Is value investing dead? | CWL with Greg Steinmetz
Summary
TLDRIn 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
💡 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.
📚 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.
📈 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.
🤔 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.
🚀 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.
🛠️ 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.
💼 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.
Mindmap
Keywords
💡Value Investing
💡Holding Period
💡10 Baggers and 100 Baggers
💡Indispensable
💡Market Volatility
💡Meme Stocks
💡Patience
💡Sequoia Fund
💡Concentration
💡Costco
💡Expeditors International
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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