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Lessons After 40+ Interviews of the Greatest Investors with William Green

Welcome to the Investing for Beginners podcast. In today’s show, we interview William Green of Richer, Wiser, Happier:

  • Takeaways from the book on life, habits, and processes
  • Discussion on cloning, finding ideas, and how to win in the markets.
  • How to fashion the life you want to live and discover what is important to you

Check out the book here, Richer, Wiser, Happier.

For more insight like this into investing and stock selection for beginners, visit stockmarketpdf.com

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Transcript

Announcer (00:02):

I love this podcast because it crushes your dreams and getting rich quick. They actually got me into reading stats for anything you’re tuned in to the Investing for Beginners podcast led by Andrew Sather and Dave Ahern with a step-by-step premium investing guide for beginners. Your path to financial freedom starts now.

Dave (00:00:33):

All right, folks, welcome to investing for beginners podcast. Tonight, we have a very special episode. We are honored to be joined by renowned journalist William Green, who has written for, among many other publications, Forbes time and the new Yorker. And he recently came out with a fantastic book. It is awesome. It’s called Richer, Wiser, and Happier, and he talks about some of the world’s greatest investors and kind of how they win in life and the markets. So he’s here to share some of his insights with us, and there are many of them. So let’s start by maybe talking about my personal favorite and being the first chapter in the book. So that was kind of appropriate. Is Monish Pabrai. Monish is one of my favorites, and there’s some great stuff in there. And I wonder if you could tell us a little bit about Monish and his personality and kind of what kind of came through for you as like what his keys to life are?

William (00:01:30):

Sure. Absolutely. When I, when I first started working on this book about five years ago, which I’m embarrassed to say that it took me so long, but it’s it was a pretty monumental task. The first person I went to travel with actually was managed. And I knew from spending a lot of time interviewing him in the past that, that he’s pretty special and that he would give me a way of exploring a really important idea, which is the idea of what he calls cloning, which you could call replication or mimicry modeling, something like that. But what he’s basically doing is he’s reverse engineering, what people who are smarter, wiser, more experienced have already figured out, and then he’s replicating it with, really, for Monish. So attention to detail. And this struck me as a really fascinating idea because most of us really are obsessed with the idea of being original.

William (00:02:27):

And here was this very brilliant guy, a guy with an IQ and a hundred eighty, basically saying I’m actually just going to figure out who the smartest players of this particular game of investing are, and then I’m going to reverse engineer them. And so it all started fo for Mohnish in, I think, 1994, when at the time he was running a tech company, it was a tech consulting company. And I think he, it was pretty successful. He had something like 150 160 employees. He ended up selling the company for about $6 million, but he, he was basically, whiling away some time in Heathrow airport. And he opens a book by Peter Lynch, and he reads about Buffet for the first time. And he sees that Buffet basically had been compounding money at 31% a year for 45 years. And Monish, who’s very mathematically oriented, understands the implications of this.

William (00:03:22):

And he realizes, Oh, here’s a guy who’s won the game of compounding. And so what he figures out is, Oh, that means that he’s doubled his money 18 times already and is well on his way basically to becoming the richest guy in the world. So what Monish does is he says, well, if I can reverse engineer, what Buffett has done, I can actually make a million dollars that by that point he had set aside for the first time he came from a very poor background in India. Grew up in, you know, in a tiny apartment in the outskirts of what was then Bombay, now Mumbai. And so, really, it really came from nothing. And, but by then, had had basically a million dollars socked away. So he says, okay, so Buffet’s average 31% a year. If I could. If I could average 26% a year, then that means that over 30 years, I’m going to turn this million dollars into a billion dollars; that’s kind of the glory of compounding.

William (00:04:24):

And so what he does is he starts with this ferocious intensity to read everything that he can about Buffet. And, and, and he basically says, okay, here’s a guy who’s figured out the laws of investing, and these laws are as fundamental as the laws of physics. And so he, he, he begins his 30-year game basically to clone Buffet and later Munger who’s, Buffet’s Buffet’s legendary partner, who’s now 97. And in the end, he actually has become very close to manga and has also become friends with Buffet. But, but, you know, he, he, he’s something of a, of a sort of protege of mangoes and goes and plays bridge with monger in his home and has dinner with him and, and, and stuff like that. And so it’s an extraordinary story of how this guy can come out of nowhere with no MBA, no CFA degree here.

William (00:05:20):

The sort of qualification that, that a lot of financial analysts have no experience investing and yet has become one of the great investors of our time. And so the reason I start with him is that it gives you, it gives you an extraordinary way to explain the fundamental laws of investing, and also to explore this idea that, that we don’t have to be original in life, not just in investing, but in life that one of them, one of the smartest things we can do is to figure out who, who the smartest people are. Who’s already figured out the rules and then, and then mimic what they’ve done. And it’s, to me, that’s an intellectually really fascinating idea. And it, and it opens up all sorts of possibilities. It’s not just in investing but in every area of life.

Dave (00:06:06):

Yeah. That’s, and I think that’s what I took away from it because I have a background in music and music is all about kind of it’s, it’s about creativity, but it’s also about coning about learning from the masters and then taking that and trying to build on that. And I guess in some ways; I feel like that’s maybe what Monish is, is trying to do. And one of the things that’s always kind of struck me about him is you, you mentioned his, his intelligence and his brilliance, and he, he’s one of those people that is able to take a very difficult concept and make it sound so simple and so easy. And I, I liken that to, to Charlie Munger and Warren buffet. They both have that ability to, and I just, I think I’m just odd by both of them from, from all of them, just the brilliance of all those guys. And I really enjoyed that chapter and how you kind of brought him to life, for other people and for me. And I think that’s one of the things that I liked about the book so much is that it’s not about the numbers, it’s about the personalities and the people behind them. And I think I guess exploring that idea of coning and, and exploring kind of how that could make us better by learning by other people. What are your thoughts on that?

William (00:07:19):

I, I was hugely affected by it personally. I mean, I, I spent a lot of time with Monish, right? I went to California, where he had an office to interview him. I traveled to India with him for five days. We even, we even went on an all-night train together, sharing a bunk bed from, from Mumbai to Kodak together. So, so this was a pretty intimate experience. And I went with him multiple times to book Berkshire Hathaway’s annual meeting in Omaha. And, and so he really had a huge impact on me because he’s a, he’s a very formidable character. He’s larger than life character. He has tremendous personalities. This is a big kind of bully guy with a very luxurious mustache. And he’s, he’s just the character, you know, he’ll be wearing his pink jeans and, and always wears a, a branded shirt for his charitable foundation, Daksana.

William (00:08:13):

And so, so I was very taken with him intellectually. And so there’s a, there’s a part of that chapter where I talk about leaving a meeting with him in California and sitting on the plane if I remember rightly and just being like, okay, let me, let me write down lessons from Monish. And I literally took a piece of paper, and I started to jot down what I had to learn from Mohnish number one of the five or so rules to learn from him was clone like crazy. And one of the things that, one of the reasons why I think it struck me was that I think that’s what I had always done naturally as a writer. So I studied English literature at Oxford, and then I left and became a, and became a writer when I was very young when I was about 2021 and was already writing for magazines like the spectator, which was this kind of famous English magazine that had published people like Graham Greene and Dr.

William (00:09:09):

Johnson. These are these really kind of legendary English writers. And no one taught me how to do that. And so I literally, at the age of 2021, would take a whole bunch of backward use of the magazine. And I would go through their book reviews cause I was writing book reviews for them, and I would kind of reverse engineer them. And I would, I would basically go through them line by line, and I’d be thinking, Oh, so here are the different ways you can start a book review and, and how many quotes can you use and how much should you be paraphrasing using the plot of the novel that you’re reviewing and, and how opinionated can you be? And can you use it? And so, in a way, I think because nobody taught me how to, how to write. I actually was naturally reverse engineering.

William (00:09:55):

What other people were doing who were better and more experienced. And later on, when I was writing these long magazine features for things like fortune, I would look, there was an extraordinary rate. Who’s now a very well-known columnist. That was one of the great magazine writers of my era, a guy called Jonah, Sarah. And I would reverse engineer what he had done in these long pieces for, for fortunate and in this kind of golden era of fortune magazine. And I would see, Oh, okay. So that’s how you structure a long narrative piece. And so I think when I saw Mohnish doing this, it really resonated with me, and I could just see that the difference between him and me was that he was taking this practice of cloning to just this relentless degree. And that strikes me as one of the most really dominant features of these extraordinarily successful investors and extraordinarily successful people in general is they, when they come up with, with a particular strategy or idea or principle or habit, they just go a thousand percent on it.

William (00:11:04):

And I think that’s often the difference between pretty successful people and extraordinarily successful people is, is this kind of ferocity, the relentlessness of say, Mohnish is attention to detail when he’s replicating a habit that works. And so it’s not necessarily that their ideas are better than ours. It’s, it’s the intensity with which they commit to it. And then there was a moment when Monish said to me I’m just a shameless cloner. And I said I sent the manuscript after I had written it to this friend of mine. Who’s a very, very close friend of Monash’s and is, is one of my closest friends is a very well-known hedge fund manager or guy spear. And Guy is one of my closest friends. And one of his comments on the manuscript was that he said, he said, I worry that that phrase, shameless, cloner doesn’t, doesn’t convey the ferocity with which monitors cloning.

William (00:12:03):

And I thought that was and I added a point about that in a, in a footnote, because I think it was a very shrewd observation that what, what guy was saying was that underneath the calm, demeanor, that the all of the greatest investors have, there’s this intensity, this kind of firing us. And there’s a; there’s a wonderful story that I mentioned in a, in a footnote of the book where there were two great investors Will Danoff, who I write about who’s one of the greatest investors from fidelity manages over $200 billion and Bill Miller, who legendarily beat the market for 15 years running when they first met something like 30 years ago, Bill Miller said to me, I held out my hand, and I said to, well, down off high, well, I’m Bill. And he said, Will, didn’t take my hand.

William (00:12:51):

And he said, you just look at me. And he says, I’m going to beat you, man. I’m going to beat you. And you’ve been friends for the last 30 years, but I think there was something really revealing about that intensity. And, and so Charlie Munger Buffet’s partner has this wonderful line where he says, take a simple idea and take it seriously. And I, that, that was one of the lessons for me of the chapter about Monish was that when you come up with a really interesting idea, like cloning and you think, okay, let me, let me reverse engineer what people who are smarter and wiser and more experienced to figure it out already, and then replicated with real attention to detail. When you come up with an idea like that, that’s really powerful. You really want to take it seriously. And what, what, what money you said to me is most people they hear about an idea like that, and they say, yeah, yeah, that’s interesting, whatever.

William (00:13:44):

And then they move on and Monish who’s, you know, full of colorful language. Well, we’ll sort of curse and say these people; they just don’t understand those total morons. And he says, he says, when you find an idea like that, you go a thousand percent. And I think that’s a really fascinating observation. And I, and I hope that one of the things that people who read my book will do is they’ll find, they’ll find a number of ideas and insights and habits that resonate really deeply, and they’ll actually make them a core of what they do. And I have to admit I I’ve done that. And, one of the habits is cloning.

Dave (00:14:24):

Yeah. That, to me, that was one of the things that I took away from that chapter was the idea of ferocity. And I think you conveyed it really well in the book. And because I, I have read other similar ideas from him, but I think after reading the book, I really took away the ferocity. And I think one of the things that for me kind of permeated the book was several ideas of number one that people are investing harder than sometimes it needs to be and they unnecessarily complicated more than it really needs to be. And some of the simplest ideas are some, some of the best things. And I think it kind of goes back to sports where you think about you’re practicing the basics over and over and over again. And if you can’t do those, then you can’t do the more complicated things. And I think that was one of the things that I took away from a book. And I really, really enjoyed that idea that you kind of had a running theme through not just Monique, but with, you know, guys like Joel Greenblatt and Tom Gayner and, and some of the other characters that you’re ordering the book. I thought that was something that, that really kind of carried through the book.

William (00:15:30):

Thanks. Yeah. There’s a whole chapter on simplicity on the importance of simplicity. And I was really fascinated by the fact that that simplicity, keeping things simple, not, not, not dumbing them down, but reducing them to their essence turns out to be a kind of superpower, both in investing and business and sports and, and spirituality and all of these different areas and, and green blood in a way is a, is a perfect embodiment of this a bit. This is a guy who’s, who’s pretty legendary, right? He’s, he’s actually much better known, probably the Monish Pabrai. He’s older; he’s in it; he’s in his sixties. And he legendarily had this fund that the average 40% a year for 20 years, which is, which is an astonishing thing. I mean, even, even his peers in the hedge fund business would look at that and kind of golf because what it means is you basically turn a million dollars into $836 million.

William (00:16:28):

So it’s an astounding feat. And so you think there’s going to be some incredible secret sauce here and Greenblatt who’s, who’s also a professor who he’s, he’s taught at Columbia business school for about 20 years. And a writer is a terrific writer because he writes and teachers have synthesized and distilled all of the laws of investing in, in this kind of very pure way, because he’s had to keep explaining to his students what it is that he’s really figured out. And so what really fascinated me was when, when he basically reduced everything to its essence, he just said, well, the core of investing, it really just comes down to one thing, which is you, you value an asset, and when you buy it for much less than it’s worth. And this is an incredibly profound idea. And yet, it’s so simple. And Charlie Munger often says that investing is simple, not easy.

William (00:17:27):

And, and this is a perfect height, perfect example of it, the underlying idea that you want to value a company value an asset and buy it for much less than it’s worth is simplicity itself. But when you think about actually what that entails in real life, it’s really hard. And one of the points that I make is that the first thing you have to ask yourself is, well, do I know how to value a business? And that is such a difficult question because, actually, almost all of us don’t really know how to value a business. And so what, what Joel Greenblatt says is if you, if you try to value, if you try to buy individual stocks without knowing how to value a business, then you said, it’s essentially like, like running through a dynamite factory with a lit match that he says, he says, very colorfully. He says, you may survive, but you’re still an idiot. And I think that’s a very powerful idea. And it really got me thinking because it made me think, well, okay, so I’m a pretty smart guy, but actually I’m, I’m kind of literary. I’m not mathematical. I can count to about seven if I’m lucky if I’m given a calculator to help you.

William (00:18:43):

And then, you know, for years I worked As a financial journalist, and I had this beautiful, very fancy calculator. And when I left this job, about five years later, I’d literally still not got a battery for it. So, so even having a calculator didn’t do me any good. I never figured out how to turn on the calculator. So I’m unlikely to be someone who’s going to be able to do the math. Who’s going to have the patience. I’m not really that interested in spending my time analyzing stocks; that’s just not the thing I’m interested in. I’m much more interested in personality. It’s a great investment that’s and what makes them unique and, and how they view the world and how they deal with, with risk and change. And the fact that the future is unknowable. These are these almost philosophical questions that really fascinate me fascinate me. And so just that self-awareness that this is not a game that I’m necessarily wired to win.

William (00:19:36):

And also, I don’t necessarily have the best temperament. I mean, I’m relatively contrarian, which helps. I’m able to buy things that other people don’t like and to diversion the crowd, but I’m not as patient; I’m not as unemotional as the great investors. And so once you start to understand that the basic law, the essence of investing is valuing something and then buying it for less than it’s worth you actually, I think have to have this self-awareness to start saying, well, is this a game that I’m, that I’m set up to win? And so what I try to explain in that chapter of Joel Greenblatt is that not only did he figure out the essence of this game, but actually, he’s perfectly optimized temperamentally to win the game. He’s, he’s very calm. He’s very contrarian. He’s very rational. He’s always thinking about odds and probabilities, and he’s extremely competitive, very, very, very unemotional.

William (00:20:34):

And even he, he went to Wharton and, and his professors, there were always saying, well, the markets you know, it’s going to be impossible for you to beat the market. It’s just; it’s just too difficult. The market is very efficient. And so you might as well just buy index funds. And I think there’s some part of him that’s kind of impish and subversive and radical that he just loves over and over again, showing that his professors were wrong. And so he just has this, not only the skills and the knowledge and the context to see how this game should be played, but he has this personality. That’s why I perfectly for it, knowing that I don’t have really important implications because it means well, all right. So I’m going to have to outsource the job to somebody else.

Andrew (00:21:22):

That, yeah, that is, that is quite fascinating. I love the idea. And not only did you touch on it in the chapter about Joel Greenblatt, but also with some of the other investors throughout the book, I definitely found myself relating to some more than others. And you know, this idea that we can all take something from the book and, and really go intense with the lesson and, and use it to become a better investor. I think that’s a huge takeaway, and I think we should all take it seriously, but I loved how a few of the investors shared their habits about how they stayed resilient during tough times in the market. We obviously had a fresh example of that just 12 months ago, of how investors really needed to stay resilient. And I, I found that fascinating how a lot of the investors, at least ones coming to mind where he basically said, you have to establish the habits before turmoil happens. And so can you speak to that a little bit of, of what kind of things they said, cause there’s a huge amount of life wisdom in there as long as, as well as investing wisdom.

William (00:22:32):

Yeah. That that had a tremendous impact on me, actually, not just in the way that I approach investing, but actually in the way that I approach everything in life. Because I think, I think w w whether we’re a professional hedge fund manager or a writer or, or a doctorate or whatever, you, you need equanimity, you need peace of mind in order to function at a high level. And, and then, the person you’re talking about is, is a guy called Ken Shubin Stein. Who’s actually a good friend of mine. And he’s, he’s in a chapter that I wrote about Charlie Munger primarily. And it’s the whole chapter; basically, it’s called, don’t be a fool. And it’s about how to succeed by basically being less stupid by reducing our tendency to make terrible errors. And obviously, one of the reasons why we make terrible errors is because we become very emotional and, and our brains are very glitchy when we’re very emotional.

William (00:23:31):

And what’s interesting about Ken Shubin Stein is that not only was he a very successful investor in hedge fund manager and private equity guy who had 300 or so people working for him, but he actually, he started out as a doctor and a couple of years ago, he, he quit the investment business and actually went and became a neurologist. And, and over the last year or so, has been treating COVID patients. And so he has this unusual range of knowledge, right? He’s, he’s not only a really smart investor. He’s been teaching the advanced investment research course at Columbia business school for the last decade, but he actually really understands the brain. And so what, what I ended up asking him about a great deal was how do you, how do you optimize your thinking? So you’re less likely to make mistakes cognitive errors in extreme circumstances.

William (00:24:25):

And Ken has really thought about this in great detail. And one of the things that he does is he basically says there; there are several States in which, in which you’re basically primed to make lousy decisions. And so he has a mnemonic, which is partly inspired by addiction literature, the scientific studies of addiction, which, which helps him basically avoid screwing up in intense situations. And so you said it’s, the mnemonic is hope PS. And what it stands for is, is basically you’re likely to mess up when you’re hungry, angry, lonely, tired in pain, or sad or scared as well, actually. And so one of the things that he does is, is when he’s in extreme circumstances, whether it was the global financial crisis in 2008 or nine or actually more recently when he’s been treating COVID patients who were dying and were attached to ventilators, he’s very consciously looking at himself and saying, what’s my physiological state, how many in a state where I’m so upset, or I’m so uncomfortable, or I’m so hungry, or I’m so tired that I’m going to mess up.

William (00:25:37):

And one of the things he told me about working in a hospital, dealing with COVID patients is he said my PPE equipment was so physically uncomfortable that I needed to be aware that if I’m spending hours and hours in this, in this emergency room, treating patients and my goggles are too tight and I’m too hot. And I’m, and I’m, and I’m exhausted, and I’m upset, and I’m scared. And, and, and he had just had his first child about three or four days before you started treating these patients. And he’d had to move into a hotel away from his child because he had to protect his child and his wife. He knows that he’s in a state where he’s less likely to make good decisions and less likely to treat the patients calmly and less likely, you know, he was having, he was having to call our families and tell them what the state of their loved one was.

William (00:26:28):

I mean, incredibly intense situation. And so he was using that mnemonic to say, okay, let me slow down, let me calm down, let me go into the bathroom and breathe for 30 seconds in the hospital bathroom. So I can just take this mindful moment. Another thing that he said that I, that really helped me in, in, in, in sort of extreme circumstances, but probably not quite as extreme as that was that he said, the performance of your brain, we know scientifically is affected by four things. There are these four leavers that can really help you. And basically, it’s, it’s sleep, it’s nutrition, it’s exercise, and it’s meditation. And so what can be figured out is if I’m going through an extreme circumstance, like, like a pandemic or a market meltdown or a lawsuit, or a problem with a, a wife or a problem with a kid, or what, you know, all of the things that any of us go through in life a boss who’s impossible or an employee who’s impossible, whatever it might be.

William (00:27:34):

He, he knows that he has to simplify his life and get back to those four basic things, of making sure that he’s sleeping enough, making sure that he’s exercising, making sure if he can to meditate, which he’s finding extremely hard these days, because, because he’s, he’s doing his residency as a, as a neurologist. So he’s, it’s more a matter of, for him taking mindful moments throughout the day. And then whatever the fourth one was, ex exercise, nutrition, sleep, and meditation. And, and he would simplify his day. I’ve seen him when he’s under extreme stress, and he would, he would go through his calendar, and he’d say, let me reduce complexity because I’m starting to feel overwhelmed. And to me, this is, this is really powerful. This is someone of very high intelligence with real knowledge, of the science of how we should have, how we can think optimally basically applying these, these workarounds to help him think better, both in markets and life.

William (00:28:37):

And I just think there’s a; there’s a tremendous amount of applied wisdom there. And, and in some ways, this is, this is one of the reasons why I was so attracted to writing about investors in the first place is, is that they are these great pragmatists that, that the best investors are basically looking for any advantage they can get. And so, so they’ll be trawling through the scientific literature about addiction to see what, when, when we’re in a state that’s going to make us tip back into our addiction. There’ll be looking at the science of meditation. There’ll be studying nutrition; there’ll be studying, you know, what type of exercise is going to help me most in dealing with my, in, in dealing with my stress. So that just these tremendous pragmatist drawing, drawing, practical knowledge from any field. And so, for me, there is a tremendous filter for how to view the world. And so there’s a, there’s a really interesting connection, I think, between how you succeed in markets and actually how you succeed in life. And, and I think Ken Shubin Stein’s approach to thinking well is, is, is a, is a beautiful example of that very practical and very applicable for all of us, whatever it is we’re doing,

Announcer (00:29:48):

What’s the best way to get started in the market—download Andrews ebook for free at stockmarketpdf.com.

Andrew (00:29:57):

And if we’re staying on that idea of having broad knowledge, I can’t think of anybody better than Charlie Munger. And you had a few, a few minutes to spend with him. You know, what was your biggest takeaway from him as somebody who has spent a lot of time researching a lot of different practices and different things in life?

William (00:30:22):

Munger has been described by Bill Gates as having the broadest mind of anyone Gates has ever met and, and, and Buffett, who’s worked with Munger for more than 40 years, said he has the best 32nd mind of anyone on earth. That basically, you start speaking about any subject, and he’s already figured out the answer before you finished your sentence. So in his, he’s an astonishingly bright guy, but I, I, as I mentioned in this chapter about manga, I was told I was going to have 10 minutes with him. And so, so I traveled 3000 miles to spend 10 minutes with this guy. And it ended up being quite a lot longer. Thankfully I got to spend more time during the day with them, but what, what struck me, I was preparing for weeks for this because I, I sort of, it, it was, it was kind of like going to see God, right?

William (00:31:14):

I mean, within the investment wealth, this guy is, is the smartest. But also the scariest guy, because you have this sense that he is going to see through you in every way, he’s going to see your sin and folly and stupidity. And so I felt very exposed. And so, so I spend an enormous time preparing for the interview. And what I realized is I read through a ton of, of his, his writings and speeches and quotes over the years was that really what he’s doing is trying to reduce what he calls standard stupidities. And so there’s this wonderful paradox that you have one of the smartest guys on earth. And what he’s really trying to do is be non-idiotic, as he puts it. And, and his point is that that it’s actually really difficult to be smart, but it’s really pretty easy not to be stupid.

William (00:32:05):

And so what he does is he goes through life, basically collecting what he, what he calls absurdities and inane. It is an ASIN in it is all these examples of the times when people have been inane and dumb. And then he says, what, what caused the disaster? What made them do this really dumb thing? What was the source of this company blowing up or, or their life blowing up, or their relationship blowing up or that dumb investment, let me, let me figure out the causes of the disaster, and then let me not do that. And so, so one of the things that, that he does is inspired by 19th-century mathematician and algebra is called, called CoStar Jakoby, is that he’s always inverting. And so, just to explain this very briefly, what Jack would be very famously said is invert, always invert.

William (00:32:55):

And so Munger, who takes ideas from every discipline, takes this idea from math and says, okay, so let me invert everything. So if I want to be a great investor, let me first figure out how to be a terrible imposter, or if I want to be a great husband, let me first figure out how to be a terrible husband. And so he’s solving the problem backward. You can see that it’s kind of a piece of algebra but applied in regular life. So for, for, for us, if you bring it down to the level at which non-geniuses like me can understand this and apply it, what you’re basically saying is, okay, so let me study all of the ways in which investors screw up and, and let me not do that. So, so you start to list the ways in which people mess themselves up.

William (00:33:40):

And it’s things like investing in things that they don’t understand or trading too much. So they have too many transaction costs and, and, and their, their fees and their taxes go up or trying to time the market, which we all know is basically a fool’s errand. It’s not going to work. Or one of the examples Mungo gave me was people would buy a cyclical stock at the top of the cycle, assuming that, that this sort of glorious period is going to continue indefinitely. And then, of course, it collapses. And they’re totally surprised that that, that the glorious period actually wasn’t a permanent thing, but was going to end. And so there are all of these ways in which we mess up and, and he’s just trying not to do those. And this is something that Monish Pabrai, who we were talking about before, does as well.

William (00:34:29):

He was stunned when he first figured out that the laws of investing, then he looks around, and he sees all of these other fund managers who owned too many stocks, traded them too often, and bought things that were too expensive. And he just said, they’re hosed. And so this habit of just looking at what doesn’t work, understanding first, what doesn’t work, and eliminating that reducing those standard stupidities actually puts you ahead of probably 80, 90% of humankind, because most people is, as Charlie Munger said to me, they’re all so busy reaching for the prize that they don’t think about the things that can actually mess them up along the way. And so I think this is a really powerful idea that applies not only to investing but to life because you really do want to start to say, okay, if, if for example, I’m driving too fast, or, you know, I’m on my phone while I’m driving, that’s a standard stupidity, right?

William (00:35:26):

It’s something that can end in disaster, or if I’m unfaithful to my spouse, or if I cheat on my taxes or I, I cheat on my expenses at work. I, I’m not trying to be more realistic about it. It’s these; these things are a bad bet because they have limited upside and massive downside. And what the great investors are always trying to do is make these asymmetric bets where there’s a huge upside and minimal downside. And, and so I think part of being wise in life and being smart is, is to avoid these things where there’s a massive downside and minimal upside. And also just to collect examples of the ways in which people make a mess up. And then, and then really scrupulously and systematically, try to try to reduce the likelihood that you’re going to fall into the same trap.

Andrew (00:36:16):

I guess, moving along with that, you know, I, I have that story you told by Joel Greenblatt and mine, where he talks about one of his first investments that were like an arbitrage trade, and that totally blew up for him. And you know, he learned from it, and it’s fascinating to me how a lot of the investors in the book ended up retiring early and pursuing other things in life. And so I wonder if there’s a lesson in there about, you know, if you want to talk about what not to do, if, if by retiring early, if they’ve consciously or unconsciously made the decision that I’m not going to let this thing be so obsessive, that is, that it’s like my only focus or, or it’s something, you know, where you take for more money and the greed to such an extreme that you’re not able to to have sort of a, a more balanced life. Did you, did you notice anything like that?

William (00:37:15):

There’s, there’s a really wide spectrum here. There are some people who just love the game, and it is just going to do it till the day that they drop, and it just is who they are. And I think that’s absolutely fine. I mean, there’s a, there’s a guy right about of, Irving Cohen who died at the age of 109. And he actually had three siblings who all lived over a hundred. So they obviously were with genetically unbelievable UN UN Irving; I think he smoked till he was about 50 and ate unbelievable amounts of red meat. And so, as a, as I say in the book, you kind of wonder how long you would have lived if he’d taken care of himself. And, and so Irving worked really until he was about 108 years old. And even, even when he was over a hundred, would take the bus or the subway to work in Manhattan.

William (00:38:05):

So, so I mean, I, I point out that he was just living in alignment with who he was. It was the game that he liked. He didn’t particularly like going to the theater. He didn’t like going to see art museums. He just loved to read. He loved to love to invest. He loved to make good decisions, and he just sort of enjoyed the game, and he loves studying new technology and just learning constantly. And, and he wasn’t interested in fancy restaurants, anything like that. Didn’t have a plane or anything; you know, he just, he really enjoyed studying and making good decisions about his investments. And he, he spent something like 86 years working on wall street. It’s a; it’s an astonishing thing. But then you look at someone say like ed Thorpe, who I describe in the book as the greatest game player in the history of investing.

William (00:38:51):

And, he basically closed up his hedge fund at a certain point having, having literally not had a losing quarter in 20 years. I mean, he’s, he’s an astonishing investor and an utterly brilliant man, possibly the cleverest of all of the people I’ve interviewed. And he just, he’s very balanced. I mean, when I, when I interviewed him first, he was maybe 83 and he, he looked about 60, and he was like this very cool guy wearing his black leather jacket, kind of handsome, charming, totally comfortable in his skin. And you had this sense that he had kind of won the game of life, and he didn’t need to maximize his amount of money. He didn’t need to be charging anyone heavy fees. He was perfectly happy to kind of walk away. And he said to me that the most important thing in your life is who you spend your time with.

William (00:39:44):

It’s all; it’s all about your relationships. It’s not about your money, but at the same time, he really loves the fact that he has a Tesla, and he loves the fact that he has a beautiful house overlooking the beach in California. And so you sort of seeing the sunset every day. So it’s not like the money hasn’t gotten him anything. I mean, he, he enjoys the fact that his lifestyle is good and that he gets to live in a beautiful place, but, but he never, he never fell into this sort of illusion that he, if he made more money and got more Teslas and bigger houses, it would make him happier. He knew that his relationships were going to be more important. And so I think it runs; it runs the gamut. You have; you have some people who are true to themselves by just continuing to play the game until they drop.

William (00:40:31):

And, and some people who and realize that there are other things that are more important. And, and, and perhaps my favorite example is, is, is Nick Sleep. And Zach, his partner who basically had this astonishing record, where they ran a hedge fund called nomad, and over 13 years, they’d beat the market by 800 percentage points, which is an astounding feat. And they got to a point where they had about $3 billion in assets, which meant that they just could become vastly, vastly rich. And instead of doing that, they just closed the fund, returned all of the money to the investors, and just decided they were going to manage their own money. And they would spend the second half of their lives giving away as much of their fortune as possible in a way that would have a really long and enduring effect on society.

William (00:41:19):

And so they actually retired from the investment business at 45. And, and so I think that’s very true to who they are and that it was a wonderful thing was Zack said to me, I, I just thought it was going to get boring. I felt like we had squeezed lemon as much as we could, and we’d solve the problem. We, we figured out how to win this game, and it was just going to become repetitive. And so, so they quit and because they’re very, very concentrated fund managers when they quit, Nick’s sleep, just adds three stocks. And Zack had about six stocks. Nick now has four stocks. And so they just have this very concentrated portfolio that’s continued to do extraordinarily well. And they just spend most of that time doing things like biking, beekeeping, and hanging out with their families and go, you know, giving away money.

William (00:42:10):

I mean, they, they have a really nice lifestyle, and I, I think it’s deeply in alignment with who they are. So I, I think if there was a takeaway for me from this, it, it was the same takeaway that I got from spending time with Mohnish. Right. Which is that if you possibly can, you want to construct a life that’s deeply true to who you are, you, you don’t want to be fantasizing about, about making money, hand over fist. If that’s not really, what’s important to you, you, you, you don’t want to be working till you’re 109, if that’s not what you’re important at, what’s most important to you. But on the other hand, if, if really what you love doing is analyzing companies and placing that. And, and, and you’re happy commuting to, to a skyscraper in the middle of Manhattan at 108 as, as Irving was then great go for it.

William (00:43:03):

And I remember I became friends with Tony Robbins at one point, and Tony, Tony would say, you really have to have to define what a beautiful life is to you. And I’ve thought a lot about that, but just trying to, trying to figure out, okay, so how, how do I construct a life that’s true to who I am. And so I’m not; I’m not playing somebody else’s game. And that’s something that I, I think I really drew from Monish, who I can just see lives in a way that’s deeply true to who he is. And that’s, that’s really something that he cloned from Warren buffet because Buffet lives in a way that’s, that’s deeply aligned with who he is.

Dave (00:43:40):

Yeah. That absolutely permeates throughout the book. And that was one of the things I was actually going to ask you about that, that was, I really took that away from. And I think that was, to me, one of the most profound things about the book was that they all, they all seem to fashion a life that was important to them, whether it was like you were saying playing the game or whether it was doing something else. And I think that’s what I took away from. Monish took away from Tom Gayner, from Nick, from Guy Spier. Who’s not in the book, but I read his book, and I’ve read a lot about him and listened to his interviews, and he falls the same kind of idea. And I love that about this book. I think that’s one of the things that I think really is a powerful idea.

William (00:44:23):

Yeah. And Guy Spier had a huge impact on me in thinking about this because I helped Guy write his memoir The Educational Value Investor. And so I, I spent a lot of time with him in Zurich years ago. And so I was basically living with guy for several months, helping him with his book. And I could see the fact that he has structured his life in a way that was true to him. And so one of the things that he had done has he moved away from, from Manhattan where he felt that he was getting kind of sucked into this vortex where he felt like he was, he had to compete with people like Bill Ackman, who was a friend of his, from Harvard business school. And here was Bill, who is like this big sort of swaggering billionaire with billions of dollars under management.

William (00:45:09):

And I think Guy sort of felt well; wait, so do I need to market my hedge fund massively so I can become huge as well. And, and so he kind of got sucked into this life that wasn’t really true to who he is. And, and so then when he moved to Zurich, he really rebooted everything and, and designed his life in a way that I think is very true to who he is. And so when I, when I moved to New York very shortly after that I’d been living in London, I’ve been, I’ve been editing the European edition of Time magazine. And then, and then I, I helped him with his book. And then I moved to New York. And I really consciously thought about how I am going to structure my life in a way that’s true to who I am. And one of the things that were really interesting to me, cause I, I’m sure people are going to have the objection where they’re saying, well, it’s really easy to do if you’re hugely rich, like all of these hedge fund managers and to some degree, that’s true.

William (00:46:02):

But one of the things that I did is I moved to an area where the street next to me is really, really modest. And the houses are really kind of small and inexpensive. And my street is nice, but it’s not like super grand. And I actually think that it’s been really helpful for me to live in a, not incredibly ritzy, a block, basically. So I’m not looking out and, and kind of benchmarking myself and thinking as I was, when I lived in London, whereas in the ritziest area of London, I just always felt poor. I would look out of my house, and there would be Maseratis and Ferraris, and Lamborghinis. And I, I, and as a writer, I just always felt like the poorest mick on the street. And, and so part of constructing a life for me, that’s happy is actually to live in a place that’s not ostentatious and that’s not overreaching. So I, sorry, I actually feel like I can be very calm and peaceful, and I can write, and I can think. And, and so I do think one of the great, one of the great advantages of having money is that it does help you construct a life that’s in alignment with who you are, but I, but I think all of us, regardless of how wealthy or unwealthy we are, we need to think much more about Whether, whether we’re doing what’s in alignment with our, with our skills, our temperament, and our values.

William (00:47:25):

And, and, and I think that’s it, it doesn’t necessarily require you to be vastly rich. It requires you to have a little bit of self-awareness and, and to be, and to be fairly disciplined about what you reject. And so sometimes when something comes along, and it’s, and it’s, and it seems really attractive, you kind of have to say, yeah, it’s attractive, but not to me. And I could see that with Monash that he, he, he, for example, he said, he said to me, I just don’t like the mumbo jumbo of marketing my fund. I’m just not interested in, in, in meetings with people where I have to pitch my fund. And so he said, so I just don’t do it. And, and so he’s actually willing to forgo millions of dollars in fees, just not to have to deal with, with this stuff that he doesn’t like.

William (00:48:13):

And that, to me, is quite inspiring. And, and I kind of wonder, like, do you become more successful because you live in alignment with who you are, or, or are you able to become aligned and live, live a life like that because you were already successful. And I, I, there’s a little bit of a chicken and an egg question here, but I, I have a feeling that if you live in a way that’s deeply aligned, you’re more likely to become highly successful because you’re Josh, Waitzkin who, who I admire a lot, who, who is a great writer who wrote this book, the art of learning sometimes talks about unobstructed self-expression. And I think that’s one of the things that I see in these great investors is that there’s unobstructed self-expression. And so what you’re, what you’re trying to do is become deeply true to who you are.

William (00:49:04):

And I think that’s, that’s the case, whether you’re a writer, an investor, a banker or whatever. I mean, maybe it’s really hard if you’re a banker and you have to work 90 hours a week. I don’t; I don’t, I don’t know. But I, one of the things I decided at a certain point is I just don’t really want to work for a big corporation. I’d rather make less money or have more independence, you know, like, like my independence is worth more. And so that, that was an attitude that was very much inspired by, by actually hanging out with these great investors. It was, it was sort of thinking, what am I, what am I willing to sacrifice to live in alignment with who I am? And that’s something that I thought really talked about? What, what, what your, what, you’re, what you’re willing to give up for money. Are you, are you willing to give up your principles to violate your ethics? Are you willing to sacrifice your family? Are you willing to devote all of your time to work? And, and, and there’s no right answer here. I just think these are things that we have to think about quite deeply ourselves and an answer in a way that’s true to ourselves.

Andrew (00:50:13):

It makes me wonder, you know, as we have a lot of listeners who are just getting absorbed into the market for the first time, the whole world of investing personal finance, and really, you know, we try to put people on the path to financial, but it’s, it’s not often, I think where somebody wonders, what is financial freedom? Like, how am I defining that? Because it is a definition you make and the decisions you make, and even what strategies you choose, you know you could, you could be, you had the whole spectrum of investors. Some would trade a lot more frequently; some would hold and just let the companies compound for a very long time. So you have the personality and your goals and how you define those and those all kind of feed together. And it kind of; I liked the way it all ties in. And I felt it feels like every chapter in the book really works with itself. You know, you talk about, he talked about being richer, healthier, and wealthier.

William (00:51:22):

Yeah, it’s all connected. There’s not mean there’s a wonderful thing. When Nick sleep said to me investing is, is just a subset of everything else. It’s just another form of worldly wisdom. And, and so he, he said, it’s a, it’s a metaphysical and almost spiritual pursuit because really you’re, you’re looking for truth. You’re trying to figure out what’s really going on what the future holds. You’re trying to deal with uncertainty. And the fact that, that, that the world changes constantly, and we know nothing about the future really, and yet we have to make decisions and bets about the future. And so it, it, it’s really a beautiful microcosm of life. The markets it’s not just this, this game where you get rich, it is that as well. But it’s really a microcosm of everything. And so for, for me, what was fascinating was the fact that once you actually start to get inside the minds and lives of these extraordinary investors, you see this consistency in the way that they think and invest and live.

William (00:52:30):

And that was something that I don’t think was obvious even, even to my editor necessarily, or to anyone else before I started working on the book; I, I sort of felt that that was true, but I was trying to prove it out. And I think you can see the temperament of these different people, how, how it affects everything that they do, that then there’s a, there’s a really striking consistency. And so someone like Monish, for example, when I, when I interviewed him about how he dealt with COVID, you could just see he’s, he was really pretty much totally unaffected by it. He’s always optimistic. He always thinks everything’s going to be great. He’s, he’s, he’s a pretty positive guy. And he always thinks everyone else is wrong, I guess, more or less. And so he looks at the fact that all of the malls are shot and that no one can shop and everyone’s stuck at home.

William (00:53:27):

And, and for the first time in years, he buys US stock, which is a mall operator. And so here at exactly the time when everyone else is fearful, he’s just quietly playing the odds. And he’s just thinking, well, people are going to shop again. And these malls will open. And they’re going to; they’re going to be transformed into, into properties that can be used for other things as well. So, so this is really valuable prime property, and it was just so characteristic of him that that was how he responded to COVID. And, and so it seems to me, yeah, there’s just this wonderful consistency in the, in the way people behave as, as investors and in life. And I, I sort of with someone like Tom Gayner as well, who I write about at length, who’s a remarkable guy. Who’s the co-CEO of Markel and is still a very decent person who, who, who wants Markel to be a kind of iconic company that people look at and think, wow, that’s really admirable the way they behave.

William (00:54:28):

And so, because it’s really important to him, how he’s that he’s, he’s ethical and upstanding and setting a good example. When I said to him, how are you dealing with, COVID it, are we saying, are you just hiding out at home? Are you working from home? And he’s like, he’s like, no, I feel like I have to go into the office every day. There were only 10 of us in, in headquarters, even though they had 17,000 employees, but he said, we, we have lots of frontline workers who are exposed and how, how can I expect them to expose themselves to danger when I’m quietly holding up at home. And so I thought there was a really interesting consistency there where he just wanted to set a good example for his team. And also he just said, yeah, I’m just putting, I’m just putting one foot in front of the other. I’m just plugging away. And that’s what he does in every area of life. It’s just this sort of indomitable consistency in going in, in, in vaguely the right direction. And, and, and you see that in, in, in everything that he does, whether it’s the way that he invests, the way that he exercises, the way he diets, it’s, it’s all, as he puts it directionally, correct. It’s not optimal, but it’s directionally. Correct. So again, it’s this consistency and the way that these people approach both life and markets,

Andrew (00:55:48):

It’s, it sounds like you can’t have one without the other. And it’s, I think it, it really contributes to why a book like this is so valuable. I mean, you know, I’ve been reading investing books since 2012, which in the grand scheme of things isn’t a huge amount of time. But, you know, after a while you start to read a lot of the same ideas, this is a book that not only do I feel was extremely valuable to me and had all these fresh insights, but I feel like somebody who is looking at a book like this as their day, one book to get exposed to investing could also pick up, learn a ton. And, you know, from there, kind of figure out what they’re going to clone and, and what maybe habit or personality trait, or whatever thing that they want to work on to try to fit where they’re trying to go with the investing. I think this book is perfect for it. And so I, I messed up on, I blanked on the title, but obviously, I read the book it’s richer, wiser, and happier how the world’s greatest investors win in markets and life. And I highly endorse it. I know Dave does as well. And so William, we really appreciate you coming on. Where’s the best place where people can find out more about the book, find out more about you and everything you got going on.

William (00:57:06):

Yeah. I have a website which is William Green Writes.com, which it won’t surprise you to learn is totally a cloned URL. I, I, the, the URL for William Green.com was, was already gone. So, so I looked at what Michael Lewis, his website was, and his was Michael Lewis writes.com. So I was like, okay, William Green Writes.com. So, so that’s my website, which has news and events and, and I’ll have a newsletter coming out soon, so you can sign up for that. And anything else that I’m doing in the future, and then I’m on Twitter. My handle is William Green72. You’re welcome to connect with me on LinkedIn, on Twitter, email, and I really do like to keep in touch with people. I, I like taking questions from people, and I like hearing what’s resonated with you from the book. And it’s, it’s nice.

William (00:57:59):

It’s a; it’s a conversation because I’m, I’m, I’m sort of a fellow traveler here. I’m, I’m trying to figure out how to invest in how to live more wisely and how to think better. And I like the fact that, that it’s a, it’s a journey that we’re on together. And I hope that comes through in the book that it’s not, it’s not me presenting myself as some, some Sage who’s figured it all out and is a multi-billionaire it’s it’s me trying to distill what these great investors have learned so that I can, I can apply to my own life and also share it with other people. And so, so I really enjoy that conversation. That sense that, that your listeners and your, and the readers of the book are actually kind of on, on this journey with me.

Andrew (00:58:42):

Yeah, it was, it was amazing, it was an amazing book, William. It really was very well-written, and it was very easy to read. And this is coming from somebody who’s like Andrew, read a lot of investing books. And I would argue that this would probably be one of them, one of the first books that people should read because it will put them on the path to where they really want to go and think about all the great ideas that you expose in this book. It’s fantastic.

William (00:59:04):

Thank you so much. I appreciate It.

Dave (00:59:07):

You’re welcome. You’re welcome.

Dave (00:59:09):

All right, folks. Well, with that, we are going to wrap up our conversation with William tonight. I wanted to thank William again for taking the time to come and talk to us today. That was amazing. And you guys need to run, not walk, run, and grab his book. It is very easy to read and lots of, lots of great insights, as I hope you gathered from the interview. So without any further ado, I’m going to go ahead and sign us off. You guys, go out there and invest with a margin of safety emphasis on safety. Have a great week. We’ll talk to you all next week.

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