[00:02:19] Stig Brodersen: So there are three segments here of today’s episode and I would like to play a clip from one of your episodes on your show, William, Richer, Wiser, Happier episode 28 here in the first segment, and it’s an episode where you discuss what you learned from Mohnish Pabrai, Tom Gayner, and John Spears and I would say that what I learned from this episode, where you also played clips is actually not so much for any of those three titans, but it’s more of your reflections after you’re speaking with Mohnish. And this is what you were saying, William.

[00:02:53] William Green: And as Hawkins puts it, the more that you can reject these kinds of weak attractors, the better. So you’re trying to move away from things like resentment or jealousy or self-pity or fear or anxiety or greed. And I think one of the things that was striking to me when I read Hawkins that feels true to me is that things like shame and guilt calibrate at an incredibly low level.

[00:03:20] William Green: And so, the practical lesson that I drew from this, that I think is really valuable is that you kind of want to flood the zone with these positive emotions like love and compassion and forgiveness and the like. And the less you can indulge in these weaker emotions, the better. And I remember talking to Munger about some of this stuff, not about Hawkins, but Munger said to me when we were talking about negative emotions, he famously has said that “Envy is the dumbest of the seven deadly sins cause it’s not even fun.”

[00:03:46] William Green: And he said, “With these things like envy, anger, really intense anger, jealousy,” he’s like, “I just don’t indulge them. I do not let them run.” And I said, “How come? How do you do it?” And he said, “Well, I just know that they’re stupid, so I don’t let them run.”

[00:04:09] William Green: So this is a really powerful and important issue, I think, because it gives you a sense of, these are sort of guiding principles. They’re simple, but they’re very powerful guiding principles. So, this is what I got, I think from Power vs. Force. But then I started to fall down this deeper rabbit hole. So, I started to read some of these other books by Hawkins and they’re all worthwhile. But I’m going to pull out a page from one of them. It’s not my favorite of his books, but there’s a particular page that’s absolutely extraordinary in a book of his called “Transcending the Levels of Consciousness”. And then there’s a, the subtitle I think is “The Stairway Enlightenment”. And I don’t get the idea that I’m anywhere close to enlightenment, but I’m reading this list of virtues that he’s talking about, and I’m like, “God, this is the most unbelievably helpful list.”

[00:04:56] William Green:  And so, he talks about how simple tools consistently applied are incredibly powerful, which is something I write about in my book, right? The importance of simplicity, that you don’t need to get that complicated. And he says, “Some tried and true basic tools that are brought about tremendous results over the centuries are as follows.”

[00:05:15] William Green: So, the first one in this list, and I’m not going to read you the whole list, but the first one, he says, “Be kind to everything and everyone, including oneself all the time, with no exception,” right? Which is what we read from Power vs. Force, something very similar. Then he says, “Revere all of life in all its expressions, no matter what, even if one does not understand it.”

[00:05:35] William Green: And then he says, “Presume no actual reliable knowledge of anything at all.” And this has been really helpful to me because I keep thinking whenever I’m trying to judge someone, or I’m thinking about like, “I can’t believe this happened to me,” or “This is terrible,” or “I don’t understand somebody else’s behavior,” and I think it’s reprehensible in some way, I start thinking, well, presume no actual reliable knowledge of anything at all.

[00:06:00] William Green: What on earth do I know? And I don’t understand these people. I don’t understand the way they’re behaving. And then he says something that I think about a great deal. He says, “Forgive everything that is witnessed and experienced no matter what.” And I just find that an incredibly helpful idea that whatever happens and it’s hard to forgive everything, but at least I know that that’s an incredibly powerful guiding light.

[00:06:25] Stig Brodersen: To me, this is immensely profound here what we just listened to and I would like to jump into a discussion about your comment here on the positive and negative emotions. I guess I’ve come to realize that you cannot live a life without negative emotions but how we react is to some extent up to us and what I’ve also found is that the more that we resist to our negative emotions, the more we also keep them alive.

[00:06:54] Stig Brodersen: And I think that if I were more enlightened, I would probably just observe my emotions. That is supposedly how it should be done. I’m not there yet. And I don’t know if I will ever be. You have a wonderful episode. I want to say it’s the one with Daniel Goleman, where you actually, when you talk about this, William, but [Crosstalk]

[00:07:11] William Green: Yeah, Daniel Goleman and Tsoknyi Rinpoche

[00:07:13] Stig Brodersen: Yeah. You should just observe your emotions. Whenever I heard that, I was like, this is so beautiful and then I tried doing it. It was like, at least for me and again, it might be my lack of enlightenment. That was really, really difficult for me and so I guess what I would like to talk about here is if you’re also not able just to observe your emotions, I found something that I’d used for years that I would like to share with you that might be a bit more approachable for you.

[00:07:40] Stig Brodersen: And it’s a concept called habit pairing. And I cannot for the life of me remember which book I read about habit pairing. It might have been one of the [Inaudible] books. That would be my best guess, but I honestly, I don’t know. But basically the idea is if you do something you don’t want to do, or if you’re supposed to do something you don’t want to do, you tend to procrastinate and very often it ends up with not happening in the first place.

[00:08:05] Stig Brodersen: And so what you would want to do whenever you do habit pairing is you want to do something you really enjoy while you’re doing something that you do not enjoy to avoid procrastination. And so, for example, whenever I’m doing the dishes, which isn’t a lot of fun, which to me is a luxury, I don’t focus on anything else.

[00:08:23] Stig Brodersen: I just listen to sports podcasts. That certainly does not make me be smarter. If anything, it probably makes it a little sad because my favorite sports team is doing so poorly but you know, it’s something I enjoy and I’m doing something that’s less fun, so I do that. So sports podcast, unfortunately, is not enough for me.

[00:08:39] Stig Brodersen: Whenever I deal with negative emotions, you would need a stronger remedy, but I wanted to use that as an approachable example of the concept in itself. And I would say that like so many others, I have my own demons. And this was a long way around referring to Charlie Munger that you refer to in this audio clip here, because he’s talks about how you’re not supposed to let your negative emotions run.

[00:09:01] Stig Brodersen: And for many years have been really difficult for me and so what I found to be useful for me, which may or may not be useful for you, William or anyone else is that I’ve used a different type of happy pairing for some of those negative thoughts I can get from time to time. And what I’ve done is I’ve set something, I’ve set a goal that’s very important for me to achieve.

[00:09:23] Stig Brodersen: And for a long time, there has been financial independence and it could be anything else for you, but it’s something that used to be very important to me. So every time I had these negative emotions running, I would get up cause very often it would be when I’m in bed or in sofa or doing something. I would literally get up and I would start working towards that goal.

[00:09:44] Stig Brodersen: And it has two wonderful implications. First of all, like the brain is a complex thing, but you can generally just focus on one thing. So if you’re really focused on your goal, it’s very difficult to have these emotions at the same time, but also if you channel your energy towards something you really want, at least for me, because I used to have many negative emotions.

[00:10:05] Stig Brodersen: Well, the closer you get to that goal, it’s supposed to be a gift for yourself or a present for yourself that then unfolds. And it might sound a bit silly, but there’s a sort of a different layer to that because the more we feed those negative emotions, the more they take over. So as soon as you start welcoming those negative emotions, this suddenly become less frequent.

[00:10:27] Stig Brodersen: And I don’t know if I’m being too vague here or if it’s something that only works for me, but I would highly encourage anyone listening to this to test it out. And I want to throw it back over to you, William, and then ask you, how do you attract positive emotions in your life and perhaps eliminate, I’m not sure that’s the right word, but how do you deal with bad emotions?

[00:10:46] William Green: Yeah, lots of different approaches and I like that one that you were talking about. That’s very interesting. And it reminds me vaguely of stuff that I read in that B. J. Fogg book about habits, tiny habits, which I think is worth reading for people. I didn’t finish it. Because one of my habits is that I read so many books at the same time that I forget what book I’m reading, but I remember him talking about, if I remember correctly, you know, if every time you went to the toilet, for example, you came out, you did one push up, you’re connecting, you’re pairing different things.

[00:11:19] William Green: So one thing becomes a trigger for some other kind of behavior and for some positive behavior and likewise Charles Duhigg in his book on habits talked about the same sort of thing like having this sort of sequence of things where I think for a, I may be misremembering it, but I vaguely remember him saying, for example, if you put out your sneakers or something like that, you know, It’s more likely to trigger you going out for a run.

[00:11:44] William Green: So this idea of just sort of stacking the odds slightly in favor of you behaving optimally is really smart. And of course I fail to do it the whole time, but on the subject of emotions, yeah, as I say, I have a lot of different approaches to this stuff, maybe because I’m a fairly emotional person and I feel emotions pretty intensely.

[00:12:03] William Green: And so, you know, I’m definitely prey to things like, you know, stress or anxiety or fear or the like, although it’s funny because I don’t feel any of that particularly at the moment, so you have to sort of cast your mind back into that state, but one thing I, also irritability and sort of, which I think is a kind of probably an English version of anger.

[00:12:26] William Green: It’s like that we’re too polite to be visibly angry. But my wife can see it. You know, my wife can see if I’m a little snappy. And so for anyone else, they’d be like, oh, that, that really, that was anger. But actually it is anger. It’s frustration, but it’s just covered up by this veneer of English politeness and etiquette.

[00:12:46] William Green: So the first thing I think is to be very aware of the emotion, to know what it is you’re feeling. And I think that requires some kind of quietness, whatever the technique is, whether it’s from meditation or anything else, just pausing and seeing where the emotion is, particularly in your body, where you can see, I mean, I was thinking this morning, for example, that when I was in England last week to give a couple of speeches, In the run up to that, I’d had a twitch in my left eye quite a lot over the last couple of weeks, and I was just thinking this morning, Oh, that’s totally gone, and so it clearly must have been related, I guess, to this trip where I was going to do a couple of kind of, you know, speeches that were demanding, and, you know, even though I did a lot of preparation and I knew what I was going to do. Obviously, there was something being expressed in my body, so to have some sense of what’s happening in your body is really important, and I think you see it with a lot of investors, right?

[00:13:48] William Green: You, I remember reading, I think it was the Alchemy of Finance by George Soros, where he talked about listening to his body and realizing that when he started to have really bad back pain, It was a sign that there was something wrong in his portfolio that he needed to address and likewise Jeff Vinik who was one of the great investors of his time who managed the Magellan fund after people like Peter Lynch and was an extraordinary investor who became manager of the biggest mutual fund in the world in his early thirties.

[00:14:19] William Green: He once said to me that when he felt physically nauseous when he was buying a stock that was a clue to him that it was probably bottoming out, that it was so hated, it was so unpopular, so out of favor, that it made him feel sick to buy it. So I think some sort of self-awareness of what’s going on is really valuable.

[00:14:41] William Green: I remember Guy Spears saying to me that one of the great benefits of moving to Zurich. was that, and to a fairly quiet neighborhood in the suburbs of Zurich was he’s, he said, look, I have this very busy, distractible mind. And I want my mind to be like a calm pond so that I can see the ripples. So I think that’s really important to find a way.

[00:15:03] William Green: To put yourself in a context, whether through meditation, or whether going for walks in nature, or whether living somewhere quiet that’s a little detached, so that you can see the ripples in the water, so you can see what’s happening, that’s a really important first step, I think, and I’ll caveat all of this by saying I’m by no means an expert on all of this, I’m just observing other people.

[00:15:23] William Green: and observing myself and then finding strategies that work. So apologies to everyone who’s truly an expert. I’m just an expert at using the glitchy faulty machine called William Green, and even that I’m not much of an expert on. So that’s the first thing, self-awareness. The second thing that you were alluding to before when you were talking about this whole idea that came up in my podcast with Daniel Goleman, the author of Emotional Intelligence, and Tsoknyi Rinpoche, this great Tibetan Buddhist meditation master, They have an extraordinarily powerful technique that I think is very profound which grew in part out of work that Dan Goleman’s wife, Tara, has done.

[00:16:06] William Green: She’s a psychologist very smart, and wrote a book on emotion, something called, like, The Alchemy of Emotion, or something like that. It’s a very good book we’ll put it in the show notes. which is called Tara Bennett-Goleman or Tara Goleman-Bennett. And so the technique that came out of their discussions, Tara and Dan and Tsoknyi Rinpoche, is basically identifying what they would call your beautiful monsters.

[00:16:32] William Green: So these emotions, these recurrent, these difficult negative emotions, difficult recurring patterns, and then really sitting there and abiding with them, being aware of them. But then Tsoknyi has this beautiful technique called handshake practice that you can find out more about in that episode.

[00:16:51] William Green: And also in this book, Why We Meditate that he and Dan Goleman wrote. Where you abide with the emotion. So you see, so let’s say you’re suddenly assailed with a sense of anxiety. So let’s say you have a lot of stuff to do and you’re like, oh my god, I’ve got to prepare for a speech or a meeting and at the same time I’ve got all these issues with my kid and at the same time, you know, like my business is struggling.

[00:17:16] William Green: What if it’s not okay? And my wife is unhappy with me over this or whatever it is. So suddenly you’re feeling like the pressure of the world and one thing triggers another and you start to go into this spiral. And so, one of the things that Tsoknyi Rinpoche would do is He uses this practice, handshake practice, where you’re looking at the emotion with a kind of warmth and kindness.

[00:17:40] William Green: You’re not trying to suppress it, or judge it, or project it onto anyone else, or to change it. You’re moving towards it. In the spirit of a handshake, maybe you’re literally, you’re like smiling at it, or you’re speaking at it, so you see the emotion like fear or anger come up, or anxiety, and you’re like, oh, hi, there you are, there’s anxiety, oh, and I feel it in my forehead, I feel my jaw clenched.

[00:18:06] William Green: I feel like a twitch in my eye. I feel like a little stress in my stomach or whatever it might be. Like, I would often find the, I’m no great meditation master by any means. The idea is comic, but I find often when I’m when I’m meditating, I realize the extent to which I’m clenching my jaw.

[00:18:24] William Green: So, these are clues when you look at your body, you’re like, oh, that’s what’s going on. I’m under much more pressure than I realized. And then you watch it in your body with this kind of affectionate warmth. And the paradox is that even though you’re not trying to change it, it changes.

[00:18:41] William Green: Because as we know from Buddhism and from our own experience, everything is impermanent, everything is in flux. And so one of the things that David Hawkins talks about also in, in his book, Letting Go, that I’ve discussed before on the podcast. is that it’s the resistance and you mentioned this before as well.

[00:18:57] William Green: It’s the resistance to the emotion that often keeps it going. And so when you drop that resistance and you have this kind of radical non-resistance, the energy behind it dissipates. And so this is very profound because when we were growing up, in my case in England, where we were pretty repressed and not very good at dealing with our emotions and talking about our emotions or acknowledging our emotions, This stuff is all just churning under the surface of the ocean and you’re not really aware of it and you don’t talk about it and so you’re kind of controlled by it.

[00:19:33] William Green: And so once you become a little more aware of it, it’s possible to have this kind of affectionate, warm, kind attitude to it, and it dissipates. And Tsoknyi Rinpoche had this wonderful saying in one of his classes, he has a course called Fully Being, that I think is a beautiful course online it’s he’s really remarkable.

[00:19:51] William Green: He said in one of his recordings, one day we will be friends with all of our beautiful monsters. And so that’s a beautiful attitude where instead of being a little bit ashamed of these emotions Oh, look, I have fear or anxiety or something. You’re like, no, it’s I’m human. Let me have a little self-compassion towards this And then, you know, he’ll talk about, it’s as if, you know, you’re sitting on your meditation cushion, but it can be on your sofa, it can be like in a meeting or whatever, and he’s like, you’re bringing up a blanket for your beautiful monster, and you’re like, yeah, okay here’s my fear.

[00:20:24] William Green: And so that to me is a very beautiful approach and in practical terms, if people want to explore this, I would listen to the interview that I did with Tsoknyi Rinpoche and Dan Goleman, but I would also look at Letting Go, the book by David Hawkins, where in chapter two, he describes this mechanism of letting go that I think is tremendously similar to the, this approach of handshake practice.

[00:20:54] Stig Brodersen: Thank you for sharing William and I think it’s different from, I guess everyone listens to this would get different things out of it and we just talked about just before we started recording how Buffett and Munger, for example, are not religious and I, this is not the intention of this is not to talk about religion.

[00:21:13] Stig Brodersen: That’s very much not the purpose of anything we do on TIP. We don’t want to be political. We don’t want to be religious in any kind of way but I wanted to pull on a thread that you talked about as you were explaining this, William, before we started recording, where you said, that channel is not open to Buffett and Munger.

[00:21:31] Stig Brodersen: And I kind of felt that was an interesting take. Yeah.

[00:21:33] William Green: I mean, my analogy is I’m never going to be Michael Jordan. I’m never going to be Buffett. I don’t have the wiring and the intellect that he has. But there are other things, there are other channels that are open to me, so I can read fiction in a way that maybe he or Munger can’t, and can find things in it that are totally related to investing, that are really profound for investing, that’s just something that’s open to me, it’s not a particularly valuable thing, I’m not trying to aggrandizing way, you know, being able to sit there in an interview with someone and understand, feel what they’re feeling was a very different skill than if you’re a fairly unemotional investor who’s extraordinarily good at analyzing situations in an unemotional way.

[00:22:28] William Green: I mean, I was thinking of this whole question of Buffett and emotion. I don’t know if you remember at the annual meeting back in, was it May? There was an extraordinary moment where during the Q& A, Buffett said, I can’t recall any time in Berkshire’s history when we made an emotional decision and he turns to Charlie and he’s like, have we ever made an emotional decision, Charlie?

[00:22:50] William Green: And Charlie’s like, no, and one of them said, I can’t remember which one it was, said, you know, you don’t want to have no emotions in other areas of your life, but in business, it’s really helpful. And so this whole question of how we deal with our emotions is really important in our relationships, in our marriages or relationships with kids or family members or whatever, but it’s also really important in investing.

[00:23:14] William Green: And so you have to actually know how you’re wired emotionally as an investor so that you can make adjustments to prevent yourself blowing yourself up. And one of the most helpful things I’ve seen in terms of investing an emotion is something I wrote about in, I think the chapter about Munger in my book, which is called Don’t Be a Fool.

[00:23:34] William Green: Where I talked about this friend of mine, Ken Shubin Stein, who’s a very thoughtful guy who is a, he was a very successful investor who then quit the investing business in his late forties and became a neurologist. And so he’s an expert on the brain. And he’s taught the advanced investment, he taught the advanced investment research class at Columbia Business School for a decade.

[00:23:57] William Green: So he’s very smart about investing and the brain. And one of the things he said is that he has this mnemonic called PS, which he uses to remind himself that when he’s hungry, angry, lonely, tired, in pain, or stressed, he’s likely to make suboptimal decisions. And so [Inaudible] PS reminds him of each of those states so that when he’s upset, for example, I mean, he became a doctor right at the start of the COVID pandemic and he was working in an emergency room, working with people in a room full of ventilators.

[00:24:35] William Green: And he, it was just how it was like fighting a war. And he had just had his first child a few days before and couldn’t see the child. because he couldn’t risk infecting the child or his wife. And so he was staying in a hotel away from his wife and newborn kid and treating dying patients. And he said it helped him immensely, this mnemonic that he’d used whole PS during his investing career to say, well, What state am I in while I’m making decisions for patients and while I’m dealing with their family?

[00:25:09] William Green: And so he said that his back, you know, he had a back injury from wrestling in his teens, his back hurt, and he was wearing this PPE equipment that was very tight and uncomfortable. And so he had to really be aware of how his fear, his physical discomfort, how these were likely to be messing with his judgment.

[00:25:31] William Green: And so this is a very profoundly practical intervention for our listeners, that when you’re feeling in one of these states, just slow down, just be extra careful. about the way you talk to people, about the decisions you make, because we know from the scientific literature that we make worse decisions when in those states like hunger, anger, loneliness, tiredness, pain, stress.

[00:25:59] William Green: And so one of the things that Ken would do was when he started to become overwhelmed with work, for example, he would start to cancel lots of unnecessary meetings. He would clear his calendar. And this is something I really internalize when I’m starting to feel overwhelmed. I’m like, no, I have to simplify.

[00:26:18] William Green: And another thing he would do that I think is incredibly practical, is he said, we know there are four things that optimize brain health and brain function, and they’re sleep, good nutrition, exercise, and meditation. And he’s like, we know this scientifically, we’ve seen the impact on the brain of these things, like Dan Goleman wrote a book called Altered Traits about the impact on the brain and meditation.

[00:26:41] William Green: And we know from things like Why We Sleep by Matthew Winkler, who I’ve interviewed before, about the power of sleep. So, one of the things Ken would do is he would say, okay, let me get back to basics. I can see that I’m in a bad state. And so, he did this during the financial crisis where he was having a terrible time with redemptions from his fund and the like.

[00:27:03] William Green: And he really made a point of going back to eating lots of fruit and vegetables and fish and the like. and trying not to eat ice cream with crumbled oreos in it, which was one of his particular downfalls. And so I think just, if you’re self-aware, if you know what emotional state, you’re in and you know you’re a little bit jangled, it helps you to adopt these good habits.

[00:27:28] William Green: And then the other thing, before we move on to a different subject, the other thing that Ken said that I thought was really wise and I’d never heard anyone else say is, he said it’s really important to develop these good habits before the storm. And so he said it’s great once the storm hits to have a good meditation practice and have good sleep and have good exercise.

[00:27:50] William Green: Regimen and the like, but he said, it’s much better to have those things really bedded down before the storm hits. I thought that was a very wise and just, it just, it’s so practical. It just makes total sense.

[00:28:07] Stig Brodersen: So thank you for sharing William, and I think that’s a good segue to go to the next segment here of the show, where we talk about seeking the truth, staying objective, and then perhaps also talking about if that’s even possible, you know, much inspired by Mohnish Pabrai, and I probably should say in turn by David Hawkins, I’ve started to live a more truthful life.

[00:28:33] Stig Brodersen: And truthful is not the same as being impolite or unkind. I do think that it’s, that’s, I do think there was a lot to be said about that. It is, especially if you are in a privileged position, it is often way more challenging to be kind than to be honest. So truthful can take many different interpretations, living a life with more.

[00:28:58] Stig Brodersen: honesty in where you’re more offensive can give you a few more bruises. That’s my disclaimer especially in the beginning. And, but I also say that I found that it pays dividends immensely in the long term if you do that, and you just attract. People of a really high quality. who also want to live that way.

[00:29:19] Stig Brodersen: And it’s a relatively rare quality, but it’s one of those things where whenever you meet those people, you can almost just continue talking with them. There’s almost like this bond with those people where you get attracted to each other. The other nuance I wanted to bring to the table was to this idea of always looking for the truth and Ray Dalio, who I’m sure most in the audience know, he has this wonderful.

[00:29:45] Stig Brodersen: I’m going to say quote, but I’m going to butcher. So I would just say, he said something along the lines of, if you agree with another person, the chances are that at least one of you are wrong. And would you like to know if that was you? Now that seems very simple, but most people do not want to know if they’re wrong.

[00:30:04] Stig Brodersen: Like that’s just not how we are wired. We might say that we want that, but it’s almost like saying, yes, I eat healthy and I go to the gym. We say things, but it’s not always if you monitor our behavior, how it turns out. And I recently had a conversation with a very intelligent friend. And if you ask him. I think he is as much on a quest for the truth in life and financial markets as I am.

[00:30:32] Stig Brodersen: And so my friend just out of the blue, he sent me a message with an audio. It was like a YouTube video. And it was about a somewhat controversial financial topic and he was super excited about this talk and you know, that contained quote, unquote [Crosstalk]

[00:30:47] William Green: What was it about Stig? Be more specific.

[00:30:53] Stig Brodersen: So actually, there’s a reason why I don’t want to be specific because it is quite a controversial topic and I know I’m cupping out on this, but the reason why [Crosstalk]

[00:31:02] William Green: Are we talking like ESG or cryptocurrencies or inflate, like what sort of realm, like, don’t be specific if that’s [Crosstalk]

[00:31:11] Stig Brodersen: Right, right, right. Yeah. It will be something along the lines of something in financial markets. It’s not like, it’s not like one of those pro-life pro-choice type of like, but divisive probably for no one else in financial markets that let’s put it like, but then it’s very divisive in financial markets.

[00:31:29] William Green: I’m such a relentless journalist that if we were sitting here privately, let it be known that within two minutes, I would know this, because I see that there’s something I can’t let go. So I apologize for asking the question.

[00:31:44] Stig Brodersen: No, that’s completely fine, William. And I’m going to cap out on this because it’s part of the process for those people listening to this point, because if I told you what it was, everyone would already have made up their mind about this topic.

[00:31:56] Stig Brodersen: And so they would either automatically agree with me or they would agree with my friend. And the entire point of this exercise is not to agree with anyone. It’s more about finding the right process for validating truth, for staying objective. It’s very much on purpose that I’m not saying what the topic is.

[00:32:14] Stig Brodersen: So he sent this to me and I watched it because I was curious. It wasn’t typically something I would, because I had an idea of what this person, which is a I had a pretty good idea of what he would say. And so I watched the clip and I was a little horrified to be completely frank. He said what I thought he would say, but just even more.

[00:32:33] Stig Brodersen: And I honestly felt it was a bit like watching a cult leader speak. Like I felt it was very, like very narrow perspective, very biased. Every time he said something, the audience cheered. And to say the least, I was quite skeptical about the message that wanted to pass along. Now, I then jumped on a call with my friend to discuss this clip and a few other things.

[00:33:00] Stig Brodersen: And again, this friend who I perceived to be highly intelligent, he just right out of the gates, he said, have you ever thought about if you would go to something like Omaha, listen to Buffett and Munger, it’s sort of like being in a cult. And I was like, What? Like, you know, it was kind of interesting because he beat me to the punch, right?

[00:33:20] Stig Brodersen: Like, I was supposed to tell him that this person that he sent me this YouTube clip from, like, he was the cult leader and here he was like, out of the blue. talking about that, you know, Buffett and Munger was a bit like being a part of a cult. And I was like, thinking to myself, I have a lot of respect for Buffett and Munger, and I find them to be such objective thinkers.

[00:33:44] Stig Brodersen: But then I thought to myself, is that because they kind of have the same opinions as I do? And would then that be an oxymoron in itself? Like, do we think that other people with the same opinions on ourselves are objective and seek the truth? And it just seems like in this world where we all live in those echo chambers and we hear so many people talking about the truth, including you and me here today, William.

[00:34:09] Stig Brodersen: It’s just such an interesting topic to discuss, more like to be meta about, so thinking about how we are thinking. So this is my long winded way of asking you, William, and then perhaps after we start recording, I can tell you more about the topic, but do you actively seek the truth and if yes, how do you even define it? How do you validate if something is truthful?

[00:34:34] William Green: Yeah, I’m obsessed with truth seeking. As a journalist, that’s what you’re trying to do. People have these very distorted and dogmatic views of the media, but that is essentially what you’re doing as a good journalist. It’s kind of like being an investor.

[00:34:49] William Green: There are great investors and there are lousy investors. So, yeah. When you look at the best journalists, what they’re doing is they’re trying to figure out how to present the, in inverted commas, truth in a somewhat fair and balanced, open minded way. And so the whole thing really is a pursuit of truth.

[00:35:07] William Green: And likewise, investing is the pursuit of truth, right? You’re searching in very murky circumstances where you only have a limited amount of information. You’re trying to figure out what the future holds, despite the fact that the future is unknowable. And so we’re always seeing as through a glass darkly, right, trying to grope our way through the fog with very incomplete information, trying to figure out what’s at least approximately true or more likely to be true than not.

[00:35:38] William Green: And even the concept of truth is a difficult one, right? Whether there is any such thing as an objective truth. And so I think the mindset to start with that’s really valuable to have. is just to have no illusion that you’re an objective observer, that you’re looking, you’re trying to analyze something that’s extremely murky and you have your own biases and prejudices and blind spots limited intelligence, limited knowledge, limited experience.

[00:36:09] William Green: And so starting from a position of humility, I think is really valuable. And think also of. The line that I quoted from David Hawkins earlier, I think in that first excerpt that you played, where he said, Presume no actual reliable knowledge of anything at all. That is an incredibly valuable mindset to start with the assumption that I don’t know.

[00:36:33] William Green: And think of Howard Marks, who has said to me before, he’s talked about how he belongs to the I don’t know school of investing. He’s not coming at things. with the arrogance to believe that he has the ultimate answer. He’s always making probabilistic guesses basically. It’s like, well, I think this is more likely to be true.

[00:36:55] William Green: This is more likely to happen. So that attitude of humility is a really helpful starting point. And I just, I’ve seen ample reason to. To accept my own limitations on this front, my, my failure to see the truth because I’ve failed as a journalist before to see the truth. You know, what was really going on.

[00:37:15] William Green: I remember very early in my career, in my early twenties, I was writing for a great English magazine. It’s probably the best English magazine at the time, the Independent Magazine, and I went off to Spokane, Washington, to do an article about a family of gypsies, who the New York Times and Life magazine had written about.

[00:37:35] William Green: And they had been its murky, the details, all those years ago. It’s about 30 years ago, I think. But they had got involved in a conflict with local law enforcement and law enforcement had come in and had been searching for stolen goods and the like, and the gypsies were saying, you know, they touched our women and they made our women marry me, which meant impure.

[00:37:56] William Green: And I read this in the New York Times and Life, and I went out to Spokane to see this family, and they were led by the Gypsy King of Spokane, Washington, and it was a fascinating story, and for me as a young liberal journalist, I was very much open to the idea, I would assume that their civil rights were being violated, and there was a moment where I was interviewing the assistant district attorney, And he starts showing me transcripts of conversations, if I remember rightly, they had wiretapped stuff, something like that.

[00:38:29] William Green: And I started to realize, oh, this is nothing like I believed it was, like there’s, you know, he’s showing me evidence that, you know, there were all these allegations that they were, they had stolen goods and they were, you know, and you start to realize, Oh, wait a second. This isn’t a clear cutter case of people’s rights being violated by an oppressive state.

[00:38:53] William Green: It’s like, no, it looks like they were doing something really bad and then they’re using this this very smart and probably to some degree justified argument that their rights are being violated. And there was a moment in that interview with the assistant district attorney maybe he was the district attorney, I think, the assistant DA, where I just realized how blinded I had been by my own prejudice.

[00:39:16] William Green: And I also realized that Life Magazine and the New York Times had kind of got it wrong, at least in my perception. And then there was a moment, sometimes as a journalist, you know, you do what you call the lay down, where you sort of, you know, you, you lay down the evidence that you have. And I remember talking to the son of this gypsy family.

[00:39:36] William Green: I’m not in any way trying to say this in any way that’s sort of, you know, politically insensitive. I know these are sensitive questions. I start to tell him the evidence that I’ve been looking at that makes me disbelieve what he’s saying. And he starts to get kind of really agitated. And he’s like brandishing this gun in his kitchen and it was a pretty intense situation and so because I had that very early experience of seeing how my own prejudices and biases to believe that the state in some way was violating the rights of these individuals, I just could see the dangers of going into anything with a closed mind, anything with prejudice And that situation, that story is so murky in its own right, I mean, you could interpret what happened with that family and with the police in so many different ways and I still don’t really know what happened.

[00:40:33] William Green: And so I think seeing your own history of getting the wrong end of the stick is really valuable. But then the real question is, okay, so what do we do? Once we’re aware of how limited we are, and how murky life is, and that there’s, we should not presume any reliable knowledge of anything at all, what do we actually do?

[00:40:56] William Green: And so, one thing is to start with what you might call a beginner’s mind, right? There’s a famous book called Zen Mind Beginner’s Mind. I remember interviewing an investor who said to me that, Whenever she went to analyze a company, someone called Mariko Gordon, who is a very smart thinker about investing, she said whenever she would go interview the executives at a company, she would start with a beginner’s mind, willing to ask stupid questions that might make her look foolish, and that’s a very helpful attitude to start with a blank slate, not a blank slate.

[00:41:33] William Green: I mean, one of the reasons why I messed up in that story that I was doing for the Independent Magazine about this family in Spokane was that I was with a photographer who was extraordinary. And so I wanted, he worked I think for the Magnum Agency, which is this legendary agency, and I wanted him to see how tough and smart I was.

[00:41:53] William Green: And so I think there was an element of ego there that also, once you’re a little bit older and wiser, hopefully you’re at least self-aware enough that you’re like, well, I don’t want to show off to the photographer. Let me ask the stupid questions. So starting with that beginner’s mind of being prepared to go in open without prejudice, or at least be aware of your prejudice, is very helpful.

[00:42:20] William Green: And then to have this mindset that Munger talks about, where he very consciously was cloning the attitude of Darwin, and Darwin’s ability to seek disconfirming evidence.

[00:42:35] William Green: Darwin had religious beliefs that made it very difficult for him to write on the origin of human species. And yet, he was willing to challenge his most loved beliefs. And that’s an extraordinary mindset. So Munger actively congratulates himself anytime he destroys one of his most cherished ideas, one of his most cherished beliefs.

[00:43:03] William Green: So that’s really helpful in practical terms, just to have that attitude of seeking disconfirming evidence. If, for example, you’re a conservative Republican, you read the op ed page of the New York Times so you can broaden your mind, and if you’re left leaning, you read the [Inaudible] page of the Wall Street Journal to challenge your views, and so that’s a really practical thing to rewire yourself so that you’re actively seeking, disconfirming evidence rather than trying to be in an echo chamber.

[00:43:36] William Green: The other thing is to surround yourself by people who are willing to challenge you. So Munger was described by Buffett famously as the abominable no man, because he’s willing to challenge anything that Buffett and so Buffett might make a, want to make some investment and Munger was opinionated enough and clever enough that he didn’t hesitate to say, no, that’s the most foolish thing I’ve ever heard.

[00:44:06] William Green: And so that’s really helpful to actually structure your ecosystem so that there are people who can challenge your views. And so this is something also that journalists are doing the whole time that is very valuable. This process of triangulation, where when you’re trying to figure out the truth in a situation, you go to multiple people and you see whether they confirm it or not.

[00:44:29] William Green: What other people have said. And so if you’re assessing a CEO, for example, you want to be talking to multiple people and saying, what have I missed? And Ken Shubin Stein the doctor and hedge fund manager that I mentioned before, would very consciously clone this from people like Munger and Darwin, always saying, what would make me wrong here?

[00:44:48] William Green: So it’s actively embracing this scientific attitude of looking for disconfirming evidence. And then one other piece of very practical advice I would give is that once you start to be aware of your own Myopia the fact that you see such a limited amount of things and that you’re liable to be wrong You have to hedge against your own blindness your own capacity to miss what’s going on So I think of someone like Jeff Gundlach who is often called the king of bonds I interviewed at some length my book but didn’t write about at length in my book.

[00:45:22] William Green: He once said to me that he’s wrong about a third of the time. And so he said, the real question is what’s the consequence if I’m wrong? So once, once you’re aware of how flawed your judgment is and how little you really see and how murky everything is and how unknowable the future is, it’s very important to say, well, what’s the consequence if I’m wrong?

[00:45:49] William Green: So, let’s say I make a dumb bet on Alibaba, which I did. It didn’t hurt me, because I went into it with this sense of what’s the consequence if I’m wrong. And so, I invested enough so that I would be pleased if it quadrupled, but I didn’t invest enough so that it would jeopardize my daughter’s final year at college and that’s really important. And so just this awareness of your own inability, your own blindness is not enough. You have to have some practical safeguards. And so diversifying, having small enough positions sizes with investing so that you’re not going to be destroyed if you’re wrong, is hugely important.

[00:46:35] William Green: And so one thing I came to the conclusion, I don’t know if I wrote about this in the chapter called the resilient investor. I think that’s probably where it is. I came to the conclusion that if you have all of your money in one asset class or one country or one currency, or even one bank or one brokerage firm, you’re probably playing with a loaded gun and just have the assumption that things can go horribly wrong that I can’t imagine. It’s very valuable. So diversification, there’s a very interesting book called War and Wealth or something like that by Barton Biggs, late Barton Biggs, who’s a hedge fund manager and wise guy and he talks at one point about diversification. He talks about, he made this sort of passing quip about how people would have all of their money in farm animals and then there would be a drought and, you know, this thing that had always worked just no longer worked. And he’s, so he talked about diversification as this sort of prudent principle that had served us well through the ages.

[00:47:42] Stig Brodersen: You know, one thing I would like to add here, William is that I often wonder how much of a survivor bias you have with some of the wealthiest people.

[00:47:51] Stig Brodersen: And that’s, I know that can probably come across as envy, but at least I’ve learned so much from Charlie Munger not to have envy because it’s the only deathly sin you cannot have fun with. So it’s not that there could be an element of survivor bias because by definition, even if everything was completely up.

[00:48:10] Stig Brodersen: to lock which is not the case, obviously. But if it was those who would be most concentrated would also be at the very top. It’s just how math works, one thing I’ve. And I also say that many of these very successful people are extremely assertive and not just a cerebral, extremely assertive whenever they communicate, but then there are some that are few, and they’re very good at talking about articulating.

[00:48:34] Stig Brodersen: that they don’t know a lot of things, or they know something about small pockets of say, financial markets. And one that I really admire is Ray Dalio, who you interviewed a few times also, William. And Dalio talks about in his books and in his interviews with you, how he has made more money by what he doesn’t know than what he actually knows.

[00:48:55] Stig Brodersen: And I kind of feel that’s just an interesting first principle. And that comes from Dalio and I don’t know what his net worth is, 20 billion or something like that. Like, he’ll be okay, even if he misses a few bets, but like that humility where you say, I just don’t know and go back from that rather than say, this is what I know.

[00:49:15] Stig Brodersen: And then you try to align the facts in your favor. So. You will get into why I’m inclined to say Alibaba is a good investment. That’s only because I’ve, I haven’t lost my shirt, but it hasn’t been the opposite either. I think I’m down 25% on that position, but again, it goes back to what you also mentioned. So I took a full circle on that, William, it’s the waterline principle, like diversify. So [Crosstalk]

[00:49:38] William Green: That’s the other thing, Stig, I think is to focus on areas where you really have competence. And so I have some competence in understanding who the smartest investors are and so my default when I had Munger and Lou Simpson talking to me about why they loved Alibaba was, oh, these guys know what they’re doing.

[00:50:01] William Green: There’s some justification to that, even though I was outsourcing, which is kind of dumb. But I didn’t really know. I didn’t really do the work. And then when things went wrong, Lou Simpson has now passed away. I can’t talk to him about it. I haven’t talked to Munger about it again. I don’t really know why I should own it.

[00:50:19] William Green: I sort of have a sense, but I’m a little bit paralyzed. And so sticking to things where you really know. So it’s not just this blanket idea of, oh, well, how little we know, it’s also play games that you’re equipped to win. And I had this very powerful example of this a week or so ago when I was in London and I was speaking at a conference of BlackRock.

[00:50:43] William Green: And there was a session where they had half a dozen people from. different countries working for BlackRock in their value added real estate business. And they’re talking about these mega themes that BlackRock has identified. BlackRock is managing what, 10 trillion dollars, I think it’s the biggest asset manager in the world.

[00:51:04] William Green: So very sophisticated. And in each of these countries, they’ll be in Sweden and they’ll have a guy who speaks fluent Swedish who’s on the ground looking for properties that fit these five mega force themes that BlackRock’s identified that are driving the property market. And likewise, they have a really smart person in France and a really smart person in Spain and a really smart person in the UK.

[00:51:29] William Green: And I’m just looking at this and I’m like, how can you compete with this team that has specialists in each of these countries looking specifically for one or two properties that could fit this these mega force themes. And it was just a really vivid, visceral reminder of the importance of having specific expertise.

[00:51:54] William Green: They’re more likely to come out with a good solution and a good outcome than someone who’s in America trying to figure out how to invest in European property, but they’re actually an expert in the stock market, not in property, right? So it’s so obvious but just this idea that also comes from Munger and from Ed Thorp, who I write about in the book as well, talking about this of playing games that you’re equipped to win is huge.

[00:52:25] William Green: So you want to stick with your circle of competence. Yes, you want to expand your circle of competence the whole time, but just this ability to know the limits of your own knowledge and expertise is hugely valuable.

[00:52:37] Stig Brodersen: Yeah, it’s about playing the odds. Nothing is certain. It’s all about probabilities. I’d like to use a poker metaphor.

[00:52:44] Stig Brodersen: I don’t know if it hits home. If you don’t play poker, perhaps it doesn’t, but poker is all about probabilities and even if you’re sitting with the so called nuts, which is the best possible hand you can get, there’s still no guarantee of you winning. And you might be saying, but you’re sitting with the best possible hand, but like now deceased Doyle Brunson would say, you know, back in Texas, back in the day, if you want all the money, someone could pull a gun on you.

[00:53:09] Stig Brodersen: Nothing is certain. It’s all about odds and I think it’s so important not to be susceptible to resulting. We’ve talked about resulting a few times, and I would like to take the opportunity to recommend Annie Duke’s book, Speaking About Poker and Quit is a fantastic book. She also has the book Thinking in Bets.

[00:53:25] Stig Brodersen: It’s probably the most famous one and then How to Decide. All wonderful books and they all talk about the concept of resulting, which is briefly is that don’t think that because of result being X, Y, Z, then it wasn’t necessarily a good decision or bad decision. It’s all about the process and I thought a lot about that recently, because, you know, I only invested with one money manager ever for public equities and that was Mohnish.

[00:53:49] Stig Brodersen: And, or that is Mohnish, I’m still investing with him and he sent me a kind note here the other day to me and some of the other investors and I’m in PIF3 for anyone who is like really into the weeds, but I’d say roughly I’ve doubled my money with Mohnish all the past short of 18 months now, and which is not supposed to happen.

[00:54:09] Stig Brodersen: Like I’m not again, full disclosure and I’m invested and yada, yada. Don’t get any commission. I don’t know how many other disclosures I could possibly make, but like anyone would be pretty excited about that. So proudly told that to my wife as it was my accomplishment and not Mohnish’s accomplishment.

[00:54:25] Stig Brodersen: And there was like, for a second, I was thinking, well, Stig, you spoke with like 500. people, whatever on the podcast and you chose one and that was Mohnish. That must be and I thought probably up to a full millisecond that was because I was genius, not as smart as Mohnish, but at least I picked him and then I thought to myself, okay, Stig now you’re going to go back in the track record of this specific fund that you chose and take the past 18 months just before you invested and see how that fund performed.

[00:54:53] Stig Brodersen: And no, it did not double. And there was just this element of, and Mohnish didn’t change. I didn’t change, but for a number of different reasons, I just chose to invest starting January 1st, 2022, or sorry, April 1st, 2022. So that was just very, like, that was lucky. I don’t know what you want to call it, but like, don’t be susceptible to resulting. It’s about the process and you have to stay true to that process.

[00:55:20] William Green: Yeah, and look I know Mohnish very well. I spent a lot of time with Mohnish over the years, and he’s a friend and someone I admire greatly. And I didn’t invest with Mohnish, and one of the reasons is that he’s more of a risk taker than I am. He’s bolder, more aggressive.

[00:55:38] William Green: So I’m pretty confident that he’ll do really well, but his ability to take enormous, outsized bets is scary for me. So I think part of it is just being aware of our own risk profile, our own risk appetite. And it’s not necessarily about beating the market. Some of it is about staying in the game and survival and so your situation is very different from other people’s situation and your risk appetite is very different. And so I think with all of these things, it’s really important to know yourself, to know how aggressive you can afford to be. I often talk about Bill Miller, for example, I spent a huge amount of time interviewing him over the years.

[00:56:21] William Green: And Bill said to me recently, a few months back, that he basically has three investments that he calls the Holy Trinity. And so he has a huge Bitcoin investment, which he started buying at like 200 a coin, and he has a huge Amazon investment, which he started buying back in 1999, 2000, and he has private investment in this company clear that when you go through the airport, they give you quick clearance of the airport.

[00:56:51] William Green: And that’s true that he has this holy trinity of investments, but actually, yeah, Here’s so much other stuff I can’t even tell you like I’ve been in his house in Maryland, which is beautiful I’ve seen his art and his other collections You know, I’ve asked him about some of the other stocks he owns, and I know that he owns other stocks because we’ve talked about them, and I’m sure his small investments that are rounding errors in other stocks are bigger than my entire portfolio, and his book collection is worth more than mine.

[00:57:22] William Green: You know, you can imagine. And so I don’t know. It’s very important to put in context when people are saying, well, I have this one investment or I have these three investments and this is something Guy Spears talks about a lot is just being aware when someone says, Oh, I’m all in on this thing. You know, like Munger makes an aggressive bet on Alibaba.

[00:57:42] William Green: It’s not that big a bet, you know, like compared to his stake in Berkshire or whatever, you know? So I think just to, you know, just to have a sense of context and a real focus on surviving, reaching the finish line and not getting too carried away by other people’s successes, by other people making more than you, is very valuable. A lot of what we’re managing is ourselves, not our portfolio.

[00:58:10] Stig Brodersen: Yeah. Like, I find them saying like, don’t be fooled and the easiest one to fool is yourself. Something along those lines. And I think it’s true, and I think, you know, speaking about Munger, that’s also why he’s such a biography nut. I think that’s what he calls himself because you really need to understand the context of the person before you can see if it applies to you, which it likely does not.

[00:58:32] Stig Brodersen: And one of the things that you talk about in Richer, Wiser, Happier is that the best investors are typically, they’re just wired differently. I think this was, and you would know this by heart, but I think it’s Chris Davis who said something along the lines of, they’re just not emotionally attached the same way as most, whereas you know, the CEO’s of the world, you know, they have a high EQ and they used to be captain of the football team.

[00:58:59] Stig Brodersen: And then you have these brilliant investors. They are not good with team sports. They might be playing tennis or swimming or whatever they were doing. Very, you know, antirealistic type of sport. [Crosstalk]

[00:59:12] William Green: And even that is nuanced, Stig, because I talked to Chris yesterday, actually. Chris Davis is a very thoughtful guy who’s, he’s in an upcoming episode of the podcast.

[00:59:21] William Green: So we had a lovely conversation yesterday, but I gave a speech a year or so ago maybe two years ago at Brian Lawrence’s house and Chris was there. And I’d been talking about Charlie Munger, I think, and saying how unemotional Charlie was and Chris came up to me afterwards and said, you know, it’s not quite true, you know, Chris is very close to Charlie, and he said, if I remember rightly, he said, you know, back in, I guess it was 73, 74, around then, when Charlie was managing a limited partnership, he took a massive hit, and maybe it was down 50 percent or something, I can’t remember.

[00:59:57] William Green: And he said it was really painful for him. It was very emotional. And so I think one of the great benefits of partnering with Warren was it worked for him emotionally. And likewise with Bill Miller Bill is very unemotional about investing. He can make these super rational, probabilistic bets about investing.

[01:00:21] William Green: But when I talked to him on the podcast last year, I think it was, he said, look, I cry when I listen to music. I’m not unemotional. And likewise with Mohnish, who I, you know, has this very tough exterior and is hyper rational. When I see Mohnish, I think Mohnish is a very soft hearted person, a very gentle, very emotional soul.

[01:00:44] William Green: Just doesn’t seem like it and so when, this is one of those things where I’m starting to realize how much more nuanced this question is about our emotion. You know, we, maybe we can make unemotional, rational business decisions if we’re Buffett or Munger. But even for Munger, I’m not sure he’s as unemotional.

[01:01:06] William Green: It’s not as simple as I think I had, led myself to believe it’s more nuanced. Maybe there are areas where you can be unemotional, but I don’t know. So I think, again, you need to have some self-awareness so that you are not putting yourself in situations where, your emotion is going to torpedo your judgment.

[01:01:28] William Green: So think of Joel Tillinghast, who I interviewed on the podcast, one of the great fidelity investors of all time. He once said to me I know that biotech stocks are going to make me crazy. They’re too unpredictable. They’re too volatile. And so I stay away from them because they’re going to make me crazy.

[01:01:44] William Green: So I think once you have a sense of how you’re wired emotionally, you can develop some kind of workaround. So one thing I know that I’m going to look for the best in people. And so it’s really dangerous for me when I’m trying to pick a fund to invest in. So I have to, again, triangulate. I’ll ask other people.

[01:02:07] William Green: I mean, there’s a, there was a moment where there’s someone I invest with and I showed Mohnish the portfolio and I’m not really supposed to, but I showed it to him and I said, what do you think? And he was like yeah, it’s good. It’s a smart portfolio. And that’s just a way of seeing, is there something that I’m missing that somebody smarter than me about this can, see?

[01:02:32] William Green: And. When I went to Omaha for the annual meeting, I was sitting a couple of seats to Mohnish’s right at a dinner that he held that evening. And there’s a famous defensive lineman, enormous guy, I think defensive lineman, I don’t even know these terms, but an enormous 300 pound footballer lovely guy who you would not want to get hit by on a field.

[01:02:55] William Green: Who is sitting to my left next to Monish and I said to him, look, when you make millions of dollars on, you know, your, you know, signing your new contracts, just whoever you invest with, just have Mohnish look at it and tell you am I doing something stupid? And so again, that attitude of seeking disconfirming evidence, having the humility and having a few people in your life that you trust who are really smart.

[01:03:22] William Green: And so maybe you don’t have access to Mohnish, but you know, when I was getting engaged to my lovely wife, Lauren, 30 something years ago, I called my mother and I called my father and I called my brother independently beforehand to say, Is there something I’m missing? Cause I was 24 and it was a really important decision.

[01:03:41] William Green: And they were all like no, she’s really lovely. She’s really lovely and so just this habit of being humble enough to seek disconfirming evidence, it’s really helpful in every area of life.

[01:03:56] Stig Brodersen: Yeah. And I think just as a concluding remark here, before we go to the last segment here in the outline, William, I think it’s so important to understand this nuance you talked about. So for example, like money, like either you have to be sizing appropriately, whereas investing with money is just a small part of your portfolio or you have to be wired the way that he is. And he mentioned in your book, Richer, Wiser, Happier that he was down, I want to say 67%, but it was dramatic, like during the great financial crisis.

[01:04:33] Stig Brodersen: And he mentioned that his then wife couldn’t feel a thing. which is probably not the case for most as a manager, but that’s how he’s wired. And you need to be able to be on that rollercoaster ride and I think you’re absolutely right. We are all wired differently and I think it’s so, speaking about money, it’s okay to clone, but you need to understand what you are cloning.

[01:04:51] Stig Brodersen: And I guess the volatility of investing with someone like Mohnish and I know volatility is a lot easier to grasp whenever it’s volatility in your direction and not the other direction. You really have to know yourself and start off small and figure out how you react. So I put myself through school playing poker and so I think at times I’m probably also very unemotional.

[01:05:14] Stig Brodersen: I’ve seen and experienced myself and others lose a hundred percent with a flick of a card. And so whenever the stock market is down 3% and everyone is running for the hills and you’ll go like, but that’s 3%. That’s like, it’s like a slow 15 minutes at the poker table. Like you just wired differently and that’s completely fine. You probably shouldn’t do that with your finances, but there’s probably certain things you can do before you start getting obligations. I think you need to understand that but at the same time, don’t feel that to your point, William, that it’s in all walks of life, you know, I think someone who was looking at someone like, like Mohnish, who is like very unemotional, like you said, in many ways, he’s probably not, and I can see it in myself, like, I think most would probably be shocked to see how I react with XYZ draw down, but then I have a really hard time not being with my wife and I can get almost like anxiety and like, I have like, can have really strong negative emotions.

[01:06:09] Stig Brodersen: Well as perhaps for others, I don’t know if that’s the best example, if I’m going to say they were happy enough to be with their wife but they cannot do it as a wife.

[01:06:16] William Green: It’s a great example, Stig, because it shows how nuanced emotion is. So, when I’m sort of saying, oh, look, the greatest investors are all on emotional, it’s like, yeah, when it comes to making Financial decisions, maybe when it comes to making a bet where the odds are stacked very heavily in their favor, but it doesn’t make them unemotional in other areas of life, but even that, you know, they may not be great with relationships.

[01:06:43] William Green: I mean, there are, there, there is evidence that a lot of these guys end up getting divorced. Maybe it’s because they’re not great with their emotions, but it may also just be that they’re very intense and very driven. and obsessed with their work and super competitive and so don’t give enough attention to their spouses.

[01:07:01] William Green: So I don’t know. It’s complicated and like everything in life, just the admission that it’s complicated, that it’s murky. is very valuable because it means we don’t need to be dogmatic and we don’t need to come from the school of I know.

[01:07:18] Stig Brodersen: William, let’s jump here to the third segment and it’s work in progress, but I’ve here in our notes, I call it the living a wiser, richer and happier life.

[01:07:28] Stig Brodersen: And I kind of feel that ties very well into our discussion about changing, perhaps eliminating our biases and looking for that truth. But I think I want to start with whenever I, I read Richer, Wiser, Happier, and I’m currently re-reading it for. I don’t want to make you blush William, fourth time, fifth times, something like that.

[01:07:51] Stig Brodersen: And you know, still every time I read it the investor stands out to me, that’s Arnold Van Den Berg and this is like, if you ever read William’s book, like this is a, like the threshold, like talking about like a tough company to stand out from the crowd. Like you have your Munger and Buffett in there and the other Titans.

[01:08:11] Stig Brodersen: But It’s really Arnold Van Den Berg that’s probably have gone below the radar for a lot of investors out there. To me that’s really who stand out to me. And I’m going to, I want to play this clip from a recent interview you had with him on Richer, Wiser, Happier episode 30 but perhaps before we do, William, and just to make sure people don’t go to episode 30, which they probably should do afterwards, I don’t know if I could ask you to just do a brief introduction of who he is, because I think that would tie very well into the clip that we’re going to listen to here next.

[01:08:43] William Green: Arnold is a very remarkable person, and when I first wrote my book proposal, I sent it to Scribner, which is owned by Simon & Schuster, and there’s a famous editor there, Rick Horgan, who’s had something like a hundred bestsellers, and he sends me back these very smart notes about it, and one of the things that he wrote back is, I don’t understand why Van Den Berg is in the book.

[01:09:05] William Green: And that was a very helpful thing to have an editor say, because then I had to think, why? Why is this obscure guy, who nobody’s heard of, who nobody’s ever written about, based in Austin, Texas? Why is he the person that, along with Mohnish, when I first started reporting the book, which took me five years, right?

[01:09:26] William Green: I mean, it was a pretty big mountain to climb. The first things I did, I traveled to India for five days with Mohnish, and I went to Texas and spent two days with Arnold. And so why was he so important? And the way that I explained it in the epilogue of the book, because I end the book with Arnold, is that he’s not the most successful investor I’ve ever met, but he’s the most successful human being I’ve ever met in the investing world.

[01:09:51] William Green: And so I really wanted to explain through Arnold, what being a successful human being looks like, what having a truly rich and abundant life looks like, and Arnold, one of the reasons why he’s so fascinating and so inspiring, is that his success was so unlikely because he was dealt such an awful hand.

[01:10:12] William Green: And so he starts off, he was born in 1939. On the same street as Anne Frank in Amsterdam as a Jewish kid at a time when the Nazis were invading the Netherlands and rounding up Jews and killing them. And so he spends the first couple of years of his life in hiding and then is smuggled to an orphanage by a girl who risked her life to save his life.

[01:10:39] William Green: So it’s an extraordinary story and it came out of the orphanage, barely able to walk because he’d been so malnourished. There was a suspicion that maybe he had brain damage because he’d been malnourished at such an important formative time of his life. And he came out as a teenager full of rage and very low self-esteem, barely made it through high school.

[01:11:05] William Green: And his father made him work unbelievably hard, more or less, to support himself from the age of 13. And so, he had, in many ways, the worst possible hand you could have dealt to you. Yet, he’s transformed himself into this extraordinary human being, this incredibly kind and loving and decent human being.

[01:11:26] William Green: And he once said to me, look, I could lose all of my money and I would still be rich. And so, when I see Arnold, I see someone who… is an extraordinary role model in life in so many ways. And so the story that you’re about to zero in on is a story that he and I have discussed a few times over the years that came at a very important time in his life when he was this very damaged kid without, you know, with a sense that he was living in a hostile world where he had lost 39 members of his family during the Holocaust and was struggling at school, struggling to make a living, struggling to support himself, wanted to buy a car so he could take a girl out. in his car and so he was working as a flower salesman among many other things. So that’s my setup for the story.

[01:12:18] Stig Brodersen: Wonderful, William. So let’s go ahead and listen to your conversation with Arnold now.

[01:12:25] William Green: Then you had that extraordinary job when you were about 16. It’s a little bit of a detour thematically, but I think it’s important to mention, your flower selling job, which is one of the great stories you ever told me. So, I wondered if you could tell us what happened when you were selling flowers.

[01:12:42] Arnold Van Den Berg: Well, there was a job. There was a couple of kids at school that had a flower route, and what they would do is they would recruit kids from the high schools and put you on the corner, and you’d sell flowers. What we learned is that some corners really were good because they were in good neighborhoods and people made a lot of money, and there were other parts of town that were tough and people didn’t have that much money and you didn’t do it.

[01:13:07] Arnold Van Den Berg: So, when you were new, they put you into the worst corner, and that is so you could prove yourself. If you proved yourself, they knew what was a good job and what was halfway. So, they had a quota for each corner. So anyway, the way to move up to the best corner is to continue to outperform the quotas in the bad neighborhoods.

[01:13:32] Arnold Van Den Berg: And then you’d move up to the one. Well, I worked for months to work myself up to the best corner, which was in Bel Air near Beverly Hills. I even had Tony Curtis buy flowers for me. He came up on his Cadillac with his wife and so forth. But anyway, I was really excited because it was hard work and the neighborhoods that weren’t too good.

[01:13:52] Arnold Van Den Berg: You just stood there for hours sometimes, not sell very much, and it gets discouraging. But anyway, finally worked up to the corner and as I was so excited getting up in the morning, knowing that I’m going to be in this great corner. So anyway, I was there about an hour or so, and then it started raining, and it got really bad.

[01:14:12] Arnold Van Den Berg: It was a real downpour and I thought, “Oh my god. I’ve worked all this time to get up to this corner and now, I’m not going to be able to do very good when it’s raining.” As I was thinking about it and going back and forth, people kept stopping in the rain and I was selling the flowers and I thought, “Well, I’m already wet.”

[01:14:33] Arnold Van Den Berg: Yeah, I was drenched. “I’m already wet and people are still buying, so I’ll just keep selling.” So, I kept selling. Finally, a lady pulls up and says, “Young man, what are you doing in the rain?” I said, “Well, I’m selling flowers, 35 cents apiece, and three for a dollar.” She just looked at me and shook her head and she whispered to her husband and she says, “How many flowers do you have?”

[01:14:57] Arnold Van Den Berg: I said, “Oh, I got plenty. How many do you need?” She says, “No, no. I want you to count exactly how much you get. I want to buy all the flowers.” I said, “What?” She says, “I want to buy them all!” I said, “What? What are they for?” She says, “Young man, would you just count those flowers?” I said, “Okay,” $16, so I said, “$16.” That’s like a hundred dollars today, or even more.

[01:15:23] Arnold Van Den Berg: So she said, “Okay.” She pulls out the money and I hand her flowers and she says, “Now get in.” I said, “What do you mean?” She says, “Young man, I’m buying you those flowers to get you out of the rain, so get in. We only live a few blocks from here. You’ll get dried out and I’ll get you some soup, and so forth.” So, I was just shocked.

[01:15:43] Arnold Van Den Berg: I never experienced anything like that. So, I said, “Okay.” I got in the car and went home. She made me some soup. The husband came out with a beautiful shirt and he said, “Here, put this on. “After I was dried out, I said, “Boy, that is a beautiful shirt.” He said, “Okay.” So, we sat there and I watched TV with him for a while, and then things went by and I said, “I’m going to have to get back to my corner pretty soon because my boss is going to come and pick me up.” So, they said, “Okay.” So, I went to take off the shirt to give him the shirt, and he says, “No, no, that looks so good on you. You keep it.” I thought, “Where am I, in heaven or something?” I couldn’t believe people doing that. So, they drove me, dropped me off, and my boss came by and he said, “Where’s all your flowers?”

[01:16:29] Arnold Van Den Berg: I said, “Well, I sold them.” He said, “You sold them in the rain?” I said, “Well, let me tell you what happened. This lady came by, wanted to get me out of the rain, and she bought all my flowers.” He goes, “You’re kidding.” Yeah. He was shocked. I said, “Yeah.” He says, “Well, all right. Well, that’s great.” So anyway, that really was an amazing experience.

[01:16:53] Arnold Van Den Berg: I’ve never forgotten it, and it has influenced the way I think because at that time, I didn’t think there were people that cared about other people and wanted to help people and all of that. That just didn’t – in our neighborhood, people didn’t do things like that. It was totally out of character.

[01:17:11] Arnold Van Den Berg: So anyway, I always made a mention of this. Whenever I see the Girl Scouts selling cookies or something like that, I always buy a big batch of them, and when they look at me and there’s kind of a surprise, I said, “That wasn’t my idea. There was a lady,” and I tell them story, “that came by and wanted to get me out of the rain, and she bought all my flowers, and I know how good that felt and so I want to make you guys feel good, so thank you for all the cookies.” Then I say, “Okay, what’s your favorite? What’s your favorite? Mom, what’s your favorite?” And then I divide it up and give it all to them.

[01:17:49] William Green: I love the fact that, Arnold, that this thing that happened to you, what, 67, 68 years ago has reverberated over the decades and so you once said to me, “When somebody touches your heart like that, it changes you forever.” I remember you once saying to me, I don’t know, it sounds a little tactless to say but I think it’s worth saying, you had come through the Holocaust where you’d been – you’d gone through appalling things and 39 members of your family had been killed by the Nazis.

[01:18:17] William Green: And so, one thing you once said to me is in a way, one reason why this event had such a profound impact on you is because this couple was non-Jewish, and so there was this – it was an incredibly powerful thing for you to see non-Jewish people taking care of you.

[01:18:33] Arnold Van Den Berg: Yes, and that was very much because my mom was born in Poland in a small ghetto, and bad things happened from an antisemitic thing and they always had problems. Then they moved to Amsterdam, Holland, which was very good compared to where they came from. My dad was from Germany, but the point I’ve always heard all my life is the Jews are one thing and Gentiles are another, and you can’t really trust the Gentiles because look what happened to us, and so on and so forth. So, I never had this viewpoint that Gentile people could be good people and they’d want to help Jewish people.

[01:19:11] Arnold Van Den Berg: Of course, people hid my folks during the war and there’s also people who turned them in to the Nazis. So, I wasn’t quite clear about that, but when I saw this couple who was non-Jewish and treated me like I was their son – they treated me as good as their son, so that changed my viewpoint and it opened my eyes to the fact that the things I heard about Gentiles were biased. It was through their experience, and so if you had that experience and that’s the only experience you had, then that’s what you believe.

[01:19:44] William Green: Yeah, and it’s probably one of the reasons you became so open to studying different faiths, the teachings of Christianity, and Hinduism, and Buddhism, and all these other faiths that you started to see, “Oh, well, wait a second. It’s not just my own tradition that has valuable principles.”

[01:19:59] Arnold Van Den Berg: Absolutely, yeah, and I think that’s the value of kindness. When you are kind, and I’ll talk about it later, it actually creates chemicals in your body – serotonin, dopamine, endorphins, and things of that nature. So, one of the things that we’ll talk about later is if people want to be happy, they have to build the things that create those chemicals because the brain is a chemical instrument.

[01:20:24] Arnold Van Den Berg: And so the more you do the right things that create these endorphins, and dopamine, and serotonin, and so forth, the happier you’re going to be. Well, it turns out having good diet, doing exercise, being in the sun, and being kind and being honest, those all are things that create that. All you have to do to be happy to live a good life. It’s dedicated by your chemicals in your brain.

[01:20:49] Stig Brodersen: So, I mean, this is just such a wonderful story. And I have to say that whenever I was tuning in, I was in Italy at the time. I was already in a bit of emotional state for, I was in Italy. I had a lot of fun, but I was already like, I was for different reasons, my wife wasn’t there.

[01:21:04] Stig Brodersen: So I’m always a bit on edge whenever that’s the case and so like, I was almost tearing up whenever I was listening to that. It was such a beautiful story. I have to rewind and listen to it again. Cause it just like, it makes you just makes you feel good. And I think one of the things that I took away from that, it really reminds me of this beautiful Abraham Lincoln quote, where he says, when I do good, I feel good and when I do bad, I feel bad. That is my religion. Because if we can really go full circle on the first clip, we had there for episode 28, you and Mohnish talk about how ethical behavior is such a huge competitive advantage and it’s really the same principle that’s at stake here because it’s incredible self-serving to be kind to other people. It’s incredible selfish because it is truly the recipe for living a richer, wiser, happier life. Like do good to other people.

[01:21:59] William Green: Yeah, I’m certainly very struck when I look at the investors, I’ve interviewed who are the happiest that they tend all to be sharing in extraordinary ways. They’re not perfect individuals, as you can imagine, like all of us, they have their flaws, but they’ve all built into their lives a degree of serving others, being kind to others, lifting up others, you see it with Mohnish with the Dakshana Foundation, which is extraordinary, which I really encourage people to look at. He’s built into his life.

[01:22:32] William Green: The idea of lifting people who are very deserving, An incredibly talented out of poverty. That’s an incredible thing. And I don’t know, it was very striking to me when I did my interview with Mohnish on the podcast where we were talking about David Hawkins. And I said to him, it’s curious to me that you came out of it thinking the virtue I want to go big on is being more truthful.

[01:23:01] William Green: So to me, I came out of it thinking, it’s really about being kinder and he said, well, it’s easier for me to be truthful and to be kind. And that made me think, oh, well, maybe it’s easier for me to be kind than to be truthful. And so maybe I need to do more to try to be truthful. And so again, none of this stuff is simple, but one of the things you learn from Hawkins is that when you find a great virtue, whether it’s being truthful or kind, you want to go big on it.

[01:23:39] William Green: And one of these great timeless virtues, if you really take it seriously, can take you a very long way. And so in terms of, you know, the transformation of your own consciousness. And so I, one thing that I’ve memorized. from Hawkins is this line where he said simple kindness to oneself and all that lives is the most powerful transformational force of all and I think about that a lot because It’s just in a very complex and confusing world If I keep coming back to that idea of simple kindness to oneself and all that lives I know that I’m going to be approximately okay over time, but then I was looking this morning I was looking for the quote from Power V.S Force that came from.

[01:24:26] William Green: And I know Power V.S Force isn’t your favorite of Hawkins books, and I agree. I mean, I think it’s a very profound and important book, but there are other books of his that I found probably even more helpful. But I tracked down the quote, and I had written the entire quote, the longer part, on a card that I had attached to my wall in a really prominent place in my study that I kept looking at, and I’d taken it down because I had my study painted, but I actually typed it out again this morning, and so I have it in front of me and I wanted to read it to you cause it’s such a, the full quote is extraordinary and it’s really worth internalizing. So here’s what Hawkins says.

[01:25:02] William Green: It says simple kindness to oneself and all that lives is the most powerful, transformational force of all. It produces no backlash, has no downside and never leads to loss or despair. It increases one’s own true power without exacting any toll, but to reach maximum power such kindness can permit no exceptions, nor can it be practiced with the expectation of some selfish gain or reward, and its effect is as far reaching as it is subtle.

[01:25:30] William Green: That to me is very powerful on a number of fronts, right? I mean, for one thing he’s saying, it’s not just kindness to all that lives. It’s kindness to yourself as well. So when you see your own flaws, your own failings, you stumble to look at yourself and say, well, yeah, I’m human. I’m flawed. And you know, let me let go and start again with self-compassion and try to do better next time.

[01:25:53] William Green: So it’s not giving yourself a total blank slate carte blanche to do whatever you want this lousy, because, you know, you’re going to be forgiven for it. And we’re all flawed, but it’s at least saying, yeah, I’m human and I’m flawed. So let me be kind to myself, which was never particularly easy for me.

[01:26:10] William Green: So trying to rewire myself on that front, but then this idea, the kindness, it can’t be practiced with the expectation of some selfish gain or reward, partly with everything that we do. It’s the intention behind it. It’s the consciousness behind it. So it’s really wonderful to be. kind and generous. And because of what we know from Robert Cialdini and the reciprocation process, you know, people are going to reciprocate.

[01:26:39] William Green: And if you’re kind and you’re likeable and you’re decent and you’re ethical, they’re going to respond and you’re going to draw people towards you who are also kind and decent. And that’s a tremendous benefit. But there’s also this higher level that where you don’t just do it for a selfish gain, you do it because I mean, at the highest level, you know, sorry to put it in spiritual terms, but there’s a word Lishmah which in Hebrew means to give pleasure to your creator.

[01:27:05] William Green: You do it to say, well, whether I believe in a creator or not, it’s like, this is the best part of myself. Let me let me give strength to the best part of myself. So I think there’s a difference when you do the right thing with a different intention and I remember Chris Davis, who you mentioned before, once saying to me that he thinks the fact that Charlie doesn’t necessarily think he’s going to get rewarded in the afterlife for behaving ethically and honorably, he said, is almost kind of better. Like, there’s something about behaving honorably without any expectation of reward that’s kind of better. I don’t know if any of that makes sense.

[01:27:45] Stig Brodersen: I think it makes a lot of sense, especially if you put it in those terms of do good and feel good. And I’m almost ashamed to say that whenever I started adopting that, it was partly for selfish reasons.

[01:27:58] Stig Brodersen: I realized how good I felt whenever I was nice to other people. And I’m shocked that it took so many years for me to figure out. And I think some of those things are, you know, I read, I think it was how to win friends and influence people, but it was many years ago. And in that book that he talked about Benjamin Franklin and like the different virtues and choosing which virtues to be a part of your life.

[01:28:21] Stig Brodersen: And I remember thinking at the time, and I, even to some extent today that it was so, it felt so daunting. It’s, it seemed so ambitious to live a life like that and live according to all those virtues. But I think I want to quote a good friend of the podcast, Tom Gayner and say, to be directional correct, that’s enough and then see what happens. And even if you don’t come any closer than directional correct, it’s still wonderful. And you will be ahead of 99%. And so I think I would leave it at that. It’s at least for me, it’s been immensely helpful. And I wanted you to have the last word here, William.

[01:28:58] William Green: Yeah, I’ll just give you one really small anecdotal insight on this subject of kindness. Well, so we have that story from Arnold, right? Where this kindness of this woman, something like 67 years ago has reverberated over decades and has had this immense impact that she would never have known on Arnold, but Arnold then is doing things like mentoring this young investor I know who’s kind of remarkable.

[01:29:26] William Green: And so I see him carrying it forward in a really wonderful way. But then at the same time, I’ve had this very vivid example of kindness and unkindness this week, where my daughter, Madeline, who’s 22, who’s at college in Boston, just in her final semester or two at college, has been desperately struggling to get, to find her way through this bureaucratic mess, where she could sign up for classes at Buckley College of Music, while also being in classes at Emerson College, where she officially is a student And it’s complicated, and she’s always late on things, and it’s always complicated, and you get rejected from certain classes, and they’re over full.

[01:30:06] William Green: And it got to a point, literally, where yesterday we thought, she might have to leave college this semester, like, this semester may just be a total bust, she may, the classes she got accepted into from Berkeley, she may no longer be allowed to stay in because she doesn’t have enough credits from Emerson.

[01:30:24] William Green: And a couple of people really, like, came out of the woodwork and just totally took charge of the situation and saved her semester. Totally. I mean, literally, yesterday, she basically would have had to pull out of college for the semester. And it was just because a couple of people, one of whom she’d never met, and she wrote to this woman and said, you know, I’ve missed your first two classes.

[01:30:46] William Green: This is the only class I can get into where I get these credits and I’ll be able to stay in college and do these other classes at Berkeley that I’m desperate to do. And this woman, despite her missing the first two classes was like, yeah, okay. I see how desperate you are. And you don’t have the pre requirements to be in my class.

[01:31:06] William Green: So you need to talk to the chairman of the department to get those waived, and someone else writes to the chairman and gets them waived, and it was really extraordinary to see sorry to be so self-referential, but to see this situation where a couple of people, for no reason except that they were kind, stepped up and, you know, salvaged a really difficult situation for someone who is really struggling and who is very deserving and really talented, but really confused by the system and not served well by the system.

[01:31:43] William Green: And there were other people who really did the opposite. So that to me is a really beautiful and very tangible and very vivid thing. And it’s literally been happening in the last day. So, I mean, I declined a FaceTime call from my daughter while we were having this conversation. So this is a very live, live issue and so it’s just a reminder that these things that don’t seem like that much, like writing an email at an opportune moment to the right person can actually change somebody’s life.

[01:32:14] Stig Brodersen: What a wonderful way to end this podcast episode, William. I think I’ll just leave it at that and hope that people will tune in another time whenever William and I are having these quarterly Richer, Wiser, Happier conversations. So let’s just end it there. Thank you so much for tuning in.

[01:32:30] William Green: Thank you.

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