Is value investing dead? | CWL with Greg Steinmetz

Summary

In this insightful podcast, host Sam North engages in a deep conversation with author and investor Greg, discussing the importance of patience and value investing. They explore historical examples, such as the negative gas prices during COVID-19, to highlight investment opportunities. Greg shares his experiences from the Sequoia Fund and emphasizes the significance of holding onto exceptional companies like Costco. The discussion also delves into Greg's writing process and his upcoming book focusing on the ideological clash between Andrew Mellon and Franklin D. Roosevelt, reflecting on shifts in American economic policies.

Takeaways

• 💡 The importance of patience in investing: Holding stocks for the long term can lead to significant gains, as exemplified by the Sequoia Fund's average holding period of 7 years and Berkshire Hathaway's 30-year holding period.
• 📚 The value of historical perspective: Learning from the past, such as during the COVID-19 pandemic when gas prices went negative, can provide insights into market opportunities and the cyclical nature of wealth.
• 💼 The significance of indispensability: Jacob Fugger's success was partly due to making himself indispensable to powerful figures, a strategy that can be applied to investing in companies with unique, essential value.
• 📈 The potential in market downturns: During times of crisis, such as the COVID-19 pandemic, there are opportunities for value investors to buy stocks that are being undervalued or dumped.
• 🤔 The challenge of identifying true value: Even with thorough research and analysis, recognizing a company's exceptional potential and not being overly concerned with the exact purchase price is crucial.
• 📚 Lessons from past successes: The Sequoia Fund's early investment in Costco and Fenol, which turned out to be great investments, teaches the importance of recognizing and sticking with exceptional businesses.
• 🔍 The role of research and due diligence: In-depth research, like visiting stores and talking to industry insiders, can provide a unique edge in understanding a business's potential for success.
• 🕊️ The resilience of value investing: Despite claims of its demise, value investing remains relevant, as market fluctuations continue to present opportunities for those with patience and insight.
• 🏦 The impact of interest rates on private equity: With interest rates moving unfavorably for private equity, there may be more opportunities as companies previously taken private are listed again.
• 💬 The power of storytelling in writing: Engaging storytelling can make complex financial insights more accessible and entertaining for readers, as demonstrated by the author's approach to writing about financial figures.
• 🏛️ The historical significance of government policies: The shift from small government to big government ideologies, as explored in the upcoming biography about Andrew Mellon, has lasting impacts on economic structures and can offer lessons for today's investors.

Q & A

What is the main theme of the conversation in the provided transcript?

The main theme of the conversation is value investing, with a focus on historical insights from Jacob Fugger and Jay Gold, as well as the application of these insights to modern-day investing practices.

Who is Jacob Fugger and why is he considered the richest man who ever lived?

Jacob Fugger was a German banker and businessman who became the richest man of his time. He is considered the richest man who ever lived because he was the wealthiest commoner, having amassed his wealth without being a king or a member of nobility.

What lesson from Jacob Fugger's life is most relevant to investors today?

The lesson from Jacob Fugger's life that is most relevant to investors today is the importance of being indispensable. Fugger made himself indispensable to the Pope and the ruler of the Holy Roman Empire, which allowed him to extract profits and survive in a challenging time.

What is the significance of the story of gas prices going negative during COVID-19 in the context of value investing?

The story of gas prices going negative during COVID-19 signifies an opportunity for value investors. It illustrates the point that temporary market conditions can create investment opportunities that may not last, and investors should be able to recognize and capitalize on such moments.

How does the guest in the conversation define patience in the context of investing?

In the context of investing, the guest defines patience as the ability to hold onto investments for a long time, allowing for significant gains. He mentions that investors often struggle with patience, which is crucial for achieving substantial returns.

What is the average holding period for stocks in the guest's firm?

The average holding period for stocks in the guest's firm is 7 years, and they have held stocks in Berkshire Hathaway for as long as 30 years.

What is the guest's perspective on the recent phenomenon of 'meme stocks' like GameStop?

The guest views the 'meme stocks' phenomenon as not investing but rather a short-term market trend. He suggests that it's not his realm and that he prefers to focus on long-term value investing rather than participating in such volatile and short-lived trends.

What is the guest's approach to writing about historical figures in finance?

The guest's approach to writing about historical figures in finance is to tell the best possible story, focusing on entertainment and information rather than being prescriptive. He allows readers to draw their own insights from the stories.

What was the guest's most memorable investment success during his time at the Sequoia Fund?

One of the guest's most memorable investment successes was buying Costco very early on and selling it after it went up a quarter of a point from their purchase price. It later became a 20-bagger from that point.

How does the guest view the current state of value investing, especially with the rise of technology?

The guest believes that value investing is not dead, despite the rise of technology. He points out that opportunities for value investing still exist, as demonstrated by examples like the temporary negative gas prices during COVID-19 and the rise of a company making air conditioners for data centers.

What advice does the guest give regarding having a cash pile and waiting for investment opportunities?

The guest advises that having a cash pile and waiting for investment opportunities is a valid strategy, especially when interest rates are low and the market is overvalued. However, he also notes the importance of being ready to invest when the right opportunities present themselves.

Outlines

00:00

💡 Wealth Insight and Investment Philosophy

The speaker begins with a discussion on wealth, referencing the unusual event of negative gas prices during the COVID-19 pandemic as an opportunity for value investors. He emphasizes the importance of recognizing temporary market anomalies and the potential for long-term gains. The conversation shifts to the guest's background, Greg, and his experience in the investment world, including his tenure at Sequoia Fund and his approach to value investing, which is characterized by a long-term holding period and a focus on indispensable companies.

05:03

📚 Lessons from Historical Figures in Investing

The paragraph delves into the insights gained from Greg's book about Jacob Fugger, the richest commoner in history, who exemplified the importance of indispensability in business relationships. The discussion highlights the value of patience in investing, as illustrated by the Sequoia Fund's average holding period of seven years and the concept of holding onto 'winners' to achieve significant returns. The speaker also touches on the psychological aspect of investing, suggesting that historical patterns of booms and busts are influenced by unchanging human nature.

10:03

📈 The Significance of Patience and Persistence in Investing

Greg shares his perspective on the key themes from his recent book about Jay Gold, emphasizing the virtue of patience in investing. He contrasts the short-term focus of many investors with the long-term gains achieved by those who hold onto their investments. The narrative includes anecdotes from Greg's experience at Sequoia Fund, where the firm's strategy of holding stocks for an extended period contributed to its outstanding performance over 40 years.

15:04

🤔 Balancing Historical Storytelling with Financial Insights

In this paragraph, the focus is on the approach Greg takes in his writing to combine historical storytelling with practical financial insights. He explains that his primary goal is to entertain and inform readers, allowing them to draw their own conclusions about investing lessons from the stories he tells. Greg also discusses his career as an analyst and the Sequoia Fund's origins, which were endorsed by Warren Buffett, and its subsequent success despite a challenging start.

20:07

🚀 Memorable Investments and the Evolution of Market Dynamics

Greg reflects on his most memorable investment successes and challenges during his time at Sequoia Fund. He discusses the strategic purchase of Costco shares early on and the missed opportunity due to selling too early. Another highlight is the investment in Fenol, an industrial parts distributor, which demonstrated the power of a unique business model and aggressive compensation system. The speaker also comments on the increased difficulty in gaining an informational edge in the current market, compared to the past.

25:09

🛠️ The Craft of Writing and Upcoming Projects

The paragraph explores Greg's writing process and how it has evolved from his days as a journalist to becoming an author of lengthy biographies. He discusses the challenges of transitioning from writing shorter news pieces to crafting full-length books and the improvements he has made with each book. Greg also teases his upcoming book, which will focus on the period when Andrew Mellon was the U.S. Treasury Secretary, highlighting the ideological and personal conflict with Franklin D. Roosevelt.

30:11

💼 The Resilience of Value Investing and Market Valuations

In this segment, the discussion centers on the enduring relevance of value investing, even in the face of rapid technological advancements. Greg uses the example of negative gas prices during COVID-19 to illustrate the temporary nature of market disruptions and the opportunities they present to value investors. He also shares his experience with a company that manufactures air conditioners for data centers, which underscores the importance of patience and the potential for significant returns in value investing.

🏦 Cash Reserves and Market Opportunities

The final paragraph addresses the strategy of maintaining cash reserves for investment opportunities and the challenges of waiting for the right moment to invest. Greg discusses the philosophy of always having some cash on hand, the difficulty of doing so when cash is earning minimal interest, and the importance of being prepared to invest when the market presents opportunities. He concludes with his thoughts on current market valuations and the areas he finds most promising for future investment.

Keywords

💡Value Investing

Value investing is a strategy where investors look for stocks that are trading for less than their intrinsic value, with the expectation that the market will eventually recognize the true value of the company. In the video's theme, it's discussed as a long-term approach to investing, exemplified by the speaker's firm's average holding period of 7 years and their philosophy of holding stocks for decades. The concept is brought up in the context of market opportunities, such as when gas prices went negative during COVID-19, indicating a potential buying moment for value investors.

💡Holding Period

The holding period refers to the length of time an investor expects to hold onto a security before selling it. In the script, the concept is highlighted when discussing the average holding period of the speaker's firm, which is 7 years, indicating a long-term investment strategy. This is contrasted with short-term trading, which is not the focus of their investment approach.

💡10 Baggers and 100 Baggers

In investing, a '10 Bagger' is a stock that increases in value tenfold, and a '100 Bagger' is one that increases a hundredfold. The terms are used in the script to emphasize the potential for significant returns from long-term investments, particularly when investors have the patience to hold onto stocks that have strong fundamentals and growth potential.

💡Indispensable

To be indispensable means to be essential or crucial to a particular context, often implying that one's services or contributions cannot be replaced. In the video, the speaker draws a parallel between historical figures like Jacob Fugger, who made himself indispensable to powerful entities, and modern investors who should seek companies with similar indispensable qualities to ensure their longevity and profitability.

💡Market Volatility

Market volatility refers to the rapid and significant fluctuations in the price of a security or the market as a whole. The script mentions the extreme price swings of meme stocks like GameStop, which can increase or decrease by large percentages within short periods. This concept is used to illustrate the difference between short-term market movements and the long-term investment approach the speaker advocates.

💡Meme Stocks

Meme stocks are stocks that have gained popularity and attention through social media, often leading to significant price movements driven by retail investors rather than by traditional financial analysis. In the script, the speaker discusses the phenomenon of meme stocks, using GameStop as an example, to contrast the unpredictable nature of such investments with the more grounded approach of value investing.

💡Patience

Patience in investing refers to the ability to hold onto investments for a long period, even in the face of market fluctuations or when the investment is not immediately profitable. The speaker emphasizes the importance of patience as a key theme in the video, drawing on historical examples and personal investment experiences to illustrate how patience can lead to significant long-term gains.

💡Sequoia Fund

The Sequoia Fund is a long-established mutual fund known for its value investing approach. In the script, the speaker discusses the fund's history, including its challenging early years and its subsequent strong performance over the next 40 years. The fund serves as an example of the effectiveness of a patient, value-oriented investment strategy.

💡Concentration

In investing, concentration refers to the practice of focusing one's investments in a limited number of securities, often based on a deep understanding of those companies. The speaker mentions the practice of concentration as part of the Sequoia Fund's strategy, which contributed to its outperformance by allowing the fund to capitalize on its most promising investments.

💡Costco

Costco is a membership-based warehouse club known for its low prices and high-quality goods. In the script, the speaker recounts an investment in Costco as an example of a successful value investment. The company is highlighted as an 'exceptional' investment that significantly outperformed, illustrating the potential rewards of identifying and holding onto fundamentally strong companies.

💡Expeditors International

Expeditors International is a company that provides global logistics services. The speaker mentions the company as an example of a successful investment due to its unique business model and aggressive compensation system. The investment in Expeditors International exemplifies the value of in-depth research and understanding a company's operations, which contributed to the decision to hold the stock for an extended period.

Highlights

Discussion on the importance of patience in value investing and how short-term market fluctuations can be ignored for long-term gains.

The story of Jacob Fugger, the richest commoner in history, and the investing lessons from his life, particularly his ability to make himself indispensable to powerful figures.

Insights into the life of Jay Gold, emphasizing the value of persistence and the importance of holding onto winning investments for extended periods.

The average holding period of stocks in the speaker's firm is seven years, with some stocks held for up to 30 years, illustrating the principle of long-term investing.

Anecdote about the negative gas prices during COVID-19 as an opportunity for value investors, highlighting the ability to identify undervalued assets amidst market chaos.

The role of history in understanding market trends and human behavior, suggesting that historical knowledge can inform modern investing strategies.

The Sequoia Fund's history, its initial struggles, and subsequent success, demonstrating the power of patience and value investing over a 40-year period.

The speaker's experience with Costco as an early investment and the lesson on not being overly concerned with the exact purchase price when a company is exceptional.

The investment in Fenol, an industrial parts distributor, and the unique business model that led to a successful 20-year holding period.

The importance of on-the-ground research and talking to industry insiders for gaining a deeper understanding of a company's operations and potential.

A comparison between the ease of investing in the past due to an informational edge and the increased effort required today due to information overload.

The speaker's transition from journalism to writing full-length books and the improvement in writing skills with each book.

The upcoming biography of Andrew Mellon, focusing on his tenure as Treasury Secretary and the ideological clash with Franklin D. Roosevelt.

The philosophical shift in American history from small government and low taxes to big government and high taxes, and the speaker's exploration of the causes behind this change.

The speaker's approach to writing, focusing on storytelling and allowing readers to draw their own insights rather than being prescriptive.

The challenges of value investing in the technology-driven market and the speaker's belief in the continued relevance of value investing principles.

The experience with Verve, a company specializing in air conditioners and power supplies for data centers, as an example of a successful investment based on thorough research and patience.

The strategy of holding cash and waiting for the right opportunity, even if it means waiting for an extended period, as part of a disciplined investment approach.

The speaker's preference for investing in industries and companies that he understands well, such as industrials and retail, and the caution towards sectors like banking.

Transcripts

if it was dead we wouldn't be talking

about it anymore I think about wealth

let's remember during Co when when gas

prices went negative for a day let's say

you were you were stuck in traffic in

New York you might be going through the

holl tunnel and you're surrounded by

these cars belching gas you knew that

that gas wasn't going to stay negative

for right was there an opportunity for

an value investor to to buy something

that was being dumped at the time uh of

course there was and we way

on my firm where at worked our average

holding period was 7 years and we've

held stocks Brookshire halfway 30 years

and you're never going to get 10 Baggers

let alone 100 Baggers if you're buying

and selling every

[Music]

day hello everyone and welcome back to

another episode of conversations with

leaders I'm Sam North your host today

and I'm joined by Stein met Greg it's

great to have you with us how are you

great thanks for having me Sam well it's

great to to have you one we're going to

talk about a couple of the books that

you've written we'll also talk about the

third potentially that's on its way

we'll talk about your time as a uh as an

analyst in your career uh as well for uh

regular listeners you you know Matti

Alon very well so I've had the pleasure

of finding out a little bit about both

of you already but we can get into that

shortly as well first up Greg I want to

talk about uh your book the richest man

who ever lived first of all the title

really really grabbed me so it's quite

an interesting story The Life and Times

of Jacob fuger um it offers uh you know

sort of an insight into their life where

a lot of people wouldn't ever have heard

of this person before what inspired you

to write about it uh and what lessons

from his life do you think are most

relevant to investors in today's

world at the time that I had the idea I

was working as the Berlin bureau chief

at the Wall Street Journal and in

Germany Jacob fuger is a well-known name

it's not doesn't quite have the same

residence as as Rockefeller in the US

but it is a word that means someone

who's very rich um very conniving very

Savvy very smart with money and and you

see that name throwing around here and

there and Americans and people outside

Germany they they didn't know about him

I asked around no one had ever heard of

them and for someone as a journalist

you're always looking for a book to do

to prove that you're credible that

you're more than just uh writing up

press

releases I thought okay here's an

opportunity and uh I contacted an agent

out of the blue and he immediately saw

the relevance of the story and then the

publisher immediately saw the relevance

and it it went from there and the idea

that he would the richest man who ever

lived yeah that's controversial because

there are others who uh get attributed

to that but in his case he was the the

richest commoner someone who came up not

being a king not being a member of the

nobility made money on his own and if

you do a calculation where you take his

worth and divide it into the prevailing

European and GDP which is how you do

these calculations to figure out who's

the richest he was the richest who ever

lived and in terms of his investing

lessons the one big one that that I keep

thinking about is well what can we learn

as investors we can learn to invest in

companies that share some of fugger's

attributes and the biggest one that

comes to mind is being indispensable

fuger made himself indispensable to the

pope he made himself indispensable to

Charles I the ruler of the hburg Empire

and by doing so he was able to not only

extract very nice fees and and profits

from them but he was also able to

survive in a time when it was very

difficult

to uh survive when you had as much money

and power as as the Emperor or some of

the other people you're living to the

analogy that comes to mind I think of

that oligarch in Russia cordak kovski

right he got very rich he thought he was

bigger than Putin he ended up being

tossed into jail fuger always lived with

that risk if if the emperor and the pope

didn't like fuger they could have made

life very difficult for him but because

they needed him yeah he survived and

lived through a rip B age yeah it's

fascinating story I recommend everyone

to to go listen to that uh that book um

did you find you know through your your

career as as an analyst and investing

and writing that it made you a better

potential investor as well would you

take little bits from all of these

stories to to bring on board for

yourself I I think what it did is give

me more of a perspective a bigger

timeline and I'm I'm more aware of the

long-term trends and how things can

change quickly but then they revert back

um and that's the great thing about

history there there is very little that

we haven't already seen uh the

technology might change but human nature

is the same so we have booms and bus we

have fads we have perennials and

studying these folks um I've I've gotten

a much better appreciation of that I

think it help helps me keep my C Under

Fire yeah yeah in your in your latest

book what what key themes or messages do

you hope um you know readers

particularly retail investors for the

sake of this conversation can can take

away and how can these insights be

applied to modern-day

investing well the the latest book um

I'm working on one now but the the book

that came out more recently about Jay

gold yeah the Rober baren gold used to

say there are a lot of stocks on Wall

Street but the big

stock that there isn't is the stock of

patience that investors are are too

flighty uh they change their opinions

every day and if you just sit back and

stick to your guns you do much better

and and he appli that in every aspect of

his life when he was a kid he would stay

at the chalkboard if he was called up to

do a math problem he would stay there

until it was finished even if it was

after all the other kids went home uh he

would be involved in litigation and just

keep litigating until he wore the other

side out and as an investor he would do

the same thing he would uh attack a

company and just keep at it until he was

able to drive the price down enough so

he could buy it for a song and it it's

similar to to the lesson from the fuger

story that patience is is very important

and at RNE on my firm where worked our

average holding period was seven years

and we've held stocks Berkshire halfway

30 years um and you're never going to

get 10 Baggers let alone 100 Baggers if

you're buying and selling every day yeah

yeah I I think for retail investors if

they were to name five things that they

struggle with I'd reckon most of them in

that top five is all going to be

patience isn't is having the ability to

hold a winner for a long time and you

got to let those winners run as as as

you're saying

um can you share some it's boring not to

it's more fun to right yeah reading

around you know the analogy I like to

use and I think we follow this a Wayne I

don't know if you have snapping turtles

where you are but there're these Turtles

they lie in the pond in the mud all day

with their mouth open hoping that a fish

swims by and when it does they snap and

grab it and a patient value investor

it's I think it's like the snapping ter

yeah

yeah how do you no I like GRE how would

you deal yourself with you know some of

the moves we've seen in the market

recently let's just call it the meme

stock stuff like GameStop or you know a

market that might explode 30 40% higher

one day and then drop the other do you

just say to yourself that's not my realm

I'm going to leave it alone do and and

it just doesn't bother you is is that

the way you would look at it yeah let

someone else make the money yeah it's

not investing

and it it's it's difficult if you have

clients to ignore whatever is working at

the moment when I joined R kff it was

the year the dots were going crazy and

everyone thought the people who invested

like Buffett were

idiots and that we had lost our way

people wanted to fire us and then the

next year it all went the other way and

we were named mutual fund of the year

so you just have it's very it's very fun

to watch though right yeah from the

social revenue of less than10 million

and yeah you can see where the train is

going but it's it's fun to watch in the

meantime yeah no for sure from the

sidelines um how do you balance this

historical storytelling with with

practical Financial Insights in your

writing which is obviously important um

do you aim to provide actionable advice

for investors or is the focus more on

that sort of historical narrative or is

it just combining the

two well I don't hit readers over the

head with it you know and put out a list

uh you know the investing secrets of of

Jacob fuger I I did that as a article

that

appeared um was it business week

somewhere you know to promote the book

said okay here's the here's the 10

things about investing you can learn

from fuger but my uh method as a writer

is to just tell the best possible story

I can and the readers it's not too hard

from reading his story to to figure out

the insights on their own so my primary

objective is to entertain and inform and

to get the reader to turn the

page um rather than being prescriptive

yeah no I like it I like it let's talk

about your your career as an analyst

then and everything around that uh

Secura fund how did that come about um

tell us a little bit about the the fund

itself well the Sequoia fund got its

start in 1969 at about the Time Warren

Buffett

was uh wrapping up his investment

partnership because he was doing

Berkshire hathway so he had all these

investors mostly in places like Nebraska

and Iowa who needed a new

home uh Warren went to uh school with

Bill R the founder of our firm bill was

an analyst and a money manager a kider

PE buddy along with rip kff

and

Buffett wrote a letter to his investors

which I actually found a couple years

ago a guy was talking to happened to

have it he had been following sequ for a

long time he still have that letter from

Buffett and the first thing that Buffett

wrote in his annual letter of that year

I don't know if it was 6970 whenever it

was uh I've got a lot of questions about

what to do with what people should do

with their money now that I'm leaving

money management I suggest you give it

to Bill ruin no guarantees but he's a

smart guy you can trust him with your

wallet and that's how seoa got started

and then it had three years of horrible

returns it was a very tough Market at

the time it got going sequa

underperformed their questions about

whether it survived h and then we went

on to become the best performing mutual

fund of the next 40 years outperforming

on average by two points by being

patient by doing value investing doing

all these things we're talking about

concentration yeah I think there's a big

lesson in that for for all of our

listeners uh the importance of of

patients um during your your time at at

seoa fund obviously would have met some

incredible people and and again from a

you know from a perspective of you know

starting your career out there or

developing your career there I should

say is it is is it a valuable lesson to

say never stop learning always feel like

you can learn more from other

people uh yeah of course of course but

when I hear when I hear an investor say

we learned a lot from the bad experience

we just had I think huh do I want to be

what do I want to have my money from

someone who's still learning we used to

on a stock in a company called

expediters

International and uh the CEO used to say

we're not doing this for the education

you know we we know what we're doing uh

we're past the point of making dumb

mistakes and so when I hear people say

oh we learned a lot from that we be

better next time you know I think boy I

wish I was with the person who didn't

have to learn that

lesson yeah because all these

lessons if you're if you're a student of

history or better yet if you have

experience in the market you've seen it

all even the meme phenomena I'm sure

there are things that were similar 20 30

years ago yeah I'm sure they were

manifest itself differently yeah yeah

exactly uh what do you consider to be

your most memorable investment success

and your biggest challenge on on the

opposite side of that during your time

at

seoa oh okay

um let's see we

owned uh we bought some some

Costco very early

on and because we have a value

disciplined after it went up you know a

quarter of a point from our price we we

stopped and it went on to be a a 20 bger

from that

point um and that that was different

because R when ran was was in charge um

if he liked something he would just buy

it he he didn't get too too uh specific

about the price um so for me that was a

lesson right if you really think a

company's exceptional

um don't don't get too too crazy about

that um and let's see what one of the

big successes we had um company called

fenol which is an industrial Parts

distributor very boring business right

they just go around knock on doors and

say hey can I sell you some nuts and

bolts but they had something special in

that the company ran on energy and it

ran on aggressive comp ation system that

really rewarded people who hustled and

that turned out to be a a winning

formula a unique

formula uh we owned that stock for about

20 years and it was a great investment

and I probably visited about a third of

all their stores the the Insight that I

brought and what my value added was at

sorei is as a journalist I was very

comfortable talking to strangers

approaching people cold and asking them

questions and in the days before there

expert

networks we could get a lot of unique

information we didn't cross the line it

wasn't inside information but we could

figure out how a business worked just by

going to trade shows and talking to

people and now you can call up an expert

Network and you can find 10 people who

you know have their stories down they

they tell you how it all works and I was

talking to people who had never been

approached by an investor before and now

if I were to call up some they're

probably involved with five networks and

their 10th phone

call but in the case of fast andol that

was one where a lot of Sho Lea went into

making that a successful investment and

giving us the confidence to stay with it

through the ups and downs of the

business c yeah I'm not sure if this

next question is an easy question to to

answer but when I speak to intraday

Traders a lot of them say it was easier

to make money back in the day than it is

now but from an investing standpoint

would you say it was easier or harder

back then when you sort of started out

or would or would you say the opposite

what would you what would you

think I think it was much easier and I I

wish we had appreciated just how much of

an informational Edge we had with the

sort of research that we did um now you

can still have a differentiated opinion

and have insights that maybe others

haven't arrived debt but it just takes

so much more effort I think because not

only do you have to read the 10ks and

the q's and the conference calls you

have to read all this stuff that's

available through the networks through

the streaming services the the two-hour

podcasts on different companies all of

this it just takes a lot more to just

catch up with everyone else um and

before with just a few phone calls we

would be the lead we used to say okay it

takes us about six weeks to catch up

with the cells side and from then on

anything we learn is beyond what most

people know and I don't think that's the

case anymore it's gotten a lot

harder yeah did you did your um you

writing perspectives um your approach to

it did it change much from your time as

an

analyst my the way I wrote yeah and the

way you went about it I I became

well I I became a better writer with

each book yeah only because I had done

it before as a journalist you know the

longest thing I would ever write might

be 2,000 words 3,000 words and that's

that's a lot different than 100,000 or

200,000 words so you get better by doing

it I'm hoping that my next book is even

better than the last one which was

better than the first one well let's

talk about that third one then just

quick quickly can you give us any

insights or is it all hush hush at the

moment no um my my editor tells me okay

your Niche is doing biographies of of

financial folks so give us another one

make it American don't make it 500 years

old um have some relevance to the

current day and age and I was pursuing U

Andrew melon who is the treasury

secretary under uh Harding coolage and

and Hoover right before

FDR and as it got into that I thought

okay well there was a biography on on

him it was done with the authorization

of the family he he pulled some punches

uh it's not it's told more like a

historian would tell it not as a as

someone who you know didn't follow sort

of a novelistic formula which I Tred to

do uh and then I thought well rather

than do a cradle degrade biography it

would be more fun to just focus on the

period of when he was in office and

throughout his whole career as treasury

secretary and afterwards when he was

retired he was in a confrontation with

Franklin

Roosevelt and Not only was it an

ideological Clash but when Roosevelt

took over he wanted to make a scapegoat

of of melon in order to legitimize what

he was trying to do get more support for

the New Deal and he just attacked melon

relentlessly in the courts and in the

press in every way he could and blamed

melon for creating the Great Depression

so we have this conflict uh there's

opportunity in that to create some

suspense create some drama there and it

it has kind of a weird ending

because U melon at the same time he was

trying to save money by donating money

to charity the charity he was donating

it to was his own philanthropic

organization which was by buying

European masterpieces to put in a museum

that melon wanted to build and that

museum was the National Gallery which he

gifted to the American people and it

sits right on the federal triangle in

Washington and so we have this conflict

here not only between the individuals

but between the ideologies of L Fair

versus government we have small

government versus big government and

this is the moment in American history

where everything changed where we went

from being small government low taxes no

debt to when we have all these things in

Spades and I wanted to get at what it

was that created that shift was it just

that okay people liked uh bank deposit

insurance was it just like that they

liked getting um a social security check

or did something change in in the in the

psyche of the American people and I was

able to get at that by exploring this

story about melan and

FDR fascinating for for everyone uh

listening or watching this the links

will be uh below for the two previous

books and uh and Greg when when do you

reckon we'll expect the third we got a

rough date well my deadline to finish it

is December 25 so

realistically you probably wanted period

all 27 forun nice no no no it's good but

it gives time for people to check the

other two and I definitely recommend

people to do that okay look a few

questions now um on on value investing I

mean look some people will will claim

value investing is dead especially with

the rise of Technology what would you

say to

them well I put that question this

morning to my friend Marshall Jeffy in

newberger Burman and he said the fact

that you're asking the question means

that it's not done yeah right it's still

around

if it was dead we wouldn't be talking

about it anymore uh I think about

well let's remember during covid when

when gas prices went negative for a day

yep let's say you were you were stuck in

traffic in New York you might be going

through the Holland Tunnel you're

surrounded by these cars belching

gas you knew that that gas wasn't going

to stay negative forever right were

there an opportunity for a value

investor to to to buy something that was

being dumped at the time uh of course

there was um what did what did Buffett

pay for Apple absent the cache nine

times for this for this fast growing

dominant

brand um no there's all sorts of

opportunities um more recently I had an

experience with a company that makes U

air conditioners and and power supplies

for data centers a company called Verve

symbol VRT

um it got taken over by a guy named

David Cody who was the CEO at

Honeywell uh great track record at

Honeywell rebuilt that company it was a

home run for investors he took it over

it was a spack so there was a little red

flag there but the stock was in the in

the mid 20s it fell down to 12 when they

missed earnings but all the work that I

did told me

that um data centers they're not going

away there's going to be more them and

this guy Cody was the real deal he he

wrote a book about himself it was very

self-serving in a way but I knew some

people who are engineers at Honey wall I

talked to them I said well can you take

this guy's word to the bank they said

yeah everything he says if he says it he

means it and he will move Heaven and

Earth to make it happen um okay so

they're making basically air big air

conditions right they're not doing

anything that is in

technology um yeah that thing was just

sitting there U got down to 12 bucks

it's now over uh 100 uh gosh and G look

that up where is that but there's so

these opportunities come along but it

takes patience you got to be the

snapping term and at RNE we went through

years when we didn't buy anything well

we didn't see we didn't see an

opportunity we would take invest uh

money from new investors and tell them

well it might take three years before we

even put all this money to work we're

not going to charge you until we do we'

only charge you on what we invest but

we're just going to wait until prices

come into our range and otherwise sorry

um so I I think maybe maybe it's a

little difficult now you know all the

private Equity that's coming in bought

up companies makes it harder but with

interest rates going the wrong way for

them you know maybe there's there's more

opportunity there' be more things listed

so maybe it's a narrower universe but

you just got to you know look around

more yeah yeah for sure I mean the

company you're you're on about there I

mean almost 9x in it in less than a year

which is is incredible a question Greg

now on In fairness In fairness I didn't

see the the the data center thing you

know in AI ballooning like it did uh but

you know that was certainly nice yeah I

got above 100 snow9

yeah yeah you take that um what do you

think about valuation these days when

you've got all the tech sector versus

the old non-tech businesses you know in

other words what is a bargain in today's

market from a sort of PE multiples or or

do you look at it a little bit

differently I wish that it was

March when did Co hit 2019

2020 when it 2020 sorry

2020 and everything was being killed

right and here here was the choice here

was the choice we were

facing okay do you w to plow a bunch of

money into the market knowing that it

could go even

lower or do you do

nothing and if Co ends up killing us

all if Co ends up killing us all what

difference does it make

right you just put in your money and if

we survive the stocks will recover and

if the stocks don't recover that means

that Co killed us all so it was a very

easy time to buy stocks I think and I

think about the the saying that well the

rich people on Fifth Avenue they stay in

their mansions and wait for the bargain

then they come out of their mansions and

buy things in downturns and then they go

away from for another seven years and

that's kind of how I like to invest you

just look for that when the risk premium

gets to some some crazy number um

otherwise you've got to be an item

picker and find things that you think

can grow a reasonable multiple so in

general unless there's a recession I I

sort of always think the Market's

overvalued um but within that market

there are opportunities

last yeah last couple questions here how

do you how do you feel about having like

a cash pile you know sort of waiting you

know patiently waiting for for a real

opportunity and also I guess potentially

understanding that that you could be

waiting in for for a fair while is it

just is what it is that's the way to do

it or how do you

feel well the the philosophy of R Used

to Be always have some cash but that's a

lot easier when the cash is earning

something yes yeah when the cash is

earning zero when the cash is earning

zero and the Market's going up it can

really hurt uh

so I guess if yeah I I would want to be

as close to fully invested as I could

yeah at all

times yeah but if you can earn if you

can earn something on the cash that

makes it a bit easier that makes it

easier yeah okay F final question um

areas in the market for the future that

you you like the look of is there

anything that sort of sticks out to you

at the

moment the the things that I'm most

comfortable

with um are those companies that I think

I can understand or have a shoted

understanding so that that takes me

towards

Industrials and Retail retails very

tough because unless you you've got

something special think Costco has

something special company like

Aldi uh in has come to the US and

they're talking about you know thousands

of stores and I think that's realistic

now you can't invest in them but they

have something special with a very lean

U skew

count um

Industrials anything in in Aerospace

where the FDA has only

approved one item for a specific plane

where you have a monopoly on those parts

those kind of businesses but in right

now I don't know I don't even know

what's cheap and if it was if it's a

bank I don't know if I'd want to go near

it yeah yeah for sure Greg it's been an

absolute pleasure uh having you one as I

mentioned in the uh the bio of both the

podcast and the YouTube people can find

links to to your socials and also the

books as well but Greg thank you so much

for coming

on yeah thank you Sam this was a lot of

fun thank you

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