William Green: (03:24)
And then what was funny is I was reading the first chapter of my book. I was looking over it again the other day, reminding myself of what was in it. And I’d written all about Mohnish Pabrai and one of the great lessons from Mohnish Pabrai that I’d written about when I just hung it out with him in Irvine, California and I was flying back from California to my home, and I write this memo to myself of lessons from Mohnish. One of the great lessons is, okay, live by an inner scorecard and don’t worry about what others think of you, don’t be defined by external validation. And what I suddenly realized is I’m hugely defined by external validation. And I care deeply about what others think of me. And it was just one of those reminders where you can so easily fool yourself into thinking, yeah, I’m wired this way, or this is what I believe.

William Green: (04:10)
And I was just kind of thinking in investing, it’s one of these areas where if you lie to yourself if you’re not self-aware, you’re so vulnerable. And so for a writer like me, it’s kind of a little bit comic that I can fool myself into thinking that actually I live by an inner scorecard and there’s not really a price to pay. It’s just kind of a human foible. It’s just like, you look at yourself and you laugh. And you’re kind of like, really, I still care so much what other people think of me. But as an investor, I actually think it’s hugely important that tendency that we have to deceive ourselves.

William Green: (04:42)
And I was sort of thinking about this, there’s one point in the book where I write about my friend, Ken Shubin Stein, who’s a neurologist who was a private equity investor and hedge fund manager, very successful, very, very smart. And so he is really an expert on the brain and biases. And I remember Ken saying to me, the one thing that every investor should do is they should actually take Charlie Munger’s list of 24 causes of misjudgment, psychological biases, and the light. And they should rewrite it and include their own biases and their own failings and their own mental glitches.

William Green: (05:16)
And I remember Ken saying to me that one thing he’s vulnerable to is authority bias. So if he saw that people like Charlie and Warren, people he really admired had bought a particular stock, it swayed him. And so he needed to be aware of that vulnerability. And likewise, Howard Marks said to me that he knows he’s inclined to worry. So he just has to know that he’s filtering things through that particular kind of temperamental bias. So that during the 2008/2009 global financial crisis, he had to sort of say to himself, well, I can’t be a chicken here. This is an amazing opportunity. And the prices are so low that I can’t be a chicken.

William Green: (05:54)
So in some ways, there’s a sort of self-congratulatory aspect of my celebrating the fact that people like Charlie have said something really nice about me. And then there’s also this kind of reminder that I better actually be pretty careful because it shows me just how vulnerable I am to that need to sort of please others, feel like I’m approved of and admired. And that’s a vulnerability. And I think one of the things is you just have to understand your own quirks. So you have to be a kind of great use of the machine called Stig Brodersen. And I have to be a great user of the machine called William Green. And that requires me to understand that this bit is kind of falling off and this bit needs a little more oil and this bit needs a repair. So this kind of led me to think about a lot of ways in which we’re vulnerable, I think.

Stig Brodersen: (06:46)
It makes me think of Paul Charles Ellner. It’s just this amazing book and there’s this wonderful quote by Richard Feynman where he’s talking about, “I’m going to butcher this up,” but it’s somewhere along the lines of don’t fool yourself. And remember you’re the easiest one to fool. Whenever you said that for us in the value investing community, we often heard about the inner scorecard and we also scribe to it. And I think whenever push comes to shove, it’s like, no, we just can’t. It will almost make us inhuman if we did. And if I had to choose one person aside from Charlie Munger perhaps, who really lives by that inner scorecard, would be someone like Mohnish Pabrai, an absolutely brilliant person who now lives true to his values. And it’s wonderful. And even he said that whenever Buffett gave him the nod of how he thought about charity induction, he was like, oh, I felt I could die in peace. And that happens even to Mohnish. Even, can I say to the best of us, I think that’s just how we are wired?

William Green: (07:44)
And Mohnish, I think gets enormous satisfaction out of the fact that Charlie who he absolutely reveres and rightly has kind of adopted him as a friend and mentee, and I think for Mohnish who’s always been a bit of an outsider, that’s an amazing thing to have the resident genius of the investment community say, no, no, you’re fantastic. And I think even with Warren, much as we say, he lives by an inner scorecard and it’s true that he does live by an inner scorecard, I do think there’s some degree to which Warren enjoys the bright lights of the Omaha annual meeting and 40,000 people flocking to revere him and listen to him and Charlie. And we’re just complex characters, right? I mean, I think there’s something that’s really selfless about Warren and Charlie and they’re there as teachers and they love imparting wisdom. There’s presumably ego there too.

William Green: (08:39)
And so I see that in myself as well, as this combination of arrogance and pride and vulnerability and fragility. And I just think it’s really useful to have this kind of inner inquiry, especially as an investor, because I think the markets are so brutal that if you have these underlying fault lines in your character, they’re going to get exposed sooner or later. And so if, for example, you are impetuous or you’re fearful, or you’re inclined towards jealousy and envy of other people’s returns, it’s going to get you in the end, unless you actually take some countermeasures.

William Green: (09:20)
I’m thinking of this a lot recently because I interviewed Bill Miller recently and he’s talking to me about why Bitcoin is so wonderful. And I’m sitting there and I’m thinking, geez, back when I was writing this book, I remember spending a couple of days with him at his home in Maryland and his office in Baltimore. And he was saying to me, “Look, William, here’s why Bitcoin is so great.” And at the time it was at 8,000. And I’m like, there’s no bloody way I’m spending 8,000 on this thing that has no apparent value. What am I doing? And so here I am. Now it’s at what, 60,000 or something like that. I haven’t checked it in the last couple of days. And I feel like such a schmuck and I can feel the pain of missing out, rising up, and just knocking me off course.

William Green: (10:07)
I had lunch with Guy Spier a couple of weeks ago. I’m close to who runs the Aquamarine fund and who I know has been on this show as well. And I was saying to him, “How do you deal with the whole cryptocurrency thing and how are you thinking about it?” And he said to me, “Look, I’m a farmer. I can just stay in these fields that I’m plowing. I can just focus on these companies that have good destinations and I don’t need to play other games.” It was one of those things where I’m like, he has so much better temperament than I do. Like for me, it’s still kind of torture. I just keep reminding myself, no, I shouldn’t be investing in things I don’t really understand. And so let me understand Bitcoin more. Let me figure it out. Let me really get my head around it because I was so distracted by working on my book. I sort of missed it. I just didn’t really give it enough thought.

William Green: (10:54)
I just think this whole area of self-knowledge, self-awareness of asking yourself how you’re wired, where you’re vulnerable, where your strengths are, temperamentally and emotionally and where your weaknesses are, is just really, really helpful.

Stig Brodersen: (11:09)
Well said, William. Here on the podcast, I don’t think it’s any surprise that we’re avid readers. And one of the most public guests we had on here this year, was business author, Jim Collins, that was back on episode 372. And what Jim did with his team was to analyze big sets of data. And then look at the most successful company founders. He concluded that there was no such thing as a right background to have, a right background as this education level or rich or middle class or lower class or whatnot. That was not the determining factor to be a successful company founder, because we heard all these stories about this person, he had this background. So that’s why it happened. And this person had a different background, which is also why X, Y, Z happened. So I’m curious to hear how that translates into the investors you’ve been speaking to. And is there such a thing in your experience as to have the right background, to be a successful investor?

William Green: (12:05)
There’s such a tremendous range in the backgrounds of the people I’ve interviewed, but I think what I would say is I think it’s true to say that either temperamentally or figuratively or literally they’re all outsiders, they’re all people who diverge from the crowd and question orthodox opinion. And it makes sense because the only way you can beat the market is if you diverge from the market. So you have to, I think come from a slightly strange place intellectually or sometimes physically or temperamentally. I think of someone like Sir John Templeton, who I interviewed 20 years ago in The Bahamas. And he had physically removed himself from the crowd by moving to The Bahamas. And so he had this kind of detachment and he had grown up in this unconventional way in Winchester, Tennessee in this kind of small-town life. Then he’d gone to Oxford as a Rhodes scholar and then he’d traveled for months to something like 30 countries if I remember rightly.

William Green: (13:08)
So, he was always an outsider thinking differently. And he had this informational advantage, I think that came from the fact that he was studying foreign countries and foreign cultures, but at a time when nobody else really even had passports. I mean, it just wasn’t common for people to fly, for example. It was sort of, he was going to Germany before World War II in the run-up. So he was seeing the hysteria over Hitler. So he saw the Olympics there before World War II broke out.

William Green: (13:41)
And then you think of someone like Mohnish who grew up in, I think it was a $20 a month apartment in the suburbs of Mumbai, which was then Bombay. So again, an outsider coming at things from a different perspective. Or you think of Bill Miller, who was studying in a Ph.D. philosophy program instead of an MBA program and then went and became a military intelligence officer. And I was talking to him recently about the extent to which studying philosophy instead of business had helped him. And he’s like, “Well, look, that’s why I gave $75 million to my old philosophy department as a gift because I wouldn’t have been so successful if it hadn’t been for them.”

William Green: (14:18)
So they’re all people coming from these weird backgrounds and slightly offbeat. That’s not to say you can’t just go to Wharton or Harvard Business School. There are plenty of people like Joel Greenblatt and Howard Marks and the like, who’ve gone that path, but they’re also quirky in their own special way. And then in some ways think of someone like Nick Sleep, who I write about at great length in the book, who’s also the ultimate outsider, both in the way that he invests and in his background. So Nick, and for your listeners who don’t know them, Nick and his partner, Zak, called Qais Zakaria, but goes by the nickname Zak, they set up this fun Nomad that, I think in 13 years of which are 921% have beat the market by something like 804 percentage points. And they regarded it as what they call the rebellion against the sin and folly of Wall Street. So the whole thing was incredibly idiosyncratic. You look at where they came from and it kind of makes sense that they were so offbeat.

William Green: (15:18)
I remember asking Nick about his childhood and he said, “Well, look, I went to this private school, this boarding school Wellington,” which I think was set up by Queen Victoria in England. And it had something like 450 acres of land, one of these beautiful old English private schools. And he was one of the only kids who wasn’t a border. So at the weekend while all these other kids were playing at school, playing rugby and cricket and stuff like that, he was literally working in a pub. And so he said, “I just was happy being outside the group.” And so he got used to very early on not being a part of the group. And then goes off to university. I think he went to the University of Edinburgh, starts off studying geology, and then switches to geography.

William Green: (16:03)
So again, nothing like the conventional route that most people have in studying business and finance and accounting and all of that. And then didn’t have any intention at all of becoming a fund manager. He actually wanted to be a landscape architect and he had this kind of fantasy that he was going to be building these beautiful parks, designing gorgeous parks, where people could… He’s a bit of an aesthete, and he is kind of spiritual and philosophical. And he thought people are going to be able to retreat from the noise and ugliness and busyness of life. And they’re going to be in these beautiful parks. And instead, he goes to work for this landscape architecture firm and discovers that he’s just designing parking lots and dormer windows. And then after a few months, they lay him off.

William Green: (16:46)
And he had an apartment in Edinburgh that he and his future wife Serita had bought. And so he wasn’t thinking, let me become a fund manager. He literally is just looking around thinking, oh geez, how am I going to stay in Edinburgh? Well, let me think about what Edinburgh’s good at. So he is like, well, they do IT. There are lots of IT companies. So he was thinking of doing that. And then he reads a book about the investment business, some obscure book on unit trusts. And he’s like, oh, that sounds cool because it’s kind of like an intellectual inquiry. So he ends up going to work at this tiny Scottish investment firm and discovers that he’s really good at it. And so he is just like this weird intellectual who’s landed in this profession by accident.

William Green: (17:27)
And so while other investors are reading accounting tones and stuff like that, he was reading Zen and the Art of Motorcycle Maintenance by Robert Pirsig, which he became absolutely obsessed with. And the whole thing is this inquiry into values. And so Pirsig, who’s this very eccentric guy, was fascinated by the idea of quality and what quality constitutes. So when Nick set up Nomad with Zak, it was really a kind of spiritual and philosophical exercise to see if you could create a fund that was all about quality. So would you treat your partners in a way that was high quality or would you squeeze them as much as you could to get as much money out of them? Could you be truly aligned with them?

William Green: (18:12)
Literally, they set up a fee structure, for example. So I think they had a tiny, tiny annual management fee to cover their costs. And then they took, I think it was 20% of the profits, but after a 6% annual hurdle and then they were like, so let’s make it even harder for ourselves. So after a few years, they put their profits, their incentive fee in a holding bucket. And they said, well if we screw up, we’ll give back the profits. So they kept making it worse for themselves and better for their shareholders.

William Green: (18:45)
And I remember Nick saying that at one point during the financial crisis when they had this kind of emergency meeting in McDonald’s to see if Nomad was going to survive, I didn’t write about this in the book, he said, “We were so deep in the hole. We were down so much,” because I think Amazon was down about 50% that year, 46%. For the fund, I think they were down. And he said, “We actually owed years’ worth of fees. Like we were going to have to work for free for years.” And then it just happened that they bounced back so unbelievably, they made about 400% over the next three or four years. They ended up doing incredibly.

William Green: (19:17)
But so here I wrote about this in the book, I say, these were these two odd ducks who landed by mistake in the investment business. Total outsiders. Zak wanted to be a meteorologist. And he used to read weather reports as a kid. And his parents just said, no, you can’t do that. And so he was just this very eccentric, brilliant mathematician, went to Cambridge, wanted to work for his family’s company, but his father got cheated basically and went bankrupt. His father had fled from Iraq where they’d been purged, where Zak was born. And the father invested in all of these companies that were run by unscrupulous people on Wall Street. They were basically Ponzi schemes, I think. And he just lost everything. He was leveraged. He invested borrowed money and he got taken advantage of by unscrupulous people and lost everything.

William Green: (20:05)
So Zak, far from wanting to be an investor, wanted to be a meteorologist and was disgusted by what he called the casino aspect of Wall Street, this tendency to line your own pockets at other people’s expense. And so for him as well, Nomad became this exercise in quality. He loved the fact that you could say, well, this isn’t about the money. We’re just going to focus on long-term returns on getting the best long-term returns we can. So everything is going to be super-rational. We’re just going to own about 10 stocks. And we’re going to focus on companies that have great long-term destinations. We’re not going to read any Wall Street research. We’re going to think totally independently. We’re just going to travel and see as many companies as we can, study the best business models, and think about what businesses are likely to reach a great destination in 10, 15, 20 years.

William Green: (20:56)
And that led them to have this very concentrated portfolio that was full of these companies that embodied this model of scale-economics-shared. So companies like Costco and Amazon grew by driving down costs massively, creating an incredible deal for their customers, and just giving them more and more and more value. And so as they grew, they gained this kind of competitive advantage that these economists scale, that they just kept sharing. And so Nick and Zak were just totally independent of Wall Street, just thinking about these questions of what’s the best business model of all? And so in a sense, they’re the perfect example of people who didn’t go the conventional route in terms of studying business and investing. They were thinking about these weird questions from Zen and the Art of Motorcycle Maintenance about how to build a quality fund, how to lead a quality life, how to treat your shareholders with quality, how to live in an honorable way. And then having cracked the investment problem, they retire from the business at the age of 45 and they say, well, we’ll spend the second half of our lives giving back the money to society because we don’t want the money to bend us out of shape. And we want the joy of giving back and seeing our money go to work and help other people.

William Green: (22:11)
And so there’s something so wonderfully eccentric and idiosyncratic about the whole thing. I think they’re just a really extreme example of this unorthodoxy, this willingness to question the conventional way of doing things. I don’t want to depress people who are going the regular route and are saying, no, I want to go to Wharton and I want to go to Harvard Business School. I think that has tremendous value as well. But even if you look at someone like Joel Greenblatt, who I write about at length, Joe went to Wharton and he was just appalled by the fact that they kept telling him that the markets were efficient. And he said, “I just didn’t believe it. I didn’t buy it. I could see that it wasn’t true.” And so the thing that actually changed him was reading an article in Forbes about Ben Graham. And he’s like, “That makes more sense. The market is bipolar. I can see that.” And so that changed his life. So even someone who went this kind of conventional path, like Joe, ended up questioning it and veering from it.

William Green: (23:13)
I think, again, one of the things you have to ask yourself as an investor is how am I wired? Am I someone who’s comfortable being outside the herd or do I need to be inside the herd? And again, it’s not that one is better or worse, it’s that you need to understand yourself so you know what game to play. And Howard Marks said to me, “Most people should index most of their money,” which is a great path where you are exploiting the wisdom of crowds. But if you want to be someone who outperforms over the long term, I think you’ve got to be a little weird. You’ve got to be a little strange. You’ve got to be comfortable outside the crowd.

William Green: (23:53)
And maybe that’s one reason why I was so drawn to these people that I’m writing about, is because I’m an English writer living in New York. I’m a Jew who went to eat in the poshest, oldest English school pretty much. So I’m kind of a weird outsider. And so when I saw all these maverick, free-thinking, iconic classes like Nick and Zak and Joel Greenblatt, Mohnish Pabrai, I sort of recognized them as my weird tribe of misfits. They’re much better investors than I am, but there is something temperamentally similar, I think between a writer and a weird maverick contrarian value investor, certainly.

Stig Brodersen: (24:36)
I think that’s a great segue to my next question for you, William. There’s this saying that concentration makes you rich, but diversification makes sure that you stay rich. You know the best investors in the world and you follow their portfolios up close. Do you think that statement is true?

William Green: (24:53)
It’s a fascinating point. I think there’s clearly a tremendous tension between the benefits of concentration, where you see people like Joel Greenblatt in his early career, having maybe 80% of his money in six to eight stocks. And he ends up making 40% a year over 20 years at Gotham, his original hedge fund, an incredible performance by buying weird little stocks off the beaten path that he said, other people would’ve bought if they’d done the work. So there’s that path, that’s also the path that Nick Sleep and Qais Zakaria took. When I chatted with Nick recently, he still basically just owned four stocks. His personal portfolio was just Amazon, Costco, ASOS, and Berkshire. And that’s it, four stocks in his entire portfolio. And Zak, who’s never sold a share of Amazon, when I spoke to him last had 70% of his portfolio in Amazon. And so, I mean, amazing concentration. So there’s this lure of concentration where you look at it and you’re like, wow if you want to outperform, this is the way to go-

William Green: (26:03)
You look at it, and you’re like, “Wow!” If you want to outperform, this is the way to go. And yet, it’s also, they’ve done incredibly well. Because, A, they were really smart. B, they were kind of lucky. I mean, I remember Joel Greenblatt saying to me, once, when I asked him to explain how that original fund had done so brilliantly, he said, “Look, we stayed small.” I think they had something like 300 million dollars in assets when they closed it to outside investors and returned all the outside money; it remained really small. And he said, “We concentrated our bets and we got lucky.” He said, “For some reason, we just didn’t have any major disasters.” And he said, “Part of it was I had a very high hurdle; I had to be absolutely certain before I invested in something.” Because he said it tortured him to lose money.

William Green: (26:45)
So it wasn’t an accident, but there was an element of luck. I’d say there’s probably an element of luck with Nick and Zack, despite the fact that they were brilliant. And they figured out this one great business model of scale economies shared, that dominated their portfolio in the end. But then, as I was saying, there’s this tension, because if you are concentrated and something goes wrong, you may not survive.

William Green: (27:10)
And so look, say, at the Sequoia Fund, Bill Ruane ran. I remember, many years ago … For your listeners who don’t know Bill Ruane, he’s the guy who when Buffet shut down his limited partnerships in the sixties and the market was massively overvalued, he said, “Well, if you still want to invest, invest with my friend, Bill Ruane, who’s great. And Ruane proceeded to have this unbelievable record, beating the market by thousands of percentage points over decades.

William Green: (27:35)
And I had this kind of rare interview with him, I think, in 2001, where I was asking him the secret of his success. And he again said, “Look, I want to really concentrate. I want to know everything I can about seven or eight ideas. And he said, “If you find something really cheap, why not put 15% of your assets in it?” And so, at the time … This was 2001. So I think it was still the tech bubble at the time, the.com bubble; it hadn’t yet burst, in around March of that year. He had I think, 35% of his portfolio in Berkshire Hathaway, which was totally out of favor. And he said, “Look, you have the smartest guy in the country running this undervalued business that nobody loves. Everyone is saying, “Buffett has lost his touch.” And so, he was totally happy to do that.

William Green: (28:21)
And I was hugely impressed with that and I thought, well, that’s brilliant. But then you look at his successor, Bob Goldfarb … I remember Bill Ruane telling me he was absolutely brilliant. And I’ve never met Goldfarb, but I’ve heard wonderful things about him, and that he’s a really terrific investor. Goldfarb had this kind of stunning record and was hugely admired. And then had, basically, a third of the Sequoia Fund in Valiant Pharmaceuticals, which imploded. And I don’t know, did it go down 90 something percent? And it basically ended this illustrious career of this great investor; this one huge mistake. And so I think that gives you a sense of the double-edged sword of concentration. It’s a beautiful idea when it works, and if you are right and you’re lucky, it’s fantastic. But if someone as smart as Goldfarb can get blown up by Valiant, that’s a really, really good lesson for the rest of us, just to be a little humble and a little wary.

William Green: (29:28)
And I think of someone like Templeton, telling me, all those years ago, when I interviewed him, I guess, around 2000, saying to me, “Look, for a regular investor, a regular investor ought to own five mutual funds, probably, and they should be giving you exposure to different parts of the market.” And I’ve thought about that a lot, over the years. Because he said to me, “Why would you be so arrogant as to believe that you can pick the best fund, the best advisor, the best country?”

William Green: (29:56)
It’s tricky because Templeton was brilliant and came top of his class at Yale, and as a Rhodes scholar, and all of that. And so he was able to do things like … At the time that I was interviewing him, it was the Asian financial crisis. And he made this enormous bet on a Korean fund that had been the single worst performer of the last year. And he put something like 10 million dollars in it, and made an absolute fortune; it was the number one fund, over the next year. It was just a brilliant contrarian bet.

William Green: (30:25)
So he could pick the single best country. I mean he had the intelligence and the temperament, and he was so on top of it, that I think he could pull off that stuff. But I’m constantly reminding myself, because I’m a slightly fearful person and I’m slightly skeptical of myself and worried that I’m full of hubris and arrogance and pride and self-deceit, I’m always saying to myself, “Well, yeah, what if I’m wrong? What if this person I trust, who’s a great fund manager, turns out to be a conman?” Or “What if I have all of my money on one brokerage firm and there’s a cyber attack, God forbid, and it falls apart?”

William Green: (31:04)
So there’s a part of me, temperamentally, that’s very drawn to these highly concentrated investors. I have huge admiration for the people who just own four stocks, 10 stocks, 12 stocks. I mean, I think that’s wonderful, but I think you’ve got to be wired in a particular way, where it’s not painful for you when the market gets killed. And I remember Greenblatt saying to me that there were times where, in a matter of days, his portfolio would go down 20, 30%. And he said, “That’s fine for me because I understand what I own.” But he said, there’s no way that he could have outside shareholders who could cope with that kind of volatility.

William Green: (31:42)
So yeah, I just think there’s a real tension between the need to survive and the yearning to outperform. And you have to find some comfortable balance that suits your temperament. If you look at someone like Fred Martin, who I write about, and he just has this rule where he says, “At the time of purchase, I’m never going to put more than 3% of my portfolio in any stock.” He owns about 45 stocks, and he lets them run. So he owns them for at least a decade, on the whole. So if something performs really well; great, it becomes a big part of his portfolio. But he said that that strict adherence to that rule has enabled him to survive for decades, and, yet, out-perform.

William Green: (32:25)
You look at Tom Gainer as well, where, he owns about a hundred stocks, which seems absurdly diversified in some ways. And yet if you look more closely at his portfolio, actually, two-thirds of the portfolio is in the top 20 holdings. So Tom describes himself as radically moderate. And I think that’s an interesting balance that suits his personality; this kind of balance between concentration and diversification, out-performance and survival.

William Green: (32:53)
So yeah, that’s a sort of a long and complicated answer to a very difficult question.

Stig Brodersen: (32:59)
I really like that, William. At the end of the day, it’s all about learning, becoming a better version of yourself. Whenever I look at the value investing community, I really … I know it’s hard to read the label from inside the box, but it seems like we have a unique culture in the value investing community. And I do think a lot of that comes from what most of us have learned directly from Warren Buffett himself. If not in person, then through his letters, and through everything that he’s … Interviews and whatnot.

Stig Brodersen: (33:29)
Buffett has said, himself, that he wants his legacy to be as a teacher. Or he was asked during one of the annual shareholders’ meetings, “What do you want your legacy to be?” And I kind of found that to be very insightful. It wasn’t like the best investor of all time or whatnot, it was to be a teacher. And whenever you study Buffet’s relationship with his old professor, boss, and mentor, Benjamin Graham, I do think it explains a lot of how the value investing community got started, and where we are now.

Stig Brodersen: (33:57)
So from your perspective as an educator in the value investing community, what do you think will happen to the community when Buffett and Munger are no longer among us?

William Green: (34:09)
I think they’re irreplaceable. I may be totally wrong, but I don’t see 40,000 people a year, flocking to Omaha to hear Greg Abel, Ajit Jain, Ted Weschler, and Todd Combs talk, if those are the successors. And that’s not in any way a diss on them. I mean, I remember walking on the floor, in Omaha, at the annual meeting with Mohnish and Guy Spier, and running into Greg Abel. And he sort of just comes and chats with us, and he is standing there, posing for photos with us. He couldn’t have been more humble, modest, smart, amiable. You just look at him as this kind of … You can exactly see why Warren would like him; like not arrogant and yet really smart and just totally capable.

William Green: (35:03)
But not charismatic in the way that Warren and Charlie are. I mean, Charlie has a strange kind of charisma, right? Like the, “I have nothing to add,” kind of curmudgeonly brilliance. But there’s something … I remember it feeling like a comedy show. Like, it was like you were watching Walter Matthau and Jack Lemmon when you see these two old guys quipping on the stage. And I remember, once, hearing Charlie say something about how, “When you mix turds with raisins, you’ve still got turds.” And Warren just sort of says, “Now you see why I do all of the talking?” And it’s just funny. You watch them, and you think, they’re not only really clever and really successful and really honest about their mistakes and stuff, but they’re funny, they’re entertaining. And so it’s kind of this gag show as well, where you are learning. I don’t see that that can survive. I may be totally wrong.

William Green: (35:58)
But then I think one of the things that’s extraordinary about the value investing community, as you mentioned, is that these guys are teachers. And I think Ben Graham was extraordinarily generous in sharing his ideas. And Warren has taken that habit of being extraordinarily generous in sharing his ideas; same with Charlie; they’re teachers. It’s a kind of didactic exercise, the whole company, right? It’s like, this is how you run things.

William Green: (36:27)
And I remember Nick, Nick Sleep, and Zak, saying that when they went to Berkshire to the annual meeting, the first time, it was like the scales fell from their eyes. Because Zak had been working at, I think, Deutsche Bank, during the tech bubble, and he was just appalled by the willingness of Wall Street to sell any old crap to any credulous investor who’d buy it. And he was a broker, and it just killed him, because he’d seen how his father had been ripped off by unscrupulous brokers and had been bankrupt. And suddenly it’s like this cosmic joke, that he has to become a salesman, himself, of crappy ideas. And he just couldn’t do it; he was a terrible broker and couldn’t sell anything.

William Green: (37:09)
And then he goes to work for Marathon, the company where Nick was working before they set up Nomad. And they go to Berkshire together, I think, in 2000, or 2001. And he’s like, “Wow! Warren and Charlie, they’re talking about businesses, and businesses we love, and businesses that are going to do great, over the long term. And he was like, there’s no element of the casino here. It was just the most fabulous thing.

William Green: (37:29)
And so, Nomad grew out of that idea, of like, “No! No! We are not just lining our own pockets. We are not selling crap to people. We’re studying great businesses, and collecting them for the long term.” And so that role model … It wasn’t just that they were hearing the ideas from Warren and Charlie, it was they were actually seeing the behavior being modeled by them.

William Green: (37:51)
One of the things that had a huge impact I think, was seeing that Warren and Charlie were getting salaries of, I think, a hundred thousand dollars a year, to run this company that now has … What? A market value of 600 billion? Something like that. 650 billion I mean, it’s an extraordinary thing. They had set themselves up to make money as your partner. They weren’t making money off fees, off screwing you, squeezing fees out of you, regardless of how well or badly they performed. They were making money alongside you.

William Green: (38:22)
And when they messed up, they would tell you. I always loved it when I went to one of the meetings, and Charlie said, “Yeah, we should have bought Google. We totally failed you.” And then as if that’s not enough, to have told 40,000 people, “We totally failed you with Google,” he says, “Yeah, we totally screwed up Walmart as well. And we should have owned that.” I mean, it’s a wonderful thing; that honesty and integrity.

William Green: (38:43)
And so I think one of the great lessons; it’s not just what they write that’s been so helpful, or what they say that’s so helpful, it’s the behavior that they model. And you see that and it makes you want to be a better person. This isn’t to say they’re ideal. They have their foibles and flaws, just as all of us do. But you look at this kind of enlightened capitalism that they embody, where they’re trying to be honorable, they’re trying to be transparent, they’re trying to treat you as partners, and it gives you a sense of, well, there’s a better way to do this. We don’t need just to be selfish and just to look out for ourselves.

William Green: (39:20)
And you think of someone like Charlie said, when I asked him about, “What the secret of a happy life was?” And “What we could learn from him and Warren about a happy life?” he immediately starts talking about partnerships. And he said, “Warren has been a marvelous partner to me. And I’ve been a good partner to him.” Which I think is also a very interesting way to phrase it, that he’s diminishing his own … His praise for Warren is higher than his praise for himself. And then he said, “And we have a really simple model, a really simple system, which is, if you want to have a good partner, be a good partner.”

William Green: (39:53)
So, to me, when you see that behavior, that has an enormous impact on you. It makes you … There’s this better way of doing business. And so I assume that culture is going to go on because I assume that in picking people like Greg Abel and Ajit Jain, those guys embody that same mindset and that culture will survive for a while. But without those two charismatic guys there to teach you, something will change … Something.

William Green: (40:20)
But then you think about Charlie’s phrase that, “He’s always been hanging out with the eminent dead.” So he’s also drawing great guidance and insight from people like Ben Franklin and Darwin … Einstein. And so there is something about the way that great behavior endures, or great insights endure. We’re just very lucky that they’ve left us with so many transcripts of their talks, and so many interviews. And things like “Poor Charlie’s Almanac”. So you’ll always be able to study their lessons, in the same way, that Charlie can study Ben Franklin.

William Green: (41:02)
But I don’t know. It’s like, with Jack Bogle not around, there’s something different, right? Like, did Vanguard ever find a real replacement for Jack Bogle? I mean I’m sure they were extraordinary business people, and the company has continued to grow incredibly, but Bogle is a kind of moral force, fighting for the rights of shareholders. For that, you have to go to the books that he left us with.

William Green: (41:24)
And so, I don’t know, so part of what I was doing in my own book, I think, was trying to celebrate and honor these people who I think embody a more enlightened way of doing capitalism, so I could try to preserve some of those ideas. So I do think, the fact that we can study these people who are great role models is immensely helpful, whatever you’re studying; whether it’s spirituality, or philosophy, or investing, you want to, as Charlie would say, hang out with the eminent dead, hang out with the people who were the best in previous generations.

William Green: (41:59)
One of my favorite parts in Richer, Wiser, Happier was actually were… I think it was an obscure part that almost nobody will notice, that I think I tucked away in the notes on sources and resources, where I talked about Jack Bogle peering up in a conversation that I had with him. It was on the phone. I thought the phone had gone dead and I’d lost him. And then I realized he was choking up because he was talking about his mentor, Walter Morgan, who was one of the pioneers of the investment business. And he said, “Walter Morgan just had this idea that the shareholder is king.” And he said, “My God, once one of the shareholders wrote to him and said, “Mr. Morgan, I don’t have a good suit. Do you have a suit?” And he said, “And Mr. Morgan sent him one of his own suits.” And that spirit pervades Vanguard, I think. So it’s something that Bogle got from his mentor, Walter Morgan.

William Green: (42:51)
And when Vanguard was driving down fees and treating shareholders well, that was because Bogle had learned that the shareholder is king, from Walter Morgan. And so in a sense, I was trying to preserve this lineage of decent, honorable shareholder-oriented thinking, that had come to us from Walter Morgan, through Bogle, even though both of these guys were no longer alive.

Stig Brodersen: (43:14)
Let’s talk about the next generation of value investors. Let’s specifically talk about First Eagles’ Matthew McClennan. Depending on which generation you are, you might think of him differently. Not in any kind of bad way, but I guess to some generations he might be the person who took over from the legendary, Jean-Marie Eveillard, just one week before the Lehman brother’s collapse. But, in any case, you have the privilege of having to speak with both of them, back in Episode 345, last time you were on the show, we talked about Jean-Marie Eveillard. And I would definitely recommend everyone to go back and listen to that.

Stig Brodersen: (43:48)
But, today, I would like to talk about the new generation. I would like to talk about Matthew McClennan. Perhaps, some in the audience are not as familiar with him? So for those of us who are not, could you please introduce him to our audience, and also tell us about his untraditional background?

William Green: (44:05)
It’s a fascinating background. And firstly, I should tell you, I’ve actually been hired as a strategic advisor for First Eagle, just recently. So, part of the pleasure of that is, actually, that I’ve got to spend more and more time with Matthew McClennan.

William Green: (44:18)
He does have one of the most unusual backgrounds of any investor I’ve come across. It makes Mohnish’s background, and Templeton’s background, seem more conventional. Literally, Matthew McLean grew up, I think, the first six years of his life, in Papua, New Guinea. I once heard Joe Tamar say, “You’re the greatest investor from Papua, New Guinea.” And he said, “Sample size of one!” And it’s true, it’s a very unlikely background.

William Green: (44:41)
And his parents were this kind of, I guess, adventurous … I think his mother was an artist, and physiotherapist, and his father was a land surveyor. And so they start off, they just go to Papua, New Guinea, as a kind of adventure. And then they end up buying a property in Australia, that was this beautiful place, bordered by rainforest. And they were planning to get these permits to connect to the electricity grid. They couldn’t get the permits.

William Green: (45:05)
So McClennan literally grew up in this house that had no electricity, no hot running water. So I remember telling him that when he wanted to take a shower, for example, they would take a black plastic bag and they would fill it with water, and they would hang it, outside, in the afternoon sun. And then he would shower under a tree with this warm water that had been heated up in the black plastic bag.

William Green: (45:30)
And he said, throughout his childhood, basically, they didn’t have a TV. And then finally his dad decides to get a TV. And because they don’t have electricity, they rig the TV up to the car battery. And then, one day, his dad forgets that it’s rigged up to the car battery, and so he pulls out of the driveway and drags this TV through the front door. So they never had a TV again; the TV was destroyed.

William Green: (45:56)
So he, basically, spends his childhood in this very eccentric way, removed from what he called “the literal buzz of existence.” And so he, just, was reading, and literally reading a lot of the time by gas lamp. And he had this grandfather, who he described as a kind of true intellectual, who I think he’d been a doctor on a geophysical expedition to Antarctica. And he bought stocks, and he collected wine and cultivated roses. And so there was this sense in which, McLennan came from this kind of family of intellectual explorers, and kind of oddballs, who were totally outside the conventional path of life.

William Green: (46:36)
And so there’s something deeply intellectual about him. He said to me, once, he collects these kinds of mental models, these ideas, and he collects them in his iPhone, I think. And he said he just goes over and over them. His image for it was “Like raking my Zen garden”. And so he’s thinking really seriously about the lessons of history, for example. So he would be deeply influenced by something like “Thucydides History of the Peloponnesian War,” where he would see, well, the reason that Sparta and Athens went to war, was because they had all of this hubris and this rush to judgment. And so he’s like, so you want to have the opposite qualities from that. You want to have humility and you want to move slowly. So he is literally … So he is taking lessons on how to live and how to invest, from one of the first history books ever written, an account of Sparta’s war with Athens, thousands of years ago, I guess.

William Green: (47:29)
And so, one of the things that he learns from all of these studies, this kind of free-thinking studies of history and science and various other disciplines, is to have this tremendous respect for uncertainty. And so, what he said to me is, “If you look back at history, you start to realize that the world is intrinsically uncertain and unpredictable. You need to position yourself, as an investor, and in life, to participate in the March of mankind, but to survive the dips, to survive these periods of episodic disruption, where everything goes to hell.”

William Green: (48:08)
COVID is a perfect example of it, right? Something where no economists were saying, “Yeah, there’s going to be this massive economic disruption, and disruption to the way we work and the way we live from COVID,” nobody predicted that. We knew there could be a pandemic, but nobody said, at the end of 2019, “This is going to change our lives, over the next couple of years.”

William Green: (48:28)
One of the mistakes that investors make, all of the time, as McLennan pointed out to me, is that we assume that the next period is going to resemble the current period or the last period. And this is something that Buffett warned about after 9/11, where Buffett said, “Look, I screwed up because I didn’t realize just how exposed we were to the threat of terrorism.” And he said, “What it shows you are you need to think about your exposure rather than your experience. You need to ask yourself, “Where am I exposed to risk?” Rather than, “What have I just experienced that makes me think that the world is going to continue this way?””.

William Green: (49:07)
And this is a really, really important idea. Because if you look at a period like now, we’ve just had … What? 10, 12 years of a bull market. We’re all feeling pretty good. At least, if we’re investors. Okay, so the world is in turmoil in terms of the pandemic, and there are all sorts of political woes and difficulties; I’m not diminishing that. But if you’re an investor, there is a tremendous temptation to be complacent and to assume that the future will look good, because this is our experience in the past.

William Green: (49:39)
And what McClennan said to me, that I think is an incredibly helpful lesson from history, is he said, “Think about what the world looked like, say, from 1908 to 1911. Where you’d just come through this period where everything was golden, the world was going well, the economy was doing great. It was a period of expansion.” And so he said, “If you learned the lessons of your recent experience, it was that things are going to continue to be great. And then you look at what happened over the next few years, and everything fell apart.”

William Green: (50:12)
So the first sign of this, really, was in 1912, I guess, when the Titanic sinks. And so, the Titanic is this kind of emblem of man’s triumph over nature. “We can conquer everything because we’re so smart. We can build an unsinkable ship.” And then the unsinkable ship sinks in 1912; a reminder that nature, whether it’s a pandemic or an iceberg, tends to have the last laugh. So you want to be a little more humble about your feelings that you’ve conquered nature.

William Green: (50:41)
Then World War I breaks out in 1914, a couple of years later. Then 1918 to 1919, you have the Spanish Flu epidemic, which I think killed 50 million people. Then you have the crash of 1929. Then you have the Great Depression. Then you have the rise of Hitler, which grows out of massive inflation, tearaway inflation, in Nazi Germany. And then you have World war II, which breaks out from 1930 to 1945.

William Green: (51:07)
So you go back to 1908 to 1911, this period of calm, and you think, well, we live in a benevolent, benign world, where everything kind of expands and goes well. And then it’s followed by three decades of disaster. So one of the lessons from those decades of disaster is that you don’t really want to invest in stocks because stocks gave you terrible returns and were incredibly volatile. And yet, then, right after world war II, from 1945 on, we have this golden era for investors, where the world is calm, there’s expansion. So you needed, once again, to say, ‘No, no …”

William Green: (51:46)
This is a very Howard Marx kind of observation. It’s helpful to view the world as a kind of pendulum, where it’s cyclical; the pendulum just keeps swinging. And so you have this period of tremendous calm, followed by a period of chaos and volatility. Then-

William Green: (52:03)
… followed by a period of chaos and volatility, then a period of calm, then a period of chaos and volatility. One of the great lessons, I think, is that you want to position yourself to survive these periods of episodic disruption, and also to exploit these periods of episodic disruption. It’s not just about being fearful and saying, “Oh my God, the world can go to hell.” It’s about saying, “During these periods where things get crazy, that’s when the tremendous opportunity comes about,” whether it’s the early period of COVID or 2008, 2009, when the market was being crushed, or when the tech bubble blew up in March 2000. These periods of disruption, if you have your wits about you and you’ve positioned yourself carefully to survive them and to exploit them are actually the greatest gift for an investor, but you need to position yourself so that you are going to survive those periods of uncertainty, of trauma.

William Green: (53:02)
What does that actually mean in practical terms, for you and me and our listeners here? I think it means you want to start by saying to yourself, “Where am I fragile? Where am I exposed? And what if the next period doesn’t resemble this current? Would I survive?” One of the things Howard Mark said to me is, “The real question is, do you push the limits?” You want to just make sure that you are not overreaching, especially in these periods that are conducive to complacency. You don’t want to be investing borrowed money, I think. You don’t want to have a lot of leverage. You don’t want to have a lot of debt. You want to keep some dry gum powder and you don’t want to add a tremendous amount of complexity to your life, where you position yourself in a way that you have too many responsibilities that could come back and haunt you if suddenly things fall apart. You want to try to keep your life fairly simple, develop good habits like meditation and exercise and stuff that are conducive to equanimity before things go wrong and become chaotic. You already bedded down these good habits rather than waiting until there’s turmoil.

William Green: (54:14)
I think it’s partly just learning the lessons of history, knowing that things are cyclical, knowing that we have this behavioral defect, this tendency to assume that the future will resemble the current period. There’s another wonderful practical idea from McLennan, where he just looks at the global markets as a block of marble, and then like a sculpture, he’s just chipping away everything that he thinks brings fragility to the portfolio. For example, he would chip away companies that have very expeditionary management that is taking crazy risks or companies that have opaque balance sheets, or you look at countries that don’t respect property rights, and you say, “Well, yeah, maybe I can make a fortune in Russia, but I should at least be wary because maybe they don’t respect property rights.”

William Green: (55:05)
You want to chip away your behavioral defects as well so you know that most people rent stocks for the short term and trade in and out, and they think that they can predict the market and time the market, which we know that we can’t. Maybe Soros can, I don’t know, or Drach and Miller, or Jim Simons. I don’t know, but the rest of us can’t. You’re chipping away all of these sources of fragility and you’re focusing on error elimination rather than just assuming that everything is always going to be golden. Likewise, when the pendulum shifts direction and suddenly all of those unresilient investors are reeling and are frightened, you’re in a position to step in calmly as Howard Marks did in 2008, 2009, and say, “Well, yeah, things are so cheap now that actually this is a tremendous opportunity.”

William Green: (55:59)
It’s a different way of operating in the world where instead of being a heat-seeking missile and chasing whatever’s hot at that moment, you’re positioning yourself so that you are detached from the crowd and you’re just observing it, and you’re saying, “When is risk priced attractively? When is it not priced actively? And how can I just behave in a more dispassionate and rational way?” That’s hard to do. You see it with someone like Buffet where Buffet gets criticized for sitting on 140 billion dollars in cash or whatever. It’s very difficult when you look like a fool for long periods when everything’s going right.

William Green: (56:36)
I was talking to a friend of mine the other day. He’s a very good investor, and as part of his, he had bought a Tesla three years ago and he has a play portion of his portfolio. It’s a tiny portion of his portfolio, and he said to me, “Yeah, I put $2,000 in Tesla stock at the time,” which is nothing, and he’s like, “It’s $50,000 now, three years later.” And there’s a part of me that here’s that and I’m like, “I can’t believe that I didn’t buy Bitcoin when Miller told me it was $8,000 a coin and I didn’t buy Tesla. Actually, to have that emotional distance, that detachment, is very, very hard in real life.

Stig Brodersen: (57:15)
I like that example, William. It takes me to the next question because I would like to talk about how you invest because you’ve been on the show quite a few times, and it’s clear from the conversations that you’re a very humble person and you even said today that you don’t feel like you were wired the same way as the greatest investors, and I think that’s something a lot of our listeners can resonate with. We hear all these things. Perhaps some of it is a bit anecdotal and we think, we should do the same thing, but pulling a trigger, that’s just hard, but then the big difference is that you have access to these investors, which is not the case for our listeners. With all of your knowledge, with the access that you have, I’m curious to hear how you decided to invest with three active money managers. You also have two passive index fund ETFs, and you also still do a few individual stock picks. How did you come up with, that was the right strategy for you? What’s your process?

William Green: (58:14)
It may not be the right strategy, but hopefully, the way that I’ve thought through this issue is at least instructive, at least it highlights some of the issues that I think we have to grapple with. I’ve owned two index funds, two Vanguard index funds, just the international index, and the U.S. total market index fund that I’ve owned for decades, basically. Whenever my wife is putting money in a 401k or an IRA, or I’m putting money into a 529 plan for my two kids, for example, it would always go into index funds like that, basically. The reason for that, I’ve owned index funds in my own account as well and I still do. The reason for that is that I’m kind of hedging against my own fallibility and my own hubris, and I’m aware that over the very long term, the chances of my outperforming after expenses and after taxes are not great historically.

William Green: (59:08)
I think I have a competitive advantage that comes from the fact that I know a lot of great fund managers, and I think I can pick some of them, but on the other hand, I’m aware of my powers of self-deception and self-delusion, and hubris. I’m hedging against that and the fact that I’m investing my wife’s money and my kid’s money that way is in a sense what I’m doing is I’m saying they shouldn’t pay the price for my hubris, for my self-deception. If I’m wrong and I’m not that good, then they’ll be fine. That’s how I thought through that issue. At the same time, clearly one of the most important determinants of whether you’re a successful investor is just keeping costs down.

William Green: (59:48)
I remember Jack Bogle saying to me many years ago, he said that “The math of investing was so obvious. It was so elementary. It was just so clear that on average index funds were going to outperform actively managed funds because the costs were just so much lower,” and people just accused him in the early days of it being an exercise in mediocrity, but it turned out to be true. I know that keeping costs down overall and not trading in and out of the market and just consistently adding to that part of index funds is going to be a smart thing to do over the long term, and so I’ve done that. That’s one bucket of the portfolio. I’ve also owned Berk Hathaway for not nearly as long as I should, but for a while, and I thought they were past their peak many years ago. I was like, “No, I missed it already.”

William Green: (01:00:38)
My same instinct is with Bitcoin or Tesla. I always think I’ve missed it. It goes back, I remember when I was like 17 years old at boarding school and the Rolling Stones were doing a reunion tour, and I was like, “No, I missed it. I missed the golden years.” They’re like 50 now. I was like, why would anyone go see them when they’re 50? They were probably in their late forties when I just thought I’d missed it, so I didn’t go see them play at Wembley. It’s kind of that same sense that you always missed the boat already. Here I have it with investing as well.

William Green: (01:01:09)
Again, with Berkshire, one of the things that I’m thinking… I’m not thinking, okay, so it’s going to massively beat the market over many years. I think it’ll do well. I think it’s resilient. It’s set up to be the last man standing. It’s very conservative and I like that, so that suits my temperament, but it’s also that you are not paying a management fee. Again, it’s a way of saying, “Yeah, you have the float working for you and you have no management fee.” You add that to my index funds and I’ve got low costs working for me. I think that’s a really important part of thinking about how you’re going to succeed over the long term.

William Green: (01:01:43)
The other really prosaic banal thing to say is that one of the great lessons of investing that I think we probably don’t talk about enough is that if you just get this mundane thing right of taking full advantage of your IRA, your 401k plan, your 529, whatever tax-deferred vehicles are available to you, you’re so far ahead of the game. If you just keep putting money in low-cost funds, in tax-advantaged vehicles, you kind of won already. Those are two smart things that I think I’ve done. We’ll see if they turn out to be smart, but so far over the last 30 years, they’ve been smart and they’re easy to do, but then once in a while what happens to me is, I get carried away because I see… I vowed that I’m not going to buy individual stocks, and then I do something as I go to India for five days with Mohnish Pabrai and we’re traveling around. I see that things are getting killed and he’s buying stuff that’s cheap, and it’s really hard for me not to say… I can see what he’s doing. I can see that it’s really smart.

William Green: (01:02:44)
There’s a part of me that also, I guess it’s a form of authority bias as we were talking about before with Ken [inaudible 01:02:51], that when I see people that I admire and who I think are really smart and who’ve done the work, there’s a part of me that wants a piece of that. I think in a way there’s an idiosyncrasy here to my wiring, which is I’m an empathetic person and I interview these people and I get into their heads and I get into their lives, and I think buying a stock that they bought very cheap in a contrarian way that nobody else liked, there’s a sense in which I’m aligning myself with them temperamentally and emotionally. It’s a weird vulnerability of mine, I think, because it’s kind of like, this is my team. These are people I like and admire. When COVID started to ravage the markets in early 2020, I saw that Mohnish had bought… He hadn’t really owned any us stocks for a while, one or two, maybe, but he hadn’t bought anything really. He couldn’t find a single stock to buy out of 3700 public companies in the U.S. He’d been buying stuff in Korea and China and places like that, and then when the market got slammed by COVID, he bought 13% of Seritage Growth Properties, this mall operator. To me, there’s something kind of beautiful about that. It’s a consumer contrarian thing to do. The last thing you want to buy when nobody is allowed to leave their homes and go shop in a mall is a mall operator. I see that and I’m like, well, he bought 13% of it, so this is not like Mohnish dabbling. This is Mohnish, and I remember talking to him about it and he’s like, “Yeah, I think I’m going to make 10 times my money over the next 10 years.” There’s something that’s irresistibly seductive about something like that.

William Green: (01:04:33)
For me, it’s someone I like and admire, a massive bet by them, it’s contrarian, which appeals to me because I’m naturally not part of the herd. It makes abundance sense because it’s like, you know how we always hear those stories where someone says, “Yeah, I bought a brownstone in the heart of Manhattan in the 1970s when New York was going bankrupt.” There are these periods of episodic disruption where you can take advantage. You can buy a prime asset that you then tuck away for many years. Around June and July 2020, when the market was still getting killed, I bought Seritage and as it kept going down, I kept buying more. I did that, and then I think around September 2020 when Berkshire was massively out of favor, I was thinking, well, I’m going to be happy to own Berkshire pretty much forever, I think, so let me just keep adding to that, so I bought that about four times as well as the market was getting killed.

William Green: (01:05:32)
Those were a couple of moves where I was just tucking away something for the very long term that was out of favor that I thought I’d like to own for the long term, and I think that’s rational and I think it’s sensible, but the problem is that a) I hadn’t really done the work, so I don’t have the conviction that Mohnish has, so I don’t really understand Seritage. One thing Guy Spier who owns Seritage as well said to me is, “Yeah, but Mohnish may have been underestimating just how vulnerable Seritage was at the time.” Yeah, they own great properties, but what if… Mohnish has always, I think, been happier with leverage and risk say, than Guy. It’s just their quirks of character, he’s just more optimistic, more aggressive, and a guy was like, “Well, Berks Hathaway owns Seritages debt. Buffet had a huge personal investment in Seritage,” so we were cloning Buffet at a much lower price, and the chances were knowing that Berkshire is a very honorable long term thinking business that they weren’t going to make Seritage go bankrupt, but Guy’s point to me is, “You couldn’t really know that.”

William Green: (01:06:43)
Maybe I’m misquoting him, but he was just saying, it wasn’t quite as risk-free as Mohnish seemed to think. The guy was a little trepidacious during that period. He bought more, I think, but I don’t think he was aggressive about it. Whereas, Mohnish was like, “There’s no risk here. I’m going to make 10 times my money.” I’m looking at that and I’m just like, well, I don’t really know. I don’t have the conviction. If everything goes wrong, will I be able to stick with it? I’m just aware of the fact that I’m a little bit too emotional, a little bit too fearful, I’m a little bit too anxious. I’m a little impatient as well. Even though I think I’m going to own Seritage for 10 years, I think I’m going to own Berkshire indefinitely, in actuality, who knows if I’ll have that patience.

William Green: (01:07:36)
One of the things that I’ve done over the years is just to outsource these decisions to people like Guy Spier whose Aqua Marine fund I’ve just been invested in for 22 years or something like that because I feel like even though he’s slightly fearful, too, which matches my temperament and he’s cautious and he’s long term, so he’s similar to me in his temperament, but he’s much more rational, I think, and he’s got much deeper knowledge, studied this stuff more, cares about it more. He has accounting skills and mathematical skills and he’s focused on it, whereas I’m just not. I think, again, it goes back to this question of self-awareness of just knowing, are you playing a game that you can win? Are you set up? This is something that Monga talks about a lot. Monga said, “If you’re five foot three, you probably don’t want to have a career as a basketball player. Play games that you can win.

William Green: (01:08:34)
To some extent, I think the investing game is a game I can win because I know some really good investors, but to some extent, I’m also deeply aware that my temperament is bad. Not bad, but not good either. It’s a mix. There was one point where I got kicked out of a hedge fund that I’d been invested in for some 14 years because they changed the structure of it, and so I was no longer allowed to invest in it, and I remember saying to Guy Spier, so I don’t want to invest more with you because I’m already too exposed to you, so who should I be looking at? He told me to meet Josh Tarasoff who I met, who’s become a friend who I like a lot. I’m not saying this is an advertisement for either Guy or Josh, I’m just trying to take you through my thinking process. I ended up investing with Josh Tarasoff, who runs a concentrated portfolio. I think it’s closed to new investors, which I also really liked because, like Guy, neither of them were asset gatherers. They were both people who ran small, pretty concentrated funds.

William Green: (01:09:31)
Josh’s is more concentrated, more aggressive than Guy’s, I would say. One of the things I really liked when I met Josh, which again sounds idiosyncratic, is he meditates really seriously, so he has this kind of calmness. He is a very bright guy, come out of Goldman Sachs, and he’s also a real iconoclast, a kind of maverick. He has a portfolio of about 12 stocks and he’s very long-term. He doesn’t care what the market is doing and he lets them ride. He lets his winners ride and I can just see he’s much more rational than I am. I don’t know. I had this lunch with him a few weeks ago and I remember asking him about his parents and I was saying, “Who do you take after more?” and his father had been in the investment business, so you would expect it was his father, and he said, “No, I’d probably take off my mother more.” And I said, “What’s she like?” And he said, “Chill.”

William Green: (01:10:23)
I thought that was a wonderful word and when I look at Josh, I’m like, yeah, he’s chill, and I’m not, and that’s a disadvantage for an investor. It’s probably great as a writer. The fact that my emotions are tempestuous and my mind is all over the place and I’m constantly reading weird stuff because my intellect is undisciplined and roving all over the place. Those are really good characteristics for a writer, and the fact that I’m kind of empathetic and emotional and can get inside the minds and emotions of the people I’m interviewing is really helpful, but the intensity of my emotional life is great for that particular game of writing and interviewing. It’s not great for investing.

William Green: (01:11:05)
Sorry if all of this sounds really self-referential, but I actually think it’s important in terms of the takeaways for your listeners of just saying, you’ve got to know yourself and say, “Am I playing a game that I’m equipped to win?” If Howard Marks is right and Joe Greenblatt is right and Buffet is right, that most of us should be indexing, that’s a pretty good default position. I at least think a chunk of what I invest should be in index funds, and then if I want to play around with other stuff, okay, but don’t delude myself into thinking that I’m equipped to win a game that I’m not necessarily equipped to win.

Stig Brodersen: (01:11:44)
Very good advice, William. I just want to give one quick handoff before we continue with the outline because back in the Berkshire weekend, for those who have been following the show, they would know the Berkshire weekend, that’s the first weekend of May, I spoke with Mohnish and we specifically talked about his investment in Seritage Growth Properties, so I just wanted to give the handoff to that episode 347. We’ll make sure to link to that in the show notes, and you can make up for yourself whether you think that Mohnish and William are right or wrong, and just full disclosure, and I think I mentioned this before, I’m an investor in Seritage as well, but it’s a very popular stock in the value investing community also because of Mohnish because it was Warren Buffet as the very first one, made the investment of a lot.

Stig Brodersen: (01:12:26)
I think at the time it was at a price of $35. It’s trading at 50. Now Mohnish bought it around six to nine, as far as I remember, somewhere along those lines. Another investor in Seritage and the person you mentioned there quite a few times, that’s Guy Spier, how can you not just love Guy. We’re speaking to him later this year and it’s always great hearing from him, but more than just speaking with Guy, I actually think it’s interesting to speak to you about Guy because you have a very close relationship, and also just want to say for the record, both you and Guy stand out to me and some of the kindest people in the value investing community, and just in general, who all shaped by experiences. Being enough to know you for quite some time, I know you shared that perhaps being Jewish and having refugees in your family, that’s something that has impacted you. Perhaps not you can say the same thing for Guy, but could you talk to us about your relationship with Guy and also, how you avoid biases whenever you are investing alongside him in Aquamarine Capital, given that you might be kindred spirits, too. How do you separate that?

William Green: (01:13:31)
One thing I’m actually doing is, I’m exploiting a bias and a quirk in my personality. Because I’m a relatively loyal friend, I think, I don’t want to betray my friendship with a guy, I use that to keep myself patient. I’ve invested in the fund for over two decades already and I’ve said to him, “This is a 40-year investment.” I know that I need to be a long-term investor in order to compound. I know that I should make fewer decisions. Part of what I’m exploiting is this quirk in my character to keep me patient. I don’t want to disappoint Guy and embarrass him by saying, “Yeah, I’m cashing out of your fund.” It just keeps me patient, and Guy, I remember him buying Berkshire Hathaway, I think in around 1999, 2000, when Buffet was massively out of favor. He puts on like a quarter of the Aquamarine Fund in Berks Hathaway at the time when everyone felt that Buffet had lost it, and at the same time as Bill Ruane was making that huge investment. What it had 35 or 37 [inaudible 01:14:38] of the Sequoia Fund in Berks Hathaway. Guy has just held Berkshire ever since.

William Green: (01:14:42)
He’s just incredibly patient and I could never have done that. I don’t have the temperament to sit on something and do nothing for 20 years. Whereas, Guy’s default is to do nothing. He’s got this extraordinary ability just to sit on his hands. I remember going to him a couple of years ago and saying that I’d interviewed some famous investor who was telling me that Buffet and Monga had aged out. They just weren’t good anymore. They didn’t know what they were doing and we should get out of Berkshire, and I went to Guy and I was like, “What do you think?” And Guy was like, “Yeah, and just did nothing and kept owning Berkshire.” I remember going to Nick Sleep and Nick was just like, “Yeah, no, it just has a great culture. It’s very long term, got a great culture.” So, he did nothing. And since then, Berkshire has done tremendously well, and if I’d got panic out of the situation because one brilliant guy had told me that they’d aged out, I would’ve got washed out of it.

William Green: (01:15:36)
Part of what I’m doing, in this case, I don’t think my bias is actually a problem. I actually think I’m exploiting the fact that I’m friends with Guy to be long term and to be patient, and he’s exploiting his ability to sit on his hands and do nothing to just ride companies like Berkshire and Nestle and stuff like that, and some more obscure companies that are maybe a little racier, to ride them for the long term. To go back to this question of my friendship with Guy, it really began, we were actually at Oxford together, but he was a couple of years above me, but I didn’t really know him at all there. I have this vague memory of him as this dashing young guy with a red cashmere scarf, dating some very attractive woman and me being slightly resentful of him.

William Green: (01:16:22)
A few years later, we met in New York because I was trying to join this club in New York, but traditionally it was a very posh club where you played various racket sports, and I play this game of real tennis or court tennis, which is the old version of tennis that Henry VII played at Hampton Court, which has a drooping net in the middle and these handmade balls. It’s a very beautiful game, and I played seriously at Oxford. I played pretty much every day while I was at Oxford. This was the one place you could play in New York, so I was waging this military campaign to get into this very exclusive Waspy club that traditionally was known as being antisemitic. They had never really allowed Jews for a long time. It’s no longer antisemitic, but it certainly was historically. The guy was a member. I remember going around and meeting all of these members who could help me get in and I met Guy, and I got into this club because I went to Eaton and Oxford and I sounded like a posh Englishman.

William Green: (01:17:19)
I remember going out with Guy after he had helped me get in. He was one of the seven people or whatever who wrote letters for me and introduced me and vouched for me, and I felt kind of guilty that I concealed the fact that I was Jewish, and I said to him, “Would they have let me in if they had known that I was Jewish?” And he went kind of pale and he was like, “You’re Jewish?” And I said, “Yeah.” And he said, “I thought I was the only one.” I think that was the moment where we both realized that we were these posh seeming Englishmen, but who actually was secretly getting into these very posh environments where they didn’t realize that we were Jews and that they wouldn’t traditionally have let us in, and in some strange way that created this really strong bond between us, because I think as I was saying-

William Green: (01:18:03)
… that created this really strong bond between us. Because I think, as I was saying before, with a lot of great investors, but also with writers, we are outsiders. And there’s something about being both on the inside, but also always feeling that you’re on the outside that’s very powerful. I see that very much in Guy, that in some senses he’s a consummate insider. He’s liked by lots of people. He was a tutorial partner of David Cameron, the former British Prime minister at Oxford. I mean, what could be more inside than that? But in his own mind, he’s an outsider. And in my mind, I’m an outsider, even though the appearance of it may be different, that I seem like an insider, but I don’t feel that way.

William Green: (01:18:40)
So over the years, we became friends we used to meet up for lunch in New York, and we would chat about investing and stuff. And I was a young journalist. I invested very early in his fund. I didn’t realize that he had kind of tarnished his reputation by working for DH Blair after leading Harvard Business School. I just wasn’t really aware of it. This only really came out when we wrote about it in his memoir, the Education of a Value Investor. I just saw this guy was really smart. And I thought, “Yeah, I’d like to invest with him.” And so in a way it wasn’t very good due diligence. It was much more about trusting the person’s intelligence. But I think what I saw also very early on is he had structured it in a way where most of the money was his family’s money. A lot of the money originally came from his father, who was a successful Israeli businessman. Then the guy had all of his own money in it. And he set it up with this fee structure that was very fair. So you were totally aligned.

William Green: (01:19:36)
So I thought, “If I’m wrong, at least he’s going to be wrong on a massive scale as well. He’s going to hurt too if I’m wrong.” And so there was a real alignment of interests. And he’s intensified that alignment of interests over the years. So the shared cluster I’m invested in, has a five-year lockup, but there’s a 0% management for each year. And it’s based on Buffet’s limited partnerships in the ’50s, where it takes 15% of the profits over a 6% annual hurdle. And that 6% annual hurdle compounds. So he doesn’t go back to zero each year. It’s like he’s made it so that it keeps compounding against him if he underperforms. He’s got to get himself out of this hole in order to get paid. I just thought that was a very interesting insight into his personality, that actually he structured the fees to hurt himself if he underperformed. And I remember someone saying to him, “Are you sure you want to do that? You could be working for many years without earning any money.” And he said, “Welcome to the world of aligned interests.” I thought that was really interesting. And it’s the same with Josh Tarasoff with the way he structures his funds. And it’s the same with Nick Sleep and Zach with the way they structured Nomad. It’s the same with Buffet and Munger with the way they structured Berkshire. They’re profiting with you, not off you. And I’m not saying any of this is an advertisement for Guy or for Josh Tarasoff, or any of these people. But I think it’s a really valuable filter, to look at the expenses, to look at the fee structure of a fund, and say, “Are these people behaving in a way that’s looking out for my interests? Are they eating their own cooking? Is their family’s fortune in their fund? Are they going to get paid well regardless of how they perform?”

William Green: (01:21:28)
And then I’ll tell you one other thing about Guy that I thought was really revealing when I had lunch with him a few weeks ago. Guy has been on this long mission, right, over 24 years I think of running that Aquamarine fund, of basically trying to recover his family’s fortune that was lost during the Holocaust. Right? So his grandparents had a successful millinery company, a hat factory, I think, in Berlin, in Germany. And all of their assets were confiscated by the Nazis. And so he’s been on this mission to recover that lost fortune. And he said a few weeks ago, he’s like, “Well, I’ve kind of done it. We’re back. It’s actually worked.” And so he’s like, “So what do I do now? What’s my mission now?” And he said to me, “Well, I think my mission is to make my shareholders’ lives and the CEOs of the companies that I invest with, their lives, as extraordinary as I can.” I thought that’s a really interesting reframing of what his mission in life is. Right?

William Green: (01:22:23)
It’s no longer to get back his personal fortune, his family’s fortune. It’s to make other people’s lives as extraordinary as he can make them. So I think that gives you a sense of why he’s such an important figure in my life. There aren’t many people that you meet in life who you feel is looking out for you and they want the best for you. Remember there was that wonderful thing in the biography that Janet Lowe wrote of Munger, Damn Right!, where there’s a forward by Buffet. And he says something about how Charlie is generous in the deepest sense of the word, and that he said many times, “I’ve seen Charlie take the worst end of the deal with me and with other people, knowingly take the worst end of the deal.”

William Green: (01:23:06)
And I slightly feel that with Guy, the way he’s structured the fees, or the way that he’s focused now on making his shareholders’ lives as extraordinary as possible, not just with returns but in other ways. He’ll sort of say things like, “Well, I have this kind of timeshare thing in New York. If any of you want to go stay there, just let me know. If you want a subscription to this, let me know. We’ve got a corporate subscription.” There’s something really lovely about that. And that’s had a big impact on me, seeing that. I’ve seen him change and become more and more selfless over the years. I went to a wedding a few weeks ago where a hedge fund manager end of ours got married to another close friend of ours, mutual friends of Guy’s and mine. And Guy had actually introduced them to each other. They asked Guy to marry them.

William Green: (01:23:52)
So instead of having a rabbi or anything else, they had a guy do it. And it was this beautiful kind of rooftop wedding. So I’m watching Guy from kind of the second row or third row, or whatever, [inaudible 01:24:05]. I could just see this sort of deep joy that he took out of the happiness of this couple. Like really deep joy. And he said to me afterward, he said, “I think that they had been one of the most important and meaningful things I’d ever done.” And he took his role of marrying them and helping them with their service so seriously. I mean, he prepared so much for this thing. And he kept wanting to work in God, and they kept being like, “No, we don’t want any mention of God.” And so he was trying to kind of provide some sort of spiritual aspect to this thing in a way that really respected everyone. And it was just a kind of kindness and goodwill to it.

William Green: (01:24:43)
I think, again, like we were saying before when Nick Sleep and Zach went to Omaha and they saw the kind of behavior that Warren and Charlie embodied, and their focus on businesses and business models rather than trading in and out and lining their own pockets and taking advantage of people, that it had a massive effect. I think when you see people behave in that way over the years it has an effect on you because it’s not … So seeing Guy and the amount of joy that he takes in other people’s successes or trying to help other people, that’s had a big effect on me over the years. And I’ve benefited from it myself because he’s helped me in all sorts of ways. And I’m not trying to hold him up as a saint. It’s not like he’s perfect in every way. I’m not in any way saying that. We’re all deeply, deeply flawed. But I see that goodwill, and what I think the Buddhists would call sympathetic joy or empathetic joy, is the ability to take pleasure in other people’s successes.

William Green: (01:25:41)
It reminds me of that instruction from Buffet that you want to hang out with people who are better than you because you can’t help but improve. And so I think when I hang out with people like Guy or Nick Sleep, or a lot of the other people I write about, I hope that some of it rub off on me. Because it gives me a sense of a different way to operate. It’s very helpful. It’s very helpful. It gives you an alternate model, instead of the sort of sharp-elbowed model of, “Let me just look out for myself.” It’s been a great unfolding pleasure in my life has been to have that friendship with Guy, and just to see him behave that way. It’s lovely to see.

Stig Brodersen: (01:26:18)
William, I had the privilege to speak to you quite a few times, not just on recordings like this, but in general. And it’s often we have on the agenda that we want to talk about business, but I often find that we talk about living according to your own values, whether that is professionally or privately, and sometimes those two intersect of course. I think what I’m most impressed about is how deep you’ve been thinking about this, and how vulnerable you also make yourself in terms of the struggles that we all have as we go through life. Would you be willing to share some of your reflections on how to live according to our values?

William Green: (01:27:01)
Thank you first. That’s very kind of you to say. I think one of the things that you can see from my book, and probably also from this conversation, is that I’m always wrestling with these questions of what does it mean to live a meaningful life and to live a life that’s aligned with who you are and your deepest nature? When I was interviewing people like Charlie Munger or Howard Marks or Joe Greenblatt or Mohnish, any of the people in the book, I’m not just thinking about how do we get rich? What can we learn from these people about how to get rich? I’m really thinking out what constitutes a successful and happy and truly abundant life. And so there’s an element in the book and in our conversation here of me searching to answer this question of how to live.

William Green: (01:27:48)
And that’s also a huge aspect of my reading. I spent an enormous amount of time reading peculiar esoteric books about [inaudible 01:28:00], which is this ancient sort of mystical form of wisdom that’s very exquisitely beautiful. Tibetan Buddhism, I’ve spent a ridiculous amount of time over the last year reading obscure books about Tibetan Buddhism. And I spent a ridiculous amount of time reading David Hawkins’ books. And it was actually originally Mohnish who turned me onto reading Power Versus force, which I think is a very important book. But I ended up reading a lot of his more obscure books, with titles like I: Subjectivity and Reality, and things like that. I just read them over and over again. I’m really trying to figure out how to live and how to think. Maybe that’s one reason why Richer, Wiser, Happier have resonated with people, is that it’s not me coming in saying, “I figured this all out.” It’s me actually groping towards something, and taking advantage of the fact that I have access to people like Bill Miller talking about how he’s drawn on stoicism, or Howard Marks on how he’s drawn from Zen Buddhism.

William Green: (01:28:56)
And it all seems totally interconnected to me. Remember that great quote that Charlie would often quote from a biologist about how everything is one damn relatedness after another? It’s all related. And so it strikes me that how you run your business, how you treat your partners, totally related to your relationships or everything else. So you think, say, about something like Munger saying, “If you want to have a good partner, be a good partner.” Then think about what he said about marriage, where he said, “If you want to have a good spouse, be a good spouse. Deserve one.” That’s totally interconnected. There’s a total link between the way he’s running his business life, his investment career, and his attitude to relationships with his friends, his partners, his wife. And again, this is not to say that he’s perfect, but it’s understanding that there’s a link that the way you conduct yourself in one area radiates out in all of these other ways.

William Green: (01:29:56)
And so think of something … I wrote about this in the chapter on Munger, where I came to this revelation that what really mattered to him was not just the scale of his victory, but it was the manner of his victory. It was the fact that he’d done it in an honorable way. There was this beautiful story that he told about how the best company that he and Warren ever saw, the best business that he and Warren ever saw, was a snuff company. So I guess this was tobacco that you would … I don’t know much about how you do this. But he said it was clear that going in that it was a killing product. And so he said they look at this business, and they’re like, “Yeah, it was unbelievable,” and they didn’t buy it because it was a killing product. And it was clearly causing cancer. This other kind of famous family buys the company and makes $3 billion off it. And Charlie said, “Why would I have any regret about not having that $3 billion?” He said, “My life would be worse for having that $3 billion.”

William Green: (01:30:54)
And I just think that’s really fascinating. That’s a really fascinating insight into how you want to live your life. And so when I was talking to Ed Thorp, for example, who I know you’ve interviewed, again is one of the few people in the investment business who’s as smart as Charlie. Right? I mean, he’s one of the great geniuses of the investment business. And I talked to him about his regrets in life. And he said, “I don’t regret any of the principal decisions that I made.” I just think that’s really interesting. That gives you a sense of how do you want to conduct your life? When someone like Ed Thorp looks back in his ’80s, now in his late ’80s, in his life, he’s proud of the way that he behaved, not just of the fact that he had a hedge fund that didn’t have a [inaudible 01:31:39] in 20 years. He’s proud of his behavior, of the quality of his decisions.

William Green: (01:31:43)
And I look at Nick Sleep, for example, I had this wonderful interview with Nick and Zach in their office on the King’s Road in London. It’s this beautiful kind of sunny room in the least likely setting. I mean, it’s on the top floor of a house on King’s Road. And they have like their beekeeper suits there, their matching beekeeper suits. This is several years after they closed the fund, and they still share this office. And they weren’t going in very often, but they still share the office because they were still friends after all these years of being partners. Nick said to me, “It’s a partnership built on kindness.” He said, for example, that when they were setting up the company, when they were setting up Nomad, he wanted to have it be 50-50. This was also interesting because Nick was kind of the alpha dog. Like he was this very confident, very successful, good-looking guy who already had a really good record at Marathon where he’d been working. And Zach had been working kind at Deutsche Bank as a sales analyst and had less of a clear record of success.

William Green: (01:32:43)
And Nick immediately was like, “No, no, let’s make it 50-50.” And he says Zach is hugely intelligent and he wanted him as is his partner. And Zach was like, “No, you should own 51%, and I’ll own 49%. And that way, if we ever have a dispute about anything, you’ll decide what the right way is to go.” And Nick said to me, “When someone has loaded a revolver and handed it to you across the table and said, ‘Here, shoot me if you like,'” he said, “How can you mistreat them?” And so their partnership was built on trust and kindness. So when I see people like Nick and Zach behaving that way, or Guy Spier behaving that way with his shareholders, or Munger talking about his relationship with Buffet that way, or Thorp talking about making principle decisions, or saying to me, “Look, the single most important thing in your life is who you spend your time with. That’s way more important than your money. It’s who you spend your time with.”

William Green: (01:33:41)
When I see things like this, when I’m interviewing people about these subjects, and I’m hearing these lessons about how to live and how to behave, I just find it immensely helpful. And it’s not that I’ve nailed any of this. There’s an enormous gap between the behavior I espouse and appreciate and admire and the way I actually behave. There are many occasions when I fall short. So I’m not trying to be kind of self-righteous and self-congratulatory here. But I think it’s really useful to study the great investors with this sense of what constitutes a truly successful and abundant life. I remember Molly Munger, Charlie’s daughter, saying he wanted to be financially independent and secure, but he wasn’t interested in doing it and losing the game of life.

William Green: (01:34:31)
That’s a really important nuance that I would just encourage your listeners to think about, is the reason we go to Omaha year after the year is not because of how rich they are, it’s because they embody a certain type of behavior and principles and manner. And that it just gives you a sense of direction in life. It gives you a sense of, “Let me try to be a little bit more like that.”

Stig Brodersen: (01:34:54)
You said something very profound there. Well, all of what you said, William, was very profound. And you talked about these outstanding people, and how it’s not only about learning from them, about achieving financial success but there’s this extra layer of living by the right values, being there, being useful for other people, for the community. I have selfish reasons to ask you this question, William, so I just want to preface the question by saying so. But it’s easy if I can use that word, to study amazing people who are not only smart but who also live by wonderful values.

Stig Brodersen: (01:35:33)
Can be a bit more challenging if there are really smart people, financially successful people, but where you might not agree with the way they live their lives, or you might even find them despicable, or whatever kind of word you would use for that. Because, as you said, how you spend your time, that is your life. How do you wrestle with that, that you come across many financially successful people, but also perhaps you don’t feel emotional that it’s nice to, not just interview because that might be for X hours, but also you have to recall that interview and go all your notes and spend weeks on the sort of like mentally with that other person. How do you wrestle with that?

William Green: (01:36:17)
That was a very powerful process when I was writing the chapter about Sir John Templeton, who as I admit in the book I didn’t particularly like or warm to. And I felt kind of guilty about that because everyone always makes out that Templeton is kind of this saint and was hugely moral and was brilliant. And so I was wrestling with the fact that there was something cold and austere and judgemental. We talked about this the last time I was on your show, but I was trying to explain, “Here’s what I got wrong. Here’s what I failed to understand, and that I think I now understand about why he was extraordinary and what he was trying to teach me.” That wrestling process was incredibly helpful and fruitful for me. But on the whole, in this book, I’ve actually kind of made a point of not writing about people unless I admire and like them, which is a very idiosyncratic thing to do for a journalist.

William Green: (01:37:09)
Because when I was coming up in the world as a journalist I was perfectly happy to write attacks of famous people. I worked at Forbes, for example, and I loved taking down. The very first story that I did for Forbes was a story called mining the suckers, which was about a mining billionaire, who I just thought was a total or scoundrel and unethical. That was great fun for a young, aggressive journalist with a chip on his shoulder, wanting to show the world how smart he was, and how fearless. I was able to take those flaws in my character and harness them to do some really good investigative stories. And I did a story for Money Magazine, a long piece many years ago. It was about the Kaufman fund, which had this terrible fee structure where they were just making a fortune regardless of how poorly they performed.

William Green: (01:38:02)
And my story was headlined: do these guys deserve $65 million a year? Or something like that. And it was basically about how they’d set up this thing where they didn’t have their own money in it. They had underperformed the market by something like 50 percentage points over the last three years while making $180 million between them. And so I think there’s a real place for that kind of aggressive journalism about people. And in that case, I actually did like them, and I thought they were really good investors. I just think they were kind of screwing their shareholders. And so they were kind of poster boys for this kind of less savory, more self-serving area of Wall Street. But in this book, I just didn’t want to write about people that I didn’t admire. And so it’s just an idiosyncrasy to focus on people who I think are kind of admirable and instructive.

William Green: (01:38:51)
I think there are some people, some journalists would look at it and would be like, “You’re too close to the people you’re writing about. You like them too much.” And I think that’s a perfectly fair criticism. I think the upside of it is that, because I’m writing about people I know well and who I can empathize with, they open up in a way that they wouldn’t if I was out to get them. And so there’s a kind of intimacy to the kind of writing that I’m doing, where someone like Bill Miller will actually tell you what it was like to go through an incredibly painful period of underperformance. And so that’s partly the reason he’s doing that, is because he senses that I’m not out to get him. Because I’m also telling him about the periods in my life that have been very difficult.

William Green: (01:39:33)
And so this is the way I’ve come to deal with it myself, is just to focus on people who I think you can learn from, not only about how to get rich but about how to think better and how to live more wisely. Because ultimately, just the ability to make enormous sums of money by playing this game really intelligently, there’s nothing hugely redeeming about that. There is an element of this game that’s tremendous fun and tremendously interesting. But the fact that you manage to make billions of dollars by beating the market or by charging obscene fees doesn’t make you inherently admirable. And so why celebrate those people if they’re not admirable or insightful in how they conduct their lives?

Stig Brodersen: (01:40:18)
Wonderful. Wonderful, William. It’s always such a pleasure to speak with you. Like I mentioned last time you were on the show, your book, Richer, Wiser, Happier, that’s the best book I’ve read here in 2021. It’s just a wonderful book. And I think people can just tell from listening to you that wonderful book, written by a wonderful person. Before I let you go I’d like to give you an opportunity to share with the audience where they can learn more about you, but also Richer, Wiser, Happier.

William Green: (01:40:43)
I have a website, which is williamgreenwrites.com. And I’m on Twitter. I’m reasonably active on Twitter, where I’m williamgreen72. I’m on LinkedIn. And I’m really happy to hear from people. I’m perennially aware of the fact that I’m getting behind on replying to people. And I feel guilty about it as messages come in on Twitter and LinkedIn and my website and stuff. I really like hearing from people, because I feel like we’re all kind of on this journey together of trying to figure out how to invest better, but actually how to think better and how to live better. And so it’s lovely when I hear from people who’ve been studying the same sort of stuff as me, who’ve read my book and are like, “Yeah, yeah, that really helped me.” I love that. So please feel free to reach out, but don’t be offended if it takes me a while to get back to you.

Stig Brodersen: (01:41:31)
Duly noted. William, again, thank you so much for taking the time to speak with us again. All right guys. If you listened to this on your podcast app, make sure to follow if you don’t already. And if you like it, make sure to write a review. That helps other people find the content. William, I’m sorry we have to let you go now. It’s been absolutely wonderful. Have a wonderful day.

William Green: (01:41:51)
Thank you so much.

Outro: (01:41:53)
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