0:00

You're listening to TIP. Hi there,

0:02

it's wonderful to be back

0:04

with you on the richer,

0:06

wiser, happier podcast. Today's episode

0:08

is one of my all-time

0:10

favorites. Our guest is a

0:12

legendary British investor named Terry

0:14

Smith, who manages the Fundsmith

0:17

Equity Fund. Since his funds

0:19

inception in 2010, Terry has

0:21

racked up an average return

0:23

of 14.8% a year by

0:25

investing in a global portfolio

0:27

of high quality companies. that

0:29

are extremely durable. Cumulatively,

0:32

he's beaten the MSCI World

0:34

Index by more than 200

0:36

percentage points over the last 14

0:38

years. The Financial Times describes Terry

0:41

as one of the UK's most

0:43

renowned stock pickers. Bloomberg,

0:45

which includes Terry on its

0:47

list of billionaires, calls him the

0:49

UK's most popular money manager.

0:52

Terry's success both in markets

0:54

and business. is even more

0:56

impressive when you consider the

0:58

odds that were stacked against

1:00

him. As you'll hear, he grew up

1:02

as the son of a truck driver in

1:04

the 1950s and 60s in a very rough

1:06

and tumble area of East London

1:08

that was best known for poverty

1:11

and deprivation and bomb damage

1:13

from World War II and

1:15

plenty of violence, including the

1:18

criminal enterprises run by the

1:20

infamous Kray twins. In this conversation...

1:22

Terry talks in depth about what

1:24

it took to drag himself out

1:27

of that environment to the pinnacle

1:29

of the investment game.

1:31

You'll get a keen sense

1:33

of the analytical skills, the

1:35

investment principles, and the

1:37

sheer grit and determination required

1:40

for him to become an

1:42

investing legend. He's come a

1:44

long way, both literally and

1:46

figuratively. Now in his early 70s,

1:48

he lives on the tropical island

1:50

of Mauritius off the coast of

1:52

Africa. about 6,000 miles from London.

1:54

In his spare time there,

1:56

he practices martial arts, spas

1:59

regularly. with much younger fighters

2:01

and also indulges in his hobby

2:03

of building a collection of more

2:05

than 200 cars. As you'll hear,

2:08

Terry is a remarkable

2:10

character, ferociously driven, fiercely

2:12

intelligent, charismatic, funny,

2:14

charming, charming, combative, shrewd

2:17

and I would say pretty tough. I

2:19

suspect he's not the easiest man in

2:21

the world to live with or work

2:23

with and I was slightly wary of

2:25

him going into our conversation

2:27

going into our conversation.

2:29

But I ended it by liking

2:32

him a good deal and hugely

2:34

admiring his strength of character

2:36

and really the sheer

2:38

resilience and indomitability of the

2:40

guy. In any case, I hope you

2:43

enjoy our conversation as much as I

2:45

did. Thanks so much for joining us.

2:49

You're listening to

2:51

the richer, wiser,

2:53

happier podcast where

2:55

your host William

2:57

Green interviews the

2:59

world's greatest investors and

3:02

explores how to win

3:04

in markets and life.

3:06

All right, hi folks,

3:08

I'm absolutely delighted

3:10

to welcome today's guest. The

3:12

legendary British investor, Terry Smith,

3:15

who's calling in from his

3:17

home on the island of

3:19

Mauritius, where he now lives.

3:21

Terry is the founder, CEO, and

3:23

chief investment officer of an

3:25

investment firm called FundSmith. His Fundsmith

3:28

Equity Fund is the largest stock

3:30

fund in the UK, I believe,

3:32

with more than $27 billion in

3:34

assets under management. Bloomberg, which

3:36

includes Terry on its index of

3:39

billionaires, often describes him as the

3:41

UK's most popular money manager. He's

3:43

definitely one of the most successful

3:46

with a cumulative return of over

3:48

600% since the funds inception

3:50

in 2010, which is roughly 200

3:53

percentage points also better than the

3:55

MSCI World Index. Terry, it's lovely

3:57

to see you. Thanks so much for joining

3:59

us. So far we'll see how it goes

4:01

from here. We're off to a good start.

4:03

I wanted to ask you about your early

4:05

years. I've read in different places that

4:08

you were born in the East End

4:10

of London in 1953 and that

4:12

you came from a very modest

4:14

background as the son of a guy who

4:16

I've read in different places that he drove

4:18

a bus or he drove a truck. And

4:20

my sense is either way that it was

4:22

a relatively poor area that was probably

4:24

damaged a lot by the blitz when

4:27

you were growing up there in the

4:29

1950s. And I wondered if you could just

4:31

give us a sense of what it was

4:33

like growing up in the East End, what

4:36

your family was like, and really how those

4:38

early years shape the person you'd become.

4:40

Yeah, I mean, it wasn't a very nice

4:42

place. As you rightly say, I mean,

4:44

it was still very damaged by the

4:47

war, the Blitz in particular with lots

4:49

of bomb sites, and some of the

4:51

housing was prefabricated housing, which was

4:53

built for temporary accommodation, and

4:56

it was a very poor, In terms

4:58

of educational facilities and achievement, it

5:00

was the worst metropolitan borough in

5:02

Western Europe at that time, West Ham,

5:04

which is where I technically was, for escape West

5:06

Ham is where I was saying pretty poor. The

5:08

story of how I tell people just to illustrate

5:10

it is I went to a deserode primary school

5:13

and in the very harsh winter of 1963, we

5:15

had outside toilets and they froze over. And so

5:17

we were sent home from school and when

5:19

I say sent them to God, I mean

5:21

for the day, I mean, this lasted for

5:23

about six weeks or something like six weeks

5:25

or something like something like that. And that

5:27

would have been great part of the fact

5:29

we also had an outside toilet home which

5:31

also froze over. So it wasn't a big

5:33

hell. And the house I lived in with

5:35

my grandparents and my parents and my uncle

5:38

and various other people was a very modest

5:40

house which has been knocked down in some

5:42

clearance program since I lived there. And he

5:44

had no hot running water and he had

5:46

no bathroom and he had no inside toilet. I

5:48

mean that's kind of where I was. And the

5:50

one thing I would say more than anything

5:52

else about all that is It gives you

5:54

a big incentive to try and do something

5:57

better. And tell me about your

5:59

parents. Yeah my father was as you've

6:01

touched upon already a lorry driver truck

6:03

driver very talented driver not down you

6:05

don't have to be to drive buses

6:07

and lorries but he drove other things

6:09

as well work for a company where

6:11

he's undoing was he worked for a

6:13

company embarking in Essex which amongst other

6:15

things may break linings which I guess

6:17

was where he got involved with them

6:20

and the problem was that they used

6:22

asbestos and that was his undoing he

6:24

got. people say asbestos but that's a

6:26

kind of loose term. He got mesothea over

6:28

in lung cancer and was wiped out by

6:30

that in due course as was the entire

6:32

shift at the place. And my mother

6:35

was worked in various very very very

6:37

modest jobs she was a cleaner she

6:39

worked in a factory making dartboard she

6:41

worked in a factory making brooms and

6:43

so on so they were yeah it

6:45

is a very poor sort of background

6:47

frankly yeah. And where do you think

6:49

you got... your intelligence from were both of

6:51

your parents really smart or my father I

6:53

think was one of these people who was

6:55

tracked by his background he was one of

6:58

12 children which is pretty amazing and I

7:00

had to leave school at 14 and go

7:02

to work so there was no alternative but

7:04

to that but he was clearly very intelligent

7:07

man he in the time when people did

7:09

crosswords in newspapers he regularly won crosswork competitions

7:11

day and every week a book or something

7:13

would arrive where he was winning cross and

7:15

he did eventually before he died. aspired and

7:18

became a manager of a cold storage transportation

7:20

facility and things like that. So he, you

7:22

know, he was clearly a guy who had

7:24

nature of intelligence sort of brain power who

7:26

hadn't backed the education to be able to

7:29

capitalize upon it, I would say. Yeah, I

7:31

often think of my grandfather who grew up

7:33

in London and who left school at 12

7:35

because he was like this poor, poor Jewish

7:37

kid and didn't have, you know, from an

7:39

immigrant family, he didn't have, at a certain

7:41

point, the soul in his shoe. had worn out

7:44

so much that he actually couldn't even hold

7:46

it together with newspaper because there was nothing

7:48

to hold the newspaper in. And so he

7:50

became an apprentice tailor, but he was a

7:52

world-class bridge player, which makes you realize how

7:54

God how much intelligence that must have been

7:56

that sort of got wasted because they were

7:58

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back to the show. term

44:03

will start to gravitate towards a return

44:05

that the company generates and he's not

44:07

putting forward a theory here it's a

44:09

fact and so we look at return on capital

44:11

employed and people look at all kinds of

44:14

earnings growth and so if you're prepared to

44:16

give me access to capital either by you

44:18

sending me more or me retaining your earnings

44:20

and you ignore the return on capital employed,

44:22

I'll generate earnings growth for you at lower

44:24

and lower returns, which plenty of companies have

44:26

done over time. See test code for details,

44:29

right? It's like, oh, it's a disaster, right?

44:31

So we look at return on capital, we

44:33

look at gross margins, we look at the

44:35

difference between sales revenues and cost of goods

44:37

sold, what they mark things up by. Because

44:39

companies take stuff in, they take in

44:41

components, ingredients, services, labour, and they put

44:43

a markup on it, right? And again,

44:46

in normal life, you're going to a

44:48

shop, you can imagine them having a

44:50

markup. Well, all companies have that markup.

44:52

What is it? And the size of

44:54

that tells you a lot of things. It

44:56

tells you about their pricing power, their brand

44:58

strength. It tells you about the defences against

45:00

inflation, if the cost of goods goes

45:02

up. We obviously look at profit

45:05

margins, but most people do. We look

45:07

at cash conversion and what percentage of

45:09

the profits arrive in cash? Is it

45:11

100% 80%? 120%? There are companies that

45:13

make more than 100% of profits in

45:16

cash, usually by the method of paying

45:18

people more slowly than they get paid.

45:20

And that's beneficial, fairly obviously,

45:22

because cash is the only thing in

45:24

the end. You can pay the dividend

45:26

within various things. So we look at

45:28

a raft of financial metrics for these

45:31

companies. And every year we give that

45:33

to people in terms of our portfolio

45:35

and how it looks and how it

45:37

looks against the indices and so on and

45:39

so forth. And then as I say, we start looking

45:41

at things like, well, what do they do?

45:43

So it all looks good. Do they have

45:46

brands that have control of distribution, that have

45:48

intellectual property, that have an installed base

45:50

of software or equipment that they service and

45:52

sell spares and so on and upgrades to?

45:55

How do they do they do this? We've

45:57

got to understand how do they get to

45:59

those numbers? them to get to those nuts and

46:01

then we look at things like the management.

46:03

They're not in the sense of you

46:05

know are they good managers bad managers.

46:07

Traditionally what most people mean by that

46:09

is they're meeting with them and how

46:12

did they come across. I've met people

46:14

who can present brilliantly but bad managers

46:16

and people who can't present to save

46:18

their lives who are very good managers.

46:20

Right. So and no no no let's

46:22

get to the nitty gritty of talking

46:24

to these people and ask them all

46:26

the issue of what's that product and

46:28

in this region. what we really want

46:30

to know is every year you have

46:32

this company that produces this return

46:34

these profits and cash flows are

46:36

right how do you decide whether

46:38

to give it back in a dividend

46:41

buy back shares invest in the business

46:43

or buy things right those are your

46:45

four basic choices that two are obviously

46:47

subsets of wow which is giving

46:49

money back how do you decide

46:51

between those and we're looking for people

46:53

who've got a grasp of how that

46:56

works and what they do which is

46:58

honest and that matches something like the way

47:00

that we think. So they go, well, actually,

47:02

I mean, I've met managers, I've done

47:04

projects for managers in public companies

47:06

over years where they say, my

47:09

stock's undervalued. You're busy acquiring

47:11

things, yes, yes, buying lots of things, right? Why

47:13

don't you buy your own stock? What? Well, why

47:15

would I do that? I drink. But surely

47:17

the company you know best is not

47:20

the companies you're acquiring, so when you've

47:22

already got. You must have that pretty

47:24

work, yeah. And you're telling me you

47:26

think it's undervalued. By the way, I've

47:28

checked and I think you're right. Why don't

47:30

you buy those? No, no. It's like you're

47:32

looking for people who've got an honest

47:34

and intelligible approach to that as well.

47:36

So great financials. How do they do

47:39

it? People are honest and straightforward

47:41

and intelligent in their application

47:43

of this. That's it. When you're interviewing

47:45

management and you're trying to

47:47

figure out whether they're rational

47:50

in the way that they allocate capital.

47:52

What do you find helps in terms

47:54

of your meeting style? Like is it

47:56

better to be charming? Is it better

47:58

to be combative? What... It actually works

48:00

for you when you're trying to

48:03

figure out whether these guys are

48:05

rational in the way they think

48:07

about allocation of capital. Usually it's

48:09

to try and start with going

48:11

down the route of trying to

48:13

get them to talk about how

48:15

they view it without giving them

48:17

too many clues as it were,

48:19

right? So, you know, something like,

48:21

you know, well, how do you

48:23

decide your priorities, you know? I don't say

48:25

how you could do this, you could measure

48:27

it. No, don't give them a road back.

48:29

Just leave it as obviously you want to

48:31

point them down the route of talking about this,

48:34

but you want to point them down the route

48:36

of talking about it with as few signposts as

48:38

possible to see whether they've actually got

48:40

a framework. And sometimes an angle of

48:43

framework. I mean, combative. It makes a

48:45

problem. We're not usually all that combative.

48:47

I mean, we are with people who

48:49

we think in the end are trying

48:51

to tubus or just not listening to

48:53

what we're trying to tell. Particularly we

48:56

have quite a lot of their shares.

48:58

you know, we will become confident. Like

49:00

we did with unity for in the

49:02

end, it's kind of like guys, we

49:04

will become competitive because we've only shared

49:07

for a long time, you're completely ignored,

49:09

you're ignoring us now, and we don't

49:11

think you should. And you're treating other

49:13

people who are right in the last

49:15

five minutes better than us, so we'd really like

49:17

you to, and we'd really like you to, like

49:20

the last five minutes better than us, so we'd

49:22

really like you to go on the point. And

49:24

we look, we can get you management who will

49:26

give you, I don't think you want it probably,

49:28

but we can get people management who will give

49:30

us a reference who say, Bunsmith turned up, they

49:32

did all this in turn about our business, they

49:34

bought a big stake, then we had an activist who said

49:36

we've got to cut costs and we've got to split the

49:39

business, we've got to do this, and not only did they

49:41

vote against that, but they talked to the proxy voting

49:43

agency and said, I think these people are wrong, what

49:45

they're going to do is injured, what they're going to

49:47

do is injured, is injured, into this, into this, into

49:49

this, I mean we will actually stand alongside them

49:51

and fight for the business if we

49:53

think that someone's doing something wrong in

49:56

that regard. So far from being competent

49:58

sometimes we're their best friend. One

50:00

of the things that's very striking about

50:02

your portfolio is that obviously you have

50:04

a lot of these very well-established self-financing

50:06

businesses with these high returns on equity

50:09

and durable competitive advantages very much Buffett

50:11

style companies But a lot of them

50:13

are really old I mean I remember

50:16

you once saying that the average company

50:18

in your portfolio was founded in 1883.

50:20

I don't know if that's still

50:22

true. Can you know I mean it's

50:25

about a hundred years now. It's 1920

50:27

something I think yeah That's extraordinary. Can

50:29

you can you explain that? Because we're

50:32

in an era where so many

50:34

people are just obsessed with the new

50:36

technology, right? And AI this and, you

50:38

know, biotech and drones or whatever it

50:40

is. And here are you focusing

50:42

very heavily on 100 year

50:45

old companies. What's going on

50:47

here? Because it's not that

50:49

you're ignorant about technology.

50:51

No, but mostly winners keep on

50:53

winning. It's what kind of the way the world

50:55

is. The Stern Business School in New York

50:57

produces a table, I think they

50:59

produce it annually, and it's good or

51:02

bad companies. And what they have is

51:04

companies by sector. And there are thousands

51:06

of companies. So they have the sectors,

51:08

they're many, so there's consumer stables, and

51:10

consumer discretionary, and pharmaceuticals, and health care,

51:13

and mining, and minerals, all these

51:15

sectors, hundreds and hundreds of companies in

51:17

each one. And they do a very

51:19

simple calculation of whether a very simple

51:22

calculation, And what they look at is the

51:24

return on capital employed, you know, the

51:26

Buffett thing that he focused on in

51:28

79, that we focus on, less a

51:30

guess at the weighted average cost of

51:32

capital, people get their nickels in a

51:34

terrible twist about whether it's a guess,

51:36

right, exact number, exact number doesn't matter.

51:38

And so they take off the weight

51:40

average cost of capital and make a

51:42

positive spread, in which case it's creating

51:44

value, or is it making a negative

51:47

value, or is it making a negative

51:49

value, or is a negative? Almost every

51:51

year they do it, you go, oh

51:53

right, so the good companies and ones

51:55

creating value are the consumer staples,

51:57

consumer discretionary, health care.

51:59

here, information technology, and

52:01

then what's all the

52:03

bad stuff? Oh, it's

52:05

banks, real estate, insurance,

52:07

heavy engineering and manufacturing,

52:10

mining and minerals, oil

52:12

gas and transport in

52:14

particular airlines are all bad. Now,

52:16

every dog has his day, right? There

52:18

will be a year somewhere in the

52:20

cycle where mining is good or airlines

52:22

are okay, you know, of course there

52:24

is, you know, but good things don't

52:26

become bad and bad things

52:28

don't become good. So that's the first

52:31

point is, on the whole, we're not suddenly

52:33

going to find all the good companies will

52:35

become bad companies, all the bad companies, it

52:37

persists. And the reason it persists is

52:39

because of competitive advantages in those

52:41

sectors. There are certain competitive advantages

52:43

that those sectors and the leading

52:45

companies within it enjoy. So what

52:47

Buffett calls the moat, their defensive mechanism, how

52:49

do they keep those sharp elbows that keep

52:51

you out, right? Because we can all look

52:53

at Coca-Cola, or see it's got good returns,

52:55

but how are we're going to get

52:58

in there? and we've got to get

53:00

past PepsiCo of Dr Pepper first before

53:02

we even get a crack at them.

53:04

And they've got this means of defending

53:07

themselves. There's no doubt that we are in

53:09

the era where there's been change. And

53:11

we can sort of look around us

53:13

and go, well, in the time that

53:15

I've been in business, we've seen change

53:17

in terms of computing and the internet

53:20

and mobile telephony and social

53:22

networks. And maybe we're seeing something now

53:25

in AI, maybe, maybe not, I don't

53:27

know. And it is a period of

53:29

change. And there's no doubt that you've

53:31

got to be alive to it. And

53:33

I think we are alive to it.

53:35

Not everything that we've got was founded

53:38

in 1920. Now we've got meta, and

53:40

we've got Microsoft, and we've got some

53:42

stuff that's more recent. But before we

53:44

align upon the idea that there's never

53:47

been more change in this. Bear in

53:49

mind, I did the history. If you

53:51

were involved in the communications business across

53:53

the last sort of the two centuries,

53:56

you would have started in the telegraph

53:58

business where they put up wires. typically

54:00

alongside railway lines, and you sent Morse

54:02

code. That's how you communicated, right? dot

54:04

dash, dot dash. And then somebody came

54:07

up with a means of having a

54:09

microphone, so you could have the voice.

54:11

So we attached a microphone to the

54:13

wires. Now we could talk to each

54:15

other. And then somebody invented radio. And

54:17

after we'd had radio in place for

54:20

a while, two things involved from that.

54:22

One was we could talk to each

54:24

other without being connected by a wire.

54:26

Ah. That's different, isn't it? So, you

54:28

know, ships at sea and people who

54:30

are traveling and could communicate and know

54:33

that you could communicate to the many.

54:35

You could broadcast. That's a bit different,

54:37

isn't it? Then along came somebody who

54:39

said, never mind that, I've got this

54:41

thing, you can look at each other

54:43

while you're communicating, you can look at

54:46

each other while you're communicating, you can

54:48

have television. You can have either video

54:50

or you can have broadcast television. Then

54:52

along came the internet. So if you're

54:54

involved. It's tempting to think that we've

54:56

got more change now than we've ever

54:59

had before. I'm not actually convinced. There's

55:01

so much to unpack here and I

55:03

wanted to highlight a few things for

55:05

our listeners before we move on, right?

55:07

So one thing that's very distinctive about

55:09

what you do, which is very much

55:12

in tune with Charlie Munger, right, I

55:14

wrote a chapter in my book about

55:16

Munger and just not being a fool

55:18

avoiding standard stupidatives, a lot of what

55:20

you do. is just avoiding certain things,

55:22

right? So certain sectors you're avoiding. Right?

55:25

Don't do stupid. Munger is great, I

55:27

think, because he does have this idea

55:29

that if you invest in good stuff,

55:31

you'll be all right. Roughly speaking, you

55:33

could take our investment philosophy and boil

55:35

it down my head. If you've got

55:38

good stuff, you'll be all right. That's

55:40

it. That's it. You might not be

55:42

the best fund, or you might not

55:44

output of everybody in the world. But

55:46

you'll be all right. Good stuff. Sorry

55:49

I interrupted you in the middle of

55:51

talking about Mongolia. No, that's such a

55:53

it's such an important insight. I mean

55:55

it and the ability to sort of

55:57

make it very simple right just by

55:59

good stuff. I mean I remember you

56:02

saying at one point, you don't need

56:04

to own the absolute best stocks. You

56:06

need to own a lot of pretty

56:08

good, you know, really good companies that

56:10

are resilient and durable, and then avoid

56:12

the crap. And so tell us how

56:15

you figure out what bad companies look

56:17

like. Like when you're looking at the

56:19

financial statements and you're looking for warning

56:21

signs, because a lot of what you're

56:23

doing is A, getting rid of lousy

56:25

sectors. I mean an awful lot of

56:28

it comes down to just knowing. It's

56:30

like you, there are good airlines. I

56:32

mean, people say what about Ryan and

56:34

say, every rule has an exception somewhere

56:36

out there, but on the whole, there

56:38

aren't any. And if you look at

56:41

the last 20 years of data, it's

56:43

lost something like 5% versus its cost

56:45

of capital on average every year. It's

56:47

a machine for destroying value. That's just

56:49

what the statistics tell me. So that's

56:51

what analyzing the statements will tell you

56:54

either in aggregate or individually. Then you

56:56

go, I wonder why they are a

56:58

bad industry. Let's think for a moment.

57:00

Every single major factor involved in those

57:02

companies is outside their control. This is

57:04

another thing to look for. You're looking

57:07

for companies which have certain things they

57:09

can control and work on the things

57:11

they can't control. Airlines can't control the

57:13

frequency with which you fly. that load

57:15

factors vary, right? They can't control atmospheric

57:17

conditions. Things happen to stop them flying

57:20

from tunnel, volcanic dust clouds and the

57:22

things like that. They can't control their

57:24

main input costs, which are fuel, dollar

57:26

price, staff, largely unionized, and then so

57:28

on, and the cost of airplanes. Basically,

57:30

they are buying airplanes from two suppliers.

57:33

And then you get onto this, you

57:35

know, hopefully this is a rhetorical question.

57:37

Is an industry... a good industry or

57:39

a better industry if there are fewer

57:41

from an investment standpoint, if there are

57:43

few participants or many participants, well the

57:46

answer surely is few parts. I mean,

57:48

ideally one would be great, but you

57:50

know, if we've got to have it,

57:52

a duopoly is okay, you know, these

57:54

are a master card, coat and peps,

57:56

and so on. Last time I checked,

57:59

and I'm sure I'm out of date

58:01

before anybody, he sort of brings up,

58:03

well, right, some of your podcast, he's

58:05

an idiot, but the last time I

58:07

checked and I'm sure I'm out of

58:09

date before anybody, he sort of brings

58:12

out of your podcast, I had a

58:14

large number of the owners and operators

58:16

and operators, I'm not even trying to

58:18

make, I'm even trying to make, I'm

58:20

even trying to make, I'm trying to

58:22

make, They're owned and operated by governments

58:25

using your money. They don't care. They

58:27

really don't care. Or they're owned by

58:29

entrepreneurs who really like their names on

58:31

the side of planes. So when you

58:33

look at sectors, you say, well, I've

58:35

got the financial statistics and it's the

58:38

opposite of what we do. Okay, so

58:40

there's decisions that look good. How do

58:42

they make that? How do they make

58:44

that? This is, they're really terrible. Why?

58:46

Well, we can look at all the

58:48

reasons why. mining and minerals or oil

58:51

and gas or transport including airlines and

58:53

banking and investment banking and insurance and

58:55

real estate. It's dire. Just dire sectors.

58:57

You need to begin, you almost need

58:59

to begin this discussion about the individual

59:01

companies, somebody's telling you about, you almost

59:04

need to think about it. Think back

59:06

to the Stern Business School and it's

59:08

good versus the best. Trick here is

59:10

when you get into a sector which

59:12

is commonly populated by quite good companies.

59:14

but you get businesses in there which

59:17

are not good. And that does happen

59:19

sometimes. Just like you occasionally get sectors

59:21

where they're bad sectors, but there's a

59:23

good one. Let me give you a

59:25

couple of examples, you know, out of

59:27

there. You know, if we looked at

59:30

in consumer staples, just sector that is

59:32

generally good, and we looked at Kimberly

59:34

Clark, the company that makes toilet tissue

59:36

and kitchen towel and tissues and so

59:38

on. It's not a great business I'm

59:40

afraid. The business of making paper towels

59:43

isn't something where there's a great deal

59:45

of brand loyalty. I don't know how

59:47

many people go down the supermarket feel

59:49

they've got to buy scotics or they've

59:51

got to buy clean. They just want

59:53

a paper towel. They're really not concerned

59:56

about it as much as they would

59:58

be if they put this into their

1:00:00

body, if it were to have food

1:00:02

and drink and medicine, so on. It's

1:00:04

not got the same kind of brainstorm.

1:00:06

And, you know, it's in the consumer's

1:00:09

table, but it's not great, but it's

1:00:11

not great, but it's not great, but

1:00:13

it's not great, is it? And then

1:00:15

you mustn't get hooked up on sector

1:00:17

descriptions, what it was, was, was a...

1:00:19

How many? Yeah, it literally made chemicals,

1:00:22

but it made little pots of chemicals,

1:00:24

which it supplied to biochemists doing experiments

1:00:26

and tests. And so they were trained

1:00:28

as biochemists to use its catalog, its

1:00:30

online catalogs. So when they got a

1:00:32

experiment or test to do tomorrow or

1:00:35

the after, they gone to the catalog

1:00:37

and ordered their ingredients and the little

1:00:39

pots turned up with all the stuff

1:00:41

that's what they supply. And what they're

1:00:43

really in is in the full film

1:00:45

of business. they're supplying stuff to help

1:00:48

you do, they're supplying the stuff that

1:00:50

will do. You don't really work out

1:00:52

what the bulk cost of the container

1:00:54

of chemicals is, you just want to

1:00:56

know that it's going to be there

1:00:58

waiting in a laboratory the morning when

1:01:01

you come in. And then of course

1:01:03

the final frontier is they have a

1:01:05

certain amount they supply which is corrosive

1:01:07

or poisonous or radioactive, in other words

1:01:09

difficult. And that gives them an edge

1:01:11

as well in terms of the ability

1:01:14

to safely supply ingredients like that. And

1:01:16

so it literally had chemical chemical on

1:01:18

the tin, but it, but it, but

1:01:20

it, but it wasn't really, but it

1:01:22

wasn't really. But it wasn't really. But

1:01:24

it wasn't really. But it wasn't really.

1:01:27

But it wasn't really. it was actually

1:01:29

a company which had trained scientists to

1:01:31

use its ingredients in experiments and its

1:01:33

average supply it wasn't you know it's

1:01:35

not like a bulk chemical company supplying

1:01:37

thousands of tons of phosphate or something

1:01:40

their average pot cost 400 bucks last

1:01:42

time I looked and that so it

1:01:44

says it's chemical but it's not really

1:01:46

so you've got to be careful about

1:01:48

those the ones that crossover there are

1:01:50

in a sector that's good but are

1:01:53

in a sector that's bad but is

1:01:55

the odd good one you have to

1:01:57

be careful. So when I look at

1:01:59

your list of top 10 holdings in

1:02:01

your flagship fund and i see things

1:02:03

like meta and microsoft and nova nor

1:02:06

disk and striker and which i think

1:02:08

you've owned since the inception of the

1:02:10

fund fourteen years ago or L'Oreal or

1:02:12

Automatic Data Processing, Visa, Philip Morris Waters,

1:02:14

and Alphabet. Can you take a couple

1:02:16

of those that kind of illustrate what

1:02:19

you're looking for in a business that

1:02:21

sort of embody what you love? Yeah,

1:02:23

yeah, I know. Let's take a couple

1:02:25

of words. Microsoft, you know, it's the

1:02:27

world's leading supplier of computer operating systems.

1:02:29

Your computer probably works on it. My

1:02:32

computer definitely works on it. The vast

1:02:34

majority of business computing is done using

1:02:36

its operating systems. If you go back

1:02:38

to when we bought it, that was

1:02:40

its leading business. Windows, only had the

1:02:42

services and tools professional business. It had

1:02:45

a change of management, which we were

1:02:47

hoping for shortly after we bought it,

1:02:49

and its new management took it into

1:02:51

other things which were linked in tears.

1:02:53

So, you know, it's now advised with

1:02:55

Amazon web services to being a leader

1:02:58

in the provision of cloud computing services.

1:03:00

So, you know, using distributed computing sitting

1:03:02

here on our desktop. using the cloud

1:03:04

to back up our information and process

1:03:06

it and do it on a common

1:03:08

platform is something which is they've basically

1:03:11

been one of the two leaders in

1:03:13

since that thing. They're also leading in

1:03:15

gaming. Although they screwed up the mobile

1:03:17

telephony thing and handed that to Apple

1:03:19

basically, that was before we bought it

1:03:21

and they have actually made a comeback

1:03:24

in business computing in terms of mobile

1:03:26

devices with the Microsoft surface. and so

1:03:28

on and so forth and you know

1:03:30

we'll see where they go in now

1:03:32

but all of this is built into

1:03:34

a company which has regularly produced high

1:03:37

growth in revenues and and high high

1:03:39

returns on capital I'll tell you what

1:03:41

they are what we're talking give me

1:03:43

a second I just log on to

1:03:45

my system and tell you what's relevant

1:03:47

Terry is you bought it during a

1:03:50

period where it was out of favor

1:03:52

so so I mean you often talk

1:03:54

about This is your evaluation with quality

1:03:56

companies. There's a very interesting thing, a

1:03:58

chart that you have in the introduction

1:04:00

to your book, Investing for Growth, where

1:04:03

you talk about how you would actually

1:04:05

have been justified paying a 281 PE

1:04:07

for L'Oreal back in 1973 or 120.

1:04:09

of Colgate or 63 for Coca-Cola. So

1:04:11

you're willing to pay a reasonably high

1:04:14

price for high quality, but then there

1:04:16

are things like Microsoft, where actually you

1:04:18

bought it when it was really undervalued.

1:04:20

Can you also talk about how you

1:04:22

think about this issue evaluation when it

1:04:24

comes to high quality growth companies? Because

1:04:27

it's very, it's very thorny, particularly at

1:04:29

the moment with a lot of the

1:04:31

magnificent seven. For a really good company,

1:04:33

we are very bad. One of the

1:04:35

things we're very bad at is estimating

1:04:37

the impact of compound returns as human

1:04:40

beings. When you look at the difference

1:04:42

between a 10% or an upset compound

1:04:44

return, the difference over 20 or 30

1:04:46

years isn't 25%. People don't realize that

1:04:48

actually quadruples the capital value in that

1:04:50

differential. Wow. And we're very bad at

1:04:53

that, you know, unless you sit down

1:04:55

and compute it yourself. And so people

1:04:57

don't figure that out, I think, very

1:04:59

well, which means that commonly, things which

1:05:01

are able to make persistent eye returns

1:05:03

and growth, do not get full valuation.

1:05:06

L'Oreal is a great placing point with

1:05:08

that particular calculation. It's astonishing. But if

1:05:10

you look at that table, L'Orenn, you

1:05:12

could have paid 100 for Pepsi, 100

1:05:14

times P for P for Pepsi in

1:05:16

that. But look, as much as much

1:05:19

as we acknowledge, we acknowledge, we acknowledge,

1:05:21

as we acknowledge, as we acknowledge, as

1:05:23

they're not completely perfect, aren't completely imperfect

1:05:25

either. They generally, on average, they price

1:05:27

good companies better than bad companies, right?

1:05:29

And so we're going to have to

1:05:32

pay a higher price for our good

1:05:34

companies than the average. People keep coming

1:05:36

at all and it's a bit expensive.

1:05:38

Yeah, well it's going to be because

1:05:40

it's a better company. But once in

1:05:42

a while, some form of madness overtakes

1:05:45

them and they offer you something which

1:05:47

they really shouldn't. How does it happen?

1:05:49

So we started buying Microsoft when it

1:05:51

was 25 bucks a share. It's 420

1:05:53

something today, right? and it's been in

1:05:55

our top performance eight years running. This

1:05:58

shouldn't happen with a company this size.

1:06:00

It was trading on a pea of

1:06:02

about eight when we bought it because

1:06:04

you know Steve Balmer, I don't know

1:06:06

Mr. Balmer, I don't really want to...

1:06:08

a big critical inmate, he hadn't been

1:06:11

a happy period when he was there

1:06:13

and they'd missed out on the whole

1:06:15

mobile telephony thing, then they bought Nokia

1:06:17

and that'd been pretty disastrous and they

1:06:19

bought Skype which had been pretty disastrous

1:06:21

too which is ironic given that teams

1:06:24

is now such a success. And so

1:06:26

there we were and when we have

1:06:28

looking at things like that, so we

1:06:30

look at something like this, it's a

1:06:32

company with returns on capital around 30%

1:06:34

right and revenue growth now, you know,

1:06:37

it's been coasting about 20% for a

1:06:39

long period for a long period of

1:06:41

time. This shouldn't happen. We think we

1:06:43

found one of these and we have

1:06:45

found them in fact, we found it

1:06:47

in index, in factory equipment, we found

1:06:50

it in Microsoft, we found it in

1:06:52

Domino's Pizza back in the day. We

1:06:54

sit down and think, are we missing

1:06:56

something here? And what we tend to

1:06:58

do as a sort of check on

1:07:00

sanity as much as anything else is

1:07:03

go and look at what the detractors

1:07:05

are saying? What are they saying is

1:07:07

the reason? And I remember an awful

1:07:09

lot of these. Well, no, it's not,

1:07:11

is it? We figured that out all

1:07:13

on our own. Very famously, the, in

1:07:16

my view, the Financial Times Lexcom, and

1:07:18

I do know which journalists wrote it

1:07:20

at the time, but obviously they haven't

1:07:22

got a byline on it. Fortunately, said

1:07:24

when it was $26 a share, nobody

1:07:26

should own it at this price, and

1:07:29

they were right, but not in the

1:07:31

way that they meant it. And it's

1:07:33

like, sometimes when people are just absolutely

1:07:35

mad about things about you couldn't own

1:07:37

this, you do get this opportunity where

1:07:39

a large very good business gets offered

1:07:42

to you at a price where you

1:07:44

just shouldn't get mether was another one

1:07:46

after the Cambridge Analytica thing you know

1:07:48

mether really was a giving in terms

1:07:50

of I mean it's gone up five

1:07:52

hundred percent or something like that since

1:07:55

that point where we owed it and

1:07:57

you know that we received a cacophony

1:07:59

over of inventive from people about how

1:08:01

we shouldn't own it. I mean I

1:08:03

mentioned in the, I quote my previous

1:08:05

annual letter and this year's annual letter

1:08:08

saying, I'm always thinking of having a

1:08:10

fund that just buys the ones that

1:08:12

everybody tells me not to own. Because

1:08:14

they're working off emotion and anecdote, right?

1:08:16

You know. people were saying nobody's using

1:08:18

Facebook anymore. I mean, I remember saying

1:08:21

nobody's using Facebook. I said, oh, right,

1:08:23

okay. Where do you live? Well, Tumbridge

1:08:25

Wells. I said, oh, how am I

1:08:27

in Jakarta? Are kids using it in

1:08:29

Jakarta at all? Well, how would I

1:08:31

know? I said, well, I think that's

1:08:34

kind of more important, don't you, than

1:08:36

Tumbridge Wells? Well, the plural of anecdote

1:08:38

isn't data. Just deal with the facts.

1:08:40

There's an old TV series from the

1:08:42

50s called Dragnet and the detective whose

1:08:44

name I can't remember would always be

1:08:47

interviewing a suspect, a witness to something

1:08:49

that had just occurred, a murder or

1:08:51

robbery or something like that. And they'd

1:08:53

be gabbling and he'd say, the facts

1:08:55

man, just the facts. It was a

1:08:57

very nice thing and I think it

1:09:00

was in Investing for Growth, your book

1:09:02

which collected your letters from the first

1:09:04

10 years of the fund where you

1:09:06

quoted the Simona Garfunkel song, the boxer,

1:09:08

where you said a man. Here's what

1:09:10

he wants to hear, disregards the rest.

1:09:13

Yeah, I mean look, you can get

1:09:15

an awful, I'm quite serious now, you

1:09:17

can get an awful lot of stuff.

1:09:19

from the movies and from song lyrics

1:09:21

because people spend a lot of time

1:09:23

sometimes on movies and on film lyrics.

1:09:26

Yeah. And on song lyrics. And so

1:09:28

sometimes they've got... a bit more meaning

1:09:30

than just somebody who's on a garfunkle

1:09:32

playing a nice tune. I mean, one

1:09:34

that we quote all the time is

1:09:36

the movie All the Presidents Men about

1:09:39

the Watergate affair, which has got so

1:09:41

many quotes out anywhere. And you know,

1:09:43

the bit where Deep Throws, the FBI

1:09:45

deputy director, I don't know it is,

1:09:47

but he's giving information to Woodward, paid

1:09:49

by Robert Redford, and he meets him

1:09:52

in the car park. One of his

1:09:54

critical piece of advice is, follow the

1:09:56

follow the money. Yeah. money. If you

1:09:58

want to just follow the money, right?

1:10:00

And there's lots of examples of things

1:10:02

like that. You know, we play to

1:10:05

ourselves, clips when we're explaining things day

1:10:07

and day. There's the bit in Casablanca

1:10:09

where the gondante goes to close down

1:10:11

Rick's cafe and he blows his whistle

1:10:13

and he says, this place is closed

1:10:15

down. I'm shocked, shocked to hear there's

1:10:18

been gambling here. One of the waiting

1:10:20

stuff comes by and goes, you know,

1:10:22

winning surf. Whenever we read one of

1:10:24

these things about, yes, apparently somebody has

1:10:26

been bribing people to do business in

1:10:28

Nigeria. We always played the Casablanca, right?

1:10:31

I remember Howard Marx quoting to me.

1:10:33

I quote that one too all the

1:10:35

time. A good man knows his limitations.

1:10:37

He's told by the chief of police,

1:10:39

he's being asked to deliver the ransom

1:10:41

to the bad guy. And he says,

1:10:44

we don't want any gunplay from you,

1:10:46

can I? And he said, I was

1:10:48

a cop for 20 years and I

1:10:50

never ran off of my weapon and

1:10:52

he says, that's good. Or what has

1:10:54

man knows his limitations? It's a great

1:10:57

quote. The movie is littered with great

1:10:59

quotes that you can learn something from

1:11:01

in my view. So this idea of...

1:11:03

how people hear what they want and

1:11:05

disregard the rest is really important and

1:11:07

you've operated in a in a team

1:11:10

for a long time right you've had

1:11:12

Julian Robbins I think you've worked with

1:11:14

38 years and he's your head of

1:11:16

research and he helped you co-found the

1:11:18

firm you sometimes talk to him as

1:11:20

you're dedicated you're designated successor if you

1:11:23

retire at the age of 145 and

1:11:25

yeah tell me tell me how it

1:11:27

helps to have a partner like that,

1:11:29

because I see this a lot, right,

1:11:31

with, I mean, look, Howard Marx talked

1:11:33

to me about Bruce Cash, Joe Greenback

1:11:36

talked to me about Rob Goldstein, I've

1:11:38

interviewed Charlie a lot, right, who, you

1:11:40

know, obviously was the abominable no man

1:11:42

for Warren. Talk about how it helps

1:11:44

in terms of just dealing with your

1:11:46

own blind spots and potential biases and

1:11:49

the like to have partners. Yeah. I

1:11:51

think that Julian is... very intelligent. He's

1:11:53

also got a first in history by

1:11:55

the way and very honest and he's

1:11:57

different to me and amongst the differences

1:11:59

are that he sometimes sees things in

1:12:02

terms of the subtleties of what's going

1:12:04

on that I miss and he's got

1:12:06

a very very good way of pointing

1:12:08

them out to me without pissing me

1:12:10

off. Basically he can get me to

1:12:12

understand something without getting into a fight

1:12:15

over it and that's quite important that

1:12:17

he says no I wouldn't buy that

1:12:19

because of this and have you thought

1:12:21

about this in terms of and he's

1:12:23

almost got a way of saying like

1:12:25

you're buying L'oriali. He'll go well. You

1:12:28

know, I think if you take the

1:12:30

PE ratio, roughly look at it in

1:12:32

a mirror and add your car license

1:12:34

plate, it's okay. And really, he's just

1:12:36

duping me, right? I mean, and somehow

1:12:39

he manages to get my... He might

1:12:41

have a point about looking at it

1:12:43

that way. And I go and buy

1:12:45

it. And really, I realize, no, he

1:12:47

just talked me into that, didn't he

1:12:49

realize that if I hadn't been talking

1:12:52

to it, I would always have been

1:12:54

sitting there going, going, no, it's a

1:12:56

bit too expensive, it's a bit too

1:12:58

expensive, it's a bit too expensive, and

1:13:00

I mean. And he did. And he's

1:13:02

got a great inquiring mind. He actually

1:13:05

really likes the stock market. And he

1:13:07

likes, he's lived in America for, I

1:13:09

don't know, 30 years now. And he's

1:13:11

got a wealth of knowledge about America

1:13:13

and the stock market that he brings

1:13:15

to bear in a way that I

1:13:18

simply can't. As much as I deal

1:13:20

with Wall Street and I've worked on

1:13:22

Wall Street and various, I'll never have

1:13:24

that length and depth and depth of

1:13:26

knowledge that he's got, you know. You

1:13:28

have a very interesting sort of emphasis

1:13:31

on the US in what purports to

1:13:33

be a global fund, right? I mean,

1:13:35

when I checked the other day, I

1:13:37

think it was 74% in the US

1:13:39

and obviously, you know, there are these

1:13:41

issues over where a company is domiciled

1:13:44

and all the like, you know, France

1:13:46

is about 9%. We had a company

1:13:48

that was US and in that number,

1:13:50

that's zero and sales in the US.

1:13:52

But it's clear that the US is

1:13:54

a massive hunting round for you. I

1:13:57

mean, with all these companies like Microsoft

1:13:59

and Meta. When you think about this

1:14:01

issue of what makes the US special

1:14:03

and whether this is just a sort

1:14:05

of a permanent, if anything is permanent,

1:14:07

advantage or whether it's just another kind

1:14:10

of pendulum swing and sooner or later,

1:14:12

you know, the pendulum will swing back

1:14:14

to emerging markets or whatever else. What

1:14:16

do you think? I mean, you used

1:14:18

to have an emerging markets fund and

1:14:20

then you closed it at a certain

1:14:23

point. Because is the US just a

1:14:25

persistent winner? We've continued in a sense

1:14:27

that we're right. Look, the US is

1:14:29

the biggest economy in the world. Let's

1:14:31

just start with that, shall we? Secondly,

1:14:33

it has the most active capital market

1:14:36

in the world. So when we're talking

1:14:38

about where companies are listed, you know,

1:14:40

increasingly, as you'll see much to the

1:14:42

shagrant of people in London, companies are

1:14:44

listing, which are not in America. So

1:14:46

I mean, you know, given that it's

1:14:49

the biggest economy and given that it's

1:14:51

got the most active capital market, right.

1:14:53

Because if you are a company thinking

1:14:55

of listing, if I were thinking of

1:14:57

listing, why would I think about doing

1:14:59

it in London? The greatest debt of

1:15:02

market, the biggest liquidity, the most investor

1:15:04

attraction is in New York, isn't it?

1:15:06

You know? And then you think about

1:15:08

how companies become big and very profitable

1:15:10

companies. One of the things that helps

1:15:12

American companies is that they get the

1:15:15

opportunity to build their strength in the

1:15:17

biggest market in the world before they

1:15:19

move out and take on the world.

1:15:21

So, you know, whether it's in technology

1:15:23

or health care or consumer and so,

1:15:25

they sit there and they become the

1:15:28

dominant player then. Then when they reach

1:15:30

out to the wider world, it's very

1:15:32

difficult for people to compete with them.

1:15:34

You know, when Coca-Cola and Pepsi-Cola arrive

1:15:36

in the UK, do you really think

1:15:38

that Britain can get it going to

1:15:41

give them for their money? And once,

1:15:43

so that's in their own market, how

1:15:45

about once we get to an adjacent

1:15:47

market? So in Europe, how's Britain going

1:15:49

to do there against Coca-Cola? When they've,

1:15:51

you know, it's, they're like a boxer

1:15:54

who's pumped up in the gym, who's

1:15:56

been fighting. He's been in the cronk

1:15:58

gym in Chicago fighting the best heavy

1:16:00

weights in the world and sparring and

1:16:02

then he turns out and he's finding

1:16:04

a hometown fighter somewhere in another country

1:16:07

like I wonder how this is going

1:16:09

to go. So you just got to

1:16:11

bear mind it's the biggest economy with

1:16:13

the biggest capital market and the companies

1:16:15

the Coca-Cola's and the Microsoft and the

1:16:17

strikers and so on have had the

1:16:20

ability to build a fantastic base there

1:16:22

before they move out into the wider

1:16:24

world and take on the local competition.

1:16:26

Then you get on to other factors

1:16:28

as well when you look at the

1:16:30

world at large. You know, Europe, you

1:16:33

know, the greatest saying is, America innovates,

1:16:35

Europe, China replicates, China or Japan replicates,

1:16:37

and Europe regulates. I mean, some of

1:16:39

the stuff that's going on in Europe,

1:16:41

like the Digital Markets Act, they may

1:16:43

as well put up a sign here

1:16:46

saying high tech not welcome, obviously. And

1:16:48

it's kind of sad if you see

1:16:50

what's driven the market in recent times,

1:16:52

because... Look at the heights of technology

1:16:54

in terms of the companies and I

1:16:56

know I am a billion other people

1:16:59

going well that's a bit worrying in

1:17:01

terms of the size of their domination

1:17:03

of returns but what's the biggest UK

1:17:05

technology company? There's nothing really famous is

1:17:07

there? Well I'm talking about listing UK

1:17:09

Sage and account which by the way

1:17:12

it's a good business I've got nothing

1:17:14

against Sage. Please don't take it as

1:17:16

that being that it's a very good

1:17:18

business in fact but that's it an

1:17:20

accounting software company based in UK's the

1:17:22

UK's biggest biggest. indigenous technology company. And

1:17:25

I'm embarrassed to say I've never even

1:17:27

heard of it. So that's, I mean

1:17:29

I'm based in New York and I've

1:17:31

never heard of it. It's funny you

1:17:33

should say that. We happen to know

1:17:35

that when they were looking for a

1:17:38

chief executive, and by the way this

1:17:40

is not meant to be in any

1:17:42

way, because of the courage, but I

1:17:44

think it's a good guy, but he's

1:17:46

an internal appointment. The reason he's internal

1:17:48

appointment in Mexico, is they went out

1:17:51

to head hunters to try and get

1:17:53

a... a CEO and when we start

1:17:55

if you're looking for a head hammer

1:17:57

for a software for me to start

1:17:59

in Silicon Valley pretty much when you

1:18:01

so they got a head down to

1:18:04

there and said go around see if

1:18:06

you can find any COOs or number

1:18:08

two or whatever we'd like to step

1:18:10

up and the response you just had

1:18:12

is the response they got from everybody

1:18:14

never heard of it. Go on. I

1:18:17

don't think that Europe is about to

1:18:19

overtake the United States in any of

1:18:21

the areas that we've identified as being

1:18:23

good businesses. China is difficult because you

1:18:25

don't truly own the business. China is

1:18:27

difficult because you don't truly own the

1:18:30

business. You are actually in partnership with

1:18:32

the Chinese government for good or real,

1:18:34

particularly in the high-tech businesses. And Japan,

1:18:36

at least until very recently, businesses weren't

1:18:38

run for the benefit of shareholders. They

1:18:40

were run for the benefit of the

1:18:43

employees and wider Japan. as it were,

1:18:45

you know, returns on capital and things

1:18:47

like we're discussing, we're like, hmm, okay.

1:18:49

So that's why we haven't got very

1:18:51

much. It's not that we don't like

1:18:53

them. We actually have a bit of

1:18:56

a soft spot for European companies in

1:18:58

the industries that we like, which are

1:19:00

run by families, and have a very

1:19:02

long-term perspective. So if you have a

1:19:04

look in Applephoeia, things like L'OLLL, V-V-V-H,

1:19:06

Atlas, Atlas, Atlas, Atlas Copco, you know.

1:19:09

We do like we do like we

1:19:11

do like them. It's interesting that there's

1:19:13

a discussion between two Englishmen who are

1:19:15

not living in England, so that tells

1:19:17

us something about... We're not coincidence, that

1:19:19

is it? Right. I mean, and both

1:19:22

of us, I think, love England and

1:19:24

love being there, but there is a

1:19:26

dynamism when you move out, certainly when

1:19:28

you move to New York. But when

1:19:30

you think about the future of the

1:19:32

British economy, when I go back, I

1:19:35

sometimes feel like... I mean, I only

1:19:37

really go to London, but... and I'm

1:19:39

no doubt going to annoy lots of

1:19:41

lots of people here, lots of people

1:19:43

here, but... I feel like it's almost

1:19:45

become a kind of playground, at least

1:19:48

in the areas I go to, which

1:19:50

is not that representative, it's become a

1:19:52

playground for the foreign rich, right? It's

1:19:54

not really dynamic as an economy, it's

1:19:56

more a really wonderful place for other

1:19:58

people to come and spend. It's true

1:20:01

London, I think, and I'm a Londoner,

1:20:03

so I feel strongly about London. I

1:20:05

think it's the greatest city in the

1:20:07

world probably, but I'm obviously not exactly

1:20:09

objective in that opinion. And it's sad,

1:20:11

I think that what you described is

1:20:14

at least parlatory. Well, that really explains

1:20:16

the British economy and where it stands

1:20:18

for. I think also... So what the

1:20:20

British economy has been good at in

1:20:22

terms of innovation, and it's got a

1:20:24

great record of innovation in healthcare, it's

1:20:27

got great drugs and other areas, it's

1:20:29

got it in technology in a number

1:20:31

of regards, arm in terms of low

1:20:33

power chips for mobile telephony, they dominated

1:20:35

that over time. very good. But it's

1:20:37

some, I think that the problems that

1:20:40

it exhibits are in the end I

1:20:42

think there is in my view an

1:20:44

anti-entrepreneurial, anti-capitalist, what do we want to

1:20:46

call it, spirit abroad in the UK

1:20:48

and it's been problematic I think for

1:20:50

a very long time. I don't think,

1:20:53

I think one of the biggest differences

1:20:55

with America and like you I love

1:20:57

New York, you know and the apartment

1:20:59

in York for some time and spend

1:21:01

a lot of time there, is I

1:21:04

think on the whole and I realize

1:21:06

this as a generalisation as a generalisation.

1:21:08

Americans wish to emulate success, Britain's wish

1:21:10

to destroy or criticize it. And that's

1:21:12

my take on it. And I'm afraid,

1:21:14

you know, I don't think that's helpful

1:21:17

really. You know, we've got to, got

1:21:19

to learn to appreciate people who are

1:21:21

successful and applaud it and wish to

1:21:23

emulate them and multiply it, not to

1:21:25

not bring them down in some way.

1:21:27

So the other thing about the UK

1:21:30

is I think you're probably right about

1:21:32

London, but once you go outside London,

1:21:34

the thing that becomes evident to me

1:21:36

is a number of it's being somewhat

1:21:38

hollowed out. I mean, I mean, the

1:21:40

industries which we used to rely on

1:21:43

for manufacturing have by and large gone.

1:21:45

But going back to what I was

1:21:47

saying earlier about progress, that's not new,

1:21:49

you know, if you take the textile

1:21:51

industry, it originated in the North of

1:21:53

England Industrial Revolution, then it migrated to

1:21:56

America in the North East after the

1:21:58

Civil War, and then it migrated to

1:22:00

places like Hong Kong, and then it's

1:22:02

migrated from places like Hong Kong to

1:22:04

places like Mauritius, and then it's gone

1:22:06

as this become a middle and middling,

1:22:09

has become a... And it keeps moving

1:22:11

and you have to move on yourself.

1:22:13

There's no word saying, well I think

1:22:15

we'll start. I'm not lamenting the absence

1:22:17

of the textile industry from the dark

1:22:19

satanic bill. of all England. You have

1:22:22

to move to new industries, but you

1:22:24

do need to move to new industries.

1:22:26

You don't need to have half the

1:22:28

population employed by the public sector, which

1:22:30

it is. That's not going to be

1:22:32

helpful, right? Because they aren't actually going

1:22:35

to create anything whatsoever. Here's a statistic

1:22:37

for you. The poorest state in America

1:22:39

is Mississippi, and the median income in

1:22:41

Mississippi, and I can give you an

1:22:43

exact figure, but not on this call,

1:22:45

but is about $44, US, US, now.

1:22:48

that's the same as the median income

1:22:50

of the UK. What went wrong? Because

1:22:52

something's definitely gone wrong. I mean, think

1:22:54

about, because I think one of the

1:22:56

things that strikes a lot of people

1:22:58

when they travel around America, outside of

1:23:01

the main conurbations, is how poor America

1:23:03

is once you get out into the

1:23:05

out of the boonies. Well, yeah, but

1:23:07

the UK is pretty poor all over.

1:23:09

You know, outside of those enclaves of

1:23:11

London and a few other major cities,

1:23:14

the UK is bad as not just

1:23:16

America, but the poorest state in America.

1:23:18

I'm not being party political in terms

1:23:20

of my views on this. I'm, you

1:23:22

know, my view is if they, I

1:23:24

don't vote in elections and you come

1:23:27

not on the electoral register, but if

1:23:29

they had an election, they had a

1:23:31

draw, they could bring me and I

1:23:33

let them know which way I would

1:23:35

have voted. But, because that's my view

1:23:37

on them essentially, but both sides of

1:23:40

the divide in the UK seem to

1:23:42

me to have a rather large responsibility

1:23:44

for this lamentable state of affairs. Let's

1:23:46

take a quick break and hear from

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All right, back to the show. There's certainly

1:26:55

tremendous dynamism in the US that I

1:26:58

think I definitely remember when during the

1:27:00

financial crisis when you know obviously the

1:27:02

US kind of triggered a lot of

1:27:04

the world's problems and everyone everyone was

1:27:07

sort of gleefully saying you know well

1:27:09

the US is finished and you know

1:27:11

now things and if you lived here

1:27:13

you just had this sense that it's

1:27:16

so dynamic and the flow of capital

1:27:18

to good ideas is so quick. Speaking

1:27:20

of which... But the willingness to deal

1:27:22

with things when they go wrong, I

1:27:24

quoted in my letter that I said,

1:27:26

you know, we had Unilever where we

1:27:28

had a, you know, a battle that

1:27:30

lasted many years. I mean, you could

1:27:32

say through two CEOs to try and

1:27:34

get the place straightened out. In comparison

1:27:36

with Nike, you know, the chief executive

1:27:38

screwed up the bricks and mortar, he's

1:27:41

gone. Right, that's it. And I, people

1:27:43

are terrible. I don't think it should

1:27:45

ever be allowed to fire people unless

1:27:47

you've been fired yourself. Because you need

1:27:49

to know what this feels like. And if you're going

1:27:52

to sit in a room and you're going to

1:27:54

actually fire people, you need to be able to talk

1:27:56

to them from a position of empathy, I think, in

1:27:58

my view. So I'm not in favour. of just,

1:28:00

you know, going like a chainsaw

1:28:02

of people. But I am in

1:28:04

favor of dynamism and dynamism only

1:28:06

comes that you're describing in part

1:28:08

from grasping not just money going

1:28:10

for new ideas, but also how

1:28:12

to deal with problems. The dynamism

1:28:15

of changing where people are living,

1:28:17

what jobs they're doing, who they

1:28:19

work for, is, you know, the

1:28:21

US is in another league, I think.

1:28:23

I think you're unusual also in

1:28:25

that... you've not only been a

1:28:27

very successful stock picker, but you were

1:28:29

actually a very successful CEO. I mean,

1:28:32

you've been a CEO of two public

1:28:34

brokerage companies, one of which I think

1:28:36

you've built into having about 3,000 employees

1:28:38

and the other you've floated and there

1:28:40

were lots of merges and demerges and the

1:28:43

like. And this is back in the

1:28:45

1990s and 2000s and it reminded me when

1:28:47

I was reading about your past as

1:28:49

a CEO of the quote from Buffett

1:28:51

where he famously said, I'm a better

1:28:53

investor because I'm a businessman and a

1:28:55

better businessman because I'm an investor. And

1:28:57

so I was wondering if you could talk a

1:29:00

little bit about what you learn as a CEO

1:29:02

that's helped you as an investor. Yeah, I

1:29:04

mean, one of them is that change requires

1:29:06

time quite often, notwithstanding me saying, you

1:29:08

know, acting quickly is good, because even

1:29:11

if you act quickly, you've still got

1:29:13

change to implement, you may change the

1:29:15

person. and quite often money and effort

1:29:17

and lots of other things. I got

1:29:20

a very good friend of mine who's

1:29:22

got a steel business in the UK

1:29:24

and he said when he was a

1:29:26

quoted company, which he's not anymore, he

1:29:29

went private, and that was a, he

1:29:31

said the analysts ringing up, asked him

1:29:33

about, asked him about how to change

1:29:35

things, they think that I've got these

1:29:37

two buttons on my office wall, red

1:29:39

one and a green one, when I come

1:29:42

in the morning I press the old

1:29:44

red button. He said it's a bit

1:29:46

more complex. We've got to design products,

1:29:48

we've got to get orders, we've

1:29:50

got to build mold. And I think

1:29:52

unless you've actually done that, it's

1:29:54

difficult to understand. I mean, it's

1:29:57

like people who sometimes come out of

1:29:59

running a... and then try and build

1:30:01

a fund management business. And I said,

1:30:03

well, it's like when I was head

1:30:05

of research at UPS, people used to

1:30:07

come to me because one of our

1:30:09

analysts was a very heavy guy, had

1:30:11

been a hammer thrower at college and

1:30:13

put on a lot of weight. And

1:30:15

when he sat on the toilet seats,

1:30:17

he used to break them because you

1:30:20

know, they stand on these little blocks.

1:30:22

They're up there. This guy, if he

1:30:24

wasn't killed. And people came in. It's

1:30:26

like. The way I would put it

1:30:28

is the day job isn't glamorous when

1:30:30

it comes to managing businesses. Quite a

1:30:32

lot of the day job isn't isn't

1:30:34

sort of striking a pose like road

1:30:36

out as the thinker and having great

1:30:38

strategic thoughts, right? It's actually about execution

1:30:40

implementation and a lot of execution implementation

1:30:42

does involve dealing with toilet seats and

1:30:44

the like. It just does. And it's

1:30:46

not that different with your investing, you've

1:30:48

talked about how so much of it.

1:30:50

Yeah, you have these grand theories and

1:30:53

principles and stuff that are kind of

1:30:55

timeless. But then there's the blocking and

1:30:57

tackling day to day where you're listening

1:30:59

to conference calls and you're doing modeling

1:31:01

of, you know, free cash flow. I

1:31:03

say to every new recruit that we've

1:31:05

had, with some success, but not universal,

1:31:07

I say before they begin, I say,

1:31:09

the day job is not glamorous. sitting

1:31:11

here having great thoughts on investment. I

1:31:13

said we don't sometimes have one for

1:31:15

a couple of years or more of

1:31:17

a time. You know, the number of

1:31:19

Microsoft and NIDXs and things that we

1:31:21

pull out that is relatively rare. And

1:31:23

if you've got one, we'd love to

1:31:26

hear about it, but we don't, you

1:31:28

know, when you've got three in the

1:31:30

first week, we're going to get a

1:31:32

bit suspicious. The reality is it's about

1:31:34

modeling and collecting and collecting data and

1:31:36

listening to calls and writing up notes.

1:31:38

looking so that we've got a record

1:31:40

that we can read back through and

1:31:42

read what's gone on historically and that's

1:31:44

really the vast majority of what we

1:31:46

do. And you told me right before

1:31:48

we started before we started recording about

1:31:50

a sign that you had in the

1:31:52

office. Can you tell us about that?

1:31:54

Because in a way it embodies this

1:31:56

mindset of kind of dogged incremental progress

1:31:59

and not screwing up. I put up

1:32:01

the five P's. So five application P's

1:32:03

in a frame and the five P

1:32:05

stands for preparation prevents piss poor performance.

1:32:07

Don't turn up for something without having

1:32:09

prepared. Don't go to a company meeting

1:32:11

and you haven't read the last results

1:32:13

and the note that you wrote before.

1:32:15

You know? And it originated from a

1:32:17

time when I was in Broking and

1:32:19

I went on a trip to Scotland.

1:32:21

when I was at UPS has had

1:32:23

a research with the CEO and a

1:32:25

salesman. The salesman, I'd come from another

1:32:27

broken firm and I'd looked at our

1:32:30

Scottish bio figures and they were terrible

1:32:32

and the salesman said we were number

1:32:34

one or top three or something Scotland,

1:32:36

we clearly weren't. And so we decided

1:32:38

we'd resolve this by going to Scotland

1:32:40

or by going to Scotland or by

1:32:42

going to Scotland. Why not? And we

1:32:44

were there having a meeting with the

1:32:46

general accident as it was in purse.

1:32:48

They were lovely guys I knew them.

1:32:50

But you know they were lovely guys

1:32:52

but with that with that nice steely,

1:32:54

but with that nice steely, you know,

1:32:56

you know, you know, you know, you

1:32:58

know, you know, you know, you know,

1:33:00

you know, you know, you know, you

1:33:03

know, you know, you know, you know,

1:33:05

you know, you know, you know, you

1:33:07

know, you know, you know, you know,

1:33:09

you know, you know, you know, you

1:33:11

know, you know, you know, you know,

1:33:13

you know, you And they were having

1:33:15

a conversation about what they thought about

1:33:17

the service and they said, well, what

1:33:19

do we think about the service? How

1:33:21

much do we pay you last year

1:33:23

in commission as a broken man? I

1:33:25

kind of looked at the salesman and

1:33:27

he said, I don't know. I said,

1:33:29

you don't know. They said, we're paying

1:33:31

you four million pounds or something like

1:33:33

that. Well, this is how much we

1:33:36

pay you the year before. I don't

1:33:38

know, five minutes. So they said, well,

1:33:40

they were telling us was their wallet,

1:33:42

they were telling us was, right. Anyway,

1:33:44

I came out of the meeting and

1:33:46

I said to the CEO, I would

1:33:48

fire that guy. I said, going to

1:33:50

a meeting with you in the room,

1:33:52

not me in the room, and you

1:33:54

don't have the basic information on the

1:33:56

client to head is just a no-no.

1:33:58

I mean, that tells you right off

1:34:00

the back what we're doing with here.

1:34:02

And it's like, you know, there is

1:34:04

no excuse for turning up to interview

1:34:06

a company. be interviewed by an investor.

1:34:09

If I'm being interviewed by an investor,

1:34:11

if you were, you know, coming on,

1:34:13

say, Terry, I want to, you know,

1:34:15

interview you about my holding in for,

1:34:17

and you go, well, how much, do

1:34:19

you know how much I got invested

1:34:21

in for? No, I haven't actually got

1:34:23

a clue. Will you mow? How much

1:34:25

have you got? It would be a

1:34:27

bad start, wouldn't it? When did I

1:34:29

invest? I don't know, actually. I mean,

1:34:31

we've got a data on this, but

1:34:33

if I hadn't taken the trouble, have

1:34:35

you made money or have you lost

1:34:37

money with me? How much money have

1:34:39

you made? Have you been putting money

1:34:42

in your use, right? Where you, you

1:34:44

know, you came from this poor background

1:34:46

and then... you know, you're like this

1:34:48

working class kid going to university college

1:34:50

in Cardiff and then you, you know,

1:34:52

you get your NBA, but it's not,

1:34:54

it's not from Harvard or Wharton, right?

1:34:56

It's from Henley School of Management, you

1:34:58

know, and I'm wondering if like there's

1:35:00

something about having been an outsider and

1:35:02

having to fight for everything that you've

1:35:04

had to kind of scrap and be

1:35:06

tenacious and work harder. And you were

1:35:08

always sort of this super competitive outsider.

1:35:10

Does that resonate with you? Yeah, I

1:35:12

think that's pretty accurate actually. I think

1:35:15

that's a large part of this. I've

1:35:17

never been part of whatever the establishment

1:35:19

is. I mean, I suspect we've got

1:35:21

a new establishment now that's replaced some

1:35:23

of the old establishment in time. I've

1:35:25

never been part of that. I've never

1:35:27

wanted to be part of it either

1:35:29

actually. Never struck me I particularly wanted

1:35:31

to join any club or anything like

1:35:33

that. Yeah I have always felt that

1:35:35

I was a bit of an outsider

1:35:37

and I had to work for things

1:35:39

and I think it's probably a good

1:35:41

thing on the whole to be in

1:35:43

that situation. I had a conversation with

1:35:45

somebody who were having dinner and at

1:35:48

the dinner was someone's son who was

1:35:50

eating and when we were Paris were

1:35:52

leaving and he said to me I

1:35:54

got five son I'd send him to

1:35:56

eat and I said would you I

1:35:58

wouldn't. He said why? He said it's

1:36:00

where everybody runs the world goes I

1:36:02

said no. I just don't see this

1:36:04

as a great positive I think you

1:36:06

know I would rather that he went

1:36:08

to a very ordinary school and found

1:36:10

out how the world really works. My

1:36:12

friend the steelman who I'm telling you

1:36:14

about, it's a family business, he's a

1:36:16

asylum family that's owned it for several

1:36:18

generations and he refused to go to

1:36:21

public school and put himself into grammar

1:36:23

school. And I think it's to his

1:36:25

credit. but also to his benefit because

1:36:27

I think you know when you're walking

1:36:29

through a founder and talking to people

1:36:31

you might be able to understand a

1:36:33

little more what their issues are and

1:36:35

what they're doing if you actually have

1:36:37

been alongside them from time to time

1:36:39

you know. It's such an interesting issue

1:36:41

you know I went to and I

1:36:43

went to Oxford but I'm a Jewish

1:36:45

kid with a you know from a

1:36:47

family that fled from Russia and Ukraine

1:36:49

and Poland and so I remember going

1:36:51

to a friend's house for an outsider

1:36:54

and an insider somewhere between the two.

1:36:56

I think there were a few who

1:36:58

were pretending not to be I think

1:37:00

there were that many. I think there

1:37:02

were a few who were pretending not

1:37:04

to be. I mean I think there

1:37:06

were some who concealed that they would

1:37:08

use and so I think I think

1:37:10

being an outsider and an insider somewhere

1:37:12

between the two so I'm comfortable interviewing

1:37:14

anyone or talking to anyone because I.

1:37:16

I mean, I was at school with

1:37:18

people like Boris Johnson and David Cameron,

1:37:20

so I know they were nothing really

1:37:22

that special, right? You're not that intimidated,

1:37:24

because you... Got, do you use my,

1:37:27

my cast of blood? I'm shocked, got

1:37:29

to hear that. They were very, I

1:37:31

mean, Boris, I remember when I was

1:37:33

a little boy. I mean, I was

1:37:35

13 and he was the head boy

1:37:37

and he was, he was clearly incredibly

1:37:39

charismatic, charismatic, and a big personality. But

1:37:41

the idea that these sort of... entitled

1:37:43

very bright Etonians who knew how to

1:37:45

write Greek verse. We should be making

1:37:47

big impactful decisions about the future of

1:37:49

the company, the country, just because they'd

1:37:51

gone to Eaton and Oxford. I mean

1:37:53

it was kind of laughable if you

1:37:55

knew them, because I knew what a

1:37:57

fool. was and I you know I

1:38:00

mean I can't talk in English in

1:38:02

my class I mean I was as

1:38:04

smart as a lot of those kids

1:38:06

and I know that I'm a moron.

1:38:08

But I think the ideal place if

1:38:10

you can get to it and I

1:38:12

don't think many do is to be

1:38:14

able to get along with and communicate

1:38:16

people with people whatever pretty much whatever

1:38:18

their background and if you're going to

1:38:20

I think then you've got to about

1:38:22

the right place. If you can be

1:38:24

at Buckingham Palace with Boris sitting alongside

1:38:26

you having lunch, and I have been

1:38:28

at Buckingham Palace, and at the same

1:38:31

time you can go to the boxing

1:38:33

gym with the young black kids, then

1:38:35

I think he reached a good place

1:38:37

is my view and I feel sometimes

1:38:39

I'm fortunate in that regard that I

1:38:41

can do both those things and not

1:38:43

feel particularly out of place in either

1:38:45

one. It's interesting to me that one

1:38:47

of your clients early on. was Sir

1:38:49

John Templeton and you've talked in the

1:38:51

past about going off to the Bahamas

1:38:53

to Life at Key to see him

1:38:55

and Mark Haloesco, his chief investment officer.

1:38:57

And I write in my book about

1:38:59

Sir John because I went off and

1:39:01

interviewed him in the Bahamas and spent

1:39:04

a day with him, so 25, 26

1:39:06

years ago. And in some ways, you

1:39:08

seem to have kind of recreated his

1:39:10

life where you've gone off to Mauritius

1:39:12

and you're sort of away from the

1:39:14

matting crowd thinking for yourself. Can you

1:39:16

talk about... in some ways that, whether

1:39:18

I'm, whether I'm, A, I'm right in

1:39:20

thinking that Templeton somehow influenced you, maybe

1:39:22

in the same way that that movie

1:39:24

early on influenced you and you thought,

1:39:26

oh, there's another way to do this.

1:39:28

And also how it's kind of been

1:39:30

an advantage to you to set yourself

1:39:32

up in this very independent, non-tribal way,

1:39:34

far, far away from Wall Street and

1:39:37

the city of London. A lot, I

1:39:39

actually emulate Templeton in more ways you

1:39:41

might think, because he, as you probably

1:39:43

know, used to walk in the walk

1:39:45

in the sea every day, I go

1:39:47

for a swim out to the reef

1:39:49

and back whenever I can, which is,

1:39:51

you know, two or three times a

1:39:53

week at least, and my colleagues say,

1:39:55

oh, it's interesting, doing what, and I

1:39:57

do, weirdly, if there's nothing else going

1:39:59

on when I'm doing it, I do

1:40:01

think about it. It's strange, isn't it?

1:40:03

Just doing an activity similar to what

1:40:05

he did in the Bahamas. But yeah,

1:40:07

it definitely didn't. It influenced me to

1:40:10

see somebody like that at work. And

1:40:12

I was remember very early on when

1:40:14

he talked about how to react or

1:40:16

not to events. He said, you know,

1:40:18

I mean, obviously between way free internet,

1:40:20

you know, he said, you know, the

1:40:22

papers arrive a day later, I get

1:40:24

the Wall Street Journal the day after

1:40:26

it's published. So by the time there's

1:40:28

a problem, it's too late to panic.

1:40:30

It's too late to panic. And he

1:40:32

was making an important point in a

1:40:34

trivial way about that. The events, we

1:40:36

often write up in our daily news

1:40:38

write-ups, we write to each other, and

1:40:40

we look back over periods of time,

1:40:43

sometimes only a few weeks, sometimes a

1:40:45

few months or months and so on,

1:40:47

say, if somebody had gone to sleep

1:40:49

on that day and woken up on

1:40:51

today, and we've had all these events

1:40:53

in the middle that happened where, you

1:40:55

know, terrible, great things have happened in

1:40:57

terms of elections of elections, or wars,

1:40:59

or pandemics and so on. Since the

1:41:01

market is at the same level, if

1:41:03

they didn't look at any of the

1:41:05

intervening events, I wonder what they would

1:41:07

conclude. Nothing's happening. So was anything that

1:41:09

happened terribly important then? Because mostly the

1:41:11

answer is no. No, it's not. And

1:41:13

I think he and Buffett, although I've

1:41:16

never met Buffett and so on, from

1:41:18

the way that he's explained it, it

1:41:20

is valuable. And there have been other

1:41:22

people, I think they're not the only

1:41:24

people who've done the, I don't want

1:41:26

to be in the industry, who operate.

1:41:28

from London or New York. I mean,

1:41:30

I always say a lot of these

1:41:32

guys need GPS to get outside West

1:41:34

One or SW1. I mean, we don't

1:41:36

know how you do it, right? And

1:41:38

I say to them, why are you

1:41:40

there? And they go, well, I like

1:41:42

to stay in touch with the companies.

1:41:44

I say, you're an investor in Pakistan.

1:41:46

I say, yes, I'm like, they're in

1:41:49

Cincinnati. And the other reality is, you're

1:41:51

scratching and. They like to be able

1:41:53

to go and talk to other people

1:41:55

doing what they're doing, whether they're brokers

1:41:57

or other managers, and they like to

1:41:59

be able to meet them for lunch

1:42:01

and meet them for drinks and pick

1:42:03

up. And they like to compare notes

1:42:05

on what they're all doing. And the

1:42:07

reality. years they don't really want to

1:42:09

stand out from the pack too much.

1:42:11

Which is fine. I mean that's there's

1:42:13

the old John Maine Arkansas quote there

1:42:15

that the worst thing you can have

1:42:17

from your career is to is to

1:42:19

differ from the norm even if you're

1:42:22

successful it's still it's still with asthma

1:42:24

to people and that they mainly don't

1:42:26

want to get that far out from

1:42:28

from the norm. And if you're trying

1:42:30

to invest for the real long term

1:42:32

being in that is unhelp is unhelpful

1:42:34

really unhelpful. How do you actually structure?

1:42:36

lifestyle and your ecosystem there so that

1:42:38

you're able to operate in this very

1:42:40

long-term patient independent-spirited way and sort of

1:42:42

resist, you know, even the pressure to

1:42:44

think about short-term results and stuff in

1:42:46

an increasingly short-term world. We don't speak

1:42:48

to any brokers, not one. We don't

1:42:50

take any research from brokers, we don't

1:42:52

speak to them, we do it ourselves.

1:42:55

So we've got why? Well, you know...

1:42:57

Boxers are paid to fight, so they

1:42:59

like to have fights. Lawyers are paid

1:43:01

to have disputes, so they like to

1:43:03

have disputes and prolong them. Brokers are

1:43:05

made on transactions. Guess what they like

1:43:07

to do? We were brokers. I was

1:43:09

a broker, right? Julian was a broker.

1:43:11

We've done this job. We know what's

1:43:13

involved, right? We don't speak to any

1:43:15

of them. We don't take any of

1:43:17

that. We're completely cut off of that.

1:43:19

The fact that I'm in a different

1:43:21

time zone helps as well, I mean

1:43:23

for the first four hours of the

1:43:25

day, I don't have anyone outside Mauritius,

1:43:28

my car, I've got a dozen colleagues

1:43:30

here who are awake. So I've got

1:43:32

quite a large part of the day

1:43:34

where I can mull over what I've

1:43:36

read and what I've taken in the

1:43:38

previous day and think if there's anything

1:43:40

that I need to do about it

1:43:42

or say about it or ask about

1:43:44

it, without any incoming whatsoever from people,

1:43:46

you know? And so that that really

1:43:48

does sort of, and also with regard

1:43:50

to Wall Street, you know, I'm going

1:43:52

to switch off looking at things after

1:43:54

I've been speaking to you, I'll go

1:43:56

on and have a look at. switch

1:43:58

off, and this is something really, really

1:44:01

big, somebody, you know, Microsoft goes bus,

1:44:03

give me a call, but you know,

1:44:05

outside of that, don't boil. And so,

1:44:07

you know, the remoteness does help. The

1:44:09

other thing about Mauritius in particular is,

1:44:11

I think people talk about the world,

1:44:13

and living in another part of it

1:44:15

can be quite important, I think. You

1:44:17

know, I'm living in an island that's

1:44:19

about 800 kilometers off the coast of

1:44:21

Africa, which has got a majority Indian

1:44:23

population. And you can tell almost everything

1:44:25

you need to know about, Mauritius, from

1:44:27

the national holiday system. There are two

1:44:29

days a year for Christians, two days

1:44:32

a year for Hindus, two days a

1:44:34

year for Tamils, two days a year

1:44:36

for Muslims, two days a year for

1:44:38

Muslims, two days years for the Chinese,

1:44:40

plus national day and the abolition of

1:44:42

slavery. In other words, people talk about

1:44:44

diverse societies, it's a diverse society, you

1:44:46

know. People who in the street, if

1:44:48

they don't know who you are, we'll

1:44:50

speak to you in French, first of.

1:44:52

Right. Those are the commoner languages here

1:44:54

and they're they're pretty good connecting flights

1:44:56

into China and India and we're the

1:44:58

same time zone as Dubai and gradually

1:45:00

by various means a different perspective on

1:45:02

the world begins to enter your consciousness

1:45:05

I think if you live somewhere else

1:45:07

you know. So you've set yourself up

1:45:09

in a very in a very free

1:45:11

and independent way. I mean it's been

1:45:13

a long journey from I mean, literally

1:45:15

a long journey, you're like 10,000 kilometers

1:45:17

away from London. But I mean, you've

1:45:19

in a way, the fact that you

1:45:21

weren't part of the in crowd, that

1:45:23

you weren't sort of growing up, you

1:45:25

know, going to par schools and then

1:45:27

going to work in Mayfair at a

1:45:29

hedge fund and stuff, has enabled you

1:45:31

to kind of chart your own course

1:45:33

in a very unusual way. Yeah, I

1:45:35

think it has. Yeah, absolutely. Yeah, absolutely.

1:45:38

Yeah, absolutely. Yeah, absolutely. Yeah, absolutely. I

1:45:40

had some mentors along the way, you

1:45:42

know, I've mentioned a couple of them

1:45:44

and probably two or three four mentors

1:45:46

along a lot. When people ask me

1:45:48

about careers and what to do and

1:45:50

they're you know, they want to set

1:45:52

up the latest FinTech as a matter.

1:45:54

I always say, get a job, but

1:45:56

an organisation will provide you with training,

1:45:58

right? Take everything that they offer, and

1:46:00

if you can, find a mentor, somebody

1:46:02

who will teach you how this works,

1:46:04

and in doing so, give you experience

1:46:06

that you otherwise won't get, you know?

1:46:08

And sometimes it's quite painful. I mean,

1:46:11

being mentored is not always a positive

1:46:13

experience. You have difficult ones as well.

1:46:15

I always remember when I was working

1:46:17

in March banking. and we used to

1:46:19

have to balance the accounts, the branch

1:46:21

itself has a balance sheet for its

1:46:23

operations, you don't have to load and

1:46:25

deposits and everything like that, and capital

1:46:27

that we're operating on, the supply, and

1:46:29

you used to have to balance those,

1:46:31

and all the individual accounts there, the

1:46:33

ledges that went into it. And I

1:46:35

remember not being able to balance one

1:46:37

of the ledgers, and I was a

1:46:39

graduate training, and the manager's assistant took

1:46:41

it off him and said, yeah, okay,

1:46:44

well, when he went to his office,

1:46:46

and came back and came back to

1:46:48

it, I didn't go to it, I

1:46:50

didn't go to university, I didn't go

1:46:52

to university, I didn't go to university.

1:46:54

You do need people from time to

1:46:56

time to tell you you can do,

1:46:58

you should be doing better than this.

1:47:00

It's not all people think, you know,

1:47:02

the whole world of positive reinforcement. But

1:47:04

once in a while, someone needs to

1:47:06

tell you got it wrong. Yeah. It's

1:47:08

an interesting balance, right? Because in some

1:47:10

ways, when I look at your life,

1:47:12

I think, you know, you're this tough

1:47:14

sort of indomitable guy, and in some

1:47:17

ways, there is a, you know, you're

1:47:19

obviously a very likable, and charming, and

1:47:21

charming guy, and gregarious, and you've worked

1:47:23

for you've worked for you've worked for

1:47:25

you. for or with you for a

1:47:27

very long time, for decades. But at

1:47:29

the same time, you're clearly an intense

1:47:31

and tough and slightly combative, scrappy guy.

1:47:33

And I'm wondering how that works in

1:47:35

the rest of life, out of business

1:47:37

and investing, because I look at so

1:47:39

many of the great investors. I mean,

1:47:41

this is one of the things I

1:47:43

often quote on this show, Charlie Munger

1:47:45

said to me that what struck him

1:47:47

when he read my book was just

1:47:50

how many of them ended up divorced

1:47:52

or separated or separated. When you look

1:47:54

back on your life and obviously you've

1:47:56

got divorced, you've had contentious relations. in

1:47:58

the life in your life. How do

1:48:00

you turn off the intensity that makes

1:48:02

you very successful in work so that

1:48:04

then you can come back into dealing

1:48:06

with a wife or a girlfriend or

1:48:08

kids or whatever and actually not have

1:48:10

that same mentality kind of overrun everything?

1:48:12

I don't think if I've got a

1:48:14

problem that regard. I don't think my

1:48:16

problem is is is approaching the remainder

1:48:18

of my life with the same approach

1:48:20

that I approach business. I think I

1:48:23

am able to see the two things

1:48:25

quite separately and approach differently. I think

1:48:27

what is difficult, however, is when you

1:48:29

get into situations which are very intense,

1:48:31

the matter how much you think, well,

1:48:33

this is home life and I'm going

1:48:35

to cook dinner or your bath or

1:48:37

baby or whatever you're going to do,

1:48:39

you may not still be able to

1:48:41

get that out of your head. So

1:48:43

whether or not you can engage properly,

1:48:45

sleep properly, is... it's not something that

1:48:47

you can just do by thinking about

1:48:49

it, you know, it does stay with

1:48:51

you sometimes and I think that can

1:48:53

be problematic. You know, it's not whether

1:48:56

you are, you're treating everybody like they're

1:48:58

in work and you want to see

1:49:00

their numbers and you want to, you

1:49:02

know, get them to engage in P,

1:49:04

P, P, B, or that's not. I

1:49:06

don't think it's as simple as if

1:49:08

you've had an intense time, it can

1:49:10

be difficult to switch it off. in

1:49:12

you and therefore whatever it is you're

1:49:14

doing you may not perform very well

1:49:16

in relation to it to the simplest

1:49:18

level of sleeping for example or something

1:49:20

like that you got something running through

1:49:22

your mind it may keep running through

1:49:24

your mind and you know you may

1:49:26

not be very comfortable to be with

1:49:29

at that time and and that's probably

1:49:31

the only thing is I think if

1:49:33

you do do things like running your

1:49:35

own business and you do do you

1:49:37

know run businesses including your own business

1:49:39

and you do it intentionally and successfully

1:49:41

and all that kind of thing. One

1:49:43

of the things that people who are

1:49:45

with you have to buy into or

1:49:47

not is you will do whatever it

1:49:49

takes. And some people can't buy that.

1:49:51

They want to be the center of

1:49:53

your world and you say, well, You

1:49:55

can't always be there. I've got this

1:49:57

thing over here that I do. And

1:49:59

maybe you've got things that you do.

1:50:02

Maybe you haven't. I don't know. But

1:50:04

there are times where I go, no,

1:50:06

I'm going to go and do that

1:50:08

now. And they go, well, that's not

1:50:10

very good. Because I really like to

1:50:12

go and do this. You go and

1:50:14

do it. I'll pay. But I'm going

1:50:16

over here to do this right now.

1:50:18

I just, I feel I've got to

1:50:20

do it because it's required. And some

1:50:22

people find that quite difficult to quite

1:50:24

difficult to it quite difficult to accept.

1:50:26

ferocity and intensity of drive and focus

1:50:28

comes from for you? Is it just

1:50:30

competitive? Is it kind of a bit

1:50:33

like being a fighter, being a boxer?

1:50:35

Where does it come from for you?

1:50:37

I think it comes from a balance

1:50:39

of things. I mean, one is growing

1:50:41

up in very bad circumstances, not like

1:50:43

that. Yeah, but how many of them

1:50:45

escape is it worth? And I think

1:50:47

it mainly comes from that. You know,

1:50:49

if you were, you know, you're in

1:50:51

very poor circumstances in, you know, bad

1:50:53

weather conditions and living in a terrible

1:50:55

place and it's quite violent and one

1:50:57

thing enough, it probably does read within

1:50:59

you a determination that's otherwise difficult to

1:51:01

encapsulate with people, you know, very difficult

1:51:03

to encapsulate with people. And I think

1:51:06

that's it, you know, it's, you know,

1:51:08

when I went to see the kids

1:51:10

in Mauritius who we set up the

1:51:12

boxing gym for, and it was, you

1:51:14

know, you know, you know, you know,

1:51:16

The girl that they got me involved

1:51:18

in, and people know I'm a bit

1:51:20

of a suck up at these things,

1:51:22

she was, she won some fights and

1:51:24

got a few trophies and so on,

1:51:26

but Amal was a prostitute, right? And

1:51:28

she was living in a shack and

1:51:30

so on, and they know that I'm

1:51:32

like that, but anyway, I went to

1:51:34

see her and I went to see

1:51:36

the club and I saw their circumstances

1:51:39

and said, oh, it's terrible, I said,

1:51:41

yeah, I'm going to help, I'm going

1:51:43

to help. Let me tell you something,

1:51:45

I said, I said, I said, I

1:51:47

said, let me tell you something, I

1:51:49

said, I said, I said, I said,

1:51:51

I said, I said, I said, I

1:51:53

said, I said, I said, I said,

1:51:55

I said, I said, I said, I

1:51:57

said, I said, I said, I said,

1:51:59

I said, I said, I said, I

1:52:01

said, I said, I said, I said,

1:52:03

I said, I said, I said, I

1:52:05

they don't come out of air conditioned

1:52:07

gyms, right, with drinking fountains, right? They

1:52:09

come out of gyms where, you know,

1:52:12

basically, you know, there's buckets of people

1:52:14

spitting to them. That's where they come

1:52:16

from, right? Real, you know, real grit

1:52:18

down there. That's that, that forms. kind

1:52:20

of on in the cell, I think.

1:52:22

And it does. Yeah. How do you

1:52:24

think about this whole issue of giving

1:52:26

back and sharing and lifting up other

1:52:28

people? Because I was talking to my

1:52:30

mother yesterday and I said to her,

1:52:32

she's in London, I said to her,

1:52:34

I'm going to, she's in London, I

1:52:36

said to her, I'm going to interview

1:52:38

this guy and I told her about

1:52:40

you. And she said, I disapproved of

1:52:42

him. And I said, you know, he

1:52:45

makes too much money, he doesn't. And

1:52:47

she's like, why isn't he doing more

1:52:49

to solve society's problems? And I said

1:52:51

to her, I'll ask him, like how

1:52:53

do you think about that? Well, first

1:52:55

of all, I'd like to say that

1:52:57

your mother, obviously I'm criticizing a man's

1:52:59

mother is dangerous Turkey, and she doesn't

1:53:01

know how much tax I pay with

1:53:03

a great respect. No, I'll introduce you

1:53:05

to my mother. You'll find she's about

1:53:07

as formidable as you are. Great. Yeah,

1:53:09

we recruited somebody a while back who

1:53:11

told me the story about his mother

1:53:13

and I said, I want to hire

1:53:15

your mother. Yeah. Yeah. I think she

1:53:18

sounds like a perfect employee for us.

1:53:20

Let's get it. And so, it's funny

1:53:22

you should ask that because it will

1:53:24

at least maybe in part answer your

1:53:26

mother's question, which is to say that

1:53:28

I believe that. philanthropy or giving back

1:53:30

or whatever you do. There are a

1:53:32

number of things I'm very strongly guided

1:53:34

on by. It should be private and

1:53:36

it should be with your own money.

1:53:38

I am anti to the point of

1:53:40

disparagement with the people who go in

1:53:42

for glitzy events, you know, absolute return

1:53:44

for kids kind of thing, and we'll

1:53:46

have a big event, and we'll invite

1:53:48

the Prime Minister and we'll all bid,

1:53:51

you know, a million pounds for a

1:53:53

pair of socks or whatever the hell

1:53:55

it is, and we'll give it, and

1:53:57

we'll give it, and the second thing

1:53:59

about it is you're quite often in

1:54:01

those circles and the number of people

1:54:03

are going to go but I've got

1:54:05

this charity and I want this and

1:54:07

you could take part and do that

1:54:09

before I'm going to happen here is

1:54:11

I'm going to give you the money

1:54:13

and then you're going to go up

1:54:15

front it up and do all this

1:54:17

and there's a certain degree to which

1:54:19

I have to have people like that

1:54:21

because I'm not going to run any

1:54:24

things because I mean... I try by

1:54:26

and large to keep to both rules.

1:54:28

And so, again, what you're really saying

1:54:30

is, can I pay for you to

1:54:32

go and get credit? That's what in

1:54:34

some cases, a lot of people who

1:54:36

raise money for charity. I think, first

1:54:38

of all, they don't keep to my

1:54:40

private rule. And secondly, they don't keep

1:54:42

to the, it should be your own

1:54:44

money rule. I try, by and large,

1:54:46

to keep to both rules. And so,

1:54:48

again, going back to your mother, she

1:54:50

doesn't know what I do with my

1:54:52

money. But I do give what I

1:54:54

would personally, every card is very significant

1:54:57

sums of money to a wide range

1:54:59

of things, not just boxing gyms for

1:55:01

kids, but a lot of other things

1:55:03

as well. But how do you think

1:55:05

of the parameters, because I'm assuming that

1:55:07

there's something about helping to give people

1:55:09

opportunity that resonates for you as someone

1:55:11

who managed to get out of. Like

1:55:13

how do you think about a good

1:55:15

way to help people? Well, that was

1:55:17

another part of going on private. with

1:55:19

your own money and in practical ways

1:55:21

wherever possible that affects them in the

1:55:23

way that you've just touched upon which

1:55:25

is opportunity and the ability to grasp

1:55:27

it. So I have a new wife

1:55:30

I'm pleased to say and she has

1:55:32

a stepson I have a stepson as

1:55:34

a result and we've got him into

1:55:36

school in the UK and we've actually

1:55:38

got what do you want to do

1:55:40

here I can stay in government school

1:55:42

and basically be trained in the underclass

1:55:44

here to be a gas pump attendant

1:55:46

or a guard or a security man.

1:55:48

all we can send in the UK

1:55:50

if he passes admission obviously and so

1:55:52

on and we send in the UK

1:55:54

that's good and he seems to be

1:55:56

prospering which is good so what I've

1:55:58

now moved on to is a scheme

1:56:00

to take two Creole children around from

1:56:03

Mauritius into the school so that once

1:56:05

we've got it full we will have

1:56:07

at least two children in every year

1:56:09

in that school now you know I'm

1:56:11

sure you're aware of the school haven't

1:56:13

been eating the price of schooling in

1:56:15

the UK by the time we take

1:56:17

this the phase the new VAT the

1:56:19

uniform the equipment and the flights into

1:56:21

account we're getting into some reasonable dough

1:56:23

there basically but the thing I really

1:56:25

like about it is it will be

1:56:27

of practical help to lift those some

1:56:29

of those group of children out of

1:56:31

their background to give them an opportunity

1:56:34

and and this is the really important

1:56:36

part I think some of them I

1:56:38

hope will think of coming back to

1:56:40

Mauritius to change the community in general

1:56:42

by the fact that they have the

1:56:44

ability to hold down important roles in

1:56:46

government or the private sector and so

1:56:48

on and that's that's the sort of

1:56:50

thing that really I like. enjoy that

1:56:52

a lot because I can see the

1:56:54

practical consequences of doing it now. I

1:56:56

don't want them to name the Terry

1:56:58

Smith wing after me. Yeah. I don't

1:57:00

think about the story at all in

1:57:02

fact. In fact, in terms of getting

1:57:04

these things to work quite often does

1:57:07

require some sort of input from the

1:57:09

government to get schools to respond here

1:57:11

and do that. So I say them

1:57:13

as... You can put your name on

1:57:15

it. You can say this great initiative

1:57:17

by me. I mean, you're a politician,

1:57:19

you love this, right? Put your name

1:57:21

on it, right? I don't want my

1:57:23

name on it. So your mother's never

1:57:25

going to be, almost never going to

1:57:27

be reading about me doing this. She

1:57:29

might read, she might read, she might

1:57:31

read, she might read that, she might

1:57:33

read that, the, the president of the

1:57:35

Labour Party of Maurit to account. She'll

1:57:37

listen to my episode. Yeah, I didn't

1:57:40

like that summer, you know what. that

1:57:42

guy was great or you know so

1:57:44

having exacting parents is helpful. Apart from

1:57:46

her lack of knowledge of my personal

1:57:48

affairs which is understandable but she should

1:57:50

perhaps try and tell you something before

1:57:52

it is I think she's viewing a

1:57:54

little close to that UK just like

1:57:56

of success that I was talking about.

1:57:58

That's it's an interesting question that yeah

1:58:00

I mean tell me about you know

1:58:02

obviously having grown up without money and

1:58:04

then over the years you become very

1:58:06

wealthy and you know you bought a

1:58:08

couple of hundred beautiful cars and the

1:58:10

like and a yacht and the stuff

1:58:13

and a lot of the very, I

1:58:15

mean I write about this in the

1:58:17

epilogue of my book Richa Wise Happier

1:58:19

where I talk to a lot of

1:58:21

people who've won the you know hit

1:58:23

the jackpot financially and my sense is

1:58:25

that you know as I would put

1:58:27

it the toys and baubles are kind

1:58:29

of nice but they only go so

1:58:31

far. that in some ways the real

1:58:33

gift of the money is that it...

1:58:35

Say again? Worse than that. In what

1:58:37

sense? The toys and the ballballs actually

1:58:39

get in the way of pleasure quite

1:58:41

often. You know, owning things of that

1:58:43

sort mainly is a headache. You know,

1:58:46

so if you've got a boat, you

1:58:48

end up having a crew and then

1:58:50

the crew, you know, somebody quits, somebody

1:58:52

has sex with somebody else, somebody's found

1:58:54

out doing something here, they're running into

1:58:56

the key side at the top. And

1:58:58

so, you know, really, I've got to

1:59:00

say the amount of real pleasure that

1:59:02

one gets from doing those kind of

1:59:04

things is not high in my view,

1:59:06

right? So what, I mean, like, if

1:59:08

you take the car collection, for example,

1:59:10

I think buying expensive and fast cars,

1:59:12

and I've got some expensive and fast

1:59:14

cars, I don't know about that. But

1:59:16

I've got a very wide range of

1:59:19

cars, my earliest cars from 1903, which

1:59:21

are failures, I deliberately collect failures. And

1:59:23

so, you know, and the reason for

1:59:25

that is I think that they tell

1:59:27

us things. If you, if you, why

1:59:29

do we have, why do we have

1:59:31

post-mortoms on human beings? Well, isn't just

1:59:33

because doctors like messing around with cadavers,

1:59:35

it's because if we die in suspicious

1:59:37

circumstances or difficult situations, they might want

1:59:39

to know why just in cases of

1:59:41

new illness or foul play and something

1:59:43

needs to be done about it, if

1:59:45

anything, we can learn. I mean, learn

1:59:47

how these things, because it might be

1:59:49

useful to learn something from time to

1:59:52

time about how other people have screwed

1:59:54

up in history, you know. Has it

1:59:56

informed your skepticism about Tesla? Because you're,

1:59:58

I mean, it's interesting, when you think

2:00:00

of the magnificent seven, right? I mean,

2:00:02

you own a bunch of them, but

2:00:04

you've said that Tesla and Invidia wouldn't

2:00:06

get through your quality parameters and the

2:00:08

Tesla probably never will. And I hadn't

2:00:10

really made the connection that here you

2:00:12

are a car expert. Like is there

2:00:14

some connection between your car collection of

2:00:16

the failures and your skepticism about Tesla?

2:00:18

Remember my stern business school, you know,

2:00:20

good company, bad company saying automobile companies

2:00:22

are all bad without without any... kind

2:00:25

of exception. Every single one, Toyota Ford,

2:00:27

BMW, Mercedes, the whole lot, right? They

2:00:29

destroy value. If you really like them,

2:00:31

you can go and buy them all

2:00:33

on a PEA-4 if you want, and

2:00:35

there's Tesla on 99 times, right? It's

2:00:37

a bad business. Why is it a

2:00:39

bad business? It's very capital intensive. You

2:00:41

have to build factories, right, fairly obvious.

2:00:43

And models development costs a lot of

2:00:45

time and money, and then here's a

2:00:47

problem. If I'm invested in consumer staples

2:00:49

and you buy some toothpaste or cat

2:00:51

litter or whatever you buy, when you

2:00:53

run out you have to go buy

2:00:55

some more. And so that keeps, even

2:00:58

in a downturn, you might eke it

2:01:00

out, might squeeze the tube a bit

2:01:02

better, might go buy some cheaper cat

2:01:04

litter and a number two brand or

2:01:06

one brand, I don't know. So that's

2:01:08

a little bit problematic, but it's not

2:01:10

big problematic. Whereas if you've you've got

2:01:12

a car and you've got a car

2:01:14

and you've got a car and you've

2:01:16

got a car, I always quote Mr

2:01:18

Mahadam, who is my taxi driver here

2:01:20

in Mauritius, who is an exemplar of

2:01:22

this. He drove me around in his

2:01:24

Toyota axio for 360,000 kilometers. The poor

2:01:26

chap died. And now his son's driving

2:01:28

it. Toyota haven't made a bean off

2:01:31

that car in 20 years, right? And

2:01:33

it's still going strong, I can tell

2:01:35

you. I see it on the roads

2:01:37

floating around with his son driving it.

2:01:39

It's a really bad business because what

2:01:41

that means is that it's hugely hugely

2:01:43

cyclical. And so it's huge capital involved,

2:01:45

big development costs, and demand, which goes

2:01:47

up and down enormously. And then you

2:01:49

can get on to the other subjects

2:01:51

involved, which is, so that's car companies,

2:01:53

and as a car company, which is,

2:01:55

you know, our battery is the future

2:01:57

of electric vehicle transport. I mean, I

2:01:59

don't know the answer, but there's certainly

2:02:01

some reasons to be skeptical about it

2:02:04

in terms of range, in terms of

2:02:06

use of depletion of resources, etc. etc.

2:02:08

the hydrogen fuel cell is an alternative

2:02:10

to if there is any reinstructure. So

2:02:12

not put it all together and I

2:02:14

just think I'm a big... sort of

2:02:16

a mirer of many of Mr Musk's

2:02:18

achievements in a lot of respects. That

2:02:20

man's got energy and balls, there's no

2:02:22

doubt about that. But I'm not sure

2:02:24

cars is the way forward. I mean

2:02:26

if cars are the way forward, why

2:02:28

don't you just go and round up

2:02:30

all the other ones and buy them?

2:02:32

It's interesting. I mean the fact that

2:02:35

you've been collecting cars that date back

2:02:37

to 1903, owning sectors that tend to...

2:02:39

you know, persevere and be valuable through

2:02:41

good times and bad. I mean, there's

2:02:43

some interesting through line there in your

2:02:45

life. Well, they got the 90-0-3 is

2:02:47

an Oldsmobile curved dash just to let

2:02:49

you know, it's not going to steer

2:02:51

it or it's got a tiller that

2:02:53

you steer it with. And it was

2:02:55

the first mass production car. The Mockety

2:02:57

Ford was not the first mass production

2:02:59

car. And there's history involved in that.

2:03:01

There's history involved in the Model 2

2:03:03

Ford. The Model 2 Ford is a

2:03:05

fantastic story of an industrialist than what

2:03:08

he achieved, I think. I've got one.

2:03:10

And I think it's the stories behind

2:03:12

the cars, in my view, are more

2:03:14

important than mostly the cars themselves. I'm

2:03:16

interested in the full GT40 from 1966

2:03:18

from Ford V Ferrari. and I've got

2:03:20

one and I like it. I can

2:03:22

remember that those episodes when I was

2:03:24

a child of how you know Ford

2:03:26

worked out, went on Sunday, sell on

2:03:28

Monday and tried to buy Ferrari and

2:03:30

not only did they not get Ferrari

2:03:32

but he sold out a fear and

2:03:34

dished Henry Ford and you know upsetting

2:03:36

Henry Ford was a bad thing to

2:03:38

have done really because he went and

2:03:41

built a car that beat him. And

2:03:43

in fact Enzo Ferrari managed to cause

2:03:45

the development of at least. Two cars

2:03:47

by upsetting, but at least two by

2:03:49

upsetting, with the full GT40 being one.

2:03:51

And the Lamborghini being another. Mr Lamborghini

2:03:53

made tractors. He still does make tractors.

2:03:55

Oh, they made tractors. And he bought

2:03:57

a Ferrari, which didn't work, like they

2:03:59

quite often didn't work there, and took

2:04:01

it back to Ferrari. at Maranella and

2:04:03

said, you know, this is wrong with

2:04:05

a clutch, that's wrong with a clear

2:04:07

box and so on. And apparently Amzo

2:04:09

Ferrari said, what do you do for

2:04:11

an event? He said, I make tractors.

2:04:14

And Lamborghini was so upset, he went

2:04:16

and hired a team of six young

2:04:18

automotive engineers and designers, the oldest of

2:04:20

whom I think was 26, and built

2:04:22

the Lamborghini mural and demolished Ferrari's, nearly

2:04:24

as many good cars to be built

2:04:26

by annoying people as he did by

2:04:28

actually making cars. Yeah, you also have

2:04:30

things like the 1968 Ford Mustang, right,

2:04:32

which was the car that Steve McQueen

2:04:34

drove in bullet and you have, I

2:04:36

think, the Aston Martin, D.B.5, the James

2:04:38

Bond drove in Goldfinger. So you're living

2:04:40

out the movies. Yeah, well, yeah, well,

2:04:42

yeah, I like movie cars. I think

2:04:44

if you said what you're trying to

2:04:47

do with the car collection, I mean,

2:04:49

it's about, there's a guy, he's got

2:04:51

a museum in Naples in Florida called

2:04:53

the Reds Institute, the Reds Institute. And

2:04:55

he's got a book called The Archaeological

2:04:57

Automobile and his thesis is that the

2:04:59

car is the single most important object

2:05:01

with which human beings interacted in the

2:05:03

20th century. It's not a bad thesis.

2:05:05

And I think he's certainly got a

2:05:07

point. And I think there's an awful

2:05:09

lot of human development history in cars

2:05:11

through the multi-folded industrialization and all those

2:05:13

sort of things. The rise of Japan,

2:05:15

the movies, TV shows, Morse's Jaguar, the

2:05:17

Saints, the Saints, Volvo. their part in

2:05:20

our consciousness is enormous I think and

2:05:22

they invoke quite a lot with people

2:05:24

you know and quite a lot of

2:05:26

it particularly of a certain age group

2:05:28

I think you find people talking in

2:05:30

motor museums and I've talked to a

2:05:32

lot of people in motor museums about

2:05:34

cars is they'll say they'll find families

2:05:36

walking around and somebody will be in