How to Build Enduring Wealth w/ Guy Spier (RWH042)

(00:00) you don't want in the investing world  to say I'm going to act in my portfolio in such a way that I can get my 18% annualized over  the next 20 years and be super successful when in the realities that may unfold that turns  into a great big zero all putting all of your investments in one stock and leveraging it and  so the strategies that get all of the potential outcomes to a decent result mean that you're  far more likely say to get 9% rather than 125 20% survival is everything hi folk

s welcome to the (00:39) Richer wiser happier podcast I'm here with my very old friend guy spear in the living room  of his home in clusters in Switzerland guy thank you so much for letting us do this here it's a  pleasure to be here William and when you said very old friend I was thinking of the double  meaning since a long time and also getting on in yours both we we've known each other since  we were at College uh more than 30 years ago but uh but I think we became close friends  more than qu

arter of a century ago and and (01:09) actually I wanted to start by asking you  about this the experience of actually spending this kind of intense time together in Switzerland  because we started doing this when we were working on your book the educational value investor when  we basically H up in your house in Zurich for many weeks on end which is an incredibly intense  experience and I was living with you basically for a while um more recently the last couple of  years we've been meeting her

e in clusters um I came in a week ago from New York flew into Zurich (01:41) stayed with you there and then we came here to clusters and we basically stayed with  each other for the last 5 days until finally I thought it was too much for you and I moved into  a hotel uh to give you some space can you talk about why we do this and what the experience  is like because it's so intense and I don't think most people are aware of uh what we're what  we're even doing when we spend a week together basic

ally just talking well I I think that  what I'd start off by saying William is that I (02:08) don't speaking for myself is that I  don't think I was aware of what we were doing and so you know to tell the story so there's a  movie um with uh Patrick suy I think where uh he becomes uh he dies early on in the movie and  in order to uh communicate with his girlfriend he gets into he uses a medium who is that famous  actress and so why am I saying that because I'd finished thought I'd finished my bo

ok and I  got in touch with William and said William I don't know what you're up to but you edited this (02:49) short thing that I did for time on the launch with Buffett and I'm about to submit  this manuscript and that is going to be me in the public eye and I would just be grateful  do you remember I remember I said any amount of time that you're willing to spend on it even 5  minutes I know it will make it better and then by some miracle and for me my experiences  of of it is that sometimes

I like to say that God is smiling at me and for some reason  you showed up not just for 5 minutes but for 3 months the reason why I bring up that movie whose (03:22) name maybe you can help me to remember which it is Ghost something like that I think  it's maybe ghost is that what William did for me is what that Medium does for Patrick suy in  the movie in that she sort of William gave over his whole brain to rewrite chapters most of  the book as if as if he was me and I've never seen somebody s

o intensely give over in a  way their own brain such that um William would go and rewrite a chapter of the book and  uh he would come back the next morning go gray before he rewrote then you come back the (04:02) next morning we do a read through and I'd say I I don't understand William like  I I feel like you've I feel like I know that you wrote those words but actually I feel  like they're mine and there was this very interesting thing where I don't remember you said  you know guy it's it's yo

u know it's it's both of us so what began there was kind of a very very  powerful I'm going to use words I don't really understand what they mean psychologists would  know what they mean transference counter transfer (04:30) erence uh the word that comes to my  mind is mirror mirror neurons where there's the William developed in his mind a very very  powerful model you developed in your mind a very powerful model of who I am and you kind of lived  it for three months I feel like for three months

you didn't there wasn't much space for William  Green in fact the only space for William green was you would you would leave on the weekends  to go visit your son at school in the UK and um so so that that was the experience of writing (05:00) the book and I reiterate to people they say my gosh guy you're such a good writer  and I say look the everything that's in there is Guy spear but it was shaped  and formed into something that is so palatable to the reader by somebody who's  an extraordina

ry uh has has extraordinary skills at doing that but that's just as a  backdrop to come back to this week uh uh and I'm William started editing our uh my  letters to investors and again uh I felt it was the same experience as writing the letter (05:33) the writing the book and we had we already had that experience with us and the previous  few years we've done it over Zoom I mean you were living in the US and for one reason or  another we managed to organize that William would come during value

XEX and we would do  it here so the first year that we did it to come to your point is that uh after about 3 days  together uh I came out of it and I was utterly exhausted and in a way it was more in tense  than writing the book and William was doing more than helping me with the letter William was (06:05) actually coaching me in life and you know where I was allocating my time and how  I wanted to communicate to investors but also how I wanted to communicate to myself and my  family and uh and

so I was exhausted by that experience because you can imagine it as being  uh 3 days writing 3 days Psychotherapy 3 days study 3 days friendship with like all sorts  of varying emotions all the way through but it's only after the first time that we did it I  realized William that you were also exhausted yeah and so uh we we you know we were it was just (06:44) William and me for most of the time and uh intense sort of interactions on multiple  levels of communication so that when something is sa

id there's actually three different things  happening at the same time there's the what's happening in the physical world the tangible  things that we're discussing but there's also other things that going on below the surface  and yeah I mean I don't think yeah very very intense communication that I really I'm from  my perspective William you can have your (07:12) own opinion I don't think I can fully  understand all the communication that is taking place there and I I would say exhilarating  a

nd exhausting at the same time no it's an extraordinarily intense experience and I i' I've  said this before that I think the thing that got me excited when we were working on the book a  decade or so ago was that when I when I was first coming to see you it was kind of a job it was  like okay I'm going to help guy with his annual with his with his book and then after after a (07:46) day or so I realized oh guy's actually trying to tell the truth and he's trying to  get at something really hones

t and really um you you said to me at one point you were very  excited one day when we were talking and your in your dining room and um we went into the kitchen  and you you were making one of about a thousand cappuccinos that we drank during that period  when I only put on about 20 lbs probably and um and and you said very intensely I don't care  if this book ruins my reputation I I just want (08:19) to give an honest accounting of myself  and that was when I got excited because I thought oh we

ll if we're actually doing something  that's honest that's actually a search for truth that's a whole different register that  we're attempting to to connect with and that got really exciting for me so then we had these  extraordinary experiences for example where we'd be talking about the financial crisis and  I would read what you had written in your first draft and you'd be sort of talking (08:52) about how you had made these wise decisions when uh uh when the markets were  falling apart and

how it's kind of obvious that these things were incredibly cheap and you  bought them and then everything rebounded and you made a fortune after the financial crisis  and I because we've been friends for so long and because I've been invested in your fund for  something like 23 years I knew what it had been like at the time so I said to you guy I remember  calling you in the middle of the financial crisis and saying how are you doing and you (09:19) said to me we're bleeding from every orifice a

nd I remembered the intensity of that  and so I think sometimes people think that if you're working with a collaborator on a book you  know they'll call it a ghost writer they think that in some way it's shallow and superficial  and less meaningful it's not really the person writing the book uh that the subject isn't  writing it that there's some something somehow fraudulent I actually think it became more and  more authentic because you wanted to find out (09:50) something you you were pursuing

the truth  and I could kind of hold your feet to the fire and be like no no guy it wasn't like that at all and  then suddenly you started to reveal stuff that I think you hadn't been able even to remember  because it was so painful that you'd suppressed it it's a really really fascinating phenomenon  actually if I and you're kind of allowing creating the space to see that so if I can trace what I saw  there was that first of all so it it begins for me with the autobiography of Mahatma Gandhi an

d (10:22) you know the subtitle there is the story of my experimentations with the truth and a book  that's we've been talking about a lot recently a book called power force force by David Hawkins  and for some reason I discovered in myself the courage to want to write the truth but then  and and it's interesting to me that uh um so David Hawkins talks about when people speak  truly honestly people go strong so what I'm hearing you say is that you went strong when you  read the first few chapter

s but then so because I (10:54) trusted you uh because you'd taken sort of  like my screed my Rings uh over the Buffett lunch and you turned it into really a thing of great  Beauty for time I mean I remember calling you up at the time and saying wow William you've made  me sound so smart and so eloquent I'm blown away so I trusted you and I think that there must  have been something else coming back because I remember exactly where I was sitting and it's  this wooden dining table in Zurich where

where we were doing a readr of the financial crisis (11:27) chapter and you uh EX it it didn't explode but you you harped in indignation  and it's like you've totally flubbed that chapter guy you I remember you called me up  and you said or I called you up and you said we're bleeding from every every orifice so  up to that moment I had no recollection of me saying that and I remember feeling slightly  uh uncomfortable I wanted to protest and say I didn't want you to be doing what you were doing

  and uh but at the same time at that moment or around that moment I started realizing that I (12:02) had said that to you and now I think I can recollect where I was when I when I  said that to you and um and so but and and then I wanted to resist I was like no no stop  we're not writing about this they're like like we're not writing about this this way William  you're doing a great job but but but but but uh but I I kind of like held on to it somehow  you were gentle enough with me and I was t

rusting enough of you because effectively  what I'd done already previously and I was doing with you was I was entrusting you with my (12:36) reputation and I'd given you a baby and sort of as best as I could have done and then uh  I knew that you would uh I was trusting your kind of like both professionalism and friendship  to continue with the project of honesty uh but at the same time not making me look like a  complete utter fool an idiot and um so there was a transition where I kind of like

grudgingly  it was difficult for me but I knew I had to continue with what I'd started in a way you you  seems to me that you had the courage and the the (13:13) willingness to go to kind of like  a scary place because we didn't know where it would go and that was you know again there's  this feeling and so I'm calling up the editor of the book lri Harting and I'm saying Lai I know  you're waiting for the manuscript but there's really important stuff that's happening here and  it's making it so

much better but um yeah so so that is just like for me a kind of a microcosm  of something very powerful that took place there which is kind of like miraculous because I could (13:40) not have expected that to happen and I didn't know at that moment what the outcome  would be what's that quote you often quote from Jordan Peterson about if you something like  if you want to have an adventure try telling the truth correct that's exactly right and it's  just such it struck me when he said that and

it's so true and it's so scary to tell the truth  so scary because you don't know where it will go uh and um my experience has been that whenever  you do tell the truth uh God Smiles so you know (14:10) my experience is as somebody who is  not very good with time I hate the fact that I'm not very good with time and sometimes speak  to my wife about it and I just it's a aspect of my brain that I'm unable to plan time properly  so I often end up late somewhere because I just didn't budget the hal

f an hour that I needed to  get there and thought somewhere in the back of my mind I could get there in 10 minutes so  with this power versus Force telling being honest I learned that you know rather than say (14:40) oh there was traffic I missed the Train the train was cancelled something I'd say I am  so sorry I'm 15 minutes late I have a terrible issue with time I really thought I could leave  10 minutes beforehand I should have left at half an hour beforehand and that makes people go  strong

they kind of understand so even in the most simple things and suddenly they're like  wow this guy's being real with me now I'll be real with him so my life when I started telling  the truth and I know where I was again when I (15:10) decided that I'd write that first  chapter Belly of the Beast which scared The Living Daylights out of me and in a sense  since then life has been an extraordinary Adventure you know one very interesting thing  that I remember coming out of our discussions about th

e financial crisis was as we deepened  the discussion because you wanted to tell the truth about it and you were open to letting me  kind of cut into the vein there we started to discuss the moment where be Sterns looked like it  might go under and the money in your fund was if (15:45) I I'll get the details wrong but it  was it basically you even though legally you would have been fine you might have got caught  up for many years all of the money in your your fund being sort of stuck somehow in

B STS and  I started to ask you about what the experience was like where you were sitting at the at the  weekend when you were watching to to see whether it would be rescued and how excited you were  when Jamie Diamond decided to step in and how I think you told me you sent him a Christmas  card to thank him and um we started to talk (16:16) about your father who was the biggest was  and still is the biggest investor in the fund and it became clear in our discussions that there was  a certain p

oint where he could have pulled the plug and just said no I can't take this anymore  and I want to take my money out of the market everything's going to hell and you realized as we  were having this discussion that your father who in a very interesting and complex past had among  other things been someone who dismantled bombs um had this extraordinary temperament and stood (16:54) strong at a moment where he might have where most people in his situation would have  been much more vulnerable to t

o panic and fear and I think you then went to your father and  kind of told him how grateful you were in a sense like in a way it deepened it deepened  your relationship with your father and your appreciation of your father does am I getting  that right yeah absolutely I mean so uh so just briefly uh on bath and then to to move on to  my father um uh so uh all of the assets were custodi at bands which is at the time was a (17:34) brokerage firm very wellknown and storied brokerage firm uh ran by

a guy called Ace  Greenberg who at the time that this uh financial crisis happened apparently was playing bridge with  one of his directors which is kind of shocking but uh the um in the event of a bankruptcy of a  brokerage firm then the client assets should be secure but any reasonable judge I could  have imagined would have Frozen everything to make sure that there were actually client  assets you know who there's a priority that is established according to law and (18:09) it might have take

n I mean I know people who had trades going on through  Leman Brothers during the financial crisis where the money that they was caught up  in Leman Brothers for a period of years until they got paid out which it was just  an annoyance if it was a relatively small trade but it's when it's 100% of your assets  uh and I I just remember calling my father up and saying you know I am going into the  office both days this weekend and I I'm super scared that uh this may be bankrupt on Monday (18:40) mo

rning and uh if that's the case I would have to S start researching um uh uh legal  firms that are experts in the bankruptcies of brokage firms to represent us and so it was  5:00 p.m. when that call came through so my experience of my father who's um yes he he  he was a sapper at one point in the Israeli military and did other things as well but so  so and I think that there's some wisdom that we can all get out of this so my father was the  type who um 30 years ago before I did discovered Warr

en Buffett before I had learned anything (19:24) about investing who thought that the way you make money in the market is you trade  so you buy buy and sell buy and sell you buy low sell High Buy Low sell High and the idea  of investing in a good business and holding it for a long period of time was something  that would have been an a to my father and that's not I I was good at mathematics and uh  was a decent financial analyst if you like my father's incredible in relationships uh but in  in a

sense my father didn't need to understand that he he basically just when I came to my (19:58) father saying the proverbial has hit the fan and this is a very difficult situation  and my father didn't try and focus on he he first of all gave me the domain of I understand  that in principle my son understands what he's doing uh and he's run into a roadblock he run  into difficulties and went straight into the emotional side of leadership if you like and  so he did two things one is and I think th

is is true probably in all crisis situations is you  only make it worse by um losing confidence in the (20:34) person who's in the driver's seat uh you  have to give the person in the driver's seat the opportunity to see what they need to see take  the decisions that they need to take and not make them feel like they're about to be removed  from the driver's seat and effectively he did that without really understanding the consequences  of the outcome so his Focus was on I need to EMP power in t

his case my son my partner the  guy who's managing my Capital to uh be aware of all the important information and to make the (21:08) most important decisions that he needs to make and he know he needs to know that I've  got his back but interestingly enough uh we were talking before about uh forgiveness and  judgment and and it's occupying a place where it's not saying um everything you do is going to  be fine don't worry I've got your back it's like we're in a grave situation and you're in the

  driver's seat and I've got your back to help you to make the most important decisions but  there's that element of judgment uh it's not (21:36) just like I'll forgive you whatever that  you decide to do and uh uh I've come to him uh on multiple occasions I mean most recently  with the medical issue and again he's it's incredible because he might be uh at the gym  playing tennis but there's a tone in my voice and I know that he's responsive to other people  like that as well where he knows that

this is important and he goes to that very very special  place and in a sense that's leadership it seems to me it's extraordinary leadership and I'm am (22:06) thank you for giving me the opportunity to thank my father again here for being that kind  of partner and I think that just to close that thought I think that what's really important  is I mean uh you know Warren and Charlie say to to find a good partner be a good partner but  also realize that the nature of exactly what the person contr

ibutes can be incredibly subtle  and it doesn't have to be the full range of everything that's required it might be just in a  particular emotional slice or maybe another slice (22:35) of of the the whatever difficulties  and reality one is dealing with so thank you for giving me the opportunity to talk about  that I I think also one reason why it's been fascinating for me to be behind the scenes  watching you go through experiences like that with the financial crisis or with Co or  with family

issues all of this stuff is that um it it it's allowed me to see as a partly  as a writer about investing that there's the theory right there are all these principles  about this is what works in investing this is (23:09) how you do it and then once you get in the  mud and you actually see what it's like there are all of these forces all this turbulence that makes  it incredibly difficult to be rational and so one of the things that's been a privilege for me is  that I would see when you were ha

ving struggles in your own life life or when um when the market  was really hitting you and you had these core principles but it was actually incredibly hard  to apply them and so there was this sort of gap between the the cold logical rational theory that (23:47) we've all learned from people like buff manga and the reality which is that it's a  human in a really murky situation subject to lots of stress lots of emotion trying desperate  to figure out what to do in the midst of chaos rather tha

n when we look back logically and we  look back at the financial crisis and we're like of course those things were incredibly cheap or  we look back at Co and we're like well of course those things were incredibly cheap early  in 2020 but when you're actually living it (24:15) and you're there it's so intense and  I think that's what I've tried to convey in in writing about this stuff is that it's like  no this these things are really hard because we're humans invulnerable turbulent unknown  sit

uations yeah and um you know you were saying trying to decide what to do and over and above  that sometimes the best thing to do is to do nothing but the the nature of what's happened  in the financial markets what's going on in our minds maybe conversations with clients (24:45) or analysts is that uh whereas in many periods the ability to say in this case  I do nothing suddenly that there's this voice screaming at you saying do something you idiot  and actually maybe one should do something in

which case which which course of action is it  and maybe actually one should ignore the voice completely I I what comes one of the things  that comes up for me as you talk about that and this is just my experience and we need  to say that I think that one of the things that one learns if one has the opportunity to be (25:18) an apprentice uh around a great mind of investing and I'm thinking of Tracy Brit and the  time that she got to spend around Warren Buffett and KT Plaza is to see the micro d

evelopment  of emotions or reactions to uh something that is unfolding and something that strikes me  makes me go weak in the David Hawkin sense when these great investors are described  as being unemotional because everything I know about emotion is that human emotions  the key to decision-making period we don't take decisions that's the kind of part of the (25:53) decision- making mechanism so to say that somebody like uh Warren is say unemotional  in response to Market trauma I think that wha

t I want to say is no he has a particular way  of dealing with the the the decision-making apparatus which includes emotion and I think  that to say unemotional or emotional is far too rough a way of describing it or um too we  need to get far more precise in that uh that in between emotional and unemotional there's an  enormous universe of different kinds of micro reactions to different things and it's actually (26:33) learning that in the middle and so when I think of Tracy Britt or I actually

was we  we talked a little bit about Chris Han who in a way apprenticed with I think his name is  Richard Perry Perry Partners something that I feel like I would have liked to have experienced  is you know there's something that happens at bsh Hathaway uh some important event I don't know  you know the the uh covid and now um Precision cast Parts as business is is really awful the  ability to witness Warren in his micro emotions (27:05) how he responds to that for example or  on a trading desk

even for say I imagine Chris Han seeing Richard Perry's response to a piece  of negative news it's not about emotional or unemotional those are the two extremes how are you  reacting in a subtle way what are your decisions relative to the information that's coming in  so I think it's very nuanced I I've thought a lot about this question of how emotional  or unemotional the great investors are and I there's a there's a there's a big range obviously (27:36) Bill Miller said to me at one point I I

think on the podcast he said look I'm very  emotional in certain ways I he said when I listen to music I'll cry and um Rick Rita said  to me recently this the guy who manages $2.6 trillion at Black Rock said to me he can't go  to this particular College day C ation when these schools that he helps to fund the the kids  discover what colleges they've got into he said he'll just weep and he embarrasses himself and  yet when it comes to their Investments they're (28:12) remarkably rational in certa

in ways and I  think I think Bill Miller for example there is an element of him being a kind of probability machine  when it comes to looking at companies and thinking okay well the stock has plunged it's cheaper now  and so there's some something in his brain and in his wiring that allows him to make very rational  probabilistic decisions about money while also when he got in trouble during the financial crisis  and 100 people had to be laid off from his firm because of as he put it to me a mis

take that he (28:45) made analytically he said he found that heartbreaking it it was deeply emotional so I  think it's a really Nuance thing this question how emotional or unemotional they are and  I'll give you some Nuance that I don't think I've it's been clear in my mind until you  were speaking just now that uh I think is true of me so um I think that I can describe  three different kinds of circumstances where my decision-making apparatus Works differently  so I think that uh my decision ma

king rational decision making works the very very best (29:17) when I'm looking at an idea that uh it's reasonably clear that nobody else is is  looking at they've kind of discarded it and if we look at uh these kind of investments in we've  talked about Alaska milk or wheat a bits it was just there nobody was looking at it by contrast  if and they were cheap and uh not noticed we can then go to something that is cheap but is  controversial and I've a number of times and um uh the name of the co

mpanies not coming into  my mind right now where uh Bill Amman would get (29:50) involved in something that was super  controversial Herbal Life Would have been one yeah or Valiant yeah and there was one  previously which saw old uh uh Insurance kind of like a subscription insurance for uh  for legal fees prepaid legal was the company and there was some very serious debate over  whether they were accounting for these long-term contracts appropriately and Bill acman took  one View and Market took

another view and I found it very hard because of the controversy  and because the very strong views being rep (30:24) presented in the media and elsewhere  to have Clarity in my own mind or I think that I could have I I could not separate the  emotion coming from the market and the fears over whether this was being correctly represented  or not and the analysis that seemed correct to me so you can have you know an an Undiscovered  idea non-controversial and I'm confident in the analysis then a

similar idea but because it's  controversial because there's been an accounting misstatement or something where uh where I I don't (30:56) trust my own decision making anymore and I would look at somebody like Bill akman and say  I wonder if he's right or if he's just being you know sort of like braggadocious and then you can  go to a third area where I think the decision- making apparatus kind of changes again uh so I  think that and we were talking about it how uh I'll own a position that has

gone up multiple  times and now uh you know the simple way to put it is I fall in love with the position  in a way I'm not being rational about the (31:28) likelihood that this thing is going to  double and triple again from where it's gotten to after having already gone up four or five times  and so I think that it's not just that it's subtle it's like the modes by which we operate change  depending on the circumstances and I think that to be the best possible investor I can be given my  endowm

ent of what I have is I really need to learn to understand that internal landscape as well as  possible so I can now tell myself and help myself within conversations with you and people in my (32:00) office remind me when when this thing is you know remind me that you know I I I have  a tendency to fall in love perhaps a little too much and lose that amount of rationality  I think I'm I think it's sensible for me when it's a controvers so give those there probably  more than three different uh t

ypes you know as I learn more about myself I probably maybe have  five or six but up to now it's becomes easier for me to say look it's controversial I think this  is analysis is right but I just don't like being (32:31) involved in controversial situations  it's not my area it's not something that I do well with emotionally is kind of like an  intelligent thing to do of course I can't do that when something's gone up five or six times  so it's I guess to to bring this idea to close the navigati

ng the emotions in between emotional  and unemotional is a uh complex landscape and just bring it back to Bill Miller when my  sense of him is that when it's pure financial analysis he's fine and the markets you know (33:02) you're put issuing buying and sell orders which are kind of impersonal as  well but the minute it impacts people that he has a personal relationship with that's  extraordinarily hard understandably so so I feel like one of the things that that you've done  to manage your you

r own particular wiring and emotional um landscape is that you tend just  to make fewer decisions and so there'll be an entire year where I come to edit your annual  report and I say so did you buy anything last year you're like no did you sell anything (33:35) last year no and that's happened so many times like that in a way your default  almost partly because you understand the importance of compounding and not meddling  and partly because you're suspicious of your own emotions I think you ten

d you tend just to  leave things in place is that fair to say yeah but but I just you know I want you to know I  think you do know and and I'm is that it's it's that's not with a self-confidence sort of like  this is the right thing to do I'm questioning (34:04) myself all the time are you just  being are you being sensible by not moving the portfolio around too much or um are you  hiding behind that idea because you're afraid of making a decision or because you're lazy you  know and trying to u

nderstand am I being lazy or am I being smart by being inactive and of course  that depends on where the portfolio goes so I've experienced all the range of something going up  multiple times and being glad that I left it alone selling half a position and then it going up (34:35) multiple times after that and being angry at myself something going up multiple  times not doing anything then so all of those things happen so I'm questioning the whole time  but in in my case uh the the evidence shows

that uh the more you medal the less your returns  are so I think that I'm right even though I continue to question it that the um the clarity  that I ought to have before I make on the mo a move on the portfolio ought to be enormous  it should be you know you shouldn't make a decision because it's 5149 you need to wait till (35:08) it gets to 8020 if you like but you know I'm questioning myself as I do it because  I think I I actually would say William that uh uh so so I would say that in my ca

se  so so there's there's all sorts of ways in the envir in which the environment  changes and so it's been talked a lot about this moved to Zurich and I've kind of  figured out yes the the city in which you live and the particular circumstances of the  office and how you get to work that's really really important but actually even more (35:39) profound are the relationships within which that office sits so in my case  I had no choice but the my work environment went through a profound transitio

n from being  unregulated to regulated and the simple thing that happens when you get regulated is you  have a lot more eyes on you as there should be one of the respons responses to the  financial crisis was we did not we were not looking closely enough at what all sorts of  different actors were doing and so therefore we don't care that Mr gpar doesn't short doesn't (36:09) leverage we want to have eyes on him and everybody else who has more than a certain  amount of assets and so and and what

I realize more clearly now talking to you is that you  know the the work of getting regulated is not just you know getting the appropriate  mechanisms in place it's structuring those mechanisms such that they interface into the  investment decision- making process and that is an ongoing thing that we have discussions  with on a daily basis which is kind of making sure that the regulatory oversight that we we're (36:39) required to have fits with the investing style and I think that it's been an

adjustment  for me and I think that ultimately what it did was it it it put quite a lot of friction in in in  front of any particular portfolio move probably a little too much friction so that friction from  the regulatory side plus my natural desire to do nothing uh probably reduced the portfolio movement  more than it should have and it's an adjustment and I'm making that adjustment just to clarify  for our listeners an example of this would be (37:10) that now because guy is regulated by  th

e Swiss authorities if he makes a trade in the portfolio he has to actually basically  justify the trade more or less in in writing I think with a a colleague of his um and so it  acts as a kind of circuit breaker so when guy was thinking recently of of um you know should  should I sell some of my smaller positions to free out cash to make a new investment um he  had to actually go through this process of of justifying what he was going to do and it provides  this circuit breaker that made I thi

nk this was in (37:49) the case of Alibaba right tell tell us  what happened once you actually started to look at it and say well do I really want to sell it  so um the uh the the basic principle regulatory principle is we want a record of why you made  these decisions and it's a very it's almost like I think that the benefit of doing that is  that it's like you know many investors talk about keeping a diary a personal diary or a personal  journal and this is kind of like an official Journal if

you like of what happened and why did (38:18) you do it and we see that this move was made in the portfolio made this decision is  there any kind of like backup for this so in my case I I wrote my pre-ra check for actually  we we've modified it I don't have to write it I just have to record it and then and then we can  use uh you know um otter or similar to transcribe it gets edited lightly and we have a written  record and there's a mark on a piece of paper that shows that so i' done the pre-tr

ade check  for the thing that I wanted to buy and uh I kind (38:47) of said look we we're going to make  this like 3 or 4% position and we're going to sell these things to do it these smaller  positions and um the CFO came back back to me and he said look the buy side is fine but we  need a little bit more so then I said okay fine I'll write it up and I I looked more closely at  these smaller positions and I said wait a second I don't I don't want to sell this this cheap it's  like there's no so

we went back and instead of buying a 4% position we bought I believe a 2% (39:17) position and and the balance is still to be bought so yes it acts as a kind of a check  for Mindless decisions if you like now there is an argument for saying that if it's such a small  propor of the portfolio just clear it out but at least then I would have to make that case yes  they're cheap but there is a there is a cost to us to monitoring these positions and there's  a mental energy that we're in we're inves

ting that we no longer want to invest in them uh but he  stopped me and I believe that that was the right (39:46) thing to do at that or in a sense he  wasn't stopping me he was saying that's fine but I need to know why so uh and of course it's it's  delicate because because somebody could say damn it I just want to do it or isn't it obvious why  and on the other side um you know if somebody I mean William and I I think I've figured out mainly  through therapy sessions with Lori my wife that if

you're getting agitated then the first thing  we do and we get agitated is we want to think it's somebody else doing something to us and (40:20) they probably are doing something to us but that's not the point the point is what  we're doing to ourselves and so if I would have gotten agitated at that respect response  that in itself would have been something to pay attention to I didn't get agitated I was like  yeah he's got a good point and oh my God check that out no I don't want to do that rig

ht now  so he's just saying give me your reasons and make sure the reasons are on paper it also for  what it's worth from a governance standpoint (40:44) means that there are there are multiple  eyes on these pre-trade checks or this investment official investment Journal that also allows  for example other staff in the office to say yeah this is going the way it ought to be going  or my gosh there's something really weird going on here I need to put some phone calls into our  directors to say t

his you know he's he's lost his marble so to speak so um it's it's a new world  for me I've been learning to live in that world and it's been interesting for me to to learn what (41:13) I needed to become uh but also the people around me have come to trust me it took  about it's it's it's a slow process and there's a beautiful line that I often quote it  sounds really pretentious I often quoted it to my kids Henry mine from um n where he talked  about how the the genius dances within chains and

it's I always talked about it in in terms of  of literature that it's kind of helpful to have certain rules and constraints whether it's  a a poet with certain types of of meter or (41:47) whatever you think of Shakespeare having  to write with I Amic pentameters right it's like d Dum D Dum D Dum D Dum D Dum and yet somehow you  can write amazing things within that rhyme scheme and there's something about being regulated by  the Swiss that it it's chains right I mean and yet somehow you can make

it work for you by  saying well actually it's kind of helpful to have a circuit breaker that forces me in  writing or in a dictation to explain why I would sell this position yeah I mean there's (42:23) there's so I I'm not I don't consider myself a creative guy but it's it seems to me  the case that uh actually funny enough William with CCE that you introduced me to every time I  have so much fun doing these holiday cards cc is a wonderful art director who who was a great  art director at time

who I worked with for years and has been doing lots of design stuff  for guy including the cover of the educational value invest yeah exactly and sorry for for  not explaining and uh with the holiday cards (42:53) every time what makes the holiday card and  I have so much fun with her is that we have some powerful con straint so uh that that prevents  us from doing what we'd originally thought and then it's in the work of going around that  constraint that uh a really really fun card comes out

so this idea of and I am big pentameter  how strange that actually having those constraints forces you to become um the best version of  yourself perhaps and yeah so that I guess that's true uh of the regulatory work what I (43:26) wanted to say is that you know there look what is it it's one a few times many times  this last few days William we've used the the phrase It's one damned relatedness after  another and the world is complicated so uh I used to love sort of like the distributed  office

so you know uh we uh we we had a member of our staff in New York we had a member of our  staff in the BVI but but in responding to the new constraints for example from uh regulatory  constraints working out new systems uh far better to be in one office because you want to (44:02) have intense and regular conversations about how to make it work and if you're in  a different time zone and you're doing it over the phone you kind of don't have enough  opportunity to figure out that system and so um

uh I think that um the the regulatory  constraints those constraints provide the opportunity for outperformance or excelling in a  certain way once you've kind of asked them you've engaged with them and you're developing  a rational response to them at the same time I feel like in the past developing that (44:36) response was made more difficult by the fact that we didn't have a full office day  with all of the staff who were and what I came to it's just coming to something very practical  whic

h was that that needs to be worked out in one office not not in a distributed team and I've  become very leery eyed of people who say that they can work effectively in a distributed  team across uh sort of multiple time zones and and large geographies I think there's an  enormous benefit to being in one place and when (45:06) you're all in one place your structures  can evolve to changing circumstances and when you're all distributed they be kind of become  aifi especially people not at the cent

er don't realize that the environment is changing and the  way the team Works needs to adapt so uh I I know that's not a question that you posed to me but  uh I came up for me and it was important for me to say it and now you get to Williams looking  at me in such a way you're looking at me in such a way that goes okay now can we bring it (45:32) you've traveled off the reservation what's funny is guy guy and I are both so unline  that I I you know I sorted this interview with about six or seven

pages of questions and and  I immediately veered entirely into a totally different direction oh so you did it so that's  yeah no so there there something wonderfully uh characteristic of guy in my conversations where  we'll literally talk for two days without having covered the thing that we meant to cover  and then we'll get guilty and we uh feel (46:02) guilty and we'll come back to the  main theme so I did want to ask you about a a very important topic that has been a really  central part of

our conversations over the last week which is this by the way is William being  bring us back on track and I just want you to know that I had various ways in which I could have  taken it off track I'm resisting mightily because they're so interesting far you're resisting so a  topic that's that's very Central and important I think to a lot of our our listeners and (46:28) viewers is this whole game of long-term compounding and aquamarine your  fund is a really interesting embodiment and illustr

ation of of this issue so you set it  up in September 1997 um so this is a little over 26 years ago over that period you've  averaged almost exactly 9% a year this is through the end of of um 2023 exactly 9% a year  the the S&P I think was let me check it was 8. (47:03) 3% annualized the msci was 7.1% so  cumulatively the fund has returned 874 so it's about 157 percentage points ahead of the  S&P 371 percentage points ahead of the msci so in some ways it's a beautiful illustration  of the power

of long-term compounding like we we were calculating this the other day and we  figured out that a million dollars invested at the start of that Journey 26 years ago is now 9. (47:34) 4 million right so in some ways it's an incredible example of the power of long-term  compounding and yet there's also something deeply disappointing to you about it because you  look back and you think you know when I started my career 26 years ago and was influenced  by Buffett I thought I was going to make 15% a

year 20% a year and here you are at  9% a year and in some ways is it's a it's a morality tale about disappointment and in some  ways it's a morality tale about the incredible power of long-term compounding can you talk (48:09) about how you've been thinking about this whole issue of the power of compounding the  power of good enough returns um there's so much to discuss here what what does this bring up for you  so um the first thing that I can say is that um so it's I think that the world I u

sed as I was making  notes for before you came William is Bittersweet so it's sweet because it's compounding and it's  bitter because it's not the number that I set out to achieve and it doesn't feed my ego in a great (48:42) way and I I would say that the same way that we were talking about the financial crisis  chapter um I I knew I'm I probably approached it in a defensive way anyway because that's the  nature of the human ego but uh I I trusted trust William enough to kind of bring that  to

you and a certain way I'd say that this conversation being willing to share it is is an  act of sort of like tell the truth because you'll have a great adventure in life something  like that if you want to live a meaningful life certainly tell the truth um and I'm (49:16) I'm brought back to a question that was asked to me by a very smart Google engineer  at the talk that I gave at the invitation of sarab Madan where he said um um something  along the lines of and he he probably kind of interrup

ted he put his hand up in the first  five minutes and he kind of said something like how do you know so you're so good uh you seem to  have beaten the market up to now but maybe that's just luck no and and again I had to be honest  and say well we we don't know and I don't know (49:47) and um so there's there's all sorts of  uh uh uh questions that I have about that so one possibility is that uh I'm an average investor  who was lucky enough in the first few years to outperform the market or I ma

ybe below average  investor who was lucky enough to outperform the market for a while has underperformed the market  for a while and actually if we could look into the eyes of the almighty he will reveal that  over the course of the fullness of time I wasn't a great investor or was a great investor (50:20) I don't know what the reality is I wish I did uh and so I have to operate within that  uncertain and over above that uh within that uncertainty I have to structure my own decisions  and the de

cisions of the fund in such a way that given that I don't know what I really am like as  an investor and over above that I don't know how reality will unfold I want to position myself  in this kind of a personal decision such that no matter which one of those things is true  uh I will come out in a good way on the other (50:56) side and so um you know we could do a sort  of Matrix of many different possibilities in one I'm actually so there's also referring back to a  book of our friend Ken scho

enstein I believe you edited you can have a good decisionmaking process  and a specific say investment idea and get a bad result because the world unfolded in a different  way and that doesn't mean that your process was wrong that just means that you got a bad result  but contrast you can have a terrible decision- making process in a particular investment make (51:31) the decisions for all the wrong reasons and end up with a spectacular result and the  idea that we have is somebody running with

a match through a bomb Factory you might get through  on the other side but it might have all exploded so um uh I I need to structure my decision- making  in such a way that given that hu so so I could be a good investor and the environment was not good  for me I could be a bad investor and environment was not good for me multiple different options  I need to take all of those into account uh and (52:04) all of the uncertainty about how the  world unfolds and make decisions such that on the othe

r side there's a there's a good life and  a happy life and you know we were I was talking yesterday to this um uh this this guy who's here  at valy WX who I think has got a wonderful book Luca Delana on erist and we can ask the question  um if you have the Ambitions as a young person to be a movie star you know so you're focused on I  don't know Natalie Portman or some other WTH Palos had this super successful career but you don't (52:44) see all the people who started off who didn't have that s

uper successful career who  were equally good actors and actresses who were um equally hardworking equally talented  equally uh face for Cinema and um because the world is an extraordinarily random place  so the question becomes if you're person starting off in life do do you want to take the  lottery ticket the one in 10,000 or one in a million that you become gwenneth palro whoever  else it is are you also willing to live with all of the other outcomes that you might have (53:21) and and I thi

nk that you know so long as you're happy if you don't get that starring  role and have that lucky thing that you get that career that you're dreaming of you're also  okay if it works out in a pretty boring way you end up being a waitress your whole life or  whatever else it is then that's fine but when I look at running aquamarine fund and looking  at the financial affairs of myself my family our investors an outcome where in some cases of  the world it's spectacular but in other cases of (53:52

) the world I blow up meaning you know and  the kind kind of person and there are stories like this of somebody that I know from the beginning  of my career who put all of all of his Investor's assets into one stock the stock was called  mcf and levered with the expectation that the price of gas would go from $2 from $4 to $8  to $12 except it went from $4 to $2 and he's no longer running a fund that's not an acceptable  outcome for me all of that because you feel like and I'm going to bring thi

s back to your (54:24) original question I believe is to say that I don't you know so so you don't want in  the investing world I believe to say I'm going to act in my portfolio in such a way that  I can get my 18% annualized over the next 20 years and be super successful when in  some proportion of the realities that may unfold that turns into a great big zero Allah  putting all of your investments in one stock and leveraging it and so the strategies that get  all of the potential outcomes to a

decent result mean that you're far more likely say to get 9% (55:04) rather than 12 15 20% and so the sweet part of the bitterness is that survival  is everything survival of the principle of compounding is everything that is the most  important thing not the actual annualized rate of return and yeah if all other things being equal  I can double the rate of return or increase it by 2 or 3% then that's fine but they're not equal  and so I'm constantly saying to myself and and sometimes I look at

it and and it's not a clear  picture so I can go back and and I'll hand the mic (55:38) back to you in a second I can go back  into so I had a bankruptcy embarrassingly enough in my portfolio in 2015 that was me acting with  a certain proportion of the portfolio about 10% of it in a way that was not very smart it was a  bit like running with a lighted match through a bomb Factory and it didn't work out out for  me and that's not the vast majority of the portfolio in my case but every now and th

en  I look at some positions uh that maybe that they're great businesses but they're very very (56:07) highly valued and I ask myself am I am I actually doing a little bit of um uh you know  constructing the portfolio in such a way that it only works out great in certain versions of the  world and we want it to work out at least okay in all versions of the world I think I'm kind  of mincing my words a little bit but I think I think made the point probably too much no we're  getting at something

that's really profoundly important and I've been I've been struggling  to struggling to digest and synthesize this (56:38) myself over the last few days because I  think it I think it's vastly important this idea you know so many people set up the horse  race of investing where it's about okay I'm going to get these great returns and I'm  going to beat the market and and for most of us that's not really that important important  really what we want is to get to a position where we're financially

secure financially  independent it doesn't truly matter whether you beat the market by 150 points over the last (57:08) 26 years or 300 percentage points or or 20 percentage points or if you if you trailed  so long as it's like a really positive result that's getting us toward the finish line and  so I I feel like what you've been working towards is this much greater CL ity about the  importance of compounding without catastrophe long-term compounding without catastrophe  and I think one of the

reasons you're so clear about this as a goal is that from the  very start um a huge portion of the money in the fund and it was a tiny fund at the beginning (57:46) it was like a $20 million fund right with 14 million from your dad and so it was like your  dad's all of the money that your dad had made in his entire career as an entrepreneur basically  plus a few friends who of his who were lawyers and stuff in Switzerland who might not have  been invested in the Market at all and I was one of t

he First Investors like a little bit  after that probably a couple years after that in around 1999 and so having done no due  diligence except had a few meals with you over the years and um so this priority of Simply (58:18) surviving of getting to a good end point and compounding and staying in the market  was hugely important to you and I I don't think this is something that most people think  about and I it strikes me that just avoiding catastrophe and staying in the market staying in  the ga

me continuing to compound at a at a decent rate a good enough rate it's underestimated  but then at the same time there's a danger that money managers end up changing the game that  they're playing saying that that's the game they (58:51) were playing just cuz they failed  at the game without performing they wanted to play I mean what comes up for and um is an  analogy that was so helpful for me and it's funny because we happen to be at a ski resort and  this is straight from Luca delana's book

uh so he asked so you know the name of the game we're in  in the business of uh skiing and being the most successful skier for the season and obviously  there are good skiers and we're now going to take the perspective of an individual skier who (59:21) wants to win the season and there are 10 races and uh you know as the skier he can he can  ski this is a downhill race he can he can ski as fast as he possibly can and there's a higher risk  of uh crashing and injuring himself and uh he can ski s

lower than his top speed and he takes  a higher risk of not winning that individual race but he um reduces the risk that he gets  injured and get taken out of the race and I'm not going to go through the probabilities but  I think that we can all see and in in the rush (59:55) and the excite M of the day and the  pressures that the skier feels uh there's there's a tendency to want to push the uh speed  so that you can win the race and the skier May doing that win races 1 2 3 4 and five but he's 

taking a cumulative risk there of injury and as Luca puts it in the book The skier that wins  the race is not the fastest skier it's the fastest skier that doesn't get injured but  the indiv idual and you've got an audience and there it's super exciting to see the guy (1:00:30) skiing super fast and it's even more exciting in a way if you get a massive accident  but from the perspective of the skier if he can just step back and say my goal is to survive  10 races uh then he may ski differently

and so I think this beautifully illustrates  what we're trying to do as investors and the pressure to try and win the individual  race is just enormous and this by the way is is kind of like a rule for life in all sorts  of things where what is short-term expedient what feels like Optimal in the day is not (1:01:03) optimal for the weak the year and and many years so uh and just to take it to  an investing uh um example uh there I am at the um oh man it's a famous hotel in uh Manhattan  I don't

know why I always want to remember these things with the specific place it's the W offer  story and White Mountains insurance is giving a presentation and Jack burn is the CEO and uh  Burkshire Hathaway has funded White Mountains Insurance to BU a uh distressed insurance company  which is probably at half or less of Book value (1:01:45) and now while the whole thing is still  trading at less than half of Book value White Mountains Insurance is doing an equity issurance  and Jack burn who's redom

icile this company to Bermuda standing there in Bermuda shorts and  I'm there as a young whipper snapper after the presentation for the issuance and wants to ask him  a question I say but Jack it's trading at such a discount these this share issurance is dilutive  uh we will make so much more money if you don't do this share Insurance why are you doing it and and (1:02:19) and he he basically he looked at me with his kind eyes and and you know I we've talked  about uh um His Name Escapes Me this

kind of like you know I mean I'm just a nothing to him  and just like total focus on me and he says um this uh yes if the world works out perfectly  we would have left money on the table but if the Work World works out really badly doing this  Equity issurance ensures that the company will survive and do just fine and I want you to know  guy that this issuance has the blessing of our (1:02:51) friend in Omaha Warren Buffett and  it's just an example of of you know Warren saying don't race as fa

st as you can the name of  the game is to finish the season don't take the risk by not issuing Equity that you might not  finish the season let's issue the equity yes we're going to be going a bit slower but we will  definitely finish the season no matter how the world unfolds so that's an example of that and  I would just tell you that as I say it I think of the decision that I made uh to stick around (1:03:25) in um uh in Horsehead which ended up as a bankruptcy and in that case the equivalent

  analogy in White Mountains is that I didn't do the equity issuance because I I wanted to  make as much money as I possibly can and so that the desire to do that even with a part  of the portfolio is very very high and what I learned from that moment and from Reading  Luca Delana and you know understanding his skiing analogy and seeing the decision that Warren  Buffett made is that almost in all circumstances don't do that you know and and it came (1:03:57) up at the most recent B Hathaway meet

ing I don't know who I was talking to but  somebody's pretty close to the decision making in K Plaza and they said uh you cannot imagine  how much of Warren how much time Warren spends just thinking about the downside this came up  in my conversation with Chris Davis who who had um who's now on the board of Berkshire and  if people want to check this is a fascinating part of the the recent podcast that I did  with Chris where I asked him what it was like to be in a board meeting with Buffett amo

ng (1:04:30) and he was saying you wouldn't believe how much time Buffett spends talking about the  most extreme circumstances that he's guarding the portfolio against making sure that the  company would be okay in the event of uh you know nuclear attacks financial crisis um you  know dirty bombs whatever whatever it might be I thought that was a really interesting Insight  that that that focus on resilience but what's interesting is Buffett has this ability both  to set things up to be incredib

ly resilient and then to make these incredibly bold racy (1:05:08) bets on things like American Express where he put a huge so he's one of those rare  creatures who can kind of do both but I don't think I don't think I don't think almost anyone  else can right take that sort of intense Joe greenblack did the same thing it's it's true  I think also Warren did it a different point in his life I don't think he'd do that now  if even if he could he probably can't now anyway because it's it's just fa

scinating  because in in Warren's case 40% of his (1:05:37) portfolio in American Express and um  you know salad oil Scandal and uh uh in a in a way controversial situation I talked about that  sort of contro I don't like there was controversy around it I mean uh in a way American Express's  name was do and the ability to say actually yes and Fin Financial circuit circles perhaps but  as a consumer brand it's absolutely fine and will succeed and survive and he actually what  he told I'm going to

get the details wrong but he kind of said to American Express look it (1:06:07) doesn't really matter who's at fault here just pay them out get this behind you and  you'll do fine even if you weren't at fault at all here you just want to get this behind you  because your business will be great and you can afford to do the payout um yeah I mean I I'm not  that smart I'm not that able to to to do that kind of thing it seems to me I also don't know to what  extent I mean just rewinding slightly um

the the the the and the way in which one gets started so  in my case if I could have I I'm very grateful to (1:06:41) be doing what I'm doing I'm  extraordinarily grateful to my father I'm grateful that he made the decisions that he did  if I wanted to be um if I if I could like have my past again I think that I would have liked to have  seen how things would have un folded if my father had instead of dumping the whole of his liquid net  worth into me had said look I'm going to dribble it out x

amount at a time you know you know the  my liquid net wealth the vast majority of it is extremely safe and you can have oversight over (1:07:14) that and you're going to work on growing a small chunk of it at a high rate and  I will add over time as we get more confident in it so I would have I think I would have been  more willing to take bigger bets at the time and what happened with me is I mean I was  given it was it was 14 million from these three different investor accounts that came in 

and like like 50% of it was in bonds for like five years cuz I was so super scared and when I  went and bought my first stock for the portfolio Duff and Fels even my father was disappointed (1:07:46) by how little I put into it but out of 14 million actually I put about two quarter  of a million into Duff and Phelps and made seven times my money you know instead of putting say a  million in and making seven times my money which is by the way all in the track record it's like  I've not varnished

that in any way shape or form there's nothing that's been taken out some people  might have said oh but let's remove the cash and just see the performance of the equities  I didn't do any of that what if in 20124 (1:08:12) you got a little bit better every day  when you're learning a new language with Babel that's exactly what you're doing and if Babble  can help you start speaking a new language in just 3 weeks imagine what you could do in a  full year Babel's quick 10-minute lessons are design

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playing is one of long-term compounding without disaster so that you get to  to the finish line of being securely uh securely rich like it's a sort of getrich slow um approach  that requires you to avoid a lot of dumb Behavior to think of it in in Charlie mesque terms like (1:10:02) just avoiding standard stupidities so can you just rattle off for us some of the key  things that you have to remove that are likely to interfere with that long-term compounding  Journey what do you have to get rid

of in order not to create catastrophe along the way so uh  you know two two things before I get into to it one is I love this Chinese expression apparently  it doesn't matter how slow you go so long as you don't stop which I think is a beautiful idea this  friend who's climbed Everest five times he and (1:10:37) he's taken various people up I think  less of that is happening these days but you he sort of feels like he can get anybody up Everest  so long as they're willing to put one foot in fron

t of the other and never stop putting one foot  in front of the other that's the most important thing and so I think that the other thing that I  ought to share with you is that obviously I aware of all the domain of things that I figured  out that I want to avoid um but obviously that's what's within my Consciousness and (1:11:04) there's probably a vast infinite area of things I ought to be avoiding that I'm  still not aware of and obviously we make rules for ourselves and so just to Rattle of

f a  few um it you know I shorted three stocks and you know it's it's funny because I had a  conversation with a really wonderful investor who's um extremely quiet and private and uh he  said you know I I said to him I talked to him about shorting stocks I met him Steve wman  uh I met him in Omaha incredible investor and uh I he said yeah you know I believe that (1:11:44) Charlie manga shorted three times before he decided it wasn't a good idea  and I actually shorted three times before I decide

d it wasn't a good idea but simply  looking at the mathematics of shorting you realize that if you just cut that from if you  just you know if you just cut that from your behavior and your activity you're going  to be already ahead of the game the next place is uh leverage period and in any  way shape or form certainly inside the portfolio there was a period in 1998 where we were (1:12:11) 10% levered and um uh it was just not a smart idea to be levered at all the only way that  I could argue th

at a Investment Portfolio perhaps could be levered is if you really had access to  not a margin loan but long-term capital that is not contingent on the movements of the market  so one of the problems with margin loans is that they may require more Capital exactly  the time that it's you're indisposed for it because you might get redemptions from  your investors for example so you cannot see the leverage that is in a margin loan or (1:12:48) some kind of loan against a portfolio which may have v

ery specific Market related terms  as to when more capital is required or when they can take the margin loan away and sell Securities  from underneath you you cannot compare that to a mortgage on a home a 30-year mortgage on a home  where even if you in the United States even if you stop paying your mortgage interest they can't EV  evict you from your home those are two very very different kinds of Leverage and then you can go  into the leverage inside of the corporations that (1:13:16) you're i

n and one of the huge mistakes  in Hors head was that I did not pay attention to the buildup of Leverage inside the company of  debt inside the company which should have been pretty obvious to me and it's kind of shocking  that I didn't do that it was a kind of a boiling frog phenomenon I then go into in my case the  selection of Investments so we already you know we're taking away vast areas where people  operate and then when we go into um what I find is happening to me I think with the (1:13:

46) selection of companies where I'm even willing to look and start thinking about  investing is that that area is becoming narrow ner and narrower and I kind of don't want to  think about assets that could evaporate for one reason or another so if you're a company  that has a new drug that you're at work to develop with the FDA and you've made progress  through the first first two stages but you might not make it through the third stage that  asset could evaporate and so you kind of like rule o

ut every possible asset where it could (1:14:24) evaporate in one way and or another and what you're trying to do what I'm trying  to do is only look at assets that will exist through time forever and never even after a  nuclear winter or an asteroid hitting Earth I can sort of like predict that on the other side  that will still be there and that cuts out a very very large number of businesses where you just  can't tell if they'll be there on the other side of some sort of like huge event becau

se most  businesses are just not like that any kind of (1:14:54) Consulting business uh is really just  the people and what we've seen for example in the case of um you can have an Arthur Anderson or a  McKenzie where it's extremely well known highly respected and then a series of events happened  where suddenly the brand has been utterly damaged so getting to those assets that are really around  forever and ever and only operating with those assets is also hard but those are a few things  where

you're kind of clearing things off the table and getting away to kind of like um shut (1:15:27) them out or or or reduce the brain so I'll spend thinking about them quickly  you mentioned something interesting to me the other day also when I said to you what could  interrupt the compounding Journey the long-term compounding journey in terms of your own behavior  and the very first thing you talked about before you even talked about meddling unnecessarily  with the portfolio trading too much thi

ngs like that having too much leverage uh you said  Messing up my relationships can you talk about that cuz I think it's something that people (1:16:00) people don't really think about and actually I think it's such an important Insight  that if you mishandle your marriage or your relationship with your kids or something uh or  your relationship with your friendship uh with with your friends uh that actually can have  a really powerful impact on your compounding journey and yeah and I find it in

teresting that  there are a few areas where I with deepest to respect part company with uh these great  sages that I worship in Omaha every year um it's somebody made the point to me that (1:16:35) you know these these kind of like extremely famous value investors live a very  long time but they don't necessarily have the best marriages and uh so so you know pay  attention when something really irks you and that bothers me because uh that is just not  an outcome in my life I don't want to have a

n unsuccessful marriage I don't want to be  somebody who's who who got married twice if I don't have to you know I I totally respect  and understand somebody who loses a spouse God forbid uh to some some tragedy and then they (1:17:06) end up getting remarried but so that bothers me and I because it seems  to be a pattern with some of these uh famous Valley investors but I think that my  experience of one CEO who was going through a divorce and so it's not that you know  you get into the office

and you're having I'm having difficulties with my wife and  we've had a Lous we've had a bad argument over something it's when Behavior Uh it sort of  like becomes and I I saw this from the outside with the CEO where what one spouse has done to (1:17:41) the other makes the person so red with rage that in this case he was willing to make  decisions about compensation structures inside this company that he had significant influence  over to spite his wife so or the wife with whom he was going thr

ough a divorce and I think  that uh the the problem is not you're going through turbulence with your spouse which we  all have or with significant relationships it's where the thing overwhelms Us in such a way  that we're unable to take rational decisions anymore and um I I think this is one of (1:18:18) the most important things I've learned from you over the years is actually  the the importance of having a a calm quiet steady base or foundation on which to build  everything and I I think one

of the reasons why it resonates so much for me is that um like  you I have an unquiet mind I have a you know there's a lot of noise in my head um both of  us I guess you know we often talk about having different types of attentional issues where our  minds are all over the place and so to find a place to to create an environment where we can (1:18:58) be quiet where we can think calmly is probably even more important for us than it is  for other people because it's so easy for us um to get flood

ed or overwhelmed or distracted  and so I think one of the things that I saw very vividly with you is how you by moving to  Switzerland you create a quieter environment and something something that you mentioned  me when we were working on the book that's always had a big impact on me was you said I  I it was a beautiful image you said I need I need to have my mind be like a calm pond so I (1:19:35) can see the ripples in the pond and so I think you understood much earlier than  I did the import

ance of structuring your environment including your your physical  environment your your office but including your relationships so that your mind can be  a compal pond I think for some people there are people who can sit in a cafe I know Tim  Ferris has talked about how he can write in a cafe or something where it's lots of noise and  that's helpful to him my friend John gon who's a wonderful writer um who wrote these books like the (1:20:10) ice at the end of the world and and the idea Factory

about Bell LS he used to sit down  with Wilco playing on headphones and would start writing for me my kids would start playing piano  or guitar at home and it would drive me insane you know my daughter Mar complains that for years  she couldn't play piano cuz I was working on on my book at home and so I think just understanding how  your mind works and how to create an environment in which you can operate peacefully and how  the relationships matter I think there are (1:20:41) some people who c

ould be arguing with  their wives and still have amazing returns for me so much of my life is built on the fact that my  wife Lauren is a really lovely kind gentle soul who makes life possible for me likewise with you I  see how much like I said to you earlier this week an apologist this long-winded um monologue but one  of the things I said to you this week is you seem much better this year than last year and I can see  that's because um laori is around and it's lovely you're so happy when laua

has been around she (1:21:14) drove up from Zurich the other day and cooked us dinner and was hanging out with  you and you just I can see the calmness and I I think it's such an important realization for  us to think about how to create an environment in which we can operate peacefully and think  think calmly do you have any thoughts on that so many and um uh uh and my brain wants to Dart  in five different directions uh but um so so one really important thing is that I think  I was I was righ

t to focus on constructing the right environment and the physical (1:21:48) environment is important but I I think that today from the perspective of today  don't everything counts physical environment counts but but the right relationships and  that's not so so first of all get the right relationships and then work on them to make  them better and to support your decision- making I think is something that I would focus  on a lot more and so I you know the idea that you can't build a successful

investing firm  in the middle of New York City is is wrong and especially given that some people for example work (1:22:19) extremely well in noisy cafes and some people don't another thought that comes up to me  is that that people have approached me who kind of like young they're in there sometimes some of  the people who attend buk are like as as young as 14 and have totally committed to compounding  or I'll meet uh I men in their early 20s who are maybe not even dating or haven't figured  ou

t their life partner and I will tell them if you plan to compound from my perspective  I think that one of the most important things (1:22:48) that I I started really the Journey  of compounding around 30 and you know that that extra 10 years or Warren started at 11 makes a  huge difference I mean often the difference is just the amount of time you've been in it I tell  them don't worry so much about setting up your uh investment structure and your financial  compounding structure figure out the

right spouse and invest yourself in figuring out the  right spouse and get that done get your marriage into the hopper and settled because that's going (1:23:16) to be at least for me I think that's a really really important building block the third  place I want to go is that uh is to thank you because I remember one of the times I think it was  perhaps after the horse head bankruptcy and I was rattled and you came and visited and you did so so  William did you did Psychotherapy and effectivel

y or marital counseling uh in which so so you sat  down with lorri and I don't know if I was there but you kind of said do you see that he's rattled  and I think that up to that point and so so (1:23:47) it's worth saying I mean you know  William that you you're one of these people who sees through people that's your job in a  certain way so you know one of the scary things about having William around is that he'll see  things that you want you don't want to reveal to him but he'll see it anyway

so I don't even  know if i' it's not like I'd sat down with you and said I'm rattled but you took the opportunity  and and Lori has trust in William and said you see that he's rattled and I think from (1:24:10) that day forward you kind of opened up a channel that had been closed in  Lori and she opened up to the to to that to seeing that and once she saw that she was able  to act differently around me when she saw that I was rattled and so yeah I think I mean to  be more specific about it I sa

w that you were in I think this is the start of 2016 and I was  staying with you in Zurich and I saw that you were in Unbelievable pain because horsee head  had just gone under and it was a huge mistake it was probably the worst investing mistake of (1:24:43) of your career and um and it was deeply painful and the market was getting hit  at the same time and you were doing even worse and Lori um who's AB lovely was acting as if  things hadn't changed she she was like married to this young hot sh

ot hedge fun star who had  um just published a book that everyone loved and so she was flying around the world having  a great time and I was like lari guy is in so much pain you don't understand and there was  a moment there where you said to me I think we were sitting in your office in ZK and you (1:25:21) said to me I understand why seek Captain sometimes say you have to relieve me of  your uh you have to relieve me of my command and I said to you gu do you hear what you're saying to  me and

you said to me yeah I'm saying to you get me out of my pain and so I think in a way part of  my role in your life and your role in my life has been um you know to use this beautiful phrase  from another friend of mine Matt LMA is to be friends along the path where I can kind of come  in and say guy you're under a lot of pressure (1:26:00) and make sure that the people around you  know what pressure you're under or uh and try to steer them to help you and I I think this idea  of finding friends a

long the path who can give you strength when you're really uh suffering but  who also were there to celebrate with you during the good times and there was there was also a Time  remember when we were in New York when um you were in you were at your annual meeting and you were  talking kind of embarrassed that your returns weren't better and I was like guy do you hear (1:26:37) yourself your returns have been really strong and I had to kind of remind you no no no  you're you're you're not getting

carried away um becoming too arrogant you're actually getting  carried away beating yourself up too much and so I think I I don't know if there's some takeaway  for our uh our listeners and viewers I think this idea of finding people in your ecosystem who  wish you well and are friends along the path and who see when you're in trouble and when  you're thriving when you're getting ahead of (1:27:07) your skis if that's even the term  is so um too far ahead of your skis is so um so valuable yeah

I mean uh so to just to go into  some of the subtlety of my interactions with Lori so there'd be times that I'd be feeling down on  myself or stressed or lacking in of like having impostor syndrome but the way so that's what I  was trying to express to Lori but given other things going on young children uh you know sort  of like disagreements over our roles in the home what it came across was along the lines of damn it (1:27:52) I'm out there working all day and you doing nothing and and no matt

er and so uh you  know one of the things that your conversations with Lori helped us to transition to is  uh here's some pain that I'm feeling or here's some something that's kind of like not  happy for me at work right now and to be able to talk about that without making it sound to  her like I'm disparaging her role in the home and what's important here is not what I actually  think it's the way she receives it and so that (1:28:23) that's kind of a subtle difference I  would tell you that wha

t I learned and actually I'm I'm excited to do this kind of like so  what Lori and I have learned when we have when things come up and it's very easy to tell  when something's come up because one or both of us is riled and um the the perspective that I've  developed is I don't have to try and figure that out on my own there's most of the time there is  a template out there that we may not have within our toolbox and so we've we've gone to this (1:28:56) um marital councel in London who's helped

us in all sorts of ways and you  know there there are subtle adjustments and differences or modeling of certain kinds of  interaction that just once you've got it you've got it it's a bit like learning to ride  a bicycle and so uh I'm actually curious given going back to the very beginning of this  conversation the intensity of our interactions so this is friendship but uh I'm curious to  see what this uh psychotherapist counselor family Dynamics guy has to say and if if may do (1:29:26) nothing

but we had a transition one of our children was moving from one school  to another that I was deeply uncomfortable with and we we went to him we had three or four  sessions with him his name is Philip trenchard he works in London he's amazing and he helped  us and I know that my relationship with my daughter is and will be far better because he  helped me navigate us navigate that transition so it's subtle I think this is one one of the  important things that I've learned from you is the the ex

tent to which investing is is this (1:29:58) inner game there's the there's the outer game of figuring out how to do financial  analysis how to you know how to look at the numbers whether the numbers are trustworthy  what the Leverage is all of the you know whe where management is good and then there is  this inner game that because I've had this up close and personal view of you over all these  years I can see you having to manage your own relationships your attention the structure  of your off

ice the environment and and I'm not sure I I don't know if most people are as (1:30:30) conscious about it and maybe because you've done a lot of therapy and a lot of  analysis and also a lot of writing which I think was has been hugely helpful for you  in figuring out what it is you think and believe you you're just much more aware of this  than most people this aspect of the inner game yeah you know it's interesting so the writing  definitely helps writing is really worthwhile writing in order

to figure out what you think  not writing for somebody else but interesting enough as we've discussed in the writing of the (1:31:00) book which in a way it is is does something that therapy cannot do but I'd gotten  to a certain point and you incredibly pulled me further further than I was comfortable going  despite the writing which is interesting uh I think that you know so um uh in in difficult  circumstances so if if I think of my father for a second it's fascinating because he  is he for

because of his experience as a an officer in the Israeli military other  experiences he's had when it's difficult and adverse circumstances and decisions (1:31:38) have to be made somehow he's an incredible person to have in the Foxhole  with you why because he's developed a mode of thinking under adversity and a mode of dealing  with adversity and difficult circumstances that I my brain kind of taps into and if I just go for  a second to the great investing Partnerships I think of you know I th

ink that Nick sleep and  Zach I I I actually Zach is kind of uh almost a recluse I think I would love to spend  time with Zach because I think that he's a very very important part of Nick's thinking (1:32:13) process and I think that um uh and we know the role that Charlie has played in  Warren's life and I think that what we also have to do is some people are lucky enough to  find that sparring partner that works early on for them and the relationship but but  just because we have the template

of say Nick and Zach and Warren and Charlie doesn't  mean that our template will be exactly the same our template may be different and and  I guess what might the point I'm making to you and anybody listening in is see that (1:32:46) as an area of work see that as an area of study what is what role does my father  play what role does my wife play what role does William play and we that we so to come back to  structuring the physical environment I actually think that while it's all important you

know  if if I would give 1% of my thinking power to the physical environment and 99% saying what  is my relationship with monish what is a good way to structure it when is a good way time to  talk to him when isn't a good time to talk to him what is my relationship to my father (1:33:16) when should I shouldn't I how do why all of those things is really where  the juice is and I would say that I think that some successful investment firms incredibly  not only do they develop those relationships

but they managed to transmit it through generations  and we've talked a little bit about ran kif and perhaps others and I it'll be interesting  to see how that transition happens with uh Burkshire Hathaway but um developing that and  understanding that and having a way of working with that I mean I think that actually you (1:33:47) told me that Ry has an on call psychologist at the office the ray Dalo yeah  I mean Dalo cly has uh has had some pretty important coaches who I mean I remember I thin

k it  was um well also Steve Cohen right was very big on this I remember J Jason C used to work at sa and  they would have these Sports psychologists right like super sophisticated and I remember one of the  great things that that Jason C said to me um about that sports psychologist J Jason had unbelievable  returns um there I think he was kind of the best (1:34:25) performing person there for a long  time internally at sa and then um the sports psychologist basically said to him um now that  yo

u're getting really rich are you going to use the money to complicate your life or to simplify  your life and so one of the things that Jason figured out is I don't want to own multiple homes  I don't want to have like extra complexity I I you know he would love to go to some Barts  I think on on vacation he's like I'll just rent a place and he's like I'll have six uh uh (1:35:01) gym outfits that are all the same so he so part of what what that guy was helping him  to do was actually figure out

um the softer side of of investing you know don't don't let  the money complicate your life so that all spirals out of control keep it keep it calm  keep it simple so that you can focus on on what matters to you so yeah I think I think  Ray Dalia was has always been really smart about this Steve Cohen was smart about this um I  don't know I I look at friends of mine like Yen Yen Lea who I hope will come on the podcast at (1:35:36) some point he's incredibly aware of these things about how you s

tructure your  environment how you use your time and so I think a lot of the best money managers have these  very systematic Minds that I don't really have where they think about how to structure your  environment how to how to use your time it's much harder for you and me I think naturally  but I think that you know one the way I I so so yes they have systematic minds but I  think what it comes what an well I don't think this has come up but um I think it's an (1:36:07) important sort of princi

ple to lay on the table and it's this Paradox that once  we acknowledge once we shine a light on our weaknesses shortcomings the places where our  Hardware doesn't quite fit and work right that's where we can actually solve the problems  so we've talked about you I am not systematic it's why I did well in structured environments like  universities and why I was drawn to Zurich and um in in hiring Shantal I um I was very clear  I have ADHD and um I need help with all sorts (1:36:42) of ridiculous

things like where are my  keys and leaving on time for the airport and so you can invite what is missing in your life  in once you acknowledge what it is that you need and express it in the right way and kind of  the universe has a way of potentially delivering that to you uh I want to sort of like it just  comes up and it's really really important we talked about the role of my father and the role  of uh Lori and I realized that there's something that was missing there and I'm sorry because I

(1:37:10) kind of circling back a little bit but um so so so Lori showed with your help Lori  started showing up in my life in a far better way in a more supportive way uh my father has become  more and more supportive is he's he's trusted me more and more and he's understood that what where  I you know I'm I don't have high EQ I don't think and in periods of adversity that's where he  can really comes into his own but I realized that part of why I think that's happened  better in Lor's case cer

tainly is that I (1:37:45) didn't I didn't wait for her to show up  in the right way I also ask myself how can I serve her needs what does she actually need in this Rel  relationship and the channels opened up for her perhaps in a parallel time that channels opened up  for me that allowed me to see her more clearly see who she was see what she needed see how I could  modify in some cases it's very minor modifications of what I do that make her feel super safe or  far safer than she felt I think

my point to you is um in constructing it's kind of like a (1:38:22) beautiful idea that in constructing one's not physical but uh relationship  environment it's not just saying how do I go to the supermarket of people and pick off the shelf  what I want it's like actually if I find a way to serve the people in my life in the right way  they will now become the people that I need them to be it's kind of like a weird um energy thing  spiritual thing that uh and and it it it comes to this idea that

and and I was doing it constantly  and you kept uh pulling me away from it because (1:38:53) it's just so easy to point over there  and say you know that person really needs to dot dot dot and you a few times brought me back and  and basically saying yeah but forget about that guy because you can't change them the only thing  you can change is yourself so all we really need to do all I really need to do is yeah to see the  dynamic to see the way it's not positive but then own my part in it and

change that part in it and  somehow the world has its way of uh once I do that change then the change is far more likely to (1:39:26) happen on the other side yeah I think it's a it's a really profoundly important point  it's like we we're constantly looking to change other people and I I remember a friend of  mine once saying to me he said yeah when I when I look for the perfection in my wife I  find things go much better than right and and it was I really stopped me in my tracks it's  an extra

ordinary extraordinary thing so yeah I think I I also find sometimes when I'm looking  at other people I'm looking at the flaws in (1:39:59) other people that's a really important  cue for me to realize there's something a Miss in my life where I'm stressed or upset or overwhelmed  in some way and it's leading me to criticize other people and so it's actually it's it's become  a kind of sign for me like a sort of symptom of like oh I'm struggling in some way if I'm if  if I'm looking at someone

else and I'm thinking God schmack he is uh I'm I'm obviously looking  away from myself because it would be too painful (1:40:32) to look at myself and so it's a way of  me like you you just start to get more familiar with the tricks of your own ego and to see  okay I need to focus on myself because I can actually control my own behavior and so I saw  very different behavior in you uh last time we were here uh it was which and this is I think  I can trace out the ways the the the sort of like ind

irect paths by which things unfold so uh  William and I and and when you get into locked horns over something so I was riled you were  riled and um you know Suddenly It's like it's (1:41:07) it's a struggle not over what we think  we're struggling about but there are eight things below it and then I don't know how well you  remember you did something that uh I'd never seen you do before you said and it's certainly  under the influence of Dan Gman and Sly ret Dan Gman one your podcast one of the

things he says  you just want to increase the distance between the trigger and the reaction so you did something  that I'd never seen you do before is in the midst of this heated sort of like both at each (1:41:36) other's throats you said I'm getting heated I don't like this I've got to take half  an hour just to walk away and literally you disengaged almost I felt like I was mids  sentence and you just walked away to the bedroom and you disappeared and and that was  hard for me cuz I ordered t

o remain locked in verbal combat with you and um and I was kind  of a break I was like what now you know do I make another coffee I wonder when he's going  to come out you always make another coffee so um that that was uh new but but what C (1:42:12) what so then um and I just want to trace this because I'm learning in the  process of talking about this so you did something that didn't enable me to distract  myself from whatever was going on inside by focusing on whatever the hell this I perceiv

e  to be the source of the irritation from you and uh but then something else really important so  William's been talking you've been talking to me a lot about um meditation and you gave me and  this is now Matt ladar who gave me this and I just think it's such a gem and is so important is (1:42:45) um I don't know what you went and did in the room but the key is not to say oh I'm calm  I'm calm uh this this annoying argument I'm calm it's like create the space to try and understand  what is goi

ng on so the term that Matt lodmer gave me is spiritual bypassing that's not the point of  the disengagement that's not the point of calming the mind as I understand it the point is now you  have the space to try and understand what's really going going on and so that calmness is to do real (1:43:15) work yeah it's not just to deny it and put a lid on it so um yeah you're trying  to look at what's actually going on in your body body and your mind in an honest way not  not looking away from it no

t avoiding it not pretending I'm so Zen that everything's just  fine it's like you actually you're looking at it I think this is one of the great gifts of  meditation is you're looking at with a a higher level of resolution so you can be like oh my  I've been feeling it during this conversation (1:43:48) it's like I don't know if it's so I  drank too much coffee which is usually but I I I you can never drink too much coffee usually  it doesn't have any impact on me but I'm like there there's lik

e something weird you know  like there's a sort of anxiety kind of here that I would you know in my chest that I'm like  it's like it's uncommon for me and I don't know if that's um so so yeah slightly uncomfortable  because you become more self Weare so you're like oh what's going on with me like um but (1:44:18) that's kind of helpful instead of avoiding what's going on in your body and just  being kind of all mind and just being quietly controlled by it you're like huh okay so so one  of the

things Ken schoenstein our mutual friend taught me that was hugely valuable that that I  wrote about a little bit in in Richard wiia was when he said um that you don't want to make  important decisions when for example you're hungry angry lonely tired in pain or stress and  so knowing knowing what state you're in um is (1:44:52) hugely valuable so like when when I was  in so when we had that um moment of locked horns last year and I could see I was just getting angry  and upset cuz I was saying

something to you that you didn't get and you were kind of rejecting  and then I felt hurt and rejected and so I just know if I continue to have this discussion while  I'm angry I'm going to cause damage and that's not going to help me let me just take myself  out of this situation and um so I don't think it was optimal because I wish I hadn't (1:45:27) got angry but I think it was at least I had the self-awareness to know I  need to take myself out of this situation it gave us a chance to cool d

own so I think with  a lot of these things it's not it's not like oh I'm going to become so Zen and so profound  such a great practitioner of meditation and so self-aware through therapy or whatever it  is um that none of this stuff will occur it's Dan Gman talks about this a lot um he he was  on a recent episode of the podcast and just incredibly thoughtful about this it's not that (1:45:57) those thoughts or emotions are going to go away but because you're more you're more  aware of them yeah

I think he he was he was quoting Victor Frankle who said that you can you  can expand that that space between stimulus and response and in that space between stimulus and  response you have a choice and that's your free will whereas for most of us it just it's like  the match is lit and you just explode there's no space yeah you just gave me a little  more on that that's so beautiful and I (1:46:31) just want to pause and just reflect  on it so um there's the stimulus and there's a response and

when you increase the space between  the two that is free will and that is such a beautiful idea I I um oh my brain was going  in two different direction because you get to choose in that moment where if if you're just  controlled by the stuff that's swirling under the surf fist you have no choice you're just  controlled by the fact that you got triggered by something you said to me something very (1:46:58) interesting the other day where we you said to me that there were certain points in  our

discussions over the last few days where you were being slightly triggered by something and  so you would start to feel your feet as a way of grounding yourself and you would Breathe  more deeply can you talk about that cuz that that strikes me as a sort of practical thing  that you've learned to do to kind of lean into difficult situations instead of avoiding them  yeah I'll have a go as as my brain comes back into Focus so one thing that so I so it's Dan (1:47:35) seagull who wrote a book call

ed the developing mind which I read tiny years ago  what an incredible guy and I'm sure he and Dan Goldman know each other he was a professor  at UCLA and uh he gave me this Insight that so in in um in the development of diads in uh  the there there are different the John Balby there's different kinds of attachment and he  continues with this attachment Theory and the key on developing good attachments is uh not that  you get into fights and disputes it's that you both have the ability and the c

onfidence to (1:48:15) repair from those disputes and so um and so if I if I go and and so this is  a diet is just two people in this sort of intense marinor interaction and it happens in  deep friendships it happens in relationships parent child husband wife and for various  reasons when Lori and I would get into a fight over something the way we locked horns uh  that would feel extremely unsafe for Lori because she had grown up in a family where there were  never any fights whereas I grew up i

n a family where I was arguing constantly that was like (1:48:48) that's was a normal space for me to be especially with my father so uh we had to  learn to ride that bicycle together and what would happen with Lori is that Lori would  run away uh not physically but she would shut herself off from me and that would actually  trigger me in all sorts of ways so um learning to repair after you've had that break that upset  one person yelled one person started crying whatever it is is where the acti

on is what I  started learning to do in part through having structured sessions with Lori in and the counselor (1:49:21) is first of all when when that happens if we can possibly do it is to get excited and  to get curious so my God something's happening here what is it and in a sense that's sort of  like trying to become meditative and I've done this with Lori many times I I say oh my god  look we're fighting there's something here there's something valuable for us to learn  let's find what it

is very early on in those sessions one of the things that the therapist  said was because because what happens is (1:49:51) you become reactive you want to kind  of interrupt the other person you want to try and impose your point of view you want to disagree  with them what they're saying you just like don't buy it and so literally just putting one's feet  on the floor it kind of like it grounds you and and and so I was remembering that and I've done  that a few times actually and because the po

int is when uh William or Lori and it's like you're  saying something and I profoundly disagree and and then I'm about to do more damage and (1:50:21) so just like feel my feet on the ground and breathe it in and breathe in what  he's saying and it's this fascinating thing that when so I want to go back cuz I had a  realization in our conversation so this is how Learning Happens so I I wanted to very much  say how me serving my wife opened up the channels for her to serve me what I realized Will

iam is  that you wanted to start every session where we were uh working on the book with some  study of the Zohar and I'm proud of myself because every now and then I realize I did (1:50:55) something good so if you would have asked me honestly in that moment guy is your  most important thing to do right now study Zohar I would have said no I want to get to work  on the book but what I would have been able to say at the time is but I I know that William  is doing incredible work and I know that

this is important to him and so I want to open myself  up to that not because I see it is intrinsically important to me but it's important to him and  and now I think my relationship to doing that before we do any real work is is changed (1:51:30) I kind of like I did it and then I learned it and so it seems to me that  it's just really important in all of these interactions to sort of go okay how do I  open up to this person here in ways that may be difficult uncomfortable I don't see  I'm goin

g to have to go to a new territory but open up to them and trust them if that makes  any sense and uh it's got it's interesting cuz I really don't know meditation very well I  don't know all of the learning that you've been doing with people like sop rhe but it's (1:51:59) got to do with putting your feet on the floor breathing in what is happening  giving space to the other person and I'll just end with this before I hand the mic over to you  is what they taught me and the the book to read is t

he sky Harville hendris Imago therapy um was  extremely helpful for us and this skill which is this riding a bicycle skill that they taught he  taught to me and Lori in the most basic way is so so just you know if if in doubt and if feet on the  floor and other things don't work just repeat back (1:52:35) what the person is saying so rather  than react say okay so what I hear you telling me is and just try and create the space for them  to see that you're you're seeing or you're you're making an

effort to acknowledge their reality  I don't know if that's helpful yeah I I think part of it is is getting quiet enough you you  use that beautiful term talking about giving space that you're trying to create enough  space and enough quiet so you can hear where the other person is coming from and you can um (1:53:09) yeah so I think a lot of this stuff is about adding space like get you know as  we were saying before like um expanding that space between stimulus and response um and so  when be

cause you and I are pretty emotional and pretty intense people and our minds are  just very very busy and distractable it's we're probably sort of a more extreme version  of a lot of people it's more important for us to find ways to keep quiet to to give space  whether it's through meditation exercise walking in the you know in the mountains or whatever (1:53:50) anything that you can do to create a little more spaciousness so that you can respond  more wisely on that subject I wanted to ask you

something that you and I have been talking about  a lot over the last few days I think is a really important issue that's um contentious for a  lot of people but really worth us exploring which is you and I have been talking about  the fact that we we live in this very intense period where there's a lot of division and high  emotion over um Trump and um us politics over the (1:54:31) environment and global warming and  ESG over women's right to choose what to do with their bodies versus the Sup

reme Court  kind of deciding they don't have certain rights and um arguments about guns and issues  with Ukraine and and Gaza and one of the things you and I have been talking about a lot this  week is how how to engage with people who are coming at us with very different views very  different experiences and find ways to talk and find ways not to be just reinforcing our own  prejudices and shutting ourselves off from other (1:55:16) people's views because I mean I saw  this yesterday at Valex t

his event that that you hosting here in um in clusters that a friend  of yours Abdul aiz from from Saudi came onto the stage and you just immediately hugged him and  there's something really beautiful about seeing a you know a guy whose father is Israeli uh  mother is South African in UK and this guy who I think is a Saudi living in London able to  kind of look at each other and kind of express love in that way in a situation that could  be incredibly intense and I it seemed to me (1:55:56) that

was a very conscious decision  on your part and I'm I'm trying I I'd love to get a sense from you of what you've learned both  through your mistakes and through the times when you've done it well in recent months since  October seventh not least um the attack in Israel um how you communicate H how how we can  communicate better with people whose experiences um and Views and pray prejudices and biases and  understanding is just so different from from ours on any of these contentious subjects yea

h I (1:56:30) mean boy I I I feel like I am uh so first of all I need to say Aziz is very hugable  yeah but um and he's you know I joke with aiz he's I've said to aiz aiz I want to meet your mother  because I just feel I see in aiz somebody who's deeply loved by his mother perhaps by his father  as well but I feel like it's his mother and it comes through in his smile and all sorts of  things and I'm very grateful for his EAS in my life but I I feel kind of slightly daunted  and honored that you

asked me that question (1:57:02) because I don't think that I've  necessarily handled myself if you like the best in in the wake of uh the October 7th attacks  and so um and I think that there are people who who are real experts I'm thinking of a a a sort  of a forum trainer moderator coach type in Israel called Amir K who ve seen moderate disputes and  so there are people who real experts at it and and I'm not one and I think that um I I think that  I I know the principle and the principles uh

but acting on them especially when you're involved is (1:57:39) extremely hard and I think there's many nuances and subtleties but I'll just give you  what I know which is that um when we have anger and hate uh uh but let's stick with anger a lot of  the time not always so the way I understand anger anger when a and as an appropriate emotion is an  emotion that says my boundaries have been violated and I need to take action and there's some sort  of saying somewhere you know to get angry is eas

y but to get angry in with the right person in  the right way at the right time so that that (1:58:13) sometimes maybe often that emotion  of anger is uh appropriate although acting on it and finding an appropriate way to act on it  I'm reminded of Warren Buffett who says you can always tell somebody to go to hell tomorrow you  know that's a you know we feel angry somebody's wronged us but you know is the appropriate thing  to tell them to go to hell maybe there are other things that we can do w

e should wait so  that's one version of anger but there's there's another thing that happens in Anger (1:58:41) which when we experience the emotion of anger the way I understand it which is  that it's actually covering up pain and for one reason or another we don't feel like we have  the safety the space uh the ability to experience our pain and therefore anger comes along with this  protective shield and the anger uh uh allows us to push away whatever it is that is causing us pain  if we can s

omehow in ourselves in others see that actually what is what what this anger is doing  is it's shielding pain and allow the anger to (1:59:18) kind of um be not obscure the pain that  is so if we could just go to you know what is highly contentious and a dangerous territory  but it's the one that I'm most familiar with because I've been probably far too engaged with  it uh is that what is going on in Gaza and I can template it onto fights that I've had with Lori  is that there is enormous pain o

n both sides so whether you know one can can talk about the  Rights and Wrongs of all sorts of things but I don't think anybody if I could we could (1:59:51) get them in a High conversation could dispute that there is enormous pain and I  guess we can go into a little bit um you know on the on the Israeli side well I'll start with the  Gaza well I'll start on the Israeli side so um uh there is enormous pain at the atrocities  that were committed which uh on the Israeli side very clear and I thin

k to most humans  feels extremely unjustified unprovoked and um uh things that one human being should never  do to another and then over and above that that triggers that's triggered two further (2:00:30) things which is this has happened to the Jews throughout history uh and another  trigger which is that the state of Israel was supposed to protect us against these kinds  of prgrams happening but it didn't protect us and uh we thought that we would live in a  world without anti-Semitism but ant

i-Semitism is right there and then on you know I I want  to take the perspective of an innocent gazen family who trying to make their lives and I would  tell you William that for the longest time and if if I I I somewh in my Google account this was (2:01:04) well before we had uh Google um you know inim which is a village that was founded  by my grandfather and other people in the 1930s my aunt Miriam had a somebody who was a farmand  Who would travel from Gaza he's from South Gaza I believe fro

m Khan yunes and um it's terrible  CU I forget his name but he was like he he knew everybody we knew him he uh uh would stay  overnight when he was allowed to and then Israel changed the rules and in theory he had to get up  very very early in the morning and then go all the (2:01:45) way back to Gaza and then for some  time my aunt Miriam allowed him to stay overnight against the rules because he was supposed to  go back every night for security reasons not for any other reason but when I talk

about  gazin I just wanted to be clear that I know gazin there was another gazin that I knew at  business school who at the time had started the Gaza Ro club actually there's a beautiful  beach there so from the perspective and and I know that there's the claim and and and you  know this will be controversial but there (2:02:19) there are Al you know some people want  to say the H of gardens Society is complicit in the acts of Hamas and in in Nazi Germany there  you know H Hitler's willing execu

tioners was a book that was quite successful where the author  of that book made the same claim but I'm certain in the same way that Abraham said to God there's  at least one innocent person in Gaza there are certainly more than one many who just want to  live quiet life that's what we all want to do and from their perspective there is enormous pain we (2:02:52) can't can't get a state we uh for one reason or another you know from the perspective  of that person I don't have freedom of movement

it's very very hard for me to travel just  within the Middle East let alone outside of the Middle East I have work every day just to  get my children educated and just to put food on the table Hassan was his name is his name  we don't know where he is now no Hassan wants to feed his family he wants to have to earn his  daily weight age and buy bread to feed his family (2:03:24) it's that simple and so long story  short and I don't know the half of it because obviously I connect far easier to the

Israeli side  than to the gazen side but um I would imagine in an ideal world uh sitting down with somebody  from uh even somebody in pound say you're in enormous pain aren't you and sorry that was a  long way of asking that question I think it's important I think it's um this is one of the  things that you and I have been discussing over the last few days is how easy it is to forget the (2:03:59) humanity to of the of people on other sides of any of these arguments it's one of  the things that

happened in the US with with Trump that Republicans started to to hate  Democrats and vice versa and so I listen to someone there's a very good podcast that um  Andrew Sullivan has called dish cast and he was he was talking talking to an old anchor man  who was saying that one of the things that went wrong in US politics was that um in the age of  n Gingrich they started to have cameras in in Congress and the politicians started to (2:04:35) play to the cameras instead of looking each other in

the eye across the benches  and once they no longer saw each other as humans and no longer had to look each other in the eye  it was much easier to demonize each other and so I think one of the great challenges for all of  us on on on both sides on every side of these debates whether it's whether it's Gaza Ukraine  politic uh you know Trump abortion guns any of these things is somehow to yank ourselves back  to remind ourselves of the humanity of the people (2:05:09) on the other side whatever w

hatever  we think of them however misguided we think they are they think we're misguided too not to  forget that Humanity so that that's that's one thing that's a real challenge for me because in  my in my anger and my pain uh or my distress or my anxiety about politics or geopolitics or  any other thing very easy for me to kind of batten down the hatchets and just sort of retreat  into my own sense of dogma and Prejudice I think that's key the other thing you and I discussed (2:05:40) I thought

was very interesting was a was an Insight from David Brooks that actually  also came from a discussion that David Brooks had had on the dish cast um podcast with Andrew  Sullivan which is David Brooks is this great New York Times columnist and writer said um  you you want to ask people what experience LED you to have these beliefs and there this  is something you and I discussed yesterday that there's something so powerful about that  ability to kind of gently open yourself up to the experience

of the other person can (2:06:20) can you talk about that cuz it seem really valuable Insight um so uh  the first place I want to go briefly is um this idea of seeing somebody else's pain  and the inability to somebody see somebody else's pain and you know I go back to early  therapy session with Lori with my then yion psychotherapist called sain extrom God bless  his soul he's I haven't had any contact with him since I stopped being his client SL  uh subject but really incredible guy and Lor c

ame to him we were in the midst of a big (2:06:54) fight and so you know I had to be quiet while Lori laid it out from her side and  then she had to be quiet while I laid it out from my side and I was full of anger and and he  turned to Lori he said do you see how much pain he's in I was full of anger and it was just a  moment and and I don't think that Lori saw at that moment how much pain I was in and she may  not have seen it for the rest of the therapy session but just those words over time

sank  in and um so I I find myself really wanting to get a some kind of anchor who will Who will (2:07:34) sit with some of the some of the people who representing the Palestinian case  I think awfully and say wow you guys are in a lot of pain you're in a lot of pain but I'm  sorry William because I wanted to say that but I've not really addressed the question so please  bring me back to the question well it's important to we were talking about this idea from David  Brooks this idea of um asking

what experience led the person to think what they think because  at the moment part of what's happening the SKS (2:08:01) at Charlie Munga right Charlie Munga  would talk about how people just want to go back into their Echo chamber and and get into what he  would call heavy ideology talked about Buffett's father having heavy ideology and so in a way  what we're talking about is how to have um how to operate in a way where you're not just reinforcing  your own heavy ideology and biases but open

ing yourself up to other people's perspectives  and I mean one of the things that that manga would do in Practical terms is as a as a (2:08:40) republican he would read articles by people like Paul Krugman who he disagreed  with a great deal um but he's like this is one really smart Democrat and and he wanted to  engage with his views so he was very consciously engaging with the other side um and as a  result he was a free enough thinker that he could say well so he was a republican who who  end

ed up voting for Hillary Clinton and and this is not a political debate what we're really  talking about is the ability to open yourself up to the opposing view whatever side you're (2:09:19) coming from that's what I'm really trying to get is how we do that and um yeah so  uh where do I go first something that's sort of like in a way it's just a problem in uh uh with  media and social media and the way communication works is that uh it really upsets me that some  of these people are reasonable

people with whom one can compromise who can see the other side  understand the others narrative but they know that in order to get elected or in order to  win their supporters over they have to say (2:10:01) things that they know are not true or  leave half of the truth out uh because that's how you win in the political game and I think that  that's that's kind of like just a stressing to me and I don't know what the answer is uh when  it comes to um Switz Swiss political culture and I really uh

I I think I don't know how you  construct this and this came up and you brought it up to me in the Jim shanesy podcast that um  you know how do you get to a place where what is truly respected in society is the person who (2:10:35) can best represent the middle ground what is truly respected is the person who  can best demonstrate to an audience that they understand the opposing Sid's position and to  really go into it in depth which is kind of like this healing process that we're talking about

  and I don't think that I've spent enough time studying or experiencing politics I just like  am exibitor from the side but there are people on the Israeli side who seek to understand say  the Palestinian narrative and I say Palestinian (2:11:08) narrative because there's no point  getting into facts this is a narrative and what they try and do and I'm thinking specifically  of a woman called anat wil was introduced to me by Hillel noer and U she has worked hard as  I believe did Amos o and is

to say to Israelis look this country was created in the wake of  the Holocaust uh there was much violence that was done to Jews because they didn't have a state  and that feels really good and we have a have a history that we tell ourselves and but in order (2:11:43) for us to make peace real true and Lasting peace with this set of people who  were also occupying the land I know that we want to either ignore their narrative or we  want to pick holes in their narrative and show that it doesn't co

rrespond to historical  fact but one way or another the only way we're going to get to a true resolution of our  differences with the population that inhabits more or less the same space is to engage with  their narrative in a real way and to at least even if you disagree with it because we'll (2:12:18) always disagree with it express empathy now what happen to an Amos o in that kind  of situation is that he could do that because he was an author because he would never have gotten  elected by by

writing and saying things like that and amamos is a very famous well-known Israeli  author who's no longer around but his daughter is f f o is her name and um similarly anat WTH I  mean amazing woman who's a member of the classet uh might have been Israel's nomination for  its representative in the United Nations (2:12:52) who sat with me uh she's part French so  her mother's French she sat with me in the south of France in the one time that we were l i was  luy twice I've met her and she had t

o make the decision between um telling I mean this is kind of  like nothing profound telling lies to get elected or being intellectually honest and she decided  that she wanted to be intellectually honest and I think that what is deeply disappointing  to me about the person it seems that Benjamin Netanyahu is evolved into is that he has (2:13:23) become utterly fine with telling lies it seems to me in order to be politically expedent  and he's a different person now to the person he was floored

as he was at the very beginning of his  career where I felt like what he was talking about was in some way rooted in realities and he's very  very capable of talking to a specific portion of Israeli Society in ways that are just not helpful  and productive but I mean in a way I don't I don't even really want to get into the specific spe  ific of politics like that I think it's more (2:13:54) more what I'm getting at is politicians  are playing a particular game as you point out which makes it ha

rd for them to be honest and  makes it very tempting for them to exploit Division and exacerbate Division I think I think  what we're trying to and we can move on from the subject in a second but I think what what you  and I are grouping towards is what a lot of our our friends are and peers are groping towards  which is to try to get to a place where we're not boxing ourselves into narrow ideologies (2:14:26) and anger and hatred but we're like it's it's more that action of you hugging as  eara

se and looking at each other with love and openness to learn from people with different  experiences rather than coming at it thinking I'm right you guys don't understand me and  I'm under threat and I I so I think I feel like you and I have both made our mistakes  on on this front we don't really know how to engage on this front but that's what we're  sort of working out and the more all of us can (2:14:59) work towards that I think I think  that's um it's an incredible challenge over the next

few years because these divisions are  not going away in all of these different areas I mean I I just want to bring it back to the  personal because that's where I feel like I have the best experiences I can trust my experiences  and it's it's um empirical data that I feel I can share without kind of fluff around and things  that I don't really know a lot about so I come back to my experiences in my most important (2:15:28) relationship with Lai my wife and uh I don't know if I've told you the s

tory it  it was kind of utterly miraculous for me when it happened and um and I think that my personal  experience what you're asking for is how do we translate that into the political realm and  I don't know how to translate it but I feel like talking about my personal experience and  expressing the hope that it can be translated I do believe it can so I'll just take you through  the the the sort of Miracle really I felt it was (2:15:56) miraculous so uh it's early on in our  relationship uh th

ere we have no children but I believe that Lor's pregnant Lor's we've had  this incredible marriage and it was a fantastic celebration and now it's probably sort of February  and Lor's now pregnant and it's a dark winter in New York City and I've had a lousy day at the  office and Lori who came to the us with her largest friend base in in Mexico kind of alone and  lonely and but I walk in through the door and do what I would often do which is had a lousy day (2:16:34) uh walk straight through to

the um uh TV room flip on the TV and zone out the way I  think many men do at the time that was the way a way to zone out and Lori comes into the room  and she's beside herself she's like you don't love me and uh you didn't even say hello to me  I probably like Grump hump like said did a grunt as I walked through the door acknowledged her in  a very basic way and and what comes up for me is is like you screaming yelling ungrateful  bew here I am battling the world all day (2:17:14) had a lousy

day yeah you've had nothing  to do you've been hanging out spending my money you know and like all you got to do is like  maybe make some freaking food for me at the end of the day and all I want to do is what  television and you are going to come and give me grief so this is what I want to say to her  is on the tip of my tongue I'm like f you get out of my face and leave me the hell alone and  instead you know by some miracle I remember some of the marital counseling sessions and literally (2:1

7:50) William I I I really am not I I say it through gritted teeth I don't believe what I'm  saying I don't own what I'm saying when I say so what you're telling me is that when I walked  through the door and I walked past you felt like I had ignored you you know and even in saying that  in that way in that kind of tense way I want to say and I did say hello to you and I and I didn't  have to go long into it and uh she's full of rage and anger and she she bursts into tears and she  says yes and

I felt so unloved and it's been (2:18:28) so difficult for me and I you know  and in that moment I'm tearing up right now everything changed inside me that was a miracle  and I was like you know it was like holy moly and and we've been through many of those things but  um how you know through grit of teeth William I wasn't even I was trying the most minimal way so  that that is the transformation that is capable of happening in a in a relationship and uh that  is what needs to happen in the Midd

le East for example and how we get there I don't know yeah (2:19:03) but I think it has to start with a willingness to a willingness to see the other  person's experience and their humanity and and to get over our own our own narrow narrow  prejudices so I I I don't know I hope I it's it's helpful for me to think this through cuz  I cuz I mess it up the whole time um I wanted to I wanted to switch yeah thank you for thank  you for giving the space to that I think that this feels more this is eve

n more authentic to me  because it's been deeply distressing to watch this (2:19:36) it's been deeply distressing in all  sorts of different ways and I feel like at least we're honoring the people who are in distress  right now and I specifically forgive me William I I I walk around every day caring about these  people who are underground they've been held hostage now kir bias is a you know more than one  year old he's he's he's going to be he's spent about a third to is going to come up for mor

e than  a third of his life uh as a hostage no child no child should ever have to do that and while I'm (2:20:06) saying that and I've posted this on Twitter there are from time to time photographs  of injured uh gazen children and what I want to say is that no GM child no child should have to  deal with that and that is also deeply wrong and yeah yeah so thank you yeah know it's a it's a  very important it's a very important subject um we talked before about this idea of this long-term  compoun

ding journey and one of the things you and I have discussed is you're 26 years into this  and we sometimes talk about okay so a couple (2:20:46) years ago we would say so let's say  you're halfway through this journey and now we're starting to think well okay so you're  about to turn 58 I think in a couple of days that's true thanks for reminding me I was really  holding on to that 57 you know nice prime number in the second digit and so I was sort of saying  to you the other day wait a second s

o let's say you do the fund for another 10 12 15 years  you know it's probably not halfway through anymore I mean we we figured out the other day (2:21:10) that if you continue to compound at 9% a year which doesn't sound that fantastic  that original $14 million in the fund becomes over a billion that's how extraordinary it is  if you continue to combat over half a century 9% would turn that that original stake into a  billion so it's an it's an enormous number but you and I were sort of discus

sing like what's  the point in it all anyway and you were talking about well so so as I Look To The Future what  am I really aiming for what does a meaningful (2:21:44) and beautiful life actually look  like and what part in that is um to do with money and continuing to compound and and what  part is developing these other areas of life and I wonder if you could just talk a little  bit about how your views have evolved on this question of what actually creating a meaningful  life and increasingl

y meaningful and beautiful life actually looks like for you and it's  something that thank you and something I've struggled with because it's it's not clear to me  um so I think that when you have an immigrants (2:22:22) mindset doesn't mean necessarily  you're first generation immigrant might be just but the the Immigrant mindset is first of  all to um acquire security and I don't think that non-immigrants can fully understand uh the  sense of unease and um uh yeah I guess it's the sense of une

ase of being in a society where you  don't fully know your way and I would say with UK you know my family starting with my mother and  father who immigrated to the UK when I was 11 years old I I would argue that we're still on (2:23:00) a journey of understanding what the United Kingdom is really about it's a  particularly complex I think Society with a very very complex social system and I'm on  a learning curve that I'm still going through and and getting to and um I think that many  immigrant

s understandably lunge for Financial Security that is why in many countries immigrant  populations there there are many very successful entrepreneurs amongst immigrant populations  because that is the source of security and I think that when I look back uh that is a is a part (2:23:36) of what's motivated me to be doing what I'm doing uh and we've talked and I think I've  written in my annual letters about that you know often the the kind of that sense of security or  not goes back Generations s

o in my case I think there there was a particular break in the 1930s  when any family wealth that my family had in Germany was completely destroyed and there was  kind of starting again and what's fascinating about this is that I think that we need to be  aware of it because it influences us whether (2:24:06) we like it or not and it's not like  my father or my grandparents or relatives ever sat down with me and told me that story but we  grow up living with it and so it is worthwhile to make it

explicit the place where I struggle  is that and I've said this to you it seems to me to be asinine is the word that I want to use  but you know we're in front of a guy who has read many more words of English and maybe we'll  get on to PR at some point that would be CH M's words asine yes it is and I'm kind of using it to (2:24:36) reference him but actually before I go there do you mind William what does asine really  mean well it's a it's it's in the same genre of words it's like pural stupid

naive um so asite  it's kind of dumb it's a fancy word for saying it would be dumb and purile and idiotic and  I think that what what's my point is that I'm using the word just because Charlie mongers  used it and actually I think the the better word for me to use is shallow yeah does he would  say Asin nitis and inan is right but it's shallow (2:25:09) because because what are you actually  trying to optimize for and you know uh William I think you worked out that we have less than  10,000 hou

rs based on life expectancy yeah let's probably this is is based on my conversation  with uh Chris Davis he said once you hit about 54 you're into the third set of 10,000 days and  so given that we're into the this what may be you you know it takes into our early 80s so let's  say another 10,000 productive days that I have as a 55 year old and you as a soon to be 58 (2:25:45) year old thank you um yeah so Chris's point was if you apply Monga inversion  technique you want to say what could mess u

p these last 10,000 days and let me not do that in  any case absolutely and over and above that um uh you know what is really the limited resource  is what is every moment of Our Lives filled with and what do we want it to be filled with  and uh we we it's come up for me many times is the moment so if you're Warren Buffett to  whom you could have asked the same question his answer I believe would be but I just really (2:26:32) really like looking at companies and I really really like continuing

to work on this  work of art that is Burkshire Hathaway museum of modern business and I've tried reading me I  don't I could imagine Warren saying I've tried reading PR and it really left me Stone Cold  and what I really enjoy doing so if and and I remember that moment when I realized that  what really made Warren so remarkable for me was that he wasn't trying to be that person who's  utterly fascinated with examining businesses all (2:27:04) day long he is that person and he's  tried being a di

fferent person and he isn't and then I go to some point one of the Wesco  meetings where Charlie's asked what novels he's read and he said that he doesn't read much in  the fiction world anymore and that irked me and I realized that I did not want to go through the  rest of my life having not read uh you know all sorts of works of fiction including the world's  great Classics just because I think that and I actually think that later so it's only (2:27:34) in the last decade that I read David Cop

perfield and War on peace and the Magic  Mountain and I think I'm a wiser better person for it so for me those last 10,000 hours I believe  it's more meaningful for me to spend at least some part of that time exposing myself to some of  those great minds of literature and uh you know and it's fascinating for me that you know what  I've not been able to do is to pick a particular author and I think it's really beautiful and  I'm fascinated that you seem to have picked (2:28:05) PR all one and a h

alf million words  of In Search of Lost time that you've chosen to spend time with so what I struggle with is  that in a certain way up to now I set up my life with the goal of creating this um Financial  Security for myself and my investors in a certain way I've achieved that for the people who've been  with me at least some of the people who've been with me from the beginning including my father  and my own family and I haven't really figured out the right way to structure my life going (2:28:

34) forwards and I know that the right answer for me is not to say because I do love  the investing side of things and I don't want to clean that off the table but it's creating  the space for the other things for a balanced and riched life and for me that involves reading  and learning uh and developing so so and then just forgive me going back to this Financial Security  and I go back to a talk that was given and then I'll hand the mic over to you to see where you go  um where this I think his

name is Coler I wish I (2:29:06) remember would remember his first  name five-year B reunion for business school re he talks to us and he says as the years go  on many of you will not return to your reunions and the reason you don't return He said I'm  talking he was talking from experience from analysis of business school reunions he said  it's not going to be your health it's not going to be your wealth it's going to be because you  messed up some important relationships in your life quite pr

obably the relationship with your (2:29:33) spouse you dressed as us as a group and he said don't worry about your finances  your graduates of Harvard Business School you're going to do great you're going to do far  better than the vast majority of the American population worry about the non-financial cial  side of your balance sheet and I urge you to invest in that and so that I really took that to  heart and so why would I continue to think about only getting uh wealthier in a financial sense 

if I'm not investing in the non-financial side (2:30:06) of my balance sheet my family  relationships my psychological Health all of those things what I would tell you is that  having thought about that for the last couple of decades one of the things that's been  disappointing and hard for me to understand is that you know we can do as much as we can  with our own children and even then I mean I'm got teenage children you were very soothing to  me I mean the outcomes are often different to wha

t we hoped for and expect and part of wisdom is  learning to adjust to that and when it goes beyond (2:30:34) immediate family you can invest as much  as you like but the world has a way of taking over so uh the answer is also not to just invest in  the non-financial side of one's balance sheet or of one's assets but so I'm looking to kind  of balance that out and I don't think I've done a particularly good job and um it's also there's  a kind of a sense of sort like I feel conflicted because I

mean one of the first things I said  to you when you came was like you know William I feel bad because I'm putting out not (2:31:06) an Omaha number and you're an investor with me I have to be honest about  what's going on I am interested in these other things so that's kind of hard for me  and I have to find a way to navigate my way through that uh and what I was committed to  doing and I wrote it somewhere so I delivered to William a whole bunch of things is that I'm  determined to be honest a

bout this process and not to try and cover up something which it  would be very expedient to do but ultimately that will lead to a more diminished life I (2:31:35) think in the way that when when I said to Chris Davis what does Warren talk  about in private and he talked about the extent to which Warren talks about making Burkshire  resilient and bulletproof for many decades to come I think people would be surprised at not to  equate ourselves with Warren and Chris Davis but at how much of our c

onversations over the last  week and and probably always are about these these questions of what's an appropriate  speed limit how hard should we be pushing ourselves in life how how intensely should you be (2:32:14) devoted to generating good returns and what are you willing to sacrifice for that and  and um what actually is going to constitute a rich and Abundant Life and what do we actually  optimizing for and are we optimizing for the wrong things and so the these are questions  that relate

to investing but they really as as Charlie would say using that phrase you mentioned  before everything is one damn relatedness after another it's all related like I think this  is something you and I worry about a lot or Ponder a lot lot or agonize about a lot this (2:32:52) question like just how intensely focused should we be on um things like material  and professional success and all we um I know I had this extraordinary experience with a  a great Tibetan Buddhist teacher recently who said

to me that the uh the greatest wealth  is a tamed mind and once you hear that you're like wait a second so if I'm if I'm really  intensely driving for Success blindly in this kind of physical material uh reputational way  but my mind is a mess and I have no equinity I've kind of lost the battle and so I think (2:33:34) maybe this is part of our sort of middle-aged existential crisis is we spent  an enormous amount of time actually trying to wrestle with these questions yeah I I mean  yes and it'

s it's uh it's interesting because you know I I would have felt guilty about  doing that but somehow you've made me feel less guilty you've actually made me feel like  that's perhaps uh the most important work and once you get that right many other things fall  into place I find I find myself reacting to just a a calmed mind as being the ultimate goal (2:34:08) I feel like tamed mind she mind yeah is that um I somehow for me it's it's so  Envy I think is such an interesting uh emotion again we c

ould spend a long long time discussing  trying to understand Envy there's some things on my reading list that I haven't yet read on Envy um  mimetic theory that is something that Peter teal is super into in into is you if you understand  the Envy in yourself you can probably manage yourself a lot better although it would not be  good for the demand for luxury goods so I'm quite (2:34:38) happy that it's phenomenon in humans  but again Envy is an interesting call to action so when we feel Envy uh

it's I think triggering  something in us that says I could be that I could do that and envy properly channeled says that  person has got something or is doing something that I would really like to be doing and actually  maybe I can't do exactly that same thing there's a path for me what am I not doing that I can do  and so uh to the extent that I felt enormous Envy for Warren Buffett when I was at DH Blair (2:35:11) and then I started taking steps and I I got far closer to a life that is that i

s  suitable to me and it was motivated and but what I find myself envying uh I don't I know that  Academia is very very messed up in all sorts of ways and there are practical academics  or public academics who no longer part of universities but um know one guy that I had I  was on a call with recently is an astronomer at Harvard University his name is ayob and he's  highly respected academic and um he writes something for his substack email newsletter short (2:35:51) thoughts not academic papers

every three or four days he's got an interesting thought that  he's kind of Shar sharing with his readership then I've looked at his and other academic resumés  and you know I feel Envy for the fact that they have a um they've left a body of work a body of  thinking behind them if they were to be taken off the planet and I'm super grateful I mean  I I would say that the most important things I've done in my life is get married have  three children children and produce a book (2:36:21) with you

so I've left something behind  that perhaps will be of lasting value we'll have to find out but maybe there's more there that  I should be spending time thinking through and partly I we we discussed this as well I think  that there's a lot of meaning to uh working at trying to understand things perhaps the way the  Montaine did in his essays and George orell did and I think that what comes up for me and  I've asked you about this is that do doing that is extraordinarily painful it's hard work (2

:36:54) enormous real writing sitting at the rock face and saying now what do I want to put  on paper what do I think about this what is important for me to express is just the most  painful thing without really actually being physically painful I think that I've done far  more difficult than therapy far more difficult than fighting with my wife and um and so do  I really want to do that real conversation is painful too I realized I was thinking a few  minutes ago that that tremendous discomfort

in my chest disappeared a few minutes ago (2:37:26) and I'm like oh I think that was probably anxiety about talking about Gaza  and so literally so I think like there was one point ear in the conversation where I  literally I felt so physically uncomfortable that I could have like there was a part of me  that was thinking I need to get up and go lie down in fetal position in a room over there and  now I realize oh that was like my body was like really anxious about the fact that I was going to 

raise this very painful divisive difficult issue so I think I think it gets at the fact that (2:37:59) we and now thank God that's gone um because we talked about it we talked it through  and so I think that's part of part of what we've been doing for years and there probably an  appropriate place to wrap this up especially since we're going to have to go for lunch not  because I got something I want to say to this and we haven't talked pce we're going to talk  okay but part of um we'll talk br

iefly um but part of what this is about is some kind of inner  Journey where you're looking at these difficult (2:38:30) emotions you're looking at these these  conflicts the the painful conflicts between things like trying to be materially and physically  successful in the eyes of the world and true to yourself like these are all you know how to  have your own views and be true to your own View and your own experience and yet at the same  time open to other people's use I think this is why it's

been such a rich area of exploration  for us with the conversations we've had over all these years and with your book and with you (2:39:00) helping me with my book that we're just sort of we we're we're grappling towards  some sort of truth that requires us actually to look at quite difficult quite painful quite  uncomfortable stuff and it seems to me that uh at some point though we have to and maybe this is  the last 10,000 days we have you have to actually make a conscious decision which I d

on't think i'  I'm afraid of making really is what do I want my life to be about and there's this beautiful  idea that so Ben Franklin comma printer Ben (2:39:34) Franklin with many many more things  than a printer but there's kind of like an there's a friend of mine that I'm in a forum with  and is like um landscaper you know and he's a real estate developer very successful real estate  developer but landscaper what is my life about and and and what do I want that content to be and  and two peo

ple came up to me as you were talking uh and you're never going to expect who they  are but they kind of like live with me because and so two Russian dissidents we can talk about (2:40:06) three we can talk about Gary Kasparov we can talk about Alex nalni and Vladimir Karam  MOA morza I had the privilege of meeting Vladimir Koro who was at Oxford by the way he's a  incredible mind now Gary Kasparov says you know there's a book up on the Shelf there winter  is coming I hate what's going on in Rus

sia I'm going to do my very best to try and nudge it  in a good direction but I'm going to stay very very safe in the west where they can't get  to me both Alexy naal and Vladimir kamosa (2:40:35) take an extraordinary decision and uh  you know there's a documentary on Alexa naali he decides that if he's going to change Russia he's  going to go back to Russia and he knows that he might get arrested which he did he's going to  spend enormous amounts of time in prison they might torture him they m

ight poison him uh he's  going to be separated from his wife and from his children and I've met his wife and she's a a  an incredible lady but in a way Al Alexa naali and Vladimir karosa decided that what their (2:41:11) life should be about is changing Russia and taking whatever risks it takes and  you know he's on the on the subway into Moscow and he's being videoed on somebody's iPhone  and and and the police coming to wrestl me says we have nothing to fear and he's a guy  who made the decisi

on I would rather be in a uh prison cell somewhere in Siberia than  live a comfortable life you know that is a meaningful life for me and I look at that and  I just and and then you know just briefly um uh uh the the guy who changed South Africa is (2:41:50) Mandela so you know his biography many many hours and days that he was away from  his family because he was working on changing South Africa and he got himself imprisoned  in a way the same way that those two Russian characters did and he ha

d to spend all that  time on Rob and island that was a conscious choice that he made and I look at that and I  go I don't think that even if I was inhabiting the same body the same circum the same thoughts I  would have opted for a more comfortable life and they would have looked at me so there's a choice (2:42:20) that they made that I I just mentioned them because they're extraordinary people and  human rights activists who uh take enormous risks with their own personal security and  sometimes

pay an enormous price often pay an enormous price Masa amini who was who was who  was killed in Cold Blood in in Iran because she wanted to protest not having a veil on that's not  me and I feel slightly cowardly as a result but um uh there's an incredible exercise Warren's  talked about it Mish and I have done this (2:42:50) exercise write your obituary what do  you want your life to be about and then try to live up to that obituary and I'll would tell  you William that Mish and I did that exe

rcise recently and I had a really hard time with it  because I had a really hard time deciding what you know I definitely don't want to be an Alexa  naali figure it's just not for me I'm sorry sorry all those people that I might have served but  that's just really really important what was the most important Revelation for you in writing (2:43:18) that herit about what you want your life to add up to and it was I was just so you know  I wouldn't have had a hard time saying I don't want to be Vla

dimir K morza much as I respect  him enormously but I knew that uh you know gu spear uh discovered Warren Buffett wrote a  book and made a lot of money was not enough asine to use the word or Shadow it had to be  gu spear discovered Ren Buffett had a family wrote a book made enough money continued to  make money but devoted himself to and and and produced and thought or something and that was (2:43:53) very very hard for me and it was very hard for me to see exactly how that would  fit together

and I think that the answer for me is just to struggle with it and you  know and so here's here's where I'll go into dangerous territory with you William just  is that so you know I want to interrupt you for a second before you go into that dangerous  territory and just and and we'll wrap it up in a in a couple minutes but um when you look at  manga who nearly Century long life just ended a few months ago does that does his life (2:44:25) clarify for you anything about what you know when you loo

k at his life does  that clarify at all this question of like what constitutes a really meaningful and valuable  life I think it does yeah and I think that's true that's absolutely right and uh in a  way that that you know it's it's hard to approach the um multiplicity of things that  he did whether it was building dorms and uh uh being being on being on the boards of  hospitals and uh being at the center of an incredibly Rich family with the uh (2:44:56) summer compound in Minnesota yeah I thin

k that does I think um you know we we  have to make our own path the Arthurian knights in the Legends would enter the forest in the  darkest place we all enter the forest in the darkest place I have to figure it out for me  and I'm nowhere close to figuring it out he was a channel for rationality and worldly  wisdom I mean I think I think he figured out somewhere along the road that that was um sh  sharing sharing wisdom sharing rationality was a huge part of who he is I I think somehow you (2:4

5:32) know in our own less Grand ways we have to kind of figure out like what where  do I fit into this Mosaic it's something that's really interesting I you know the year  and the Yang of Charlie and Warren you know Warren with his singular focus on Burkshire and  Charlie with his extraordinary intelligence and rationality that you know looking at that  personal can't say I I've I am friends or was friends with either of them and known known  Warren just a very very little bit and Charlie even

less just observed them from afar I (2:46:05) think that I would even though Charlie is a far more interesting conversation  partner and interesting person with all of the range of his mind on some level I think I would  have preferred to have Warren as a friend the blumkin are friends with Warren somehow I don't  know why that is but that's just an interesting thought for me um so yeah those are I don't  know exactly I mean I don't even know actually how one figures that out because I failed at

  the uh obituary exercise unless you push me I (2:46:32) want to ask you William because it's  come up multiple times um so the search is also fun and interesting but I think it should be  more than just a search but I want you to talk to me about how you it's clear for you that PR is  your author and I think that I just feel like it's just fun to hear it again because it sort of puts  into my mind for me I think that you're becoming a far wiser person reading PR and I want to hear  you on that

I think it's fun I'll I'll just try to wrap it up in a small way with this so I (2:47:08) think both both guy and I have been thinking for years what's going to constitute  a truly rich and Abundant Life for Us and given our Limited amount of time and for both of us  a limited amount of attention because our mind goes all over the place so we can very easily  fall into rabbit holes we have to be really discriminating really Discerning about what  are the really important things to focus on so I

think for both of us family is absolutely  the top of the list then there's professional stuff um friendship helping people sharing (2:47:45) insights that we've learned and then there are certain things that don't really  really make that much sense that you're like no no this is ungodly important to me and so for me  one of the things I figured out along the way is I it's really important to me to study great  literature and then figure out what's deeply valuable in it that applies in other a

reas of  life the Josh wait skin who wrote The Art of learning talks about thematic interconnectedness  this idea that when you find something in one (2:48:19) area and it's interconnected with  something in other areas it's there's something really beautiful there about that kind of um if  you find something in say for him dosm and also in martial arts and also in investing that's  kind of really beautiful thing and so part of what's wonderful for me about reading PR and this  is the third time

I've I've made a big attempt at the ascent of the pr Mountain um and it's hard  cuz it's like 3,000 Pages or something and I got 400 Pages uh from the end when I was 39 (2:48:53) and then got distracted um uh by Philip Roth and never finished so now I'm  trying again I'm about a thousand Pages through this time a little less part of the  fascination with PR is that among his other great gifts he had an astonishing understanding  of the human mind uh of um our inner life and an incredible abilit

y to understand the ways in  which we're contradictory and that we lie to ourselves we deceive ourselves and also the  way in which we appear as different things to different people and so um there's a beautiful (2:49:32) example of this great character Charles Swan who's at the heart of the the book who  is this tremendous East The Who if you want to identify if you want to tell whether it's a real  verir painting or not you can go to Swan and yet he's basically kind of destroying himself throu

gh  this obsession with a woman named odet who's kind of a corisan a sort of high class hooker um and  and then at a certain point he realizes that she wasn't even my type and yet I was totally obsessed  with her and destroyed my peace of mind for this (2:50:12) woman who wasn't even my type and  who wasn't interesting to me and wasn't smart or anything and then right after he's had this  revelation she's described as Madam Swan and you realize that Charles Swan has married the  woman after he r

ealized this and then they turn out to have a pretty happy marriage and so I  look at this stuff and I'm like it it fills me with a sense of how unknowable people are how  contradictory they are um how we're not even knowable to ourselves we confuse ourselves we we (2:50:44) deceive ourselves and this does have a a connection to investing and everything  else because also you know we construct stories about things we we look at people and  we construct a narrative about a person or a company and

we say this is what it is this  is what I believe it is and PR reminds you it's so much more complicated and and it makes  you I I think it makes you a little bit less Hasty in judging people harshly because you  know PR sees everyone's flaws in a sometimes vicious and very funny way but there's also great (2:51:23) compassion there and so so for me it's a reminder of the complex it is of human nature  and how difficult it is to see anything clearly I want to relate two things cuz you know the 

next best thing to reading it yourself because you can't read all of the stuff is to have  a friend who's either reading it or read it so you know I was describing to you William  somebody that was uh you know I kind of made me feel slightly uncomfortable not sure why or  how and I don't know if you remember and and you (2:51:53) said wow the person you're describing  to me sounds to me like this personality in this book by in Charles Dickens book David Copperville  called Uriah Heap and I'm so

grateful because I'd actually put that book on my reading list and  I'd there books that I read and I just read them and there are books that I make myself  read I'm making myself read uh the red in the black right now by stendal and um and I was  like my gosh that's right and it a enabled me to see this person in Greater Clarity because (2:52:23) all you had to say to me was Uriah Heap and then I will just tell you something  else who was SMY yah he was someone who was incredibly SMY and would

tell you what you  wanted to hear and would make you feel good but would be quietly plotting your downfall yeah  so go go read David David Copperfield focus on U but that I think first of all I got wiser  reading the book and then by your referring to the personality and making that connection To  Me Uriah heap's personality to somebody in real life I became wiser so I I really do think that (2:52:51) reading the right literature that's for you at the right time written by the right  person wil

l make you wiser and I'll just give you one more example of that that I think is rooted in  your uh reading of PR which is I brought something else up to you and you said yeah it just shows  you how you never know people that's all you said and I was like what the hell is he talking about  but now that you talk about PR I kind of think I understand where you're coming from and so I think  a beautiful thing just to bring Nicholas Christ us (2:53:19) into this so uh you know there are  networks of

wisdom that created and so in many ways you can I'm benefiting from your the wisdom  that you've received through PR even though I've not read PR and so that's kind of interesting in  in in and of itself and I'm looking forward to learning more and uh I don't know if it's going  to happen but I've been told by William that if I start reading it myself he might include  me in a book group but I know that I have to do some real reading for it but I would have (2:53:46) spent I know you want to cl

ose it down you've given me multiple hints but I would  have loved to explore that but I'll let you take the mic and take control well the the real  moral I think is that in our own different ways we're thinking about how to construct a  meaningful life for ourselves in in all of our own weirdness and so for Charlie constructing a  life where he didn't read fiction was just fine CU he was busy designing dormitories I have no  interest in designing dormies but it's pretty fun (2:54:15) for me to

read proof windowless dormet  trees are stor so on that note guy thank you so much and I I uh I I I just really enjoyed these  conversations and it's I've I've covered about you know 30% of the topics that I meant to cover  with you but it's been uh it's been more fun we went in other directions so thank you so much  yeah thank you it's so the at at some point uh our wonderful soundman and video man told us that  the fire went out I decided I had to let it go so sorry about the loss of the fire

but that's (2:54:50) symbolic in some kind of way yeah it's been fun thank you one last thought sorry  this is L what's fascinating as well is that I have this feeling so we have some awareness  of what we think we've been talking about then there's everything that's sort of like below  the conscious level that has also been going on that neither of us are aware of and that's in  a way also been fun so we're going to need your your therapist to give us the real explanation  of what's been going

on all right thank you so (2:55:16) much thank you William it's privileged  to be able to talk to you and to be able to work with you Warren and Charlie and many of  the people you mentioned have done well is they've structured their lives so whatever their  weaknesses are it hasn't taken them down and so you mentioned Charlie's bluntness I don't think  that would have served Charlie as the CEO of a Fortune 500 company so Charlie structured  his life in a way where those personality traits of hi

s didn't set him back Warren is an (2:55:45) incredible communicator and exudes this sort of warmth and people can feel but he  has a very hard time making those really hard decisions to fire somebody or to replace them  so he's structured his life to minimize those a very powerful lesson for people to carry  out is not to necessarily obsess on your weaknesses but to do your best to structure  your life so that you can avoid a lot of them