cost basis is almost zero. But, so he is investing in a way that’s totally true to himself. Total autonomy.

[00:27:48] William Green: And I think there’s a real clue there to what actually makes for happiness. It’s living in a way that suits you with all of your idiosyncrasies. And so there was a, I think I’ve told you this story before. There was a time when I was interviewing Bill at his home in Maryland a few years ago when I was working on my book, Richer, Wiser, Happier.

[00:28:07] William Green: And I spent about a day and a half or two days with him in Maryland where he has a. And you know, he was, he would come in wearing the same black T-shirt or the same type of black t-shirt and jeans every day. And he had a hole in his cashmere socks. And he is like, you know, he is dressed the way he wants.

[00:28:22] William Green: He’s in charge of his time. And he said, somebody had asked him to be the keynote speaker at a gala event, and he said, well, what’s the dress code? And they said, well, it’s black tie. You have to wear a tuxedo. And he is like, no, I threw out my tuxedo and I’m never buying another one. And so he structured his life in a way that he’s got rid of a lot of the stuff that he doesn’t like to do.

[00:28:47] William Green: And so I was talking to his wife the other day and she was like, well, it’s amazing how he can really just read and do the things that read and invest and take advantage of the fact that he’s got this really brilliant brain. And it’s just great. You know, it’s, it is like Miller Unbound. So I think, you know, when I look at things like that’s cloneable for me, right?

[00:29:04] William Green: It’s not like I have the wealth of Bill Miller, even a fraction of it. But I can say I want to, I want to structure my life as much as I can in a way that’s true to my own weirdness, my own idiosyncrasy, my own values, my own sense of what’s enriching. And so, for me to be able to spend my morning chatting with you as a friend, talking about interesting subjects to you and me, that’s a real joy.

[00:29:29] William Green: That’s a source of pleasure. I mean, I, as I was coming into my office, I sort of started beaming and I was like, this is great. You know, I get to chat with Stig, I get to be in this beautiful office space that I share with this friend of mine, Matt Lama, who’s a really lovely guy. And you know, I’m in charge of my own structure and there’s that my own time.

[00:29:47] William Green: And there’s no one really to tell me that I can’t drink coffee as I’m on the podcast, even though it looks unprofessional. Then, you know, I’m kind of wearing a semi-unclean shirt or whatever. You know, it’s like I’m sort of in charge. And for me, as somebody who really values autonomy, who really values not being told what to do, that’s incredibly valuable.

[00:30:08] William Green: I value that more than the money. And so I think Bill, simply, when I look at Bill, he’s structured his life in a way that suits him. And I see that again and again with the happiest investors that I’ve seen, that they’re doing what they want, right? So he’s doing intellectually enriching work working with people he likes, totally independent, true to himself.

[00:30:28] William Green: And then also he’s doing a lot of charitable stuff, right? So Bill has given I think he gave 75 million to Johns Hopkins to the philosophy department. So he is a philosopher himself. He came out of the Ph.D. program at Johns Hopkins, but couldn’t complete his studies. And then cause he couldn’t really afford to, cause he came from a very modest family.

[00:30:47] William Green: His father was a taxi driver among other things. And so he didn’t come from money. And studying philosophy has had a profound impact on his success. So he’s given back to the philosophy department at Johns Hopkins. He’s on the investment committee at Johns Hopkins. So he is helping his alma mater.

[00:31:04] William Green: He’s learned an enormous amount from the Santa Fe Institute where they study complexity science. And so that helped him to invest very early in things like AOL and Google and Dell and Amazon. So he’s given them I think a gift of 50 million. And so, so it’s not just that he’s got a yacht and a private plane and stuff, which he does have, which is nice.

[00:31:25] William Green: And he is got a really nice house in Maryland and a really nice house in Florida. I haven’t seen the house in Florida, but I know it’s on a, on an island and I think, you know, it’s, I’m sure it’s pretty luxurious and he’s got an amazing book collection. So he is got the toys and ball balls, but he’s also giving money away to things that that have helped him and that he thinks are going to help others.

[00:31:44] William Green: Right. You know, the study of complexity science has all sorts of implications in terms of climate change, ai, and things like that. So, so I think that’s another really important component of happiness. There’s got to be some element of sharing built in some bigger purpose. It’s not that the yacht and the plane are not enjoyable.

[00:32:05] William Green: Right. There’s a, there’s are fun things to have for him, but he’s sharing stuff he’s giving back. So I think I hope that gives a few clues as the role of money in the lives of these people. It’s not enough just to be rich. Yeah. They’re very competitive. There is a sense in which money is a kind of scorecard.

[00:32:26] William Green: It’s a marker of success, but it’s much more than that. I mean, Howard Marks once said to me that being a billionaire had made him less fearful. So there was a psychological benefit for him, but it’s not I don’t know. I mean, Howard had I know at one point he bought a home in New York for 52 million or something.

[00:32:46] William Green: So he lives very luxuriously. But really, I think, again, he’s somebody who really loves ideas. In my book, I said his real drug is ideas, not money. And I think that’s true. He’s someone who loves to read, loves to think, and he gets great pleasure out of teaching people stuff, of sharing ideas.

[00:33:02] William Green: So again he’s structured his life in such a way that it, he’s, you know, he, I think he has probably about a thousand people working at Oaktree, but they’re not really reporting to him. So he is not got any management responsibility. He’s really like the philosopher king at Oaktree, whose job is to think about things like risk and uncertainty and write about it in a way that’s helpful to his clients and to regular people who read his memos. So again, structured his life in a way that was true to him.

[00:33:32] Stig Brodersen: Which If we have to boil down to one. If I can just say like, that autonomy is just so important regardless of what your, fancy is you, and it’s easier to have that autonomy if you have money. So when, whenever we started the podcast a long time ago, there’s one book in particular that really make an impact on how I saw this good life for lack of better words.

[00:33:54] Stig Brodersen: And it, it’s a book called Call Me Ted. It’s not a good book by the way. So that was not why it made a big impact on me. But it’s about Ted Turner and I don’t know what he’s most famous for today’s, perhaps because he gave a billion dollars to United Nations. I’m not completely sure what. –

[00:34:10] William Green: He founded CNN, right?

[00:34:11] Stig Brodersen: Yeah. Yes. He found a CNN Yes.

[00:34:13] William Green: CNN. That’s a pretty good contribution as well.

[00:34:15] Stig Brodersen: That’s probably what he’s, yeah. So he founded CNN, you know, turn a broadcasting system, merged with Time Warner, and then later at the biggest corporate murder, 160 billion at the time with AOL, which was an interesting case in itself.

[00:34:28] Stig Brodersen: But it was really that merger that was, to me that was just really interesting because he, full intent purposes had all the money in the world. At least whenever you are looking for my vantage point, whether you have a hundred billion more Buffett money, or you have a billion dollars called me Ted money.

[00:34:43] Stig Brodersen: It’s the same, it’s probably not the same if you have a billion dollars, but at least to me, it’s the same if you have a hundred or one of them. And he talked about his personal struggles in that book and how proud he was at CNN, how. How he invented a new type of reporting. was actually because of the Iraq war and how everything was covered, how they played role in that war.

[00:35:04] Stig Brodersen: But he was so proud of so many things, which, you know, it was wonderful. Don’t get me wrong. And then he talked about this painful period of his life where he was doing the merger. He was like now I’m a minority, shareholder, minority, and voting rights. He couldn’t really do what he wanted to do.

[00:35:19] Stig Brodersen: He had to like have like this famous press conference where like, he had to say things he didn’t want to say, and you’d be thinking like, this guy, he can do anything in the world. He’s a billionaire. But he felt so constrained to your point before about Bill Miller, like all the different tasks that you now have is one of the guys in this popular company.

[00:35:38] Stig Brodersen: And one of the faces of that, he just had, he felt he didn’t have any autonomy. Like it was clear that he had a big ego. And that was hurt because now he was like, I don’t know, the second most important guy in this company with tens of thousands of, and the rest of us might be like, wow, you’re the second most important.

[00:35:54] Stig Brodersen: But to him, you know, he was the first loser, you know, that’s one winner. And then he’s the first loser. Like, and so the reason why I want to bring up that book is I remember thinking a lot about it and thinking if I would ever be so lucky, I would never, ever put myself in such a situation where you have everything in the world and you’re just miserable because you are, you don’t have the right yacht.

[00:36:17] William Green: I’ll tell you a great phrase that I spent a lot of time with a multi-billionaire who I helped him write his memoir that hasn’t been published yet and I have no idea whether it will be, but he’s a very, very interesting guy. And he’s said to me at one point he talked about, you know, he knows a lot of the richest people in the world and knows how miserable many of them are.

[00:36:38] William Green: And he said to me, he taught, he used the phrase poor, rich people and rich poor people. And I thought that was really revealing that there are people who are incredibly rich externally, but actually are incredibly poor. And that’s it. It’s difficult cause there’s some part of us, as you were saying before, people like to gloat about the problems of the rich.

[00:37:00] William Green: And I don’t think this is a, about that. It’s about understanding that if your life is empty in certain ways, for example, in terms of peace of mind or friendship and great family relationships, it’s pretty Barron. And this was one of the interesting things that I learned from interviewing someone like Ed Thorpe, right?

[00:37:21] William Green: Who as we’ve talked about Ed before on the show, right? This is a guy who’s probably the greatest game player in the history of investing. He’s a guy who beat the market at blackjack, beat the market, and. So many different games, right? Even at roulette.

[00:37:36] Stig Brodersen: Yes. I was just about to say, even at roulette.

[00:37:38] Stig Brodersen: And people might be thinking, how is that possible? Well, meet Ed Thorpe, he had to use a bit of different techniques, but, he would swear to this day it was not illegal at the time. It is now what he did, but what he technically did at the time wasn’t legal.

[00:37:52] William Green: Yeah. He’s a true genius and an amazing game player.

[00:37:54] William Green: And so I said to him, look if you were approaching life as a game, how do you stack the odds in your favor? So you win? And one of the things he said to me is well, look who you spend your time with is probably the most important thing of all. And Munger once I think Munger gave Ed Thorpe’s book, Man for All Markets to Mohnish at one point.

[00:38:16] William Green: And he said to Mohnish you’ll notice it’s actually a love story. And it’s not really a love story, but there is an element in there of Ed’s love for his wife of more than 50 years who passed away and now he’s remarried. But I think of Ed as somebody who never underestimated the importance of relationships.

[00:38:35] William Green: And so, so when you’re thinking about what you want to clone from the greatest investors or the richest, most successful people in the world, you don’t want to clone the wrong thing, right? So you don’t want to assume that enormous amounts of money. Are going to make you happy because then finally you’ll be independent and autonomous and can do everything you want and can, don’t have to fly on commercial planes and stuff.

[00:38:58] William Green: Yeah, that stuff’s true. But what I think is much more important is the relationships. It’s who you are hanging out with. And Munger said this great thing where he was talking about Sumner Redstone, right? Who I’ve never met. And he passed away now, but Munger said that he went to Harvard Law School, I think with Sumner Redstone, and he said, you know, he was a tough tomato, and he ended up richer than I was.

[00:39:21] William Green: So some people would say he’s more successful. But he said, that when I think of Sumner Redstone all my life, he’s an example of what I didn’t want to be. And he said, even his wives and kids hated him. And I have no idea if that’s true, but when I asked when I asked Munger what we could learn from him and Warren about how to have a happy life, he immediately started talking about relationships.

[00:39:44] William Green: That was, he was talking about the people in their lives, the people they’d partnered with, how they had so many honorable, decent people in his life. And he said, look, I’ve been a, I’ve been a good partner to Warren, and he’s been a marvelous partner to me. And his entire success is built not just on his intellectual brilliance, but actually on his partnership with others.

[00:40:05] William Green: So I think that gives you a clue. And so when you’re thinking of the desirable destination that you are working towards in your life and you’re thinking, okay, I want to look back at the end of my life and think I had a happy and rich and truly abundant life, not just the financially abundant life, but a truly abundant life.

[00:40:20] William Green: What does that consist of for you? And I’m pretty sure that an enormous part of that is actually about relationships. And so, so then you have to really ask yourself what are the inputs? In order for me to get good relationships where I have to behave better, I have to show up for my friends.

[00:40:35] William Green: I have to try to be more decent. I have to in invest time in those relationships. And there have certainly been times in my life when I got off track and I was so busy working that I didn’t invest much time at all or much energy in my relationships. It felt like they were kind of a distraction and maybe it was necessary at the time, but I look back and I’m sort of trying to make up for lost time cause I think made for a poorer life, even though externally it probably felt more successful.

[00:41:03] William Green: But I don’t think it made me happy because you know, you need people on the path with. Who are sort of fellow, fellow travelers and who can support you when you are miserable and down, and who enjoy your successes, and who you know, you can celebrate their successes. So I don’t know that that to me is an absolutely central aspect of a happy and truly abundant life.

[00:41:22] William Green: Good relationships and peace of mind. That’s the other thing. And so you got to figure out how are you going to get peace of mind? And so you got to structure your investments in a way that gives you peace of mind. Right? If you are, I mean, in my interview with Bill Miller on the podcast a few months back, I was asking him how do you deal with stress as a regular investor deal with the tension?

[00:41:41] William Green: And he said, you know, follow the advice. I think it was from JP Morgan himself, where he said, invest down to your sleeping point, you know, you’ve got to invest in a way that allows you to sleep. And so, so having peace of mind in your investments, in your schedule, in your things like exercise and meditation, you know, you, you have to really think about how they’re going to help you build equanimity.

[00:42:03] Stig Brodersen: Whenever we are in the investing world and we’re talking about meditation we have to talk about Ray Dalio, one of the billionaires we had here on the show that have pressed me the most for sure. And you recently spoke with Ray on episode 22 on the Richer, Wiser, Happier Show. I would like to play this clip for you, William, and together with the audience, we can listen in here.

[00:42:24] William Green: So let’s go back, say to that example from 1982, where I think there was a debt crisis where Mexico defaults on its debt. We have had the worst debt crisis since the Great Depression. And you bet, I think that the stock market and the economy would be battered by this, and instead, it actually strengthened and it was sufficiently disastrous that you had to fire almost everyone at Bridgewater and ended up borrowing four grand from your father.

[00:42:50] William Green: When you think of that process, in that case, how you went through this process of reflection on what went wrong, what happened, what flaws of yours, this exposed, or what misperceptions of yours and how you develop principles based on that. How would that be a good microcosm of what we should do when we screw up?

[00:43:09] Ray Dalio: Oh, that’s, it was so good. It was such a painful experience, I think and then I really learned pain plus reflection equals progress. That’s one of the principles. I learned that every time I have an encounter that it’s like a puzzle that if I can solve the puzzle, you know, what should I do differently or how should I deal with it, I would get a gem, and the gem would be a new principle in learning that would improve my life.

[00:43:43] Ray Dalio: And so in that particular case, I learned to. Fear and deal well with the possibility of being wrong. I, it gave me the humility I needed to balance with my audacity. In other words, it made me think, how do I know I’m right? And then through that process to try to find out of curiosity, the smartest people I could who disagreed with me and to study their reasoning.

[00:44:14] Ray Dalio: And it made me learn really how to diversify my bets so that I could, by diversifying my bets, I could radically reduce my risk without re-reducing my returns. And it let me also reflect on life. Like I was at a juncture, I was broke. And I, you know, it was, do I go get a job? Do I put on a jacket and tie and take the, you know, the railroad in, into the city and work at Wall Street or something, or do I not?

[00:44:45] Ray Dalio: And it was like I was sitting on one side of a jungle and I could have this safe life by sitting on the one side of the jungle and not going into the jungle. But I knew that if I wanted to have a great life, I had to cross this jungle. Of all these threats in the jungle and survive. And then I sort of said, okay, what am I going to do?

[00:45:08] Ray Dalio: Am I going to live this safe life or, and then it won’t be as terrific, or am I going to go into the jungle and how would I go into the jungle? And then I realized, I learned, okay, let me go into the jungle with people who would be on the mission with me and could see things I couldn’t see, and we would protect each other as we went into this jungle.

[00:45:29] Ray Dalio: And I found out from that experience that I didn’t want to get to the other side of the jungle, to the success and sit on the success because I found being in the jungle with these people or being on the mission with those people, even though the ups and downs and the threats were rewarding. That all came from reflections of that terrible mistake.

[00:45:50] Ray Dalio: We learn a lot from pain. You know, life I think is, it’s almost a trick that what happens is the second-order consequences are so often the opposite of the first order consequences. In other words, the things that are really good for us on don’t feel good and the things that are bad for us feel good.

[00:46:13] Ray Dalio: You know, okay, you eat the, you know, the tasty stuff. Is the stuff bad is not probably good for you. The exercise that might be painful is the thing that you don’t want to do, and you want to do the painful. So quite often pain or that is the opposite. It’s a trick. Can you do the things that are really good for you?

[00:46:35] Ray Dalio: And so those kinds of reflections I think we’re very powerful without experience really brought a lot of those. And from those lessons that I learned, that was the bottom. In other words, from that point, while there have been some ups and downs, it was almost totally up all, almost all the way. There have been, of course, twists and turns and bumps and personal things.

[00:46:58] Ray Dalio: Of course, terrible personal things that have happened. I lost to the sun, I, you know, all of those things. But to reflect on reality, okay, what does it teach you about reality and whatever and how do you approach that? All of those reflections, I’ve learned a lot from those reflections. And so it’s that, you know, that instance, but you know, many since.

[00:47:23] Stig Brodersen: So this is just one of my favorite book of all times Ray Dalio’s book, Principles. So, well, just to be clear you were talking about his book, like the interactive book principles, and then there was the other book called Principles. I don’t know if I-

[00:47:38] William Green: Yeah, the new one is called Your Personal Journal.

[00:47:40] William Green: I think it’s Principles, Your Personal Journal. And it’s about how to develop your own principles.

[00:47:46] Stig Brodersen: Just this clip here in itself is just, there are so many things to talk about. And of course, I would encourage everyone to actually go and listen to the entire episode, but he talks about pain plus reflection equals progress.

[00:47:58] Stig Brodersen: And I mean, that’s just, it’s just so powerful. And I see the leg of that all the time, not the pain part. We see pain everywhere, but the reflection part, you know, I meet so many people where in investing, and whenever they make a really good investment, it’s because of their skills, of course, cause of the skills.

[00:48:19] Stig Brodersen: And then if they lose money, it’s bad luck. Like, oh my God, how could I foresee that x y z happened? Like, so it’s just bad luck. So it’s so refreshing to hear Dalio talk about how he reflected and grew as a person from being wiped out in 1982. You specifically asked him about it and the experience, and the first thing he said was, it was wonderful.

[00:48:41] Stig Brodersen: Or I am I according correctly. But it wasn’t like, oh, it was an elbow. Like, no, of course, it was terrible, but oh, it was so good. Yes, exactly. Experience. Yeah. And you might be like, what? Really? But yes. That was a gift and a gift that really changed his life onward. And I like to use this example where, well, I wanted to explain the reason for it.

[00:49:02] Stig Brodersen: So the brain is two, 3% of your body mass, but consumes 25% of your portfolio. And what that means is that your brain is wired to be lazy. It doesn’t really want to work unless you force it to work. It’s a very interesting topic in itself. And, you know, if you want to learn more about that, then Kalman’s wonderful book, thinking fast and slow.

[00:49:23] Stig Brodersen: It’s definitely the source too, to go to. But most people will choose not to reflect. As a matter of fact, in 1925 be Russell, he had this wonderful quote in his book, the ABC of relativity. Most people would die sooner than think, in fact, they do. So, I just kind of feel that was wonderful.

[00:49:42] Stig Brodersen: And so we all know that if you are easy on your habits, life will be hard on you. And if you are hard on your habits, life will be easy on you. And this is not easy. We just are not prone to think like that. I mean, I don’t know how you feel, William, but whenever something hurts in my life, the first thing I want to do is to get away from it.

[00:50:02] Stig Brodersen: I mean, I, I like to talk about it from an intellectual perspective. Oh, we should learn from it and we should reflect. But that’s not the first thing that goes to this through my mind. It’s just, I just don’t want it to hurt anymore. But I, I want to throw it over to you. William. What did you take away from here for an interview with Dalio?

[00:50:17] Stig Brodersen: Let’s start there and then, and perhaps break it down.

[00:50:21] William Green: Well, so much I mean, I think start with that idea of him saying, When he looks back on this incredibly painful failure in 1982, where basically he almost loses his career as an investor right at the start and has to borrow four grand from his father, who was a jazz musician.

[00:50:38] William Green: I mean, wasn’t like a rich guy. So it was a very humiliating and painful thing. And so Ray’s response of saying, oh, it was so good. It was such a painful experience, is incredibly revealing because what you’re saying is you actually want to lean into your pain and not bury your own mistakes, your flaws, your failures from sight.

[00:50:59] William Green: So most of us want to hide from the things that went wrong or that feel wrong with us. And so there was a moment in that interview where I sort of, I said to him, look, I, when I look at your new book, this thing, your personal journal, you talk about how to find the biggest obstacle to your success.

[00:51:17] William Green: And I look in my own life and I feel kind of ashamed to admit it, but I’m not systematic. I’m not process driven. I’m scattered. And I felt kind of flushed as I said this to him. And his response is like, no, that’s great. And so he’s not looking at my embarrassment about. This floor in my wiring and my personality or whatever it is he’s looking at it and saying, what a fantastic thing.

[00:51:45] William Green: You’ve identified this enormous thing that’s an obstacle for you. And now that you’ve identified it and unearthed it and not been ashamed of it and buried it from view, you can actually deal with it. That’s an immensely important idea. And that’s something I’ve been thinking about really intensively in recent weeks, both before the interview because I was preparing for it and thinking about what my biggest obstacles are in life.

[00:52:11] William Green: And since then and one of the great lessons from Dalio is that you need this self-reflection. You need to start by looking at your own wiring, looking at your own values, looking at what’s important to you, and looking at your strengths and weaknesses in a really honest way. And so instead of being ashamed of it look directly at it.

[00:52:31] William Green: So then you know what you are dealing with, you know, you know the hand that you’ve been dealt. And so one of the things that Ray said to me in that interview is, look, I have a terrible rote memory. I couldn’t remember things I did badly at school when it was about rote memory. And so I started writing down principles because it helped me deal with my encounters with reality.

[00:52:51] William Green: And so one of the things that he did was develop this habit of writing down principles to, I, I think in a way to, to guide him cause maybe he couldn’t remember certain things I don’t. He was it gave him a way to force him to reflect on what had gone wrong. Another thing that he did is he would see, for example, that he’d messed up in 1982 because he was too audacious.

[00:53:13] William Green: He was too bold, too arrogant. There was too much hubris and too much self-confidence. And so his workaround, once he knew that was a flaw in his character or a vulnerability rather than a flaw, his workaround was to surround himself with incredibly smart people who were not afraid to say that he was wrong.

[00:53:32] William Green: And in a way, you think about Buffett and Munger, and they’ve done the same thing, right? Buffett has said that Munger is the abominable no man because Munger is smart enough and difficult enough, opinionated enough, and feisty enough that he can say to Warren, no, I think you’re totally wrong about that.

[00:53:52] William Green: And so part of the power of that relationship is that they’ve structured it so that you can be challenged by someone who’s really smart. So, when I’m kind of self-referential about this, and I think, okay, so what do I take away? How do I apply these lessons from Dalio? One of the things that I did is I went away and I did the Principle’s You character assessment test, a personality assessment test that he developed with people like Adam Grant, and it’s in the show notes for the episode with Dalio.

[00:54:24] William Green: And so, so you answer all of these questions, you start to get a sense of your wiring. And so I’m looking at this and it’s kind of shocking. I know you’ve done personality assessment tests before and are a big believer in them. When I do it I come up they’re all of these archetypes that describe different personalities.

[00:54:39] William Green: So, so, so mine not surprisingly, tends towards creativity, right? So, so excited by novelty, intuitive, curious, original thinker, all of that stuff, fascinated by new ideas, comfortable in a chaotic and disorganized environment. And so, so on creativity, I’m like way up there. And then I think on the thing on the measurement for the organization I don’t know, I think I came in, it was something like 2%.

[00:55:08] William Green: I mean, it was so embarrassingly low, like the lack of systematization. It just, it’s just not part of my wiring. Right. And similarly, you know, there are other people, you know, who have these archetypes of technician or implementer, which are the archetypes, I’m least like, and so they’re really organized.

[00:55:26] William Green: They really like structure processes. They’re methodical, they’re orderly. I’m just not built that way. So, so if I’m prepared to look honestly at that wiring, not necessarily as a shameful flaw, but as just the reality, it’s part of, it’s part of who I am, it’s part of the gift. That’s how my creator made me.

[00:55:48] William Green: I’m sorry. And then I can start to say, okay, so what are the solutions? And so what Ray Dalio said in that episode is, part of the solution is you work with people who make up for your own weaknesses, who are strong, where you are weak. So, that’s been kind of a revelation to me. And this may sound really obvious to other people, but I can now see that my deficiencies in areas like efficiency, orderliness, systematization, practicality, it’s not because I’m recalcitrant, it’s not because I’m not trying hard, it’s actually how I’m wired.

[00:56:24] William Green: And so I have to find people to partner with who are more systematic. So, so even, you know, look working with the Investors Podcast Network, the fact that you have this amazing team in the Philippines who have all of these structures and processes in. Is incredibly helpful for me that a structure that allows, that gives me the space to do what I need to do creatively.

[00:56:47] William Green: Where I’m thinking of who should I interview, what questions should I ask, how can I be present and intuitive about what they’re really telling me and go in a different direction. So that all plays to my strengths. But then, you know, for me to figure out the deadlines, I’ve never really figured out the deadline for my episodes.

[00:57:04] William Green: I don’t know, I sort of have some sense of it, but it’s really hard for me. Does any of that make sense Stig?

[00:57:10] Stig Brodersen: Yeah. It makes a lot of sense. And I could, yeah, I could just say like, here in the company that, that’s true. You know, actually, we, everyone here on the team have done a personality test and we actually did that after reading Ray Dalio’s book Principles.

[00:57:25] Stig Brodersen: And he talked about how important it was. And you know, a lot of people don’t like that because it’s kind of failed. They put into boxes and it’s called personality types, and it’s sort had a bad connotation, but you’re actually doing it as a kindness because you want to treat people the best possible way.

[00:57:41] Stig Brodersen: But in, in a larger organization, it’s hard to treat people well if you don’t really know them. And of course, those closest to them would know them. But then there are some people, another place in the organization that might not know how to speak with them the best possible way and what their strengths and weaknesses are.

[00:57:56] Stig Brodersen: So everyone on the team here have been asked to take a personality. The only person who hasn’t handed that in yet, that’s you, William, which probably, based on this conversation isn’t too surprising. But I’m not trying to throw you under the bus when I was saying this, but there’s, you know, you’re totally right.

[00:58:10] Stig Brodersen: we’re talking about like the structure and that part, and it is something that we are using and it’s something we learn from Ray Dalio. Like everyone here on the team has read the book and we applied a lot of his principles to our organization because it is an act of kindness and wants to be a kind, kind company.

[00:58:25] Stig Brodersen: And, you know, there, there are some people that want things a certain way, but you know, it’s easier to help people with what they need help with if they tell you. So, it comes from, it comes from a good place.

[00:58:37] William Green: Well, it’s also funny, when I looked at the scores that I had for things like doing things my own way, breaking rules, stuff like that being independent, being a conceptual thinker, I was like 98%, 99%.

[00:58:52] William Green: I mean, like, the degree to which I want autonomy is kind of extraordinary. Like, like, like the thing about not wanting guidance, I think I was 99. And so that totally makes sense with the way that I went about my book, for example, where I just hold off for five years. I missed my deadline by two years, and I just was obsessed with trying to make it as good as I possibly could.

[00:59:15] William Green: So if it failed, it wasn’t because I hadn’t put heart or soul into it. I was going to put everything into it. It was all about quality and I couldn’t really explain why I did it that way. And then when I look at my personality assessment, I can see how much I dislike rules and routines, how rebellious, how independent I am, how little I want guidance, but also how obsessed with the quality I am.

[00:59:39] William Green: It sort of makes sense. And so none of this is either good or bad. It just is. And so, so I don’t want to look at my being scattered or unstructured as a sort of shameful weakness, even though I kind of am ashamed of it and I regard as a weakness. And it makes me feel vulnerable to, to admit it to you and the world.

[01:00:00] William Green: I need to actually look at it in the same way that Dalio looked at his flaws and weaknesses and say, okay, this is the hand I was dealt. How do I structure my life? So that I’m playing the right games for me. I’m playing games that I can win. And so when I look for example at Guy Spier, I can see he’s got this extraordinary woman, Chantal who used to run a prison for war criminals then was basically sort of semi, semi-retired and then came in on a sort of organized guy’s life.

[01:00:33] William Green: And that is such an amazing thing to have a hugely organized person come in and organize someone like Guy who says, look I have a D h D I’m all over the place. I, it’s easy for me to, I mean, he said to her at this, when he was first interviewing her, he said, look I can leave the door of our office open in Zurich because, you know, I just forgot and then I’ll go to the airport and maybe I’ve forgotten my ticket or my passport.

[01:00:58] William Green: How would you deal with that? And she’s like, ah, that’s fine. I got one of those at home. You know, like , like she’s used to dealing with very brilliant people who don’t have that sense of organization. And when I mentioned this that I’d done the test of Bill Miller the other day, he’s like, oh man, I bet I would do really badly on the organization stuff.

[01:01:16] William Green: And so Bill has got really lucky. I suspect that he’s structured his life. So say has this incredible assistant Darlene who’s been keeping him on track for the last 25 years or so, so that he’s free to think. And so I think part of what’s a frustration to me, Is, but I, I think as someone who’s been writing books and doing podcasts and writing articles and stuff in re over the last decade or so and ghostwriting books, I haven’t really had a structure, a formal structure that I used to have when, say I edited the Asian edition of Time Magazine or the European Middle East and African edition of time.

[01:01:51] William Green: So there, because there were people who were very organized and systematic, I was free to do the stuff that I was better suited to. And I think part of the realization that I’ve had personally is that I’ve sort of set myself up in this independent way where I don’t necessarily have the infrastructure that I would have if I’m working for another company.

[01:02:14] William Green: So I’ve somehow got to set that up and bear the cost for it myself. And so things like, you know, I have a, I do some public speaking and so I have a speaker’s agency that represents me and they take a big slug of my speaking fees and I’m like, wow, you know, couldn’t I do it myself? And I’m like, no.

[01:02:32] William Green: Like to be able to hand that off to someone so I don’t have to actually create an invoice or figure out, you know, like I, I need to just accept the fact that the cards I’ve been dealt when it comes to organizational and structure are the worst possible cards and the cards that I’ve been dealt when it comes to thinking of new ideas or exploring concepts are weirdly.

[01:02:54] William Green: And then there are idiosyncrasies. Like one of the things that, that I’m sort of embarrassed about when I look at my assessment is it’s really clear to me that I care what people think of me to a really high degree. I really care about being liked and respected. And so I can write as much as I want about Buffett’s idea of the inner scorecard living by an inner scorecard and only judging yourself by your standards.

[01:03:19] William Green: But the reality is, I really care what people think of me. I can’t I can deny that and pretend to be something, but I’m also in this peculiar position that now I know from this assessment that I care what people think of me, but not enough that I’m going to do what they say I’m still going to do, I’m still going to do it my way and break the rules, and then I’m in this tortured position that I still want them to love me.

[01:03:43] William Green: And so, so being aware of your own flaws and foibles and idiosyncrasies, I think is a hugely valuable thing. And so I’m not trying to be self-referential here. I’m actually trying to sort of, sort of say I think our listeners would do really well to study what Ray said in that AP episode, but also really to go through the process of doing that personality test.

[01:04:06] William Green: Go through that book your personal journal and really try to figure out like, what do you care about? What are your values? What’s a priority for. And then you look back and you are like, well, how can I possibly have taken that job with those people? Like, what, why would I ever have thought that would work?

[01:04:23] William Green: Of course, it wouldn’t work. Whereas I look at my partnership with You and the investor podcast network and I’m like, this actually is kind of a great partnership with me. It’s like people I like who are honorable, who are trying to teach stuff, share valuable information, interested in concepts. I have a lot of independence.

[01:04:41] William Green: You, you know, whenever I’ve asked you for advice on stuff, you sort of say, well, yeah, here’s my view, but just do it, you know, trust your own instincts. So you’re giving me tremendous support and in autonomy at the same time. And so one of the things that Ray said to me in that interview is life is really all about understanding your own personality and preferences and t talents and then picking as he put it, suitable paths.

[01:05:07] William Green: I had great trouble pronouncing paths cause to me it’s paths. But that’s a really important insight and it’s, and like many of the great truths in life, it’s actually a really banal and platitudinous insight. It’s not that profound. But as Munger would say about investing, it’s simple, not easy. And so when you come across a truth like that, you need to take it really seriously, I think, if it resonates with you.

[01:05:29] William Green: And so you need to say, okay, let me figure out who I am, what I’m, like, how I’m wired, what I care about, what my priorities are, what a truly abundant life means for me. And then let me try to pick a profession, structure my day, structure my activities as much as I can to play to those strengths. Because if I’m playing somebody else’s game, that really doesn’t suit me, I’m going to be absolutely miserable.

[01:05:56] Stig Brodersen: So many things to unpack there William, and it’s so true. Let me give you an example, I was speaking with Guy the other day and talked about how much nonfiction a person should read and I told Guy that sometimes I feel, I don’t, I’m not saying guilty is the right word here, but there are some things I want to be smarter about, including investing.

[01:06:14] Stig Brodersen: And, you know, there’s an opportunity cost. You know, I only have 24 hours a day like everyone else. So if I sit reading one of the classics, I’m not reading nonfiction or, you know, I’m not reading about investing or whatnot. And he talked about how he went through a phase of wanting to clone Buffett.

[01:06:32] Stig Brodersen: And I think he also mentioned this in, in, in one of your books, William Weir. He was so relieved from meeting that, oh, he’s just playing such a different game than I’m playing, so I shouldn’t be stressed about not. Warren Buffett, cause I, I’m guy so, you know, as you be the best version of myself and be very aware of that.

[01:06:50] Stig Brodersen: It’s just so profound to have that type of insight. And I could just, you know, let me give you an example. Like, whenever we started working together, William, that was the most pleasant way of starting a partnership. The only other time I’ve done something similar whenever I started working with Preston, I would imagine that we probably wrote a contract, cause it would sound weird if we didn’t.

[01:07:09] Stig Brodersen: I don’t really remember what probably also makes me sound a bit disorganized, but I remember you are like this is the type of relationship I have with this person. And it’s like, I trust you. You trust me, I’m going to say yes to whatever you want to offer me and offer X, Y, Z. And you’re like, sure. You know, true to your word

[01:07:26] Stig Brodersen: Like, you’re like that’s fine. And then you sent me like, I sent you the ending report and you said like, oh, if you think it should be paid more or less, that’s also fine. We can always talk about it, but I rely on your better judgment and the sense you’re like yeah, you know, we had a great 2022, you know, I think we had like 2.2 million dollars in free cash.

[01:07:46] Stig Brodersen: And then I was saying, but we are also running the deficit right now. And for the foreseeable future, appetizing being a boom bust cycle. I’m paying to go to work and it’s not like 10 bucks. It’s like serious money. I’m paying to go to work, so I’m taking money from my own account and putting it into t p and that’s perfectly fine.

[01:08:02] Stig Brodersen: That’s the nature of how this type of business is. And so and you’re like, okay. And how wonderful is that to have that type of relationship.

[01:08:11] William Green: We also did this nutty thing when we were first structuring our contract. I hope I’m not speaking out of school by saying this, where you were saying, well, so you know, we’ll see how many downloads you get in the first month cause that’s when you get most of the downloads for an episode.

[01:08:27] William Green: And then you’ll get paid based on that. And I was like nah, we should build in deferred gratification. So let’s see how it does after a year. And so I basically structured it so that I wouldn’t get paid a penny for a year over a year. That’s kind of nuts, but it’s sort of, but there’s, but it built in a principle that I think is really valuable, which is the deferral of gratification, thinking more long term.

[01:08:50] William Green: And so I don’t know, there was something very characteristic of both of us in the way that we handled these negotiations, that it was an act of personal trust and it was long-term and you were transparent. So when I asked you whether I should be getting paid more money recently you were totally transparent about the situation.

[01:09:10] William Green: And I was like, okay, great. And I, I don’t know. I think that requires you to be partnering with people who are honorable and decent. And so this gets back to something that, that Nick. Said in my book where Nick and Qais Zakaria who goes by the name Zak, had this extraordinary partnership that Nick said, look it, it was built on kindness.

[01:09:31] William Green: And he said that originally they were going to structure it so that they would be 50-50 shareholders in that, in the hedge fund business. And that was what Nick wanted to do, even though in many ways he was kind of the alpha dog and was on top of the world and had been a, been in the investment business successfully for years, managing money.

[01:09:49] William Green: Whereas Zak was being tortured working at Deutsche Bank in an institutional sales job that he detested. And so in some ways, Nick could easily have demanded a better deal, and he’s like, it’ll be 50/50. And then Zak says, no, I want you to have 51% and me to have 49% so that if we ever disagree about anything, you’ll make the final decision.

[01:10:11] William Green: And then Nick said, when somebody hands you a loaded revolver like that and says, here, shoot me if you want, how can you possibly take advantage of them? And so, because they were both right in their judgment of the other person’s decency and kindness and sense of honor, it’s really worked out. And I don’t know.

[01:10:29] William Green: I think it’s such an interesting model for how to do business. You know, Buffett says the same thing about Munger, where he says, in, in the introduction, in the forward, I think it is the Janet Lowe’s biography of Munger. He says I’ve never seen Charlie take advantage of anyone in 41 years, and I’ve knowing I’ve seen him knowingly take the worst end of a deal with me and others.

[01:10:53] William Green: And he takes more of the, more of his share of the blame than he deserves. And I know. So if you go back to what we were saying before about the importance of relationships and you think, okay, so a successful and happy and abundant life is going to have really good relationships with the people you work with your family, with your friends, that sort of thing.

[01:11:10] William Green: How do you get that? What Munger says is, look, we have a really simple system. He says if you want to have a good partner, be a good partner. And so that’s a really helpful distillation of wisdom from a 99 year old polymathic genius when Munger is saying if you want to have a good partner, be a good partner.

[01:11:30] William Green: So, so then I have to think, well, what’s Stig going through? What are the pressures on him of running a business? What are the pressures on the team in the Philippines if I can’t remember my deadlines? And so, so I try, despite my lack of efficiency or structure, at least to be kind and polite and respectful and thankful.

[01:11:51] William Green: And that’s sincere, right? I mean, I do feel respect and gratitude. And at the same time, I’m also aware of the fact that you know, I have this vulnerability and the lack of structure and the lack of systems and it’s not really my fault like it just is kind of the way I was built, but I have to try to develop systems to overcome it.

[01:12:10] Stig Brodersen: That’s so well said, William. And I want to say, speak speaking of this and perhaps we can use this transition into talking about Charlie Munger, A person we referenced quite a few times here on this episode already, and of course, throughout the story of our podcast. So this question or this clip I’m going to play for you here is from the Daily Journal Q and A that he’s doing together with Becky Quick.

[01:12:34] Stig Brodersen: And it’s sort of like going back and forth. So let’s just play it then. Perhaps we can talk about later what we took away from it. Here we go.

[01:12:41] Becky Quick: This one comes in from Matt and he says, throughout your experience with Berkshire Hathaway, what are a few of the things that have surprised you most based upon some of your previous rational thoughts and ideas?

[01:12:52] Becky Quick: Also, how have you used some of those surprises in your quest to become a better learning machine? These are all-.

[01:12:58] Charlie Munger: Well, I would say the things that, some of the things that surprised me the most was how much the business world is very much like the physical world. Where all the animals die in the course of improving all the species so they can live in niches and so forth.

[01:13:15] Charlie Munger: All the animals die and eventually all the species die. That’s the system. And when I was young, I didn’t realize that the same system applied to what happens in capitalism, to all the businesses. They’re all their way to dying as the answer so that other things can replace them and live, and it causes some remarkable deaths.

[01:13:35] Charlie Munger: Imagine having Kodak die. It was one of the great trademarks of the world. There was nobody that didn’t use film. They dominated film. They knew more about the chemistry of film than anybody else on earth. And of course, the whole damn business went to zero. And look at Xerox as once owned the world. It’s just a pale shrink.

[01:13:55] Charlie Munger: It’s, and nothing a bird to what it once was, so that practically everything dies if you, yeah, big enough timescale. When I was young enough, that was just as obvious then I didn’t see it for a while. You know, things that looked eternal and had been around for a long time. I thought likely be that way when I was old, but a lot of them disappeared.

[01:14:18] Charlie Munger: Practically everything dies in business. None of the eminences lasts forever. Think of all the great department stores. Think of how long they were. The most important thing in their little community. They’re way ahead of everybody in furnishing credit, and convenience, in all seasons. You know, convenience, back and forth, use the same banks of elevators and so forth, multiple floors.

[01:14:43] Charlie Munger: It looked like they were eternal. They’re basically all dying or dead. Once I understood that better, I think it, it made me a better investment investor. I think.

[01:14:55] Becky Quick: I mean, the same can be said for managers. I’ve talked with Doug McMillon of Walmart who carries around in his wallet, like on him. He carries around a list of the top retailers over the decades, and nobody’s ever the same. You know, you can-

[01:15:09] Charlie Munger: Yes. Who are gone. Yes. Of course, retailers live in terror because you can die. Some get some, it’s a better way of doing it. And you just die like those department stores did.

[01:15:23] Becky Quick: The ones that you invested in early on, you mean, is it Baltimore?

[01:15:26] Charlie Munger: Well, no, most of the, think of the department stores that are gone just chain after chain and big downtown, that they’re not weakened, they’re dead, they’re gone dead.

[01:15:38] Charlie Munger: And to have IBM have a huge position it once had in terms of utter dominance, and now it’s just one of the also ran and it still an admirable place. I’m sure they have a lot of talent left in IBM. It doesn’t help you, you die even though you’re talented and hardworking.

[01:15:56] Stig Brodersen: So I really like. Charlie Munger’s response here.

[01:16:00] Stig Brodersen: Perhaps I could actually have to another clip that he’s also doing, we, we are going to make sure to link to this. I want to say it’s like two hours and 30 minutes or something like that. You can find it on YouTube for free and just watch it. But if I can just jump to actually another thing and then perhaps go back to, to what he talked about here in the clip.

[01:16:15] Stig Brodersen: Becky asked Munger how many asset managers that were worth their fees, and he said, 5% or less. It goes back to what we talked about here in the clip. Web capitalism is just so, it’s just so brutal. And, you know, great businesses come and go. You know, he talked about Xerox and Intel and other companies.

[01:16:36] Stig Brodersen: Well, Xerox has gone now Intel is still here, but in a very different shape than they used to be. And it’s hard not to think about for an active investor like me, whether I should invest passively. Whenever you hear that even Munger talks about how difficult things are now, and I’m sure many of the listeners have thought the same.

[01:16:54] Stig Brodersen: You know, the tenure in the S and P 500 is just getting shoulder and shoulder. Everything moves faster and faster. And you have more and more evidence about why passive investing is such a persuasive strategy. Also because you are fighting against your own instincts. So even if you were, quote unquote as good as the market, you might still do some silly stuff because you cannot control your own emotions.

[01:17:15] Stig Brodersen: And it’s one of those things where you can have an intellectual discussion and. I don’t become emotional. And then something like Covid happens and you know, the stock market is down 12% in a day and you’re like, this doesn’t feel that. Well, and it’s not the same whenever you are, it plays money on a or, you know, fictitious portfolio.

[01:17:34] Stig Brodersen: It’s different if it’s like, yeah, my kids and this school and I need to, you know, say up for college and I have hospital bills. Like, it’s just very different. So anyways, all of that being said, I’m still investing passively. Sorry. I, yeah, I actually, I have a few index funds too, but I am investing actively despite what Munger is talking about here.

[01:17:53] Stig Brodersen: And I wanted to talk about that decision before through it or to, to William here a bit because it’s something I reflected on quite a few times here over the past quarter. I was looking at my broker’s account here the other day, and I was, it turned out that I was marginally outperforming the market over the past five years.

[01:18:10] Stig Brodersen: And so whenever I first saw it, you know, it, it got me excited, you know, I patted myself on the backboard a few seconds, like, oh my God, you’re that amazing. But then I thought to myself, steak, you’re the most ridiculous person in the world. Think about this marginal outperformance. You could have bought a passive index and saved thousands of hours, not reading, investing books and 10 queues and 10 Ks.

[01:18:35] Stig Brodersen: Like you, you do not appreciate your own time. Like, that’s ridiculous. And you could be down tomorrow. Why? Why are you celebrating? And so I thought a lot about that and I had this discussion with some of my friends here the other day. So I have one friend who is financially independent after selling his company, and now he now has this quote-unquote problem what to do with his time now because he’s mid-thirties retired.

[01:18:59] Stig Brodersen: Like, what do you do? Like you have all this time all of a sudden. So he’s very creative and sees investing as a way to preserve his purchasing power. Like he read a ton of investing books. So he definitely had the interest, but he would really like to spend as much a little as little time as possible actually investing in just living off that income if he can.

[01:19:16] Stig Brodersen: He’s, he wanted to spend his time on something else, which I completely respect. Perhaps that approach resonates with quite a fewer listeners. And then you have the other approach which might resonate with very fewer listeners. And I kind of felt that was interesting too. So I have another friend who is also entrepreneur quite well off making close to seven figures a year, and he’s been asking me like, what should I invest in?

[01:19:37] Stig Brodersen: And I said that he should probably invest in an index fund, like track the world market done, boom. And he said that he kind of felt uncomfortable doing that because he likes the hustle. Like he likes to work and just like, oh, I’m going to get my expected 5% or whatever how however you want to make that multiple.

[01:19:54] Stig Brodersen: But like, it doesn’t sit well with him because he was used to doing the hustle. And he said to me, and I don’t know if this sounds ridiculous, but if he could still get 5% but just work hard for it, he would almost prefer it to not having to work for it and still get the same. And so whenever he said that I was laughing, but I was like, wait, stick.

[01:20:13] Stig Brodersen: You are doing the same thing, like you were doing, you were getting a market return, but you’re putting a bunch of time into it, and why are you doing it? That it sounds so ridiculous. So I want to paint a bit more color rounded because in case there are some people out there who feel the same kind of conflicting emotions.

[01:20:31] Stig Brodersen: So I love watching football. I absolutely love watching football. I do not get paid to watch football. I’m sitting in my couch watching my favorite team have a lot of fun.

[01:20:44] William Green: This is soccer?

[01:20:45] Stig Brodersen: Yes. Sorry. Yes. For the American listeners. Yes. You call Yes. Soccer. Yes. Yeah. We call it football here. Yeah.

[01:20:51] William Green: Real football.

[01:20:52] Stig Brodersen: Real football. Yes. So, and I was like, I’m sort of like trying to defend my own silliness by using the same analogy to for investing because I love the process so much. I love reading 10ks and 10qs. Like, it’s as much fun for me as, you know, watching football.

[01:21:11] Stig Brodersen: I know this is going to sound ridiculous, but like, if you’re told me like, yeah, you’re not going to beat the market and you’ll probably long-term be absolutely right about it, I’ll probably still do it cause it’s why would I not do something again, optimizing for happiness? Why would not do something that really makes me happy.

[01:21:28] William Green: If you turn out to be really good and you make money then it’ll pay off. But if not, it’s a little, I, it’s a bad analogy in some way to say it’s like going to a casino but losing only a very small amount. Say you went to a casino and you said, okay, I’m going to gamble, but I’m not going to gamble more than a hundred bucks.

[01:21:45] William Green: I’m going to get to eat in these really good restaurants at the WN Casino or whatever it is. I went to sit at the WN Casino once, cause I was working on a book project and staying in a beautiful room there. And so I didn’t gamble at all, but I got to enjoy the food and you know, I went to a great show and stuff like that.

[01:22:02] William Green: So, I don’t know, you could say it’s a little bit like that. You are prepared to lose a little bit of money to support a hobby that you really enjoy. But there’s an upside here if you are right if the danger is that we delude ourselves, right? So it’s like people thinking they’re good drivers.

[01:22:17] William Green: And so you have to, it all starts I think with self-honesty and self-awareness, you know, to look at yourself and say, do I actually have any kind of competitive advantage? And when I said to Ed Sop, how can I tell if I have any competitive advantage? He said, if you’re having to ask that and you don’t really have a good answer, then you probably don’t.

[01:22:38] William Green: And it’s very deeply unsettling. And I mean, I have some competitive advantage potentially in that I know a lot of great investors and. You could see, you know, so, so look like I talked to Bill Miller for a couple hours the other day. I know how Bill Miller invested. It would be easy for me to say, well, Bill really likes this stock and this cryptocurrency, and I should do that.

[01:23:01] William Green: But that’s really hard for me as well, because my situation is different than Bill’s and my temperament is different than Bill’s. So I’m not playing the same game. It would be hard for me to load up on Bitcoin. Whereas for him, he’s perfectly happy with situations where there’s an asymmetry where he could lose everything.

[01:23:18] William Green: But if he’s right, he’ll make enormous returns for me, I’m less comfortable with that because of my personality. So I think a lot of this stuff, a lot of this stuff really stems from self-awareness. And so one of the things that I’ve done in terms of sort of resolving this conflict between passive and active investing is because I’m kind of torn and I have the delusion that I can probably do well by investing with two or three really good active investors.

[01:23:46] William Green: There’s a portion of my portfolio in, I think it’s three different active funds that are all managed by honorable people who are very smart and very driven. And then I’ve owned Forever two index funds. So I have the, and I’m not telling anyone they should do what I do, I’m just telling you how I’m trying to resolve my ambivalence about this question.

[01:24:08] William Green: So I own a Vanguard Total International Stock Fund and a Vanguard Total Stock Market Index Fund. And I think one of them the US Fund has a 0.04 expense ratio and the international one is 17%. So incredibly low expenses. And I pretty much split it 50-50 between those two. And then I just keep adding to it and it’s in an IRA or a 401K or something, you know, personal 401k.

[01:24:39] William Green: And so, so it’s structured in a way that’s tax efficient. It’s somewhat diversified. I’m not, you know, very low expenses. I keep adding to the part and I’m not making a big bet where I say, I’m sure the US is going to continue to do better than foreign stocks. I’m happy to take the hit in recent years of investing equally in foreign markets, which doesn’t have to be better.

[01:25:01] William Green: Last year. And then I remembered this I wrote about this briefly in the chapter that I wrote in my book on Simplicity. And Joe Greenblatt and I talked about this interview that I had with John Bogle, the founder of Vanguard. Which now manages what, seven, eight, nine trillion, some outrageous sum. And so many years ago, I talked to the late Jack Bogle maybe 20-something years ago.

[01:25:20] William Green: And one of the things that he said to me is, look, the ultimate in simplicity is to get a balance index fund, and you just get one fund that has bonds and stocks in it. And so while I was writing that chapter, I actually did that for my wife’s retirement account. And I said, okay there’s a series of Vanguard funds where you get, I think it’s a mix of a US index, a stock index fund, and a foreign stock index fund, and a US bond fund and a foreign bond fund.

[01:25:47] William Green: And so you’ve got four funds within this one thing, and it’s really low expenses. And so I bought that for my wife and I was like, that’s a really elegant solution. And it seemed kind of stupid for a couple of years because bonds were paying nothing. And, but I’ve been too lazy to change anything with it.

[01:26:03] William Green: And now bonds are paying something and also stocks do terribly. And so over the last year. So, you know, I think it’ll probably do fine over the long run. And so I, I just remembered this thing that, that Bogle had said to me where he said, look, all of these star fund managers proved to be comets. And he said they light up the firm for a moment in time, and he said, then they burn out and their ashes float gently down to earth.

[01:26:29] William Green: And it, Bogle was a great writer and speaker. He was very eloquent. And I just loved that line. And he said, look, this happens almost all the time. And so it’s not all the time, it’s not like nobody can beat the market, but you look at the people who beat the market, look at someone like Joel Greenblatt who had these extraordinary returns where he averaged 40% a year for 20 years, just out outrageous.

[01:26:53] William Green: And I’ve spent a fair amount of time with Joel over the years and wrote about him at length in my book. And, you know, he has a behavioral advantage, right? He’s very calm, he’s very even-tempered. He’s super-rational very patient, and very analytical. And he’s also incredibly competitive. And that’s another thing that I see with all of the greatest investors they’re super competitive.

[01:27:14] William Green: And so it, it’s not just that they’re intellectually strong, that they have some kind of intellectual advantage or they, that they do. I mean, you know, you look at someone like, like Munger or Bill Miller or Ed Thorpe, I mean, these are supremely smart humans. There’s also a temperamental advantage that they tend to be calm and rational.

[01:27:35] William Green: A analytical, very disciplined. I’m not really built that way. I mean, when I look at that personality assessment, my way of making decisions is almost totally intuitive. I mean, I didn’t make a super rational decision about whether to partner with you and the Investors Podcast Network. I did some research and some studies, and we talked at some length, but basically, I look at you and I’m like, I like steak.

[01:28:02] William Green: He’s a really nice guy, an honorable person. And that’s an intuitive judgment and serves me in certain ways in life. I don’t think it necessarily serves me in investing because, you know, one of the things I found the other day after I spent a couple of hours with Bill Miller is I really wanted to buy Bitcoin.

[01:28:22] William Green: And I was saying to this other friend of mine who’s a well-known manager, part of the reason why I wanted to buy this Lou, I love Bill. And I feel like this sense of gratitude to him and appreciation for him, and in a way there’s this sort of, this tribal sense of allegiance. And so there’s this un there’s this sort of emotional, irrational desire to buy something, almost as a way of declaring my psychological and emotional allegiance.

[01:28:51] William Green: Tim, that’s a weird quirk in my character. That probably allows me to interview people in a good way, cause I’m empathetic. I get into their minds. I understand how they view the world. There’s a certain degree of intuition and rap rapport. It’s really good for an interviewer, but it’s not very rational when it comes to picking stocks or cryptocurrencies.

[01:29:14] Stig Brodersen: You’re probably right about that. I thought a lot about it myself, for example, investing with Mohnish, I felt that Mohnish was the right, right way of merging a person with good values, but also someone who could outperform the market. I’m very humble about my own skill set and do not have any illusions that I can beat the market and what happened was probably more luck than anything else.

[01:29:36] Stig Brodersen: And so whenever I invested with him last year, I couldn’t help but consider, what kind of bias do I have to do this? Is that, is it cause of some kind of tribal thing that you were talking about before? Now I can look back and say that the market was down and then minus fund was up 35% over the last three quarters of 2022.

[01:29:55] Stig Brodersen: Because minus is just super smart. But I think it’s also important not to be prone to any due calls resulting. I think I could have been too hard on myself if things have gone bad and I’d be like, oh my God. That’s only because, you know, there’s some kind of, I don’t know what you want to call that, but going back to the word tribal again of like having invested with one of a person like Mohnish, is there something emotional there?

[01:30:18] Stig Brodersen: I remember you talked on the episode with Annie Duke about how you invested with investing in Baba after having a discussion with Charlie Munger, like a virtual bronze type thing. And you know, there was something about that type of not, I’m not saying same approval cause that was not the specific case, but like the Yeah, you’re in the same tribes so.

[01:30:35] William Green: Yeah, I had Munger and Lou Simpson telling me how. They loved my book and telling me that they’d both been investing in Alibaba. So I have two of the greatest investors telling me that I’m great. And here we are. We know from my personality assessment that I really crave respect and liking and admiration, right?

[01:30:56] William Green: So I’m very vulnerable to this and I look up tremendously to Munger as like one of the smartest, most brilliant guys around. And so here’s Munger saying, you know, yeah, your book’s one of the best investing books ever written. And so I’m like, is this is like amazing for me, right? And then Lou Simpson says something really nice about it as well, and Lou’s one of the great investors of all time.

[01:31:16] William Green: And so, so this is like this banner day for me, right? Like, I’m just floating on air. And so how do I memorialize this day? Partly by buying Alibaba. That’s an act of allegiance to these two great-in-great investors who just told me how wonderful I am, at least in my interpretation of it. I mean, Munger probably doesn’t remember my name at this point.

[01:31:38] William Green: But, you know, for this brief moment, I felt this flash of importance. And so there’s an irrationality in that purchase of Alibaba that’s come back to haunt me. But at the same time, you know, I think it’s down about 50, 55 cents since I bought it. But at the same time, I didn’t put that much into it. So it doesn’t really matter.

[01:31:59] William Green: And it wasn’t that stupid an investment because it’s a long-term investment in China, which is very beaten up. Everybody hated it in a sector that everybody hated, and it had been bought by two of the greatest investors. And I knew that they had done a lot of work and understood it. And I knew that Munger is very close to Li Lou who’s an expert on China.

[01:32:26] William Green: And so, so there were rational reasons to do it. And if I was wrong, it wasn’t really going to hurt me. And as a diversifier, it’s not a bad thing for me to have a long-term bet on, you know, a centrally important company in China. And, you know, so, so I’m down by a half. It doesn’t mean I can’t send my kids to college or retire.

[01:32:49] William Green: It’s okay. So, so I think you have to be aware of your own flaws and vulnerabilities and irrationalities and hedge against them in some way. So I was talking to a friend the other day about my mistake with Ali Barbara, and then my desire to buy Bitcoin after my conversation with Bill. And my friend said yeah, we had a rule at this investment firm where I used to work where there was a cooling off period for a week after you met with management of a company.

[01:33:14] William Green: And I thought that was really smart, right? Because you are very easily sold on the stuff. You have all of these hipsters who are a great salesmen who believe in the future of that company, and they can sell you anything. So to have a cooling-off period, it’s not a bad thing. And so, so for me to calm down.

[01:33:30] William Green: Look back with a glow of affection on my meeting with Bill Miller, but not be so, not be so grateful for the fact that he treats me nicely and that I need to be treated nicely and appreciated. That it skews my judgment. So part of what I’m doing is I’m hedging against my own fallibility and idiosyncrasy and so I’m trying partly not to buy individual stocks.

[01:33:54] William Green: I only own three individual stocks. And one of them, one of them is Berkshire, which I regard kind of almost as a fund. And one of them is Heritage, which again, I bought after hanging out with Mohnish. And so it’s the same floor in a way. It’s like I, I fall in love with Mohnish who’s an old friend and someone I like and admire a great deal.

[01:34:12] William Green: And then I buy this stock ’cause he’d bought 13% of the company at a time when it was hated. And what I was realizing in my conversation with Annie Duke is as I talked about Mohnish, and as I talked about Charlie, I start to smile and I’m like, oh my God, I’m so vulnerable. Like, like, like I love these people.

[01:34:29] William Green: I really admire these outsiders who are rebel free thinkers going against the crowd. And so it’s a tremendous vulnerability for me. And so, so it’s smarter for me on the whole to try to outsource the investing decisions and also to try to index because and sort of systematize, but at the same time, given that I’m writing and talking so much about investing, I also think it’s a pretty good thing for me to have some skin in the game and to understand, in a very visceral sense, the emotions and the irrationality that goes with making mistakes or doing well.

[01:35:07] William Green: And even with something like Heritage, it was so cheap that it’s actually done pretty well anyway, so it’s sort of made up for, you know, there was a margin of safety built-in because it was so cheap. And so that’s made up for my stupidity and irrationality.

[01:35:21] Stig Brodersen: You know, I can’t help not to bring up the bats here, William, but later in this q and a with, with Munger, he was asked about his position, and he said that he kind of felt he was, and I’m going to paraphrase this.

[01:35:34] Stig Brodersen: This is not exactly what you said. People can watch it themselves. But he was saying that he was so fascinated about this story of the Chinese internet and the e-commerce rising in China, that he forgot that Baba was just another Dame retailer. So as someone who also bought Alibaba, perhaps for the same reasons as you William, that did not make me feel good.

[01:35:55] Stig Brodersen: And it was just screaming in me to sell after I heard that. But then one, one of the things that had been really good to me was I spoke already with Guy on, on one of the first episodes we ever did here on the show, which is very nice of Guy to make himself available.

[01:36:10] Stig Brodersen: And he’s talked about the two-year rule and about he wanted. There could be exceptions, but generally the rule was not to sell anything. The first two years after you, you made the position and I made the position, what, a year and nine months ago or something like that. So I was like, no, that’s not the two, two-year rule with a two-year rule, which has been, this has been good because you, as you said, you have to manage your own biases.

[01:36:37] William Green: Yeah. And I have a five year rule, so I’m really trying to prevent myself from doing stupid stuff because I sort of have to live with my stupidity if I mess up. But maybe that’s a bad idea. I don’t know. I really don’t know. But I think it, I mean, Annie Duke had a good discussion of this in our conversation.

[01:36:54] William Green: It’s worth people going back to cause she, she was sort of making the point that you need to re-litigate the situation. Like go back and see, well, what’s changed here. But I think there’s something useful about having the five-year rule because it makes you less willing to make bets going in.

[01:37:13] William Green: If you know you’re going to have to live with it, you’ll make fewer bets. And so, look I’m living with my Berkshire Hathaway bet and I think of it, you know, I hope that I own it more or less indefinitely. I’m living with my bet on Guy. I’ve invested with him for, you know, whatever it is, 22 years so far.

[01:37:32] William Green: And I’ve said to him, I regarded as a 40 year investment. And so we’ll see if I’m wrong, fair enough. But I think in a world where most people are very short-term, if you can push yourself towards being long-term and patient, that’s a tremendous advantage. And so I think having a few simple rules in life is hard.

[01:37:50] William Green: Like, like when I just decide, for example, that I’m not going to eat in the morning, I won’t eat before noon. That’s pretty helpful. And then when I decided I wasn’t going to eat any sugar this year, that was pretty helpful. So when I was in, when I was in Zurich and Closs and stuff, dinner, you know, would come with dessert and I’d be like, now I’m not eating any sugar.

[01:38:10] William Green: And it was very simple, simply it like clarified things cause there was a rule. And then I think I was at some dinner, I can’t remember where it was, where there was a, oh I think I went my sister-in-law’s and she cooked a really nice meal and there was dessert. And I would’ve felt rude if I hadn’t eaten it.

[01:38:24] William Green: And once that rule was broken, it was like the floodgates were open. And so I think sometimes giving yourself a simple rule that you can’t break is actually a really helpful thing.

[01:38:36] Stig Brodersen: Well said William. Well, William, we’re a bit long on time here as you always are, but I really want to go to the last part here of our discussion today while we talk about the best books we’ve read.

[01:38:47] Stig Brodersen: The past quarter, Q1 is always a great quarter to read books and at least where I live it’s dark and it’s cold, windy. You don’t want to get go outside so you can just curl up with. A book or 10Q or 10K, whatever cuts you fancy. And I just want to give an honorable mention to principles, your guided journal by Lio.

[01:39:06] Stig Brodersen: I did not put it on the list, the top five of this, because it’s not really an investment book. And I wanted to focus on that. So this is my curated, no particular order of the best five books I read in business or the past quarter. So Competition Demystified by Bruce Greenwald, wonderful book, The Little Book of Evaluation by Aswath Damodaran, Benjamin Graham, and The Power of Growth Stocks by Fred Martin.

[01:39:29] Stig Brodersen: Big Money Think Small by Joel Tillingham and The Joys of Compounding by Gautam Baid. All wonderful books.

[01:39:37] William Green: Tillinghast, right?

[01:39:38] Stig Brodersen: Yes. Sorry, what did I say?

[01:39:39] William Green: Tillingham. Yeah. Joel Tillinghast.

[01:39:40] Stig Brodersen: Sorry. Yes. Wonderful book. So perhaps let’s start with The Joys of Compounding here. This was a book that our co-host, Clay Finck recommended to me.

[01:39:50] Stig Brodersen: He said to me like, I feel I could do four episodes in this book alone. So I had to pick it up and I received it in the mail and I, you know, I flipped to the back and lo behold, there’s a gentleman called William Green who is, knows that so, and handsome I’m pretty sure too.

[01:40:08] Stig Brodersen: Yes. So it says here, Gautam is a marvelous role model because he’s such a joyful and passionate student of worldly wisdom. In this book, he gives us a powerful reminder of how enriching it is to dedicate ourselves to the pursuit of continuous lifelong learning. So with that, William want to throw over to you and talk perhaps a bit about this wonderful book, The Joys of Compounding.

[01:40:34] William Green: Oh, sure. I was thinking as you were going through your list, I’m lucky that I actually know all five of those authors, so I’m totally biased because of personal relationships or interviews that I’ve done with these people in the past. And so, Gautam is someone, is a very nice guy, really nice, really thoughtful.

[01:40:51] William Green: Someone who came from a kind of modest background applied for so many jobs in investing and, you know, he’s been really open about how difficult it was for him to get hired and how persistent he was in launching himself as an investor. And he’s kind of indomitable in the way that he persists and in the way that he’s become a learning machine.

[01:41:14] William Green: And so he is someone who’s just really systematically gone about teaching himself the principles of investing. And so there’s something just very admirable about that as a role model. The sort of person who sets about synthesizing everything that he’s learned from Buffett and Munger and Howard Marks and Kahneman and all of these great minds.

[01:41:37] William Green: And so I don’t. I don’t it’s not that it’s a trail blazingly new book where he’s gone and interviewed all of these people. It’s that he’s been incredibly committed about learning what all of these great minds have figured out and then synthesizing it. So, so you opened the book and I remember just at the very start, for example, it would have a line from Munger, the line where Munger said that best thing a human being can do is to help another human being know more.

[01:42:05] William Green: And so it’s full of things like that where he’s just distilled and synthesized so much wisdom about everything from living by in a scorecard to delaying gratification. So, so I think there’s something really central to learn from Gautam about I never quite know how to pronounce it, Gotham, Gautam.

[01:42:25] William Green: So I’m sorry if I’m getting it wrong, but there’s something really admirable about the way he set himself up to be a continuous learning machine. And then at the same time, he lives in this kind of humble way. He’s not money obsessed. He’s, he, you know, he’s set aside a certain amount of money.

[01:42:40] William Green: He’s made a certain amount of money off his investing and he’s kind of happy with that. So he lives modestly and is just sort of playing, playing the game that he really loves playing. And so I kind of admire him because of those qualities. And then, you know, the book is published by Columbia University Business Press.

[01:42:58] William Green: Which picked up on the fact that he had written this self-published book. And Miles Thompson, who’s this terrific editor there, who I’ve become friends with over the years, I think saw that there was something really good here. And Kim did a new edition of it that was sort of new, improved, polished. And so, so I also think it reflects the fact that Miles Thompson is a terrific editor that he put out this great book.

[01:43:22] Stig Brodersen: So definitely highly recommended the joy of compounding, not just by our friend William Green, forward by Guy Spier. Fantastic book. I wanted to highlight Joel Tillinghast’s book, Big Money Think Small. There were so many key takeaways and if you are interested in learning a bit more, we, it’s going to be a very quick run through here.

[01:43:42] Stig Brodersen: William, you had him on, on, on your podcast, richer Weiser, happier podcast not too long ago. Super, super smart person. And if possible, a as kind and thoughtful as he is smart. Like it was really a wonderful episode you did with him. I want to say that one of my favorite points that I had from Joel’s book was how he reminded us that advertising spending can be an investment more than an expense.

[01:44:06] Stig Brodersen: And even management themselves can’t always distinguish between economic goodwill. Or just cast out the door. Future sales on the contract, you know, gap rules tell us that, you know, it’s all expense as a cost through the income statement. And then you, of course, you can ask a company or brand like Louis Vuitton, whether they feel that advertising is money up the door, but that is just how it’s being treated.

[01:44:27] Stig Brodersen: And so kind of felt it would be an interesting segue to talk about the richest man in the world. I don’t know if people listen to this if they think of who they think the richest person is, and I would imagine a lot of people would say Elon Musk perhaps, or Jeff Bezos.

[01:44:41] Stig Brodersen: They’re, by the way, two and three respectively on that list. It’s a gentleman named Batan. No, his net worth is more than 200 billion. He’s the founder, chairman, and Chief executive officer, L V M H. So he owns, that’s the company that owns a Luang Tian company and many other very well-known brands. And so, I know famously referred this conversation he had with Steve Jobs now the late Steve Jobs, and asked him if he thought he is Steve Jobs, people will still use iPhones 30 years from now.

[01:45:14] Stig Brodersen: And Jobs said that he didn’t know. And whenever Jobs then turned the tables on that question, IO said that Steve, I think people will still be drinking Dony Young in 30 years. We are selling part of history. And so I, I don’t know if that, if there was actually a real conversation. That’s how the story goes.

[01:45:32] Stig Brodersen: And that’s what Anno has been quoted to say. I think it’s important to understand that a brand is like any other asset. They produce income, but they both require initial investment and continuance spending to sustain their established status. And you can even compare it to, you know, p e in that regard.

[01:45:52] Stig Brodersen: And also want to highlight, use that a segue to highlight Bruce Greenwell’s book competition. Demystified is just a wonderful book. And he talks about how you have to distinguish between brand value, which is the premium customers will pay for a product from a particular brand, which could be Vuong, for example, and then economic value, which is the additional return on investment that the brand helped generate.

[01:46:13] Stig Brodersen: For example, Coca-Cola is a value brand, and here we’re talking about economic value in a different way than Louis Vuitton. No one will pay thousands of dollars to be identified as a Coca-Cola drinker, but it’s a valuable brand because it’s very happy forming. Let me just give you one simple example that he writes about in this book, when you go out for Mexican food, you might order Mexican beer, but you don’t order Mexican Cola.

[01:46:39] Stig Brodersen: And I could also mention that we like to eat different types of meals, but yeah, we often drink the same whether it’s your Starbucks coffee, whatever it is. So that was just, that was very brief. I went through those two books. Perhaps another time when you have a bit more time, we can go more in depth with the books.

[01:46:56] William Green: I tell you one thing that I learned from Joel Tillinghast. Is his tremendous focus on not doing dumb stuff. So, so yeah. So he’s focused on brands. He’s focused on companies that, are adorable. So I think he’s made a thousand times his money on Monster Beverage, which I talked to him about in the episode.

[01:47:14] William Green: So he’s made money off enduring brands, but although Mo beverage is probably about as far from Don per as could be imagined. But yeah a durable brand that he bought cheap many years ago and has held onto. But for me, the most powerful lesson I’ve learned from Joel Tillinghast, I think is avoiding what Munger calls standard.

[01:47:36] William Green: Stupid. It is. And so when I first went to interview Joel Tillinghast at Fidelity’s office in Boston, several years back, I was trying to figure out, h how has this guy beaten the market by such an enormous margin over so many years? I mean, he’s, Peter Lynch said he’s basically one of the greatest investors of all time.

[01:47:55] William Green: He’s been extraordinarily successful. And the more that I talk to Joel about how he’s done it, the more clear it became that it’s partly by avoiding so many dumb things that blow up so many regular investors and professional investors. And so one thing he said to me is, look, he said, don’t pay too much for any stock.

[01:48:14] William Green: Don’t go for businesses that are prone to obsolescence and destruction. Don’t invest with crooks and idiots. Don’t invest in things you don’t understand. So just think about that list of standard stupidities as Munger would call them, that get us in trouble again and again, right? Think of the number of people who overpaid for hot tech stocks in the last year, where they got just eviscerated because they paid 10, 20, 30, 50, a hundred times sales.

[01:48:43] William Green: And so there’s this irrationality that creeps in, especially during bull markets where you see other people making money and it becomes kind of intoxicating and you lose your connection to reality, to the underlying reality of the economic reality of the business. So even with something like L V M H, you know, I had a long discussion with guys spear about this when I was in clusters, and guys fascinated by LVMH and by the luxury brand business.

[01:49:10] William Green: And he is like, look, it’s an incredible business. And there are certain benefits that you get when you have their scale because you can kind of bully your way into the best stores and the, you know, and you get your second and third brands in there because you’ve got such powerful brands.

[01:49:27] William Green: So they’re definite advantages. But then he said, I just can’t pay that much for it. It was just too expensive. And so that’s one of the things that’s keeping Guy tethered to reality. It’s just his sense of value. and then this question of what businesses are prone to obsolescence and destruction.

[01:49:44] William Green: So you think of Munger, his revelation during the Daily Journal annual meeting where he’s just saying, everything dies. Everything is impermanent. And so it’s really important just to go into investing and life with a sense that things are, IM permanent. And so, you know, a company that seems very powerful today, may not be five years, 10 years from now.

[01:50:08] William Green: And so, likewise, the conditions that are exist at the moment, economically or in the market are not likely to prevail for several years. Right. One of the things that Howard Marks talks about are that there’s this kind of pendulum effect where the market goes from fear to greed, or complacency to terror, overpriced to underpriced.

[01:50:28] William Green: And you see the same thing with the credit cycle. It goes from, they’ll lend money for anything and then suddenly they’ll lend money for nothing. And so once you understand that we live in a world where everything is prone to change, everything is prone to die and prone, you know, there’s creative destruction.

[01:50:48] William Green: You have to set yourself up to survive an uncertain future. And this is one of the great lessons from Howard Marks, I think and from Joel Tillinghast and Joel Greenblatt, Charlie Munger, Buffett, all of these great investors, you need to build in some margin of safety when you invest because the future is so un unstable.

[01:51:07] William Green: It’s so uncertain. Things that are powerful and dominant now will not be in five, 10 years. I mean, who, you know, we have no idea whether Tesla is going to live up to its promise. And so should you pay a very rich multiple for Tesla? I don’t know, I couldn’t bring myself to do it, but maybe I’m totally wrong, but at least you have to be aware of the danger that things that are ascendant now are likely not to be in future and the things that are undervalued now are likely to have their day in the sun one day.

[01:51:38] William Green: So, and then I think Tillinghast has an idea of don’t invest with crooks and idiots, that again gets back to the thing we were talking about right at the start of the conversation, which is, it goes back to Buffett’s point that you can’t do a good deal with a bad person. You want to partner with good people and then telling Hass idea that you don’t invest in things you can, you don’t understand, gets back to something that John Templeton told me 20 something years ago where he said, stay away from your own ignorance.

[01:52:02] William Green: And so, Investing is really difficult, as we’ve discussed in this conversation. It’s really hard to beat the market, but at least you can give yourself an advantage by avoiding standard stupidities. So don’t overpay don’t assume that the future will look like the past. You know, diversify.

[01:52:19] William Green: Don’t invest in things you don’t understand. Like being a learning machine where you are. You are constantly building your, building, your circle of competence, but at the same time, trying not to delude yourself into thinking that you’re better than you are and no more than you actually do.

[01:52:35] Stig Brodersen: Well to quote Charlie Munger. “It’s simple but not easy”.

[01:52:39] William Green: Ah, that’s for sure. And I saw Bruce Greenwald the other day Stig and Bruce, Bruce said to me that he was talking about exactly that. He was saying that one of the things people feel when they listen to Buffett speak is, you know, he makes it sound so simple and he is like, boy is this not simple.

[01:52:55] William Green: This is not easy. It’s really hard. And I think that’s a worthy message for people to be aware of that Yeah, you can beat the market. Yeah, you can do it incredibly well, but you got to be good. You’ve got to really take it seriously to be a kind of mental athlete, to win at this game, you need to be really good, and you need to be driven and devote the time to it.

[01:53:15] Stig Brodersen: And, Just on that note, Competition Demystified, this book is a few years old, so I think it’s from. 2005-ish. So Bruce goes through wonderful examples of different industries and it’s so interesting to read about these companies that today are not performing well. And the premise, I also want to say in, in Greenwald’s defense, cause I don’t want to make it sound like he’s making any kind of stock recommendations at all.

[01:53:42] Stig Brodersen: That’s not the point of his book. He’s talking about different industries, barrier of entry, and using that as your framework of picking stocks. And it’s just interesting to hear someone as smart as Bruce Greenwald talking about different industries 18 years ago, and then think about how those industries look today, whenever you read the book, it can seem like the barriers of entry are just impossible to penetrate.

[01:54:04] Stig Brodersen: Not that, again, not that it’s Bruce’s premise, but it can seem that way whenever it’s been explained. And then you read it and you’re like, but that company doesn’t exist anymore. Wasn’t it Support? Wasn’t it supposed to be close to impossible? And yeah. Like you said before, will that go back to what?

[01:54:17] Stig Brodersen: Munger said that one of the things that he’s learned throughout his life is just how the only thing constant is change.

[01:54:23] William Green: Yeah. And Bruce is profoundly brilliant. Bruce is someone I’m, I was trying to seduce him into coming onto my podcast later in the year and I think he’s going to, I, and he doesn’t talk often in public, so it’d be great to talk to him. He’s a brilliant mind.

[01:54:37] Stig Brodersen: Again, thank you for making time to, to speak with me here today, William. It’s always a lot of fun. Any concluding remarks? Anything you kind of feel we should touch on before we end the episode?

[01:54:45] William Green: I guess, you know, you gave your five recommendations for books.

[01:54:49] William Green: I would add one recommendation that’s not a book, but, which is something I talked to Fred Martin about, which is I think people should watch this movie Free Solo, this documentary that I talked about at length with Fred Martin, which it’s about someone trying to climb El Capitan, which is basically 3000 feet straight of granite, and this guy decides to do it without ropes without any equipment.

[01:55:13] William Green: He’s just going to do it free solo. And Fred’s point is that it’s an it’s a brilliant example of risk mitigation. What this guy does, and I think it’s all about survival. It’s all about risk. It’s all about trying to take considered risk, intelligent risk so that you’ll actually survive. And I would just really encourage people to watch it.

[01:55:33] William Green: It’s, I think it’s on Disney or Hulu or both and you can also get it on Amazon Prime. And so for those of us who have short attention spans and find it difficult to sit and read long books, you can treat yourself to watching Free Solo and can listen to my discussion with Fred about it, who’s very thoughtful about what it actually means, what you can learn about how to survive as an investor based on studying this great free solo climber, Alex Honnold.

[01:55:58] Stig Brodersen: Wonderful. We’ll definitely make sure to link to that in the show notes. William, on that note, let’s end the episode here. It was a lot of fun chatting with you as always, William. So thank you for making yourself available.

[01:56:08] William Green: Thank you! It’s always a delight Stig. I really appreciate it.

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