0:00

Hello and welcome to the Stansbury

0:03

Investor Hour. I'm Dan Ferris. I'm

0:05

the editor of Extreme Value and

0:07

the Ferris report both published by

0:10

Stansbury Research. And I'm Corey McLaughlin,

0:12

editor of the Stansbury Daily Digest.

0:15

Today we talk with Chris Mayer

0:17

of Woodlock House Family Capital. I've

0:19

known Chris for decades now. He's

0:22

a great guy and a brilliant

0:24

investor. Please take notes. This is

0:27

one of the folks I really,

0:29

really want you to learn

0:31

something from. Okay, so

0:33

get out your pen,

0:36

get out your paper,

0:38

type on your computer

0:40

wherever you take notes,

0:42

get ready to do

0:45

it. All right, so

0:47

let's do it right now.

0:49

Let's talk with Chris Mayer.

0:51

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www. American Dark Day.com. Yes, it

1:49

has. It's been a long time,

1:51

Dan. How you doing? Yeah, it's

1:54

been, I just checked. It's been

1:56

since August of 2021 here on

1:58

the podcast. Wow. lots happened

2:00

since Yeah, I mean a lot's

2:03

happened since like you know last

2:05

Monday markets. That's like two bare

2:07

markets ago That's right It's been

2:09

a busy time hectic time for

2:11

investors and it's getting more hectic

2:13

every day it seems But I

2:16

thought you know I was thinking

2:18

about that how we should start this

2:20

out because you and I have so

2:23

much history we could we could start

2:25

it a million different ways, but

2:27

Since it has been almost four whole

2:29

years, I wonder if you would

2:31

indulge me and begin by reminding

2:33

our listeners what your core investing

2:36

principles are, including your code that

2:38

you've told us about before. Because

2:40

I think that's a really good

2:42

thing. I hope they take notes

2:45

when you talk about code. Yeah,

2:47

so that was an acronym that I

2:49

developed that kind of capture some... principles

2:51

I wanted in the investments I looked

2:53

for. So the C was for cheap.

2:56

So basically you're looking for something

2:58

that is going to be worth a

3:00

lot more in the future. And that's

3:02

kind of fundamental. And the O is

3:04

for owner-operator. I'm investing in companies where

3:06

they're skin in the game, where the

3:08

management team or board or somebody owns

3:10

a lot of stock. And that's probably

3:12

one of the most important ones, especially

3:14

over a long period of time,

3:16

get those incentives aligned. The D was

3:19

for disclosures, which was just... Are the

3:21

public disclosures good enough for

3:23

me to understand what's going on?

3:26

Is it not overly complicated or

3:28

the red flags in the way the

3:30

companies organize? So that covers that

3:32

kind of thing. And then E

3:34

is for excellent financial condition, which

3:36

covers the balance sheet, financial strength.

3:39

So for me, I don't invest

3:41

in companies that have any financial

3:43

leverage or have minimal financial leverage.

3:45

And they all kind of work

3:48

in. Sink, you know, you need all those things

3:50

together. So those are the core principles,

3:52

but the basic idea too is to hold

3:54

on to these things for a long time.

3:56

So there's very little turnover in my portfolios,

3:59

buy and hold. And yeah, that's it

4:01

in nutshell. Yeah, I think the incentives

4:03

you talked about, the incentives play into

4:05

the other three, don't they? Well, the

4:07

other two, anyway, the disclosures and the

4:09

excellent financial condition, because when you're handling

4:11

your own money, you know, you don't

4:14

want to lie about it and get

4:16

in trouble and you... That's it. That's

4:18

it. So when you have that, I

4:20

sometimes say like that part of it

4:22

is the most important. The alignment in

4:24

the skin of the game because that

4:27

covers a lot of other things, you

4:29

know, you know, I have to worry

4:31

about as much. And it's true that, you know,

4:33

there's a lot of empirical studies

4:35

about this as well, but companies

4:38

where there's, let's say, family controlled

4:40

companies where there's a family that

4:42

owns a large percentage of stock,

4:44

those companies tend to be less

4:46

leverage than their peers. studied those

4:49

companies as a separate group, although

4:51

when I happen upon them I

4:53

say, oh, okay, that's good. But

4:55

since you're focused on them, have

4:57

you noticed a tendency to

4:59

sort of allocate capital in

5:02

a more careful long-term manner,

5:04

like doing the right thing

5:06

when everybody's panicking and not

5:08

doing the wrong thing when

5:10

everybody's euphoric, that kind of thing?

5:12

Yeah, I would say that's definitely

5:15

true. Of course, there's

5:17

always exceptions on both

5:19

sides, but as a general

5:21

rule, definitely. If you have, if

5:23

you own a lot of stock,

5:25

you're less likely to dilute yourself

5:27

by selling shares. You are also

5:30

more likely to invest when

5:32

others are fearful. So when

5:34

a hired hand really sees no particular

5:37

upside to... sticking his or

5:39

her neck out in investing when things

5:41

are bad. The owner, thinking much longer

5:43

term, will be more likely to do

5:46

that. So you definitely see that. There's

5:48

anecdotal evidence about that, that those

5:50

kind of firms invest countercyclically. That's

5:52

a big one. The lack of

5:54

dilution we talked about, that's another

5:57

big one. So yeah, and the other thing

5:59

I think comes up. to is focus on

6:01

R&D, so a lot of times these

6:03

companies will invest more heavily in research

6:05

things that don't pay off for years

6:08

to come, right? That's again where that

6:10

long-term mindset comes into play. So there's

6:12

a lot of things that it leaks

6:15

into and I think over time I've

6:17

come to appreciate more and more how

6:19

powerful that is because it also affects

6:21

how you incentivize people, how you pay

6:24

them. So a lot of times these

6:26

longer term family oriented, family oriented. companies

6:28

they're just that better at keeping good

6:31

people paying them. I know for a

6:33

specific example like Brown and Brown is

6:35

a company I think you have in

6:38

the portfolio too if you I'm not

6:40

sure if you still have it but

6:42

I've had it since inception my fun

6:44

and I think you started buying shares

6:47

around 25 and it was 125 until

6:49

recently it still might be like 110

6:51

or something but that's the company where

6:54

you know the Brown family owns

6:56

a significant amount of stock and the CEO

6:59

is the grandson of the founder and there's

7:01

a certain ethos there about how they think

7:03

about incentives and and there's lots of stories

7:05

of people who've gotten wealthy there as well

7:08

becoming shareholders of Brown and Brown. People have

7:10

worked there, sold the Brown and Brown, stayed

7:12

on and so that kind of legacy, those

7:15

things I really look for and those tend

7:17

to be marks of very successful companies. It's

7:19

cool, I have to say. It's cool

7:21

to find companies where in extreme value

7:24

I often like to start out the

7:26

report by discussing the history of the

7:28

company when I find that it has

7:30

something to do, that it bears upon

7:33

how they're behaving today. That's gold to

7:35

me because... when things change and they

7:37

you know they they get a different

7:39

type of management team and then they're

7:42

not doing so great for a while

7:44

and then they come back and they

7:46

get another managing oh we're doing better

7:48

now it's it sort of muddies the

7:50

waters for me a little bit but

7:53

you know I deal with it but

7:55

I like it when there's a straight

7:57

line from the founding to the present

7:59

in terms of the management continuity. It

8:02

just gives me a sense of conviction

8:04

that I don't think I can really

8:06

get any other way. Like I've got

8:08

these two high conviction sort of natural

8:11

resource plays. The last place you'd ever

8:13

want to get conviction because I know

8:15

the management teams and I'm really highly

8:17

confident they're going to behave well through

8:20

the cycles and they have. They behave

8:22

brilliantly through the cycles. And yeah, I

8:24

mean, companies do have a kind of

8:26

DNA and that gets set really early

8:29

and persists for a long time. Absolutely

8:31

can be messed up, but it takes

8:33

time. And if you do have that

8:35

kind of continuity, yeah, that's a good

8:38

sign. Yes, and it doesn't have to

8:40

be family memory. It could be like

8:42

Costco, right? Absolutely. No, it could be,

8:44

you know, ranks from within and you

8:47

see it in different ways. You could

8:49

look at, you know, sometimes I'll look

8:51

at like turnover and that's an interesting

8:53

thing because sometimes you'll see like a

8:55

top performer in industry, let's say like

8:58

old dominion freight lines, which is in

9:00

trucking, which is an industry, which is

9:02

notoriously difficult to find drivers, I mean

9:04

their turnover is. far less than the

9:07

industry average. And they train most of

9:09

their own drivers. And it's the way

9:11

they manage it too when times get

9:13

tough. They don't let go of their

9:16

drivers. You know, they keep their drivers,

9:18

but maybe they have them work on

9:20

the docks for a little while. They

9:22

still pay them the same amount. They're

9:25

still treated well, but they still have

9:27

them. So when that demand rebounds, they

9:29

can put those people back as drivers.

9:31

That's again, that's also a family run

9:34

organization. Was family founded by a family,

9:36

but has since kind of stepped away.

9:38

You still have that culture and you

9:40

still have that people have been promoted

9:43

to executive offices, CEO and so forth,

9:45

have been there for 20 years or

9:47

longer. So again, to your point about

9:49

there being kind of a, like a

9:52

golden thread from the founding onto the

9:54

present. Yeah. Is this something that you

9:56

discovered on your own or do you

9:58

have, you know, were you influenced before

10:00

you even started investing other people's money

10:03

and before you were in finance? Like

10:05

where does this, where does this knowledge

10:07

of this come from? Yeah, that's a

10:09

great question. I mean, I think it's

10:12

like slowly built up over time because

10:14

I started my career in financing banking,

10:16

as you know, corporate banking. And in

10:18

that world, you know, the business is

10:21

very well. And we always did these

10:23

deals, we'd have personal guarantees. You know,

10:25

the founders of the businesses would have

10:27

to sign on the loan personally, that

10:30

they were responsible for paying it if

10:32

it didn't work out. You know, we

10:34

could in theory go after their personal

10:36

assets. So I just saw the power

10:39

of that over a long period of

10:41

time, especially when sometimes when things would

10:43

go south. And I saw retain that.

10:45

And then I know, you know, he's

10:48

an obscure, not as well-known. financial writer,

10:50

but Martin Sosnoff wrote a couple of

10:52

books that are long at a print

10:54

that I that I really like. One

10:57

was called Humbel on Wall Street, which

10:59

came out in I think 77 or

11:01

something, not 78. And the other one

11:03

was a silent investor, silent loser, which

11:06

came out in I think they're in

11:08

the 80s. But again, out of print,

11:10

but this is a point he would

11:12

emphasize all the time, is the power

11:14

of having management skin in the game

11:17

and one of his phrases was entrepreneurial

11:19

instinct equates with insider ownership. It's one

11:21

of those things I always remember. Which

11:23

she's always taught and emphasized this aspect

11:26

of. Is that EI EO? Yeah. Yeah,

11:28

it is. It's an EI. EI. EI.

11:30

EI. I never know. I will never

11:32

forget that. Yeah, I never realize that.

11:35

I don't think equates. Yeah, so there

11:37

you go. But that was another influence

11:39

along the way. And then yeah, then

11:41

my own personal experience, I remember particularly

11:44

through like the OA crisis, you know,

11:46

you'd see some of these. teams that

11:48

didn't have skin in the game would,

11:50

you know, I thought they were a

11:53

little quick to raising capital and maybe

11:55

a more creative team that had skin

11:57

in the game might have worked a

11:59

little harder before going to the market

12:02

and raising capital at such, you know,

12:04

unattractive times. Little things like that. So

12:06

it was a combination of a lot

12:08

of influence influences in reading experience that

12:11

have got me here. Well, Chris, I

12:13

promise I'm paying attention, but I couldn't

12:15

help going immediately to Amazon and looking

12:17

for Sauce on Wall Street. is apparently

12:19

a collectible item. It starts at $116

12:22

to copy. Okay, that's not that bad.

12:24

I've actually, I've actually seen it higher.

12:26

I think I've, I think I've made

12:28

the market for, yeah, I think I've

12:31

made the market for that book. Maybe

12:33

it's come down along with everything else.

12:35

Yeah. So, yeah. I met him before

12:37

too. I went, I don't know when

12:40

I. wrote my news was writing my

12:42

newsletter way back when I visited his

12:44

office and he was very generous. He

12:46

spent over an hour with me. He

12:49

loves to talk about art. He's very

12:51

much into art and he likes to

12:53

draw lessons from the art markets to

12:55

the stock market. He's got lots of

12:58

stories where he bought certain paintings and

13:00

left them alone for a long period

13:02

of time and were worth a lot

13:04

of money. So as you can see

13:07

that's probably very applicable to investing, you

13:09

know, where... You know, we see the

13:11

prices all the time, but if you

13:13

just kind of bought something softed away,

13:16

then it might be a better outcome

13:18

for a lot of people. Similar to

13:20

art. Yeah, you know, it's, that lesson

13:22

comes from all directions and all strategies,

13:24

even the, you know, the tale of

13:27

Jesse Livermore. I forget what it's called

13:29

now. Yeah. You know, that famous book

13:31

about Jesse Livermore, that where, where they

13:33

don't name him explicitly. Right right right

13:36

the fever and You know he says

13:38

my my I always made my money

13:40

in the sitting not in the buying

13:42

or selling right? The sitting he said.

13:45

So even that guy who traded his

13:47

way to like three or four bankruptcies

13:49

or something knew that making money was

13:51

about just sitting on a position that's

13:54

working you know and and with you

13:56

it's sitting on a business that works

13:58

right right over the long term right

14:00

I mean this is one of the

14:03

things always fascinates me about investing generally

14:05

like if you just look at businesses

14:07

and I know this is in Thomas

14:09

Phelps original 100 to 1 in the

14:12

stock market and he did this with

14:14

like Pfizer was his example and he

14:16

just had some basic financial deals like

14:18

net income sales, ROE, like earnings per

14:21

share, really basic stuff. And it was

14:23

every year, I don't know, like a

14:25

20 years ban, he put these numbers

14:27

on. And if you just looked at

14:30

that, of course you'd never sell it,

14:32

you know, okay, yeah, it didn't mean

14:34

that it went every year, you know,

14:36

you know, sometimes. You know, maybe then

14:38

income was down a little for that

14:41

year, but it was still perfectly within

14:43

a band of expectations, returns were good,

14:45

turn on equity and all that was

14:47

good. Of course, you would have left

14:50

it low. But, you know, stock price

14:52

was all over the place during this

14:54

time, you know, cut half and up

14:56

down, and if you've just left it

14:59

alone, you're up like 25X or something

15:01

more than that, you know, it's crazy.

15:03

And I see that even in stocks

15:05

of my own portfolio of my own

15:08

portfolio portfolio, I mean, share with them

15:10

some examples and just in the seven

15:12

years I've had my fund you know

15:14

there have been stocks where if you

15:17

look at our overall IRR over a

15:19

five or six year period it's like

15:21

21% compounded but in the midst of

15:23

that you know I just suffer a

15:26

45% decline a 55% drop in one

15:28

case you know it's astounding but again

15:30

if you just looked at the business

15:32

you would never see that the one

15:35

that fell 45% actually increased earnings per

15:37

share every year that we've owned it.

15:39

So if you just looked at the

15:41

business. And he's looked at the sales,

15:43

he looked at the rates per share,

15:46

he looked at margins. He would never

15:48

have guessed that somewhere in that run

15:50

there was a 45% drawdown from peak

15:52

to drop. But if you just left

15:55

it alone, you've got about a double

15:57

in five years. So, which is perfectly

15:59

fine. Yeah, and

16:01

Chris, you of course wrote a great

16:04

book too here. One I read a

16:06

long time ago, a hundred baggers, where

16:08

you talk about a lot of this,

16:11

a lot of these ideas. Yeah, and

16:13

that came right out of the book.

16:15

That was the inspiration, was to update

16:18

that what he did. So that's how

16:20

that came about. Yeah, and I was

16:22

looking back through it once I knew

16:25

you were coming on. I had, you

16:27

know. earmarked some pages back when I

16:29

first read it. And the first one

16:31

I got to was when you tell

16:34

the story about monster. I know you've

16:36

probably talked about this a lot, but

16:38

just the, and then I remember reading

16:41

that for the first time and kind

16:43

of being blown away by it, because

16:45

that's one of the names that. I

16:48

think a lot of casual investors hear

16:50

about me, not when they see these

16:52

long lists of top returning stocks over

16:55

the last 10, 20 years or whatever,

16:57

but monster. And I was wondering if

16:59

you could just use that, maybe as

17:02

a brief example of why that company

17:04

turned out the way it did. Yeah,

17:06

well, I always remember the great thing

17:09

about monster, and that particular example, is

17:11

that you had years to buy it

17:13

and still make 100 times your money.

17:16

And it was evident like in the

17:18

financials, you know, it was very clear

17:20

in this company, it was, you saw

17:23

very large, you know, fat margins, big

17:25

growth, and it was, it was years,

17:27

it was going along like this, so

17:30

you had a chance to buy it

17:32

during all that time. It was like

17:34

right out there in the open, but

17:37

sometimes, you know, it's not always the

17:39

case, but this, you know, you could

17:41

really just see it, and you had

17:44

so much time, Many more times than

17:46

just a hundred. I think it was

17:48

up. I don't know 700 times at

17:51

some point in it and maybe not

17:53

more than that now I don't I

17:55

don't remember but So the lesson there

17:57

is when you find a really great

18:00

business, you know, you have a lot

18:02

more time than you think. You know,

18:04

it could be just think if you

18:07

had looked at Monster and it was

18:09

up 10X and you thought, well, you

18:11

know, I've missed it. That would have

18:14

been a shame, right? But focusing just

18:16

on the business, it had huge, you

18:18

know, what we call, Tam, total addressable

18:21

market. That's the other thing about Monster.

18:23

And, you know, it was making deals

18:25

with... distributors and so there was definitely

18:28

a story there that you could follow

18:30

but what other thing that was interesting

18:32

about Master was there was quite a

18:35

bit of skepticism about it for a

18:37

long time and And in the book

18:39

I pointed out I think there was

18:42

a value investors club right up. It

18:44

was very negative on on that stock

18:46

and the competitive position of it. So

18:49

even though it had these large very

18:51

thick margins and on paper was doing

18:53

very well, there was still a lot

18:56

of skepticism about the durability of that.

18:58

So those are some things that come

19:00

out on that case study, but that

19:03

was one of the interesting ones for

19:05

sure. Yeah, when I think of energy

19:07

drinks, of course, Red Bull was the

19:10

ultimate example. And the classic story, you

19:12

know, that it goes around about that

19:14

is that people tasted it. Yeah, that's

19:17

right. And it's terrible. If you've ever

19:19

tasted, it's terrible. That's exactly right. I

19:21

remember that, that's part of it too.

19:23

People look at it, they taste it,

19:26

it was terrible. Yeah, it was like,

19:28

nobody's gonna drink this, right? Yeah, that's

19:30

right. And everybody drinks the damn stuff.

19:33

I mean, I don't get it. Yeah,

19:35

I don't first, we get it. So,

19:37

right. Yes, that's one of those things

19:40

where maybe the Peter Lynch style of,

19:42

you know, trying the product itself didn't

19:44

help you. No, no, it kept you

19:47

away from a huge, huge winner. Yeah.

19:49

Wow. I mean, they're the only one

19:51

if you watch Formula and racing. They're

19:54

the only one with two teams in

19:56

the field. And, you know, they're. Very

19:58

few, there are only 10 teams. Right.

20:01

Of course, the other thing about Monster,

20:03

and this is true of all these

20:05

big winners, is that it suffered multiple

20:08

drawdowns. And I know in the book,

20:10

I remember I went through it, I

20:12

had a little, I think I had

20:15

a little heat map where I showed

20:17

them, and I mean, it dropped 40%

20:19

multiple times during its run. So, I

20:22

mean, one of the, I'd say like

20:24

two big lessons at a book that

20:26

I've learned about these long-term winners. One

20:29

is they all go through those periods

20:31

where you have, where you have these

20:33

massive, where you have these massive, where

20:36

you have these massive. you know, getting

20:38

cut, cutting half type drawdowns, even Berkshire

20:40

has been cut in half at least

20:43

three different times. But you also had

20:45

long stretches aboard them, which is also,

20:47

I think, just as bad. It's just

20:49

as tough, maybe tougher to hold on

20:52

to a stock that goes nowhere for

20:54

five, six, seven years. I mean, that's

20:56

hard. And there were a lot of

20:59

times that happened. I've done this with

21:01

my stocks as well, where I've gone

21:03

back and I've actually, I think it

21:06

was brown and brown. I did one

21:08

of these case studies studies studies on

21:10

where in a 16-year stretch, it was

21:13

up. I don't remember the numbers now.

21:15

It was up a good bit many

21:17

times, but there was a six-year stretch

21:20

in that where it went nowhere from

21:22

peak to peak. So, you know, that's

21:24

hard. You know, when you're watching other

21:27

stocks, you're in your looking at other

21:29

stocks, there's always something going up. I

21:31

mean, Berkshire was the best performing stock

21:34

in that study, and it had a

21:36

seven-year run where it went nowhere in

21:38

like the late 90s, like the late

21:41

90s, like, like, like, like, like, like,

21:43

like, like, like, like, like, like, like,

21:45

like, like, like, like, like, like, like,

21:48

like, like, like, like, like, like, like,

21:50

like, like, like, like, like, like, like,

21:52

like, like, like, like, like, like, like,

21:55

like, like, like, like, like, like, like,

21:57

like, like, like, like, 200% during that

21:59

time of Berkshire went nowhere. That's tough

22:02

to hold, but that was the best

22:04

performing stock in the study. So you

22:06

can imagine, you know, some of the

22:09

other top performers that weren't quite the

22:11

best, have longer stretches of underperformance. And

22:13

it's just, you know, kind of normal,

22:15

natural. You have to get used to

22:18

it if you're going to be a

22:20

long tour investor and make these really

22:22

good returns. This calls to mind the

22:25

great quote of William Goldman. Right? Nobody

22:27

knows anything. He was talking about Hollywood.

22:29

But nobody knows anything. Nobody knows anything

22:32

about the price of securities, the direction

22:34

of the... price of securities. Nobody does

22:36

anything about it. And if you make

22:39

decisions based on it, well, you know,

22:41

you're making a decision based on something

22:43

you yourself do not know and that

22:46

nobody knows. It's not how you do

22:48

it. Right. I mean, over the very

22:50

long term we know that stock prices

22:53

generally will follow the business performance, right?

22:55

You're not going to create a great

22:57

business like Costco or something and not

23:00

have the stock go up over time.

23:02

There are stretches, of course, that can

23:04

go on days, weeks, months, years where

23:07

they can be decoupled. And that can

23:09

be very frustrating. And great fantastic businesses

23:11

like Costco, if we're going to stick

23:14

with that exam, they can become extraordinarily

23:16

cheap and still be a fantastic business.

23:18

They can become extraordinarily overvalued. And if

23:21

you buy at that peak, you're not

23:23

going to perform for a long time.

23:25

But the business keeps chugging. It's just

23:28

like, you know, it's got to be

23:30

intensely frustrating, you know, for people to

23:32

look at that and be expected to

23:35

not do anything. So we often wind

23:37

up here in these discussions where we

23:39

have to admit that it's investing is,

23:41

I would say it's technically not extraordinarily

23:44

difficult, but it is emotionally downright near

23:46

impossible for most people. totally agree. I

23:48

mean sometimes I think that's my role

23:51

like the biggest service I provide for

23:53

my investors is just getting them just

23:55

stick in there and just leave it

23:58

alone and you know and be kind

24:00

of like yeah almost like a shrink

24:02

telling you know giving them bucking them

24:05

up when times are bad and and

24:07

not letting them you know give up

24:09

so but yeah I totally agree you

24:12

know just like the basic principles of

24:14

it are pretty simple if you just

24:16

You know, buying a basket of great

24:19

businesses leaving them alone or even you

24:21

only have to do that. You just

24:23

buy... index funding and you leave it

24:26

alone, that part's not so difficult, but

24:28

the emotional toll and the ability to

24:30

resist doing something and that's the thing.

24:33

People want to do something and the

24:35

ability to resist that is that's hard

24:37

and the emotions. So going through it

24:40

like we're going through it now, you

24:42

know, things are in free falls, it

24:44

looks like some kind of economic catastrophe

24:47

that's unfolding before our eyes. But we've

24:49

been here before and I think, you

24:51

know, again, if you have that multi-year

24:54

outlook, you look out five years or

24:56

so, this is going to be another

24:58

blip, plus like COVID, just like other

25:00

things we've seen happen before. Yeah, yep,

25:03

nothing new under the sun. Chris, I,

25:05

before we hit record on this, I

25:07

was asking you about the books on

25:10

the shelf up behind you. You are

25:12

an avid reader of philosophy. Yes. Does

25:14

this have any, you know, is this,

25:17

is this a hobby or does it

25:19

integrate with investing at all? Well, that's

25:21

good question. I mean, I started it

25:24

just kind of as a hobby and

25:26

as an interest, but of course it

25:28

plays in everything in life. I mean,

25:31

not just investing, but everything. So it

25:33

is kind of, it is very important.

25:35

And yeah, I mean, I'm... you know,

25:38

taking that more philosophical outlook about things,

25:40

I think it makes it easier to

25:42

go through those difficult periods for sure.

25:45

And different philosophers have different things to

25:47

teach you. Yeah. Yeah. Yep. You better

25:49

be philosophical about it when you're getting,

25:52

you know, you're getting beat up like,

25:54

you know, Trump tariff tantrum. Right. That's

25:56

right. This too shall pass. That's it.

25:59

I mean, you know, I think lots

26:01

of different things with these philosophy learned.

26:03

different things. I mean, you know, the

26:06

pragmatic philosophers teach you different ways to

26:08

think about things. Plateness are different. So

26:10

yeah, I really enjoy reading a lot

26:13

of these different things and thinking about

26:15

them. And then, yeah, they spill over

26:17

inevitably until what I'm doing. Is there

26:20

one that really sort of speaks to

26:22

you as a market philosopher who didn't

26:24

know he was one, let's say? Well,

26:26

you know, I've written a couple of

26:29

books. Yeah, I was just thinking that.

26:31

Just thinking to him, that I've written

26:33

a couple books about Krasibsky, of course,

26:36

so he's, yeah, he, there's a lot

26:38

in there that you can apply to

26:40

markets. And of course, he didn't know

26:43

it at all, whether he didn't address

26:45

that audience at all, which was the

26:47

perfect avenue for me to write my

26:50

book. How do you know? Which I

26:52

did. And I wasn't the first one

26:54

that tried to you that either, somebody

26:57

else who tried it in 19. I

26:59

forget the date now was at 19,

27:01

late 50s or early 60s or someone

27:04

else tried to write a book and

27:06

it was actually McGee, the same guy

27:08

who wrote the book on technical analysis,

27:11

the Bible technical analysis. But he wrote

27:13

a book, it was called General Semantics

27:15

on Wall Street. I remember that was

27:18

the first edition and I always chuckled

27:20

because that didn't last very long. And

27:22

there was a second printing that came

27:25

last very long and there was a

27:27

second printing that came out. on a

27:29

selling. Yeah, you put over the chairs.

27:32

Yeah, it's like a great degree for

27:34

the second edition. Yeah, right. And so

27:36

wait a worse book title. On Woodlock

27:39

Family House, Woodlock House Family Capital, I

27:41

see, Hunter Baggers, invest like a deal

27:43

maker, how do you know in World

27:46

Right Side Up? Is, are you saying

27:48

World Right Side Up is also influenced

27:50

by? Qurisibsky? No, it has had two

27:52

books. The other one I wrote was

27:55

not, probably not even on my website.

27:57

It's a book I wrote published by

27:59

the Institute of General Samandix, which is.

28:02

Corsipsky's Institute that he started in the

28:04

1930s. And that book is called Dear

28:06

Fellow Time Binder. Oh, I have that

28:09

on the shelf. That, yeah. Yeah, yeah.

28:11

I forgot. How do you know, it's

28:13

also now published by the Institute of

28:16

General Sematics as well. So those are

28:18

the two books that are really directly,

28:20

you know, related to Crisipsky. All right.

28:23

I just, I want to make sure

28:25

I have the complete works of Chris,

28:27

Mer, Mer. You want to talk about

28:30

a stock or two that you like

28:32

now? We can do that, I don't

28:34

care. Or maybe I could ask you

28:37

to talk about Swedish companies, just to

28:39

say a few words about Swedish companies.

28:41

Yes, so I got interested in Sweden

28:44

because there were all these winners from

28:46

over there. So, you know, I'm doing

28:48

these, not only these hundred baggers study

28:51

I did, but then others. studies I've

28:53

read, I've been reading, and I get

28:55

interested in this kind of thing, well,

28:58

you know, these top performers. And I

29:00

came across a chart where there are

29:02

a bunch of Swedish companies that outperform

29:05

Berkshire. I wish I could kept the

29:07

original chart that I found, and it

29:09

wasn't like from inception, but it was

29:12

over like a 20-year period of time

29:14

or something like that. And there were

29:16

these, you know, for lack of a

29:18

better word, kind of holding companies, companies

29:21

that grew a lot through acquisition. I

29:23

was like, wow, what are these things?

29:25

And so, yeah, I started to investigate

29:28

more in Sweden and turns out there

29:30

are a lot of winners. There's a

29:32

very good market. The, in fact, I

29:35

saw a study not long ago which

29:37

looked at stocks that had gone up

29:39

at least 1,000% in the last decade

29:42

and of that population, Sweden had contributed

29:44

something like 20 companies to that, to

29:46

that population, which was like a four

29:49

and a half percent. It was way

29:51

oversized based on the market cap. So

29:53

it was the big ones. It was

29:56

like the US, China, India, and I

29:58

think. Japan, but the fifth most contributor

30:00

was from Sweden was Sweden. Who knew

30:03

that there were even 20 publicly traded

30:05

Swedish companies at all? There's only like

30:07

10 million Swedes, but they produced a

30:10

number of these winners. So yeah, so

30:12

you know, like Lifco is an example.

30:14

This one I own and I was

30:17

the first, my first purchase in Sweden

30:19

and it came in 2021. And yeah,

30:21

it's a really great company. It's half

30:24

owned by Carl Bennet and other insiders

30:26

own some stock too. So you have

30:28

this skin in the game element, not

30:31

leverage. They do a lot of different

30:33

things. So it's a holding company. They

30:35

have over 200 different businesses. Some of

30:38

it they do like dental supply, so

30:40

like the cement that goes in your

30:42

teeth when you go to the dentist,

30:44

get fillings and things, they make that.

30:47

They have all these other industrial parts

30:49

and segment fittings and things that they

30:51

make. So it's a very broad. the

30:54

first by business, they take that cashful

30:56

and they reinvest and they buy other

30:58

businesses and they just can't keep going.

31:01

So it's kind of like in the

31:03

US, maybe the closest kind of equivalent

31:05

would be something like a Danahair or

31:08

a roper, you know, these kind of

31:10

businesses that they grow primarily through acquiring

31:12

other small niche industrial businesses. So it's

31:15

one this very decentralized model, which is

31:17

a very Swedish thing that's decentralized. They

31:19

call them this, they're called Swedish serial

31:22

acquireers, that's what people call them. I

31:24

don't, not necessarily that fond of that

31:26

name, but that's what it is. I

31:29

prefer to think of them more as

31:31

they're buying and building businesses kind of,

31:33

you know, as they go along. But

31:36

yeah, I mean, lifco has been, and

31:38

by the way, it's also global, it's

31:40

not like it's just a Swedish Swedish

31:43

thing. So they're, so they're, do business

31:45

all over the business all over the

31:47

business all over the business all over

31:50

the world. But it's a very solid

31:52

solid business generates lots of cash and

31:54

then they reinvest a good chunk of

31:57

it and generate good returns on capital

31:59

and And it's a machine. I mean,

32:01

they've been doing this now. If you

32:04

look, I think it went public in

32:06

2000. Well, I don't remember now. 14,

32:08

or maybe a little earlier. But I

32:10

mean, it's been a great, great winner

32:13

on the stock market. And so that's

32:15

one, one example. And there's other smaller

32:17

ones, too. So you can kind of,

32:20

you know, if you poke around, you

32:22

can find ones that are a little

32:24

earlier in the curve. I'm on the

32:27

board of one of these small publicly

32:29

traded companies. So, and I want to

32:31

talk my book too much, but it's

32:34

also an interesting one called Technion. TEQ

32:36

is the ticker over there. And similar

32:38

to a lifco except much earlier on,

32:41

so there are only 30 businesses there

32:43

around 30. We've spent some acquisitions this

32:45

year. So, I mean, that's the kind

32:48

of thing you can find over there.

32:50

And it's been very interesting. And again,

32:52

lots of skin in the game, all

32:55

these companies are own. The owners, the

32:57

management team are owners, own a good

32:59

bit of stock, they're not leverage, generate

33:02

cash, all the beautiful things we like

33:04

about businesses. They seem to exhibit. So,

33:06

interesting. I make make trip to Sweden

33:09

in a year. I go at least

33:11

three or four times a year. Last

33:13

year, probably went more than that. And

33:16

that's a good market deficient. And again,

33:18

everyone speaks English. They disclosures are all

33:20

in English. So the disclosures are good.

33:23

And it's a good market that way.

33:26

Very interesting and only 10 million people

33:28

and all those winners. There must be

33:30

something in the water in Sweden Yeah,

33:33

well, you know, there was there's a

33:35

lot of theories about this but one

33:37

is there was this company called Bergman

33:39

and Beving that got started in the

33:42

early 1900s and Fast forward they've they

33:44

were the first one that kind of

33:46

discovered the power this decentralized model and

33:48

then buying other small industrials and you're

33:51

kind of reinvesting and doing that and

33:53

So they were so successful and then

33:55

they had spinouts. So, you know, ad

33:57

tech and logarhons or spinouts of Bergman

34:00

and Beving. and they've been very successful.

34:02

So I call it kind of like

34:04

the Silicon Valley effect. It was like,

34:06

you know, you just had these tech

34:09

businesses that start happen to be successful

34:11

in Silicon Valley and it just tracks

34:13

talent there and copycats. And now we

34:16

associate Silicon Valley as being, you know,

34:18

a tech haven or center. And this

34:20

kind of similar thing happened there. They

34:22

had this model. It was very successful.

34:25

other people sort of copied it, drew

34:27

similar talent there, and so now there's

34:29

a proliferation of these kind of models

34:31

there that have all been very successful.

34:34

I have a question that I forgot

34:36

to ask you earlier when we were

34:38

talking about the code, if you don't

34:40

mind just quickly backtracking that before we

34:43

move on. I wonder, have you ever

34:45

or would you ever own a company

34:47

like Transdime, which is a levered company?

34:49

But you know, they've been, Nick Howley

34:52

is a brilliant, brilliant guy and had

34:54

a fantastic idea and has executed on

34:56

it quite brilliantly and does some of

34:58

these things that you're talking about. Absolutely.

35:01

But, but he pursues this, you know,

35:03

he likes the private equity sort of

35:05

model and he pursues that, you know,

35:08

with reference to leverage, dividend policy and

35:10

just the way he thinks about the

35:12

business. Would you ever own that? That's

35:14

a great, great question. I've looked at

35:17

it many times and then I would

35:19

say no. I mean, I, you know,

35:21

Trans-Dime, the kind of counter to Trans-Dime

35:23

is HICO. I own HIGO, which is

35:26

a similar, I mean, they're often put

35:28

in the same bucket of their different

35:30

businesses, but, and they've both been very

35:32

successful. HICO has done it with very

35:35

little leverage. and transient with eye watering

35:37

leverage for me. Yeah. But I cannot

35:39

deny, you know, they've been successful. It's

35:41

like I tell people, you know, sometimes

35:44

this just comes down to personal preference.

35:46

It's like, do you like deep dish

35:48

pizza or New York style pizza? It

35:50

doesn't mean ones. Right, you know, one's

35:53

wrong. So Transdime has a formula. It's

35:55

very successful. And I don't deny that

35:57

it's been very successful. And I expect

36:00

it will be successful. But it's just

36:02

not much fully- There's an interesting philosophical-

36:04

Sorry, sorry, there's, I didn't mean to

36:06

interrupt, but there's an interesting philosophical point

36:09

here for me. As you say, it

36:11

is a personal preference. It's partially about

36:13

investing in things that you understand and

36:15

you understand, you understand, you know, you

36:18

know, founders who don't like a lot

36:20

of leverage a lot of leverage a

36:22

lot of leverage, is great. I love

36:24

that idea. But I wonder how much

36:27

can I ever understand Transdime because, you

36:29

know, a lot of leverage, things can

36:31

happen that you can anticipate. And so

36:33

how much can you ever really know?

36:36

Even if they're brilliant, they have a

36:38

great track record, they have a culture

36:40

that has really executed very well. And

36:42

I wonder, you know, Because I have

36:45

it in the extreme value portfolio. I

36:47

think they're brilliant. I think they've done

36:49

a great thing. I do have that

36:52

straight line from the founding to the

36:54

present moment that I often like to

36:56

see. But I scratch my head about

36:58

the leverage now and then because I

37:01

think how much, you know, they've done

37:03

it the whole time. But you and

37:05

I both know that distaste for leverage

37:07

and the, you know, wanting the well

37:10

financed business, it's about all the things

37:12

that you don't know can happen. the

37:14

things you may have to ride out

37:16

so I'm I'm in a philosophical quandary

37:19

about it constantly just right not a

37:21

question just you know no I mean

37:23

that's I mean that's I mean that's

37:25

I mean I also say like I'll

37:28

tell people like you have to come

37:30

up with some sort of investment philosophies

37:32

you have to have some principles and

37:35

then you have to recognize because these

37:37

principles will also help you filter out

37:39

the investment universe as you know there's

37:41

tens of thousands of securities we have

37:44

to have some way to get to

37:46

some manageable number that we can work

37:48

on. And so you have to also

37:50

recognize that whatever principles you choose are...

37:53

filters you choose, you're going to miss

37:55

out some great winners. You know, my

37:57

aversion to leverage means I've missed out

37:59

on some fantastic winners, you know, or

38:02

the owner operator thing. There have been

38:04

some great winners where management team has

38:06

had very little skin in the game,

38:08

the way I would define it. But

38:11

I'm okay with that, because I'm looking

38:13

at it as something that is a

38:15

long term that I have to repeat

38:17

again and again and again and again.

38:20

And like you say, I mean, there

38:22

are going to be times when... It's

38:24

going to be very uncomfortable to be

38:27

leveraged. We both have been through the

38:29

2008 crisis. And in that period of

38:31

time, even in OK balance, he became

38:33

a problem very quickly. So I would

38:36

rather not have to deal with that.

38:38

Also, it folds into a lot of

38:40

other things on how you do investing.

38:42

I run a very concentrated portfolio. I

38:45

have 12 stocks at the top five

38:47

or half of it. In the top

38:49

three, I think, or about 33 percent.

38:51

You know, about 11% to or about

38:54

11, yeah, around 11% the top three

38:56

each. So, you know, I'm not going

38:58

to, when you have a structure like

39:00

that versus the structure where you have

39:03

30 stocks, you know, you can, you

39:05

think about it a little differently maybe.

39:07

Some things you can't put in a

39:09

concentrated portfolio, but you might put in

39:12

a portfolio with 30, you know, there

39:14

are different ways that you have risk

39:16

management things in a different way, so,

39:19

you know, it all kind of fits

39:21

together, as one way I would think

39:23

about it, I would think about it

39:25

too. Yeah, and having those principles, right,

39:28

is so important in times like, like

39:30

we're going through right now, right? Like,

39:32

you know, when you're, maybe we're flirting

39:34

with the bare market territory here. I've

39:37

been hearing from people that I haven't

39:39

heard from in a long time asking

39:41

about the stock market, so I know

39:43

that that's a panicky, well, fearful time,

39:46

obviously, and I think just... Right that

39:48

just having those principles right is that

39:50

part of how you get through these

39:52

these time periods Yeah, well I would

39:55

also say like from now Absolutely, absolutely.

39:57

And I would say times like this

39:59

is when people then tend to abandon

40:01

those principles. So it's easy to follow

40:04

the principles when everything is going well.

40:06

The test of any principle is, you

40:08

stick with it when it, when the

40:11

thing is getting nasty. And that's the

40:13

challenge. Right, don't tell me your risk

40:15

tolerance. Show it to me at times

40:17

like this, right? I was like one

40:20

of my favorite Mike Tyson quotes. He

40:22

says, you know, everyone's got a plan

40:24

until they get hit in the mouth.

40:26

Everyone's got investment principles till the first

40:29

bear market comes around. That's right. Yeah.

40:31

Yep. Yeah. It's all a learning experience.

40:33

Then you find out who you really

40:35

are. It's just like, as you say,

40:38

it's like anything else in life. You

40:40

know, you find out who you are

40:42

under pressure. Yes. And many people are

40:44

under pressure right now. Yeah, it's a

40:47

great way to learn about yourself. And

40:49

that you have to make your philosophy.

40:51

Your investment philosophy and principles have to

40:53

match your own. you know

40:56

personality what you know about yourself

40:58

you know I know like there's

41:00

some business I'm just uncomfortable owning

41:02

I mean I'm you know like

41:04

most retailers I'm just uncomfortable without

41:06

model I don't you know and

41:08

I know that when things get

41:10

bad I have a hard time

41:12

holding it so I've learned so

41:14

over time I've seen it and

41:16

I what things I mistakes I've

41:18

made and so I try to

41:20

put myself in situations where I'm

41:22

not going to be forced in

41:25

that corner again you know so

41:27

you if you're Always thinking about

41:29

that, I think that's a good

41:31

guiding light too. You know, there's

41:33

some things that if you're just

41:35

not comfortable with, then that's fine.

41:37

You just don't own those things.

41:39

It's lots of other fish in

41:41

the sea. Right, it's the, it's

41:43

Buffett's circle of competence. You know,

41:45

there's a clear boundary beyond which

41:47

you'd probably be better off, you

41:49

know, not going beyond it. I

41:51

would say my circle of competence

41:53

over time has gotten small. It's

41:55

like the number of things I

41:57

really want to own. You would

42:00

think it would get wider, like

42:02

you'd learn more and you'd want

42:04

it. No, actually it gets smaller

42:06

because the number of things I

42:08

really want to... it's just yeah

42:10

you get more picky I guess.

42:12

Right but it's but actually I

42:14

would say in describing that evolution

42:16

the circle of competence becomes clearer

42:18

because I'll only speak for myself

42:20

Chris because I look back and

42:22

I said well I thought that

42:24

one was inside it but it's

42:26

outside it so yeah I can

42:28

see how you say it's getting

42:30

smaller but you know clear may

42:32

be a better way to put

42:34

it actually. I like this never

42:37

really inside the circle to begin

42:39

with. I was just you know

42:41

wandering in the wilderness thinking I

42:43

knew something that I didn't know.

42:45

Well then I remember I have

42:47

a memory I don't know this

42:49

doesn't necessarily make us look great

42:51

but it's probably valuable for our

42:53

listeners anyway. One of the first

42:55

things you and I worked on

42:57

together. Yeah. I want to hear

42:59

this. One of the first things

43:01

we worked on together was like

43:03

reinsurers and we went to Bermuda

43:05

and we met with all these

43:07

reinsurers and we did a bunch

43:09

of research on that and I

43:11

don't know I'm sure Dan agrees

43:14

now but in retrospect I'm like

43:16

we didn't know we had no

43:18

business being there I mean we

43:20

were way out of our yeah

43:22

that's one of the successful investments

43:24

I think for either of us

43:26

so we learned I mean well

43:28

I was flat on Oh God,

43:30

I can't remember the name of

43:32

the company. I blocked it all

43:34

out. Yeah, I, no, you had

43:36

one that was okay. It was

43:38

like partners or something. I remember

43:40

Ryan was like Scottishry, which was

43:42

a disaster. I got out of

43:44

it before completely unfolded, but there

43:46

are, yeah, didn't work. Yep. Yeah,

43:48

I, I wish I could remember.

43:51

We did have a good time

43:53

in Bermuda, but we met with

43:55

a lot of companies, but it

43:57

was, we had a lot of

43:59

fish stew. Yeah, and yeah, Fish-Doo,

44:01

that was the best part of

44:03

it, was Bermuda Fish-Doo. We met

44:05

with that one particular fellow who

44:07

I felt taught us more about

44:09

reinsurance than any other human being

44:11

I've ever encountered in my life.

44:13

And I don't remember his name,

44:15

but I remember the company and

44:17

actually an extreme value. I'm trying

44:19

to look through the portfolio quickly.

44:21

He... I wish we could remember.

44:23

We're going to frustrate our listeners

44:26

by trying to remember, but we

44:28

actually sort of made a small

44:30

single digit profit as I recall

44:32

on that company, which I'm sorry

44:34

I can't find it right now.

44:36

And he just taught us, you

44:38

know, I'll never forget the lesson

44:40

he taught us about. these risks

44:42

with the geographical zones. He taught

44:44

us about hurricane hazel, you know,

44:46

started out in like lesser Antilles

44:48

or some place and killed a

44:50

bunch of people in, I think

44:52

it was Haiti or Cuba or

44:54

somebody, maybe Haiti, and then it

44:56

made landfall in the Carolinas and

44:58

went and killed 80 people in

45:00

Toronto. And those aren't in the

45:03

same geographical zone. So if you're

45:05

writing X percent of your net

45:07

worth as these companies do, You

45:09

were way over your skis there

45:11

on that hurricane hazel deal. So,

45:13

you know, the lesson there was,

45:15

you know, don't draw the zone

45:17

like everybody else. You know, you

45:19

got to know what you're doing

45:21

when you draw the zone, which

45:23

is a crazy thing. Okay, now

45:25

we got to know weather patterns.

45:27

You know, it just got more

45:29

and more complicated so that you

45:31

could never say that you really

45:33

knew anything. Well, that's I think,

45:35

that's, I think, yeah, that's the

45:37

key takeaway for me for that

45:40

now, is he just got more

45:42

and more complicated and you can

45:44

never be sure that you really

45:46

knew anything. And that pretty much

45:48

sums up to me as well.

45:50

Yeah. And it's, you know, it's

45:52

classic, classic Charlie Mungerism, right, the

45:54

two hard pile. You know, and

45:56

that was a long time ago,

45:58

by the way. That was like

46:00

2004 or 2005, something like that.

46:02

So I mean, he's evolved as

46:04

investors since, but that's an example.

46:06

Yeah, I also lied. We lost

46:08

14% on it in extreme by

46:10

I found IPC holdings. I PC.

46:12

That was it. Yep. Held it

46:14

for 223 days and lost 14%.

46:17

Which is probably a fantastic result

46:19

on average. Exactly. For a re-insure.

46:21

Yes. It's like to run destiny

46:23

reinsurance companies, you have to be

46:25

Warren Buffett. You don't have to

46:27

be like him. You have to

46:29

be him. You have to be

46:31

him. You know. And he had

46:33

his problems with him as well

46:35

too. So let's, you know. Now

46:37

General Re wasn't exactly the greatest

46:39

thing, you know. Well, you learned

46:41

and had some good fish stew.

46:43

Yeah, we did. You know, the

46:45

fish stew was worth the trip,

46:47

I think. And if readers bought

46:49

the stock and lost 14% but

46:51

went and had the fish stew,

46:54

I'm going to call it break

46:56

even. So. Yeah. All right. You

46:58

got any other names that you

47:00

think. teach a good lesson for

47:02

listeners or that you're excited about

47:04

like right now. Yeah, I mean

47:06

I have to tell listeners Chris

47:08

is not like the excited about

47:10

right now pick kind of a

47:12

guy if I'm you know he's

47:14

he's the guy you want to

47:16

go to these long-term lessons for

47:18

so so you know right put

47:20

that in your notes too. Yeah.

47:22

I mean one of the things

47:24

I I mean, yeah, I mean

47:26

right now is a lot there's

47:29

I would buy almost everything. I

47:31

mean, because everything's down so much,

47:33

but you know, I've been gotten

47:35

a lot more excited about a

47:37

company called Lumine Group, L-U-M-I-N-E, and

47:39

it's a spin-off of Constellation software.

47:41

Oh, really? Nice. Yeah, yeah, and

47:43

I've owned it since the spin.

47:45

average is around probably 17 or

47:47

something like that. It's 40, 40

47:49

dollars around right now. But they,

47:51

I mean, they're, they're like a.

47:53

35% return on invested capital over

47:55

the last three years. They've invested

47:57

in a ton of money, and

47:59

I think that it's just gonna

48:01

be a surge in free cash

48:03

flow here in the next couple

48:06

of years. So I think that's

48:08

one I'm particularly excited about. It's

48:10

a lot of growth. The other

48:12

one is kind of a sister

48:14

company that would be called Topicus.

48:16

What's called Topicus? And that's also

48:18

one that should have a. big

48:20

surge in free cash loss also

48:22

spin-off from consolation. And I've owned

48:24

that one since the beginning as

48:26

well that added to it, but

48:28

I think both those are pretty

48:30

timely right now because, again, they've

48:32

made all these investments. They've deployed

48:34

in a lot of capital last

48:36

year, particularly for Topicus. And, you

48:38

know, if you just do kind

48:40

of back of the envelope math

48:43

based on returns they've gotten in

48:45

the past when they deploy capital,

48:47

you know, they're making 25 percent

48:49

or so returns on this capital.

48:51

and you project that forward, there's

48:53

going to be a big surge

48:55

in free cash flow this year

48:57

and next year. And I don't

48:59

think the market quite fully appreciates

49:01

it yet. But yeah, those are

49:03

ones that I would expect to

49:05

own for a lot of years.

49:07

So like you just said, Dan,

49:09

I'm not saying by right now,

49:11

like then you're going to make

49:13

a return in three months and

49:15

sell it. These are really good

49:17

businesses that should. compound capital high

49:20

rates for a long time. All

49:22

right, so before we get to

49:24

our final question, I have the

49:26

penultimate question for you. Okay. Or

49:28

maybe it's a comment and you

49:30

could expound a little bit on

49:32

this is for our listener. Please

49:34

notice that we are talking with

49:36

Chris in the midst of the

49:38

Donald Trump tariff tantrum and the

49:40

market is down substantially, you know,

49:42

and it's wildly... volatile from day

49:44

to day, you know, it's red

49:46

and it's green and it's up

49:48

and it's down. And you have

49:50

not heard Chris mention that one

49:52

single time. Why, Chris, why have

49:55

we not heard you mention that

49:57

one single time? Yeah, that's a

49:59

good point to make. I think

50:01

right now, I saw just this

50:03

morning that we are, it's a

50:05

fourth worst start to the US

50:07

market in history. History being 21st

50:09

century and 20th century. Yeah, I

50:11

think the top two are like

50:13

from the 1930s and then the

50:15

third worst was 2020. And now

50:17

we're the fourth, which is kind

50:19

of amazing. But I mean one

50:21

reason why is because It doesn't

50:23

change anything that I'm doing like

50:25

I haven't you know Really touched

50:27

the portfolio this year as far

50:29

as selling anything or and I

50:32

don't anticipate doing anything So for

50:34

me, I mean, I don't want

50:36

to say it's a non-event. It's

50:38

important things are happening, but it's

50:40

not like making me want to

50:42

run out and sell my stocks

50:44

or you know make a switch

50:46

somehow so that that's probably the

50:48

biggest reason it's not it's not

50:50

in the actual category for me

50:52

it's not at least not yet

50:54

yeah that I can see not

50:56

wait wait a minute that was

50:58

interesting it's not in the actual

51:00

category for me what do you

51:02

mean like an actionable category like

51:04

an actionable okay I see I'm

51:06

sorry I didn't hear you okay

51:09

it's not an actionable category of

51:11

news information. Right. I mean, because

51:13

when I'm looking, because I'm studying

51:15

these businesses primarily, and so it's

51:17

not, you know, I'm not going

51:19

to, like I said, I'm not

51:21

going to run out and sell

51:23

any of these businesses because they're

51:25

down, you know, whatever, 15% or

51:27

whatever it is from their eyes.

51:29

And of all the stuff we've

51:31

been talking about, I mean, this

51:33

is really normal for equity investors.

51:35

It's just these things happen from

51:37

time to time. and we've had

51:39

more in our share of it

51:41

late then. lately than usual. I

51:43

was thinking about this the other

51:46

day, I was saying this is

51:48

my seventh year running the fund

51:50

and I've already had three bare

51:52

markets in that time, which is

51:54

unusual. That's a lot of bare

51:56

markets. Usually I have like one,

51:58

you know. So, but it is

52:00

still normal when you take the

52:02

longer view. I mean, it's, yep.

52:04

So, as you said before, this

52:06

two shall pass. Yeah. All right,

52:08

so let's, with the penultimate question

52:10

out of the way, let's do

52:12

the final question, which is the

52:14

same for every guest, no matter

52:16

what the topic, even if it's

52:18

a non-financial topic, same identical question.

52:21

If you've already said the answer,

52:23

please feel free to repeat it.

52:25

And the final question is simply,

52:27

it's for our listener's sake, if

52:29

you could leave them with one

52:31

final idea, one final takeaway, what

52:33

would it be? We'll say something

52:35

along these lines is The key

52:37

word for all of this investing

52:39

is patience And if I could

52:41

boil it down the one thing

52:43

it'd be that you have to

52:45

be patient It's like You know

52:47

when you plant You know flowers

52:49

or something or vegetables you don't

52:51

expect immediate results. You have to

52:53

give it time you plant the

52:55

tree you know you you have

52:58

to give a time to grow

53:00

and then they're going to be

53:02

good growing seasons and bad growing

53:04

seasons and it's going to be

53:06

winters and the springs and you

53:08

don't pull it out you know

53:10

or you have to give you

53:12

give a time. So I think

53:14

the biggest thing for any investment

53:16

strategy principles or however you decide

53:18

to tackle the problem is you

53:20

have to find ways to cultivate

53:22

that patience. And there are lots

53:24

of ways to do it. I

53:26

mean, I gave him one little

53:28

crutch I like is that coffee

53:30

can portfolio. Dan, you know about

53:32

this. If you Google it, the

53:35

coffee can portfolio will come right

53:37

up as an article. called by.

53:39

It came out in 1980s, but

53:41

the basic idea is you create

53:43

a portfolio with the intention that

53:45

you're not going to look at

53:47

it for like 10 years, just

53:49

leave it alone and see what

53:51

the results are. And there's been

53:53

lots of like people have run

53:55

these different experiments and but invariably

53:57

what happens is you have some

53:59

something in there that's a huge

54:01

winner. And you have a few

54:03

things that don't work out, maybe

54:05

have a zero or two, and

54:07

then you have a couple things

54:09

that are mediocre, then you have

54:12

a couple of really good performers.

54:14

And by the end result is

54:16

that it's much better than if

54:18

you had been messing with it

54:20

the whole time. So that's my

54:22

key lesson. Find a way to

54:24

cultivate patience with your investments. And

54:26

I think you'll be happier just

54:28

in life generally. Be less worried

54:30

about stuff. Especially with. Trump tariffs

54:32

and all the other things that

54:34

go on. So that's my that's

54:36

my parting thought. Excellent. Yeah, I

54:38

hope people take you up on

54:40

that. I think it's Robert Kirby

54:42

was the guy who wrote the

54:44

article and he described two clients

54:46

who were husband and wife and

54:49

they had both taken the the

54:51

buy advice of the same advisor

54:53

in separate accounts. The husband never

54:55

sold anything and the wife took

54:57

the sell advice and the husband

54:59

upon his death, she found out.

55:01

He had dramatically outperformed and wound

55:03

up with the portfolio you described,

55:05

you know, the zeros, the mediocre,

55:07

the really good, and the phenomenal

55:09

outperformers. Really interesting. I think there

55:11

was one stock in there that

55:13

was worth more than the wife's

55:15

account entirely. Right, that was the

55:17

Xerox and its spin-offs, I think.

55:19

Yeah, yeah, so it's a lesson.

55:21

Yep. And it seems like you're

55:24

pursuing something like that. You've got

55:26

your, you know, your big winners

55:28

and their spinoffs that you're home.

55:30

Yes, I do. Yeah, that's right.

55:32

All right. So we got another.

55:34

coffee canner sitting right here folks

55:36

you should learn all you can

55:38

from him. It's always a pleasure

55:40

to talk with you Chris. Thanks

55:42

for being here. Yep great talking

55:44

to you Dan, great talking to

55:46

you Corey, thanks for having me

55:48

on and yeah the pleasure. Always

55:50

a pleasure to talk with my

55:52

old friend Chris Mayor. I think

55:54

we've known each other for more

55:56

than 20 years at this point

55:58

and he's taught me a lot

56:01

frankly. Really grateful to have him

56:03

as a friend and as he

56:05

made clear at the end there

56:07

He's taught me a lot about

56:09

patience and focusing on your circle

56:11

of competence and all the things

56:13

that he discussed during the interview

56:15

Really good thinker and a good

56:17

guy to listen to right now

56:19

Yes, exactly what I was just

56:21

gonna say good voice of reason

56:23

a calm voice to listen to

56:25

right now. It's like exactly what

56:27

you if you're in this actually

56:29

for long-term investing it's exactly the

56:31

kind of advice you would want

56:33

to listen to I think and

56:35

I want to hear I want

56:38

to hear from somebody who has

56:40

looked at all of these things

56:42

in depth and what makes great

56:44

long-term winners and he obviously has

56:46

a hundred baggers is the book

56:48

that I've read from him that

56:50

when you get to the end

56:52

of it that you're just like

56:54

okay now I feel I feel

56:56

I feel good about Yeah. You

56:58

know, having this approach, if you

57:00

want to take that approach that

57:02

he outlines in the book, and

57:04

I think it pays off in

57:06

times like these where you're just,

57:08

there's a lot of, a lot

57:10

of noise out there, a lot

57:12

of fear, but he's obviously, you

57:15

know, and you too, and just

57:17

been there before and seen this,

57:19

so it's not exactly this, but

57:21

these moves, right? Right, right. One

57:23

last thing I do want listeners

57:25

to take away is that the...

57:27

the conviction to hold through these

57:29

things really comes directly from the

57:31

things that Chris was talking about

57:33

that he understands and that And

57:35

he relies on the code, you

57:37

know, the cheap and ownership and

57:39

disclosures and excellent financial condition. When

57:41

he finds those things, that's how

57:43

he gets the conviction to hold

57:45

on through all of these, you

57:47

know, bare markets of things that

57:50

he's had to deal with in

57:52

seven years of managing other people's

57:54

money, which have been really a

57:56

turbulent seven years, as he pointed

57:58

out. and people wonder, you know,

58:00

how do you do it? How

58:02

do you hold on? Well, you

58:04

hold on by knowing who you

58:06

are and knowing what's in your

58:08

circle of competence and sticking to

58:10

it. Simply put, it's probably more

58:12

complicated than that, but we wanted

58:14

to put it as simple as

58:16

possible. So, yeah, that was a

58:18

lot of fun. And that's another

58:20

interview and that's another episode of

58:22

the Stanisbury Investor Hour. I hope

58:24

you enjoyed it as much as

58:27

we really truly did. We do

58:29

provide a transcript for every episode.

58:31

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58:33

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