(S02 E01) The VALUE: After Hours Podcast

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Summary

In this episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle chat about:

  • Our 2020 New Year’s Resolutions
  • 3 Points From @LAForeverHall’s Thought Provoking Tweet
  • The Entire Stock Market Is Loaded To The Gills On One Side Of The Boat
  • How Do You Know When You’re Ready To Run Outside Capital?
  • Ken Fisher – Average On Paper Is Not How You Get To Average
  • Phil Fisher’s Thoughts On Forecasting
  • All U.S Presidents Are Motivational Speakers
  • Would We Know The Term ‘Value Investing’ If Buffett Didn’t Exist?
  • What Would You Pay For Mariah Carey’s – All I Want For Christmas?
  • Warren Buffett’s Disqualifying Checklist
  • Buffett’s Protege Todd Combs To Become Geico CEO
  • Best Questions From This Week’s Mailbag

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

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Full Transcript

Jake Taylor: Hey, everybody. Welcome back to Value After Hours. I’m one of your hosts, Jake Taylor, and happy New Year to everybody. Toby, what do you have for us today?

Tobias Carlisle: I’m talking about the fact that the entire stock market is loaded to the gills on one side of the boat. Everybody’s super bullish for the brand new decade.

Jake Taylor: Bill, what do you got?

Bill Brewster: We’re going to talk about three bullet points from a hundred bullet point thread that Liz, the handle on Twitter is @LAForeverHall, had tweeted out that were very thought provoking.

Jake Taylor: And I’m going to be going into some New Year’s resolutions and then we’re going to wrap everything up with a Mailbag that had some really good questions in it, so.

Tobias Carlisle: Big Mailbag.

Jake Taylor: Big Mailbag for the New Year. It’s right after this.

Speaker 4: Tobias Carlisle is the founder of Principle of Acquirers Funds. For regulatory reasons, he will not discuss any of the Acquirers Funds on this podcast. All opinions expressed by podcast participants are solely their own and do not reflect the opinions of Acquirers Funds or affiliates. For more information, visit AcquirersFunds.com.

Tobias Carlisle: All right. Should we kick it off with New Year’s resolutions? Have you given it some thought, Jake?

Jake Taylor: I have. My personal New Year’s revolution is actually springs from an article that came out from the BBC here recently and it was called How Busyness Leads to Bad Decisions. And, really, the idea of it is that we all… When we’re under pressure, we start to kind of get tunnel vision and we work on little stuff that makes us feel good about making progress, but we’re not seeing the bigger picture and working on the things that will really unlock the magic.

Jake Taylor: And so, especially for me, I find that E-mail is my arch nemesis when it comes to this. I get to feel so productive. They actually call it an attention slot machine because it’s like, yeah, you go in and see if there’s anything important you need to work on and you’re letting everyone else set your agenda for you. I spend way too much time in E-mail. So, their recommendation was to actually schedule time to sort out your E-mail and not have it just be open all the time. I think that’s really smart. So, that’s what I’m going to work on.

Jake Taylor: We also have some other tips about treating your life a little bit more like an art gallery and less like a pantry that you’re just trying to stuff full of things. So, you curate your…

Bill Brewster: I like that.

Jake Taylor: … an art gallery. Everything’s laid out for a reason, there’s a flow to it. The same concept can be applied to your schedule and not letting every single thing be in there that doesn’t deserve to be there.

Tobias Carlisle: Pau…

Bill Brewster: I’d like to know if these people have kids.

Tobias Carlisle: Yeah.

Bill Brewster: That’s my one pushback to them. Like all that’s nice when I wake up.

Jake Taylor: Yeah.

Bill Brewster: Come 5:30, all that changes.

Tobias Carlisle: Paul Graham has a great post on the creator time schedule versus someone who’s reactive. So, he says you’ve just got to… Because it takes a long time to get… If you’re writing, for example, you have to reread what you’ve written. And then you have to start writing so it might take an hour to prepare. Then you might get an hour or two of productivity before you need to take a break to do something else. So, you need blocks of time rather than short periods. He says you have a morning and an afternoon and morning might be get all the stuff that’s hard to do done. Or get the thing that you want to get done in the morning, then the afternoon is all for meetings and busywork and E-mail and everything else. And that’s a good schedule, that’s what I do.

Jake Taylor: Yeah, Daniel…

Bill Brewster: Paris had a good one on that. He said especially if you’re junior, it’s sort of hard to do this, but to try to articulate up front to your bosses or if it’s our role or whatever, if it’s a client, and just say… in the E-mail body, it’s almost like a… it’s pre-written. And you say, “In order to do what I’m doing for you best, these are the blocks of times that I’ve scheduled to respond to you. I’ll be working between these hours. If you really need me, you can call on my cell,” or something like that. Sounds better…

Tobias Carlisle: Good luck with that one.

Bill Brewster: That’s what I’m saying, yeah. Had I done that at the bank, they’d have been like, “Oh, that’s cool. Call me right now.”

Tobias Carlisle: Yeah. And the whole thing would’ve been insane, though. Just like, yeah, that’s my schedule. That’s why you don’t have one, you just do what I ask you to do.

Bill Brewster: That’s right.

Jake Taylor: Yeah.

Tobias Carlisle: When I ask you to do it.

Bill Brewster: I don’t know if you understand the roles here, sir. So. Might be better in a book than reality, but there’s probably something to borrow from it.

Jake Taylor: Yes…

Tobias Carlisle: Do you have a New Year’s resolution?

Jake Taylor: … I think Paul Graham…

Tobias Carlisle: Sorry.

Jake Taylor: …called it the maker versus manager schedule.

Tobias Carlisle: That’s it. That’s it. Yup. Do you have New Year’s resolutions, Bill?

Bill Brewster: Dude, everything’s perfect, man. No. I have gotten a lot this year out of creating content. I hope more of it’s good than bad, but I’d like to continue that. I’ve gotten, from this podcast… We joke about the amount of followers, but I’ve found them to be more than I thought they would be and really thoughtful and engaged. People have written me about things that I’ve said and I’m appreciative of that and it’s made me look at things in a different way. And I’m going to try to prepare for this, continue doing a good job on this and then I’ll probably try to up the frequency that I’m writing on the blog and maybe decrease my Twitter frequency a little bit. So, that’s most of it. I don’t know, I have to put together a three and five year plan and stuff like that, but… Right now, it’s just keep everyone alive and treat my family in a way that makes them not resent me on a couch somewhere, someday.

Jake Taylor: Yeah, you’re in the survival period with that many under five.

Bill Brewster: Yeah.

Jake Taylor: Both you guys.

Tobias Carlisle: Yeah. I have something similar. Just get more handsome, get richer, the usual. No, I don’t have any specific resolutions…

Bill Brewster: Yeah, but you can’t. You got a better accent. Oh, it’s perfect, sorry.

Tobias Carlisle: Yeah. I think that it’s a little trap waiting until the end of the year to get the resolutions. All this pressure and then you mess it up and then you got to wait 12 months. I think as soon as you have the thought, you’ve got to start putting it into practice and know that the first… I mean, I think in relation to anything, podcasting, whatever, I think you’ve just got to… If you want to do it, you’ve just got to start doing it and you know that the first dozen or so are just going to be write offs. Just get them done and get them out of the way and then start… I love that…

Tobias Carlisle: I forget which movie it is, but they talk about the American businessmen, they make these great leaps whereas the Japanese businessmen… Actually, it’s Rising Sun and it could be the book, Michael Crichton talking about it, he says that American businessmen make great leaps. Japanese businessmen kaizen, they just keep on improving all the time. And I think that that’s a great approach, but I think you’ve got to do both. You got to try and make the great leap and then when you make the great leap, you got to kaizen as much as you can. Tiny little improvements over and over and over again until you get something that’s where you want it to be. Because if you wait to launch when it’s kaizen, you never get there, it never launches.

Bill Brewster: There’s a push and pull to that, thought. I mean, we’ve talked about what am I doing and where does it go, right? And I would not have been ready, certainly, to run outside capital two years ago, probably 12 months ago. I mean, I know that you’re supposed to be like, “Oh, I’m the best ever,” but I don’t know for certain that I’m ready today, right? I think I’m a lot closer than I was, but I only want to pull that trigger once. That’s not something that I want to prematurely bet and then get better.

Bill Brewster: And then the flip side of that is, well, to your point, how do you ever know you’re ready. I think I know that I’m a lot closer than I’ve ever known before, so. I don’t know.

Tobias Carlisle: Well, here’s a good question. What is the difference between running outside money and running your own PA?

Bill Brewster: Other people’s risk.

Tobias Carlisle: Yeah.

Bill Brewster: Right? I mean, you’ve got people work really, really hard for it and it’s one thing to lose… I think I could pick myself back up. I don’t want to be responsible yet for other people needing to do that. And I don’t think that I would do that to them, but I only want to make that bet once. And I’m sure everybody else only wants me to, also.

Tobias Carlisle: How about you, Jake?

Jake Taylor: The difference for me is the level of responsibility that I feel. I mean, kind of like what Bill said, you know that you could work harder later if you had to or take a different job or… It’s your fault if you lose it, but the… I think maybe the reputation part for… would be really hard to do poorly and washout. You would just feel so bad. You’re letting down all these people who trusted you. That’s an awful proposition.

Tobias Carlisle: Yeah, in practical terms, I think what that means for me is I would size everything much smaller and I’d have much more diversified portfolio in outside capital. I would never size anything… I’ve seen some guys who come out of the blocks really quickly because they’re very aggressive and aggressive in positions that are volatile and slide around a lot and they put a lot of capital into them and get a little bit lucky sometimes, get a great track record, and then never ever, and that’s luck, but then never diversify out, consolidate, never do anything like that and just run into a brick wall. Massive trap.

Bill Brewster: Yeah, and, well, it’s so important to have the… I mean, it’s… You have to be in the position to do it, but having the right partners is, I think, crucial to being successful. Especially if you’re running a concentrated book because concentration works real well when it works, but when it doesn’t work, you better have people that believe in what you’re doing. Because then they’ll just run from you, right?

Jake Taylor: Toby, you’ve done different modes of investment vehicles. Do you feel different levels of responsibility between them?

Tobias Carlisle: So, no, I don’t. I think it’s the same. I think it’s the same level of responsibility. I’ve been looking for a way to… looking for a structure that matches the way I manage money, the way I manage my own PA and so I have finally found that, but it’s… that’s a process, too. That’s…

Jake Taylor: Well, I feel like, too, with your approach, you tell people exactly what you’re going to do, you show them why it’s worked in the past, why you expect it will work in the future, and you do it and if it doesn’t work out, well, shoot. What were you supposed to do? Like I did exactly what we all agreed was the right thing to do.

Tobias Carlisle: Yeah. I mean, that doesn’t suffer from not working out, though.

Jake Taylor: Yeah, well…

Bill Brewster: Yeah, but what I… I mean that’s what I love…

Jake Taylor: They can’t be mad at you, though.

Bill Brewster: Yeah, and what I love about your strategy and what Jake and I have talked about, right, is it’s like you just kept peeling back the onion, got to your answer, and then you’re like, “This is it. This is my answer.” Right? And then, to Jake’s point, it’s transparent. Nobody…

Tobias Carlisle: That’s what I wanted to…

Bill Brewster: I don’t think people could ask for much more.

Tobias Carlisle: The reason I did it that way is when I started out, who am I? Why would anybody trust me at all? I have no expectation that anybody would, so I’m going to say, “Look, this is the process that I go to to come up with the answer that I have and this is what I’m going to…”

Tobias Carlisle: And my definition of a skillful investor is one who executes on the program that they’ve told everybody else that they’re going to do. That the food inside the can matches the wrapper on the outside of the can. That, to me, is a skillful investor. I told them I would…

Jake Taylor: [crosstalk 00:12:29] that dog food, though, you’re feeding them.

Tobias Carlisle: Well, but the idea, the product…

Bill Brewster: As long as you’re willing to eat it.

Tobias Carlisle: I didn’t say it was necess- did I say it was dog food? It could’ve been like Chef Boyardee, could’ve been something like that. Something really nice.

Bill Brewster: No, that makes sense.

Tobias Carlisle: I said to my wife after we had launched and everything was going basically according to plan, I said, “This is really nice. The strategy tracks value pretty well.” And she said, “I didn’t even know that there was a risk that that could not happen.” I was like, “Yeah, sorry, that was also a risk.”

Bill Brewster: Well, the other thing that’s tough, too, is like… I mean… How many people manage through a real draw down?

Jake Taylor: What are those?

Tobias Carlisle: Virtually none.

Jake Taylor: What is this that you’re talking about?

Bill Brewster: Yeah, right? October to December, that’s a joke. I mean that’s not real pain. I mean, that’s temporary indigestion. I’m talking like pain.

Tobias Carlisle: I think that’s a good segue to, actually, this was what I was thinking about. My topic was the market’s high- I think… I saw somebody… It’s a 29% year for the S&P 500. Is that right?

Bill Brewster: Feels a little high…

Jake Taylor: I think it might be over 30.

Bill Brewster: … but December’s been strong, man.

Tobias Carlisle: And I think it was the best year since like 2013, which was also like a 30% year, like stunning, stunning returns. And those are compounded, there’s not being much… there’s been no draw down. 2019’s coming off a higher level than 2013. Every central bank in the world is printing. I don’t know anybody, other than the guys who are permabears, who is even remotely bearish. My instincts are always wrong, so I’m always slightly bearish, but there’s a little permabear in me, too. But I feel like… I just kind of get this feeling like we’re going to run into a brick wall. Just because there’s not… Every single person is on one side of the boat and all the arguments are so strong for being super bullish. Nobody’s even thinking about what happens if it’s not… if we go down a little bit.

Jake Taylor: I did… I was messing around in the Apple stocks app and I happened to notice that if you like kind of pinch your fingers together, it’ll show you returns between two points in time. And I’d never done that before and…

Tobias Carlisle: Yeah, I didn’t know it could do that.

Jake Taylor: Yeah, so then I was like, “Oh.” I kind of looked at one of the… I was just on the S&P 500s map there and if you go back to January 2018 to today, we’re only up 12% from there.

Tobias Carlisle: I can…

Jake Taylor: So… That’s like a 6% return basically compounded over the last two years, which is about what the average you would expect on any given random year for equities. But, boy, isn’t that just like what you’d also expect? The path to get there… Crazy monster draw down in, well, relatively speaking for this bull market, in late last year and then just a year, it comes out of nowhere that’s up 30% and that’s how we get to 6% annualized for the last two years.

Tobias Carlisle: Yeah.

Jake Taylor: This is a tough game.

Bill Brewster: Well, this is… I mean, people are going to say what they say about him, but I think Ken Fisher’s one of the best writers on this subject. I mean he always talks about average on paper is not how you get to average.

Tobias Carlisle: Right.

Bill Brewster: And I really like his way of picking what next year’s going to do. It’s sort of cheating, but he basically looks at what everybody says the year’s going to do and then he figures out the bands that no one’s picking and he’s like, “That’s the most probable outcome because that’s the least likely to be priced in.”

Tobias Carlisle: The band that people aren’t picking?

Bill Brewster: Yeah, so like you get up big, I don’t know what the definition of big is, right? But like he basically looks at it like you’re up big, you’re a up a little, you’re down a little, or you’re down big. And, statistically speaking, you’re either going to be down a little to up big more often than anything. So, his argument is you want to be long unless you’re going to be in the down big draw down. So, I guess when he might argue that you should get nervous is when no one’s looking at down big. That’s when you may…

Tobias Carlisle: What does he say… Has he given his 2020 projection?

Bill Brewster: I can’t read that, man. Didn’t you know what happened to him this last year?

Tobias Carlisle: Yeah, I don’t listen to… I mean, I don’t listen to anybody prognosticating about what’s going to happen next year because no one knows. The only thing that those guys don’t know is that they don’t know. And so…

Bill Brewster: He’s…

Tobias Carlisle: …they know less than I do.

Bill Brewster: I think he’s the best. I mean, I don’t know. Say what you… I wouldn’t talk like he talks at conferences, but that guys freaking smart, how he looks at things.

Tobias Carlisle: I love the story that his dad… He talks about Phil Fisher in the intro to one of the Common Stocks books and he says he got asked at some conference where you could win, I think it could’ve been a TV or a color TV, what was going to happen the next day, I think. And I think his dad said, his dad was like, “Up big.” And I don’t know what that meant for the day, but up big for the day. And then everybody else is like trying to come up with like a little move, like half a point or a point move, and he might’ve said two points or three points one way or the other. And, of course, that’s what transpired. And he asked his dad, “How did you know that that’s what was going to happen?” And he said, “I didn’t know. All I knew was that I’d be the only person picking that number.”

Bill Brewster: That one.

Tobias Carlisle: And so, when it happened, it looked like skill and if it didn’t happen, then it would look like… nobody would remember anyway. So, maybe he learned that lesson from his dad.

Bill Brewster: He might. He might’ve.

Tobias Carlisle: He’s just picking what everybody’s not picking and then, if that happens, then he’s a genius because he’s out there by himself.

Jake Taylor: I mean, that is the way to bet it, thought, right? If you’re… You kind of bet the don’t come line and wait for… and no one else is. Kind of quiet…

Tobias Carlisle: It’s definitely the way to bet.

Jake Taylor: Yeah.

Tobias Carlisle: It’s definitely the way to bet.

Bill Brewster: It’s hard to see how people are wrong because you did just have a big spending bill, you do have an accommodative Fed. Valuations… Like I don’t know where else to invest than to buy stocks and I know that that is like… what are you doing if you’re doing it for nothing else, but… I see stuff that I think is reasonable out there. So, I don’t know, it’s hard for me to be in the down big camp, but if it happens, I would be totally not shocked and I think people are going to freak out. And I have this theory that people are just holding on to things…

Tobias Carlisle: What’s definition, though, right? If it’s down big, everybody’s freaking out.

Bill Brewster: Yeah, that’s true, that’s true. But I mean… man, you can see some draw downs in a lot of these names.

Jake Taylor: I do have…

Bill Brewster: And there’s a lot that’s not rich, right? Or there’s a lot that is rich. I say I see things that I like. I like certain setups, I think… This is not investment advice, folks, but Spirit Airlines to me, people aren’t going to go nuts on Spirit Airlines. It’s a good business model, they’ve done a lot over the longterm, it’s trading at a pretty reasonable price. I’d rather on that than bonds. So, there’s some stuff out there that I see. That just came to mind.

Jake Taylor: Let me ask you guys this, what was the last pitch that you heard that didn’t have like 12 caveats added to it about like… Well, if this stays accommodative and X, Y, Z all need to break right. I just feel like every pitch now these days is like, they realize that there’s this chain of events that kind of have to happen and break the right way for you for it to really, really work out from this price level. Doesn’t that seem to represent more of the majority?

Bill Brewster: Yeah, maybe, I don’t know.

Tobias Carlisle: I don’t really look at outside pitches. So, I don’t know.

Jake Taylor: Okay. Maybe I’m just a little…

Bill Brewster: Sorry, I don’t mean to not be able to give you confirmation bias. It could be the fact that I spend time looking at airlines.

Jake Taylor: Why am I here then, if not to give confirmation bias.

Bill Brewster: It’s a good question.

Jake Taylor: I do wonder… I think you bring up some good points, though, that like if there was ever going to be a exogenous push from the, call it the powers that be, to keep the market high before an election, boy, wouldn’t this be the team that would do it. Like Trump… We thought we’ve seen a lot of rhetoric out of him so far. Imagine what he would be doing as the election draws near and the things he’s going to be putting out to try to prop up just the perceptions of the market and the economy and trade deals. Like…

Tobias Carlisle: Doesn’t he just ignore it if it’s down? It just doesn’t exist if it’s down.

Jake Taylor: Yes, he gets quiet, but yeah.

Bill Brewster: I was cracking up when Robert Shiller was like, “We’ve never had a motivational speaker that’s a president before.” It’s like, dude, that’s what half the presidents have been.

Tobias Carlisle: They’re all motivational speakers.

Bill Brewster: Just no one’s been an open market cheerleader and gone against the Fed or whatever, publicly, but…

Tobias Carlisle: What about Reagan? Reagan was just good hair. Good looking bloke.

Bill Brewster: Yeah, I mean, you’re going to Obama wasn’t a motivational speaker. Like get out of here.

Tobias Carlisle: That’s the job.

Bill Brewster: It’s ridiculous. Yeah, so.

Tobias Carlisle: It’s the CEO job, right? We were just talking about that before. Was that before we were on camera? The CEOs job is to tell the story.

Bill Brewster: Yeah, and I think Trump understand reflexivity as it pertains to trying to get people out there and spending money. I mean, he gets that. And I agree with Shiller, that he puts more focus on that than others, but he’s not like the first motivational speaker that we’ve ever had.

Bill Brewster: But I digress. But I do think that sort of goes to your point, Toby, that Robert Shiller’s on CNBC saying that cape’s pretty high, but also Trump’s a really great motivational speaker, so we can go higher. Like it’s interesting. Everybody’s pretty bulled up right now. Fear and greed is what at like 97 or something stupid like that. But [crosstalk 00:22:45].

Tobias Carlisle: It feels very weighted to one… Just the boat feels, to me, to be filled up on one side. And I feel pretty positive, too, I’m not immune. Like I feel good. It’s been a pretty good year. We’re clearly like where there’s momentum going into the new year. I don’t know how it kind of comes undone and I don’t see it coming undone, it’s just… I just get nervous when every single argument aside from the guys who you know are going to say something bearish, you’re like everybody’s bullish.

Bill Brewster: I’m not like bulled up, I’m just not bearish. If that makes any sense, like…

Tobias Carlisle: I don’t have a view. Like to be fair, I don’t have a view, I just feel good.

Bill Brewster: My view is that we probably become Japan, right? And how I’m wrong is like maybe the BlueGrass Capital view is correct and we’re in the middle of a revolution…

Jake Taylor: Technological revolution.

Bill Brewster: Yeah and the deflationary impacts take a lot of the inflation out for a while and then, once everybody has captured the market share and start to raise price, then inflation comes. I mean, that’s plausible, I don’t know.

Tobias Carlisle: So, the tweet storm…

Bill Brewster: What the hell do I do with that?

Tobias Carlisle: The tweet storm that you were going to discuss, Bill, I’m just going to jump the gun a little bit. But the tweet storm that you had. Liz, LAForever, one of the tweets was because people are living longer and we’re maybe at some tipping point where people can maybe live forever. Interest rates in that scenario go to virtually zero, which is why… Because the market is a discounting machine, markets are forward looking beasts. We’ve already kind of started discounting to zero. How do you feel about that?

Bill Brewster: I’m fading that one.

Jake Taylor: Didn’t the US just… Our longevity like tick down for the first time in 50 years or something?

Bill Brewster: Here he comes again. Here comes Debbie Downer.

Jake Taylor: I know, I just…

Bill Brewster: Come on, man.

Tobias Carlisle: That might be the average, though.

Jake Taylor: Yeah, no, I’m saying that…

Tobias Carlisle: Deaths and childbirth.

Jake Taylor: It’s the first time in forever we actually… Your next group didn’t live as long as… is not projected to live as long as the cohort before it.

Tobias Carlisle: Do the Japanese live longer than anybody else? They got to that zero interest bound before everybody else did.

Bill Brewster: That’s right.

Tobias Carlisle: So, maybe there’s something to it.

Jake Taylor: Maybe.

Bill Brewster: Jake, I think their point… I think that’s drug related. I could be wrong, but…

Jake Taylor: Oh, maybe.

Tobias Carlisle: I jumped the gun a little bit. Do you want to introduce your topic, Bill?

Bill Brewster: No, let’s just start talking about it. This take that she had… I mean, look. This woman is obviously really intelligent. That particular take, I thought, is like way cooler to talk about than real. I don’t care if humans start living for 200 years, they still can’t delay gratification.

Jake Taylor: It’s true.

Bill Brewster: I mean, what, you’re going to tell me because I’m wait 200 years to die that I’m not going to want to have something now? Like get out of here. THat’s anti-human.

Jake Taylor: It’s not YOLO.

Bill Brewster: It’s not YOLO at all. And if we know anything, it’s that YOLO is strong to quite strong these days.

Tobias Carlisle: So, we’re talking about… There’s a great… How many tweets in the tweet stream? 87 or something like that.

Jake Taylor: A hundred.

Bill Brewster: I think it’s up to a hundred now.

Tobias Carlisle: A hundred.

Jake Taylor: It’s a hundred, yeah.

Tobias Carlisle: Liz, LAForever is the Twitter handle, and there were several great tweets that you were going to mention, Bill.

Bill Brewster: Yeah, the two that I thought were really interesting, especially on the back of our Buy, Trade, Sell segment was she said… Well, it’s three. So, 17, 18, and 25 I think they are. “Company narrative metagame management is one of the primary roles of a good CEO and most do a poor job of it. Managing your narrative is a big aspect of capital allocation and can create or destroy fortunes for your shareholders.” Then she goes on, “This is why Elon Musk may be one of the greatest CEOs of all time, especially if you think Tesla is worthless. Narrative management and capital allocation alters intrinsic value.” And then she keeps going and she says, “In highly reflexive businesses, short sellers are kind of like economic terrorists by reducing the range of possible intrinsic value outcomes.”

Bill Brewster: And I think that’s pretty interesting. Look at… what is Amazon if Bezos doesn’t know how to deliver that message to the street from day one? What is Netflix if Reed Hastings doesn’t know how to deliver his message and get that leash? What is Disney without Iger right now going through this transition? There’s a way to see Disney where they got in a bidding war with Comcast. They overpaid for these assets to get Marvel because they’re desperate to get growth. Disney+ is like an offset to ESPN, which has massive headwinds and Disney’s failing. But Iger’s there and he’s got this sweet book and he’s Iger. I don’t say that like… That matters, right? And it’s all true.

Tobias Carlisle: He’s very likable, Iger.

Bill Brewster: That’s right. And he’s a visionary and he did… I’m not sounding proper because the Pixar deal was super forward looking and he’s done a lot of really good things and I’m not trying to be sort of denigrating to his record, but I do think that him being here totally changes the lens that people are willing to give to the company. And that matters a lot, especially when you may need to go out and do an acquisition and stock is your currency or potential currency and… Buffett, it’s super hard to argue that him and Berkshire has not been a massive benefit to all the shareholders. In addition to his allocation skills, who is getting them through the Solomon crisis and whatnot, I mean all that stuff really matters. So, I thought those were interesting.

Tobias Carlisle: Do you think we know the term value investing if Buffett doesn’t exist?

Bill Brewster: Probably not.

Tobias Carlisle: Do you think that Graham and everybody else is kind of… And there are practitioners who get it directly from Graham rather than… But I think everybody from the last generation or two has got it from Buffett, right? Read Buffett’s letters, then go backwards and find Graham. But there are a handful of guys who are Graham first who will probably… Do you think their records are good enough to kind of… Would it have survived to this point?

Bill Brewster: Yeah. Look, I think the records are good enough. I think… Buffett, to me, is a unique combination of a guy that wanted it so, so bad, had the skillset, and the brain to put it all together, condense it, and package it in a sellable format and something in him wants to be liked bad enough that he was willing to do it. So, I think in order to mass market a concept, you need an idol and he’s a great delivery mechanism for the message. I think those…

Jake Taylor: Don’t discount his want of teaching, also.

Bill Brewster: Yeah, that’s right. Okay, that’s fair. Sorry, Buff-Dog. But I guess there are other standalone records. Like Greenblatt, for instance, his record clearly deserves to be in the discussion. He wrote the books, but he doesn’t have the same way to get it out to the masses, so. Maybe it’s because he’s just not as rich.

Jake Taylor: My guess is that it would look like the current amount of followers of spinoffs and arm.

Tobias Carlisle: Yeah, and there’s not a lot of those guys around.

Jake Taylor: Not a lot.

Bill Brewster: You know who does it well? I wanted to bring them up. That dude Cadice, whoever runs Cadice cap on Twitter, they post really interesting ideas and they’ve been long… Bed, Bath & Beyond and Tesla in the past year, so like they have some real…

Jake Taylor: That’s range, there.

Bill Brewster: It is range. Now, maybe that’s lock, I don’t know, I don’t know the person, I don’t know what their track record is, but…

Jake Taylor: It’s the Mariah Carey of investing.

Bill Brewster: It is, but… You don’t find many of them, so.

Tobias Carlisle: That was a great discussion. Corey Hoffstein threw this out to Twitter. He said, “What would you pay or how would you even analyze what you’d pay for Mariah Carey’s All I Want For Christmas?”

Bill Brewster: Zero dollars. I’ll tell you what, I would pay all the dollars if I could make sure I’d never hear the song again.

Tobias Carlisle: Well, here’s the… Because it’s FinTwit, it gets into this… We got right into it and the analysis is kind of interesting. So, you can look at her Spotify plays. That song is the most played song on Spotify.

Bill Brewster: Right.

Jake Taylor: I don’t doubt it.

Tobias Carlisle: And it comes out every year and it goes to number one. So, her royalties from Spotify for All I Want For Christmas $2 million a year, something like that. That ignores YouTube, radio, Pandora, I guess Apple iTunes sales, potentially. Any other kind of format, so I don’t know what she’s doing all together, but it could be like $5 million a year out of that thing. Now, instead of perpetuity that’s growing, is the growth rate higher than the discount? What’s that thing worth? That’s worth a lot of money. We can still sing Bing Crosby’s songs, they came out in ’42.

Jake Taylor: Yeah, there’s a nostalgia element to Christmas songs where I don’t think they decay like other things, other IP. I mean, you want to hear the ones from… Like what are all the movies that I like to watch during Christmas time? None of them…

Tobias Carlisle: Die Hard.

Jake Taylor: Die Hard, we’re going to watch it today…

Bill Brewster: Yeah, obviously.

Jake Taylor: … because my kids are really into it. National Lampoon’s Christmas Vacation, Scrooged, Christmas Story and Elf is the only one that like breaks…

Bill Brewster: Yeah, it is.

Jake Taylor: … this decade or in this century, so. Otherwise, it’s all nostalgia, right?

Bill Brewster: I tried to get into The Santa Clause.

Jake Taylor: I’m long Mariah, at this point.

Bill Brewster: You guys are all having the wrong conversation. The right conversation is how much would you pay to be Nick Cannon. That’s the right conversation.

Jake Taylor: Good point.

Tobias Carlisle: Should we do some…

Bill Brewster: The answer is the song’s worth a lot.

Tobias Carlisle: Should we do some Mailbags?

Jake Taylor: Yes, let’s do Mailbag.

Tobias Carlisle: Because I’ve got quite a few good ones from the Mailbag after not having many last week, we’ve got… After having zero last week we’ve got three good ones. So, this is a good one. “I want to be a better investor. In the past two years…”

Jake Taylor: Me, too.

Tobias Carlisle: “…I’ve read lots of books on investing. Mauboussin discusses, in the Success Equation, the concept of luck and skill. How do you know whether you’re improving your skill as an investor? What are the skillsets you should be trying to build?” That’s from Leslie Chen, CPA, CMA.

Jake Taylor: That’s a fantastic question…

Tobias Carlisle: Really good one.

Jake Taylor: … and it’s maybe… it’s probably the question to be asking yourself if you’re in this game for the long haul because all the stuff that we talk about, is it bullish or bearish times, like all of that stuff will pass and we’ll have new setups and new opportunities and new problems to solve, but the metagame of it that she’s talking about, that’s the real game to be playing, I think, so.

Tobias Carlisle: It’s a man, Leslie Chen.

Jake Taylor: Oh, my bad. Sorry, Leslie. Genders. Profiling.

Tobias Carlisle: Didn’t mean to interrupt then, sorry. Keep going.

Jake Taylor: I think that that is the important question to be asking yourself is what can you be doing to get better and, for me, I think it really comes back to understanding yourself deeply. Because there’s certain investment strategies that just make sense to you and are going to test your conviction to keep doing them all the way through and it doesn’t work and when it does work and it has to fit your personality. And if it’s going to fit your personality, you have to know hat your personality is to begin with. So, really, it’s a soul searching kind of a thing. It’s that last liberal art that Hagstrom talks about. It’s why this game is so much fun, actually, and different for everybody and lots of different ways to win and even more ways to lose.

Tobias Carlisle: It’s one of the few things that you can get better at as you get older. Professional chess players, I think their computational skill tops out at 37, something like that, and then they can win for a few more years just because they’ve got a little bit of experience, but eventually the next guy coming through is just a better computer of positional play. And so, they start falling off in their kind of mid-40’s. That’s not true of investing because you’re not timed, for one thing, but you’ve got the ability. It’s all just experience, right? Just reps. The more reps you do, the better you get.

Bill Brewster: Yeah, I mean, for me, I think you got to look at why you’re winning. So, if you’re winning of multiple expansion…

Jake Taylor: See 2019.

Bill Brewster: Yeah, I mean…

Tobias Carlisle: What’s wrong with that? What’ wrong with that.

Bill Brewster: Is that something that’s in your control? Right? Or…

Tobias Carlisle: Yeah, if you buy it cheap enough, it is.

Bill Brewster: That’s right.

Jake Taylor: That’s true.

Bill Brewster: So, is that part of your strategy? And that’s what I think aligning what your strategy is with why you’re winning and did I underwrite that, that’s the important thing, right? If you’re just sort of directionally… I have found writing to be super important for this because it allows me to go back and say this is why I bought something. I have stuff in my portfolio now that’s like I’ve had it for years. I wasn’t writing at the time, I’m happy with the position, but I don’t know… I was right, I guess, but I don’t know that I was right like I know that I was right for some of my current positions. Or wrong, for that matter.

Tobias Carlisle: Yeah, I agree. Writing the idea down, writing the thesis down is important.

Bill Brewster: Yeah, because even AB InBev, God, I hate owning that freaking thing, but I look back and I mean, it’s doing better than I underwrote and I didn’t expect all the financial engineering this year and the volatility in it and having to be pestered about why I bet on 3G and what an idiot I am and why don’t I own Heineken. Like that stuff has gotten to my psyche, but the written thesis and the presentation I gave on it sort of is my version of a true North. So, we’ll see if I’m wrong in due time, but that would be my best advice to you is write your stuff down and see what happens from there.

Tobias Carlisle: So, I’ve got another one. This is a question that is about asset allocation. “What’s a sensible allocation of assets given how inflated all assets appear to be now? Read a bit of Meb Faber, but I’d love to hear your thoughts.” That’s Cameron from Melbourne.

Jake Taylor: We’re so international.

Bill Brewster: This is not financial advice. Also levered and long because YOLO. No. The way I run my family is I have a certain amount of cash set aside that I think that we’d need for an…

Tobias Carlisle: Living expenses.

Bill Brewster: Yeah, for a period of time that we’re comfortable with. I have a CFA and a JD, if I can’t get some job, I think I’m probably doing something seriously wrong. My wife has years of attorney experience, I’d like to think she can go back to work. So, it’s just a personal thing and then everything in addition to that, I have equities because I just don’t fundamentally believe in credit right now. That’s a personal bias, but I think it’s one that it’s right and I’m willing to die on the hill. The cash allocation is fairly large, like I’m not… And, again, talk to my financial advisor…

Tobias Carlisle: Six months? Six months of living expenses? Longer?

Bill Brewster: I have like four and a half years, man.

Tobias Carlisle: Yeah, that’s long enough for me.

Bill Brewster: I needed cushion.

Tobias Carlisle: Jake, this is kind of more your wheelhouse, isn’t it? What are you thinking?

Jake Taylor: I don’t have a wheelhouse, but… For me… I mean, this gets back to Montier’s, that repression paper that we talked about. If you believe X, then you should probably be doing A. If you believe Y, you should probably be doing B. And they’re like diametrically opposed and could both be right under different scenarios of the world that we don’t really know what it’s going to look like. So, X and Y being rates lower for longer or Y being we get reversion of the mean.

Jake Taylor: I mean, it’s really tough. It does feel like there really is nowhere to hide. I’m thankful that we don’t have also ripping inflation that is basically like increasing the ante of holding cash at this point. Depending on where you look. I’ve seen some other computations of inflation that aren’t CPI and it looks at different cities in the US and just at the 400 things that people buy the most, basically, and it’s been running at like 10%. So, maybe it is a little bit higher and that does hurt a little bit more to hold cash, but…

Tobias Carlisle: Is that a Shadowstat or is it something certain?

Jake Taylor: No, it was this other index.

Bill Brewster: A zero hedge index?

Jake Taylor: No.

Bill Brewster: You run the zero hedge index?

Jake Taylor: I wasn’t looking at that either.

Bill Brewster: I…

Tobias Carlisle: You had the CPI understates the actual inflation that’s going on?

Bill Brewster: There’s no way it doesn’t. There’s no way.

Tobias Carlisle: Yeah, okay.

Bill Brewster: Because everything that you want costs a shit ton more.

Tobias Carlisle: They also shrink…

Bill Brewster: And like…

Tobias Carlisle: They shrink everything down on you.

Jake Taylor: I know.

Bill Brewster: Yeah, dude. Great, so my TV went down in cost. I could care less, right? Like everything I want costs way, way…

Tobias Carlisle: That’s a hedonic adjustment.

Jake Taylor: A lot of hedonic adjustments.

Bill Brewster: Go get concert ticket, right? And they’re going to tell me that that’s not inflation because it’s some discretionary item. It’s what everybody wants to do. Like anything that people want to do costs a ton more.

Jake Taylor: Yeah. So, I think their argument is that, for me, I’m trying to be patient and I have much more cash than would’ve ever been probably considered prudent over the last call it five years. So, I’m probably… When I say that’s not a wheelhouse, I really meant it. I have been wrong for long enough to where I have zero confidence in my own ability to predict which way is the direction of money’s kind of gambit.

Bill Brewster: So, how do you reconcile your cash position with like how Berkshire runs their stuff or what Buffett would probably tell you to do?

Jake Taylor: I do keep an eye on that and I think I’m actually pretty close to the allocations of what Berkshire’s balance sheet looks like.

Bill Brewster: That makes sense.

Jake Taylor: Especially if you consider the cash as zero return bond, paper. It’s not that different. Granted, they have a lot more bonds because of regulatory reasons, but I don’t think I look that much different than Berkshire at this point. Now, whether he would say you’re too small to not look different than Berkshire, that’s a different argument and he may be right. Like you’re not working hard enough, then, to find. But then my counter to that would be, “I thought I’m looking for one foot hurdles. Like, if I have to work that hard for it, then what are we doing here? These are all seven footers that you’re telling me I need to find and jump over, so.”

Bill Brewster: Can you do a Fosbury Flop? The Fosbury Flop?

Jake Taylor: Yeah. I feel like I have to for a lot of these things, so. Yeah, I think I’m pretty close to what Berkshire looks like at this point, though. And I do keep track of it and as a percentage of how much cash do they have as a percentage of total value. And I’m not far off from it. If that give you an idea of the under performance.

Bill Brewster: I know that…

Tobias Carlisle: You got $100 billion in cash.

Bill Brewster: It’s not…

Jake Taylor: It’s a percentage.

Bill Brewster: It’s not fair to judge your portfolio based on what would it be if it was 100% S&P, right? That’s…

Jake Taylor: That is a very spurious argument, for sure.

Bill Brewster: Yeah. And it way overstates how much [crosstalk 00:44:09]…

Tobias Carlisle: I feel like it might be a good bit now, though. Next decade, that’s a pretty good bet. I’ll take it.

Jake Taylor: I would absolutely make the Buffett protégé partners bet today. I think…

Bill Brewster: Oh, Buffett’s site is just so happy. Ted, please be listening.

Jake Taylor: Yeah, no, I think Ted wins the next decade. He just happened to get… He got the wrong decade and I think Buffett knew that, actually, going into it.

Tobias Carlisle: The bet was struck in 2009? When was the bet struck?

Bill Brewster: Maybe seven? Maybe seven, I don’t know.

Jake Taylor: Yeah, somewhere around there. I almost want to say the beginning of eight, but I might be wrong.

Bill Brewster: Toby, what do you think on cash?

Tobias Carlisle: Oh, it’s hard. Yeah, you need some living expenses set aside. But where you allocate after that is the hard thing, right? There’s nothing that’s really good. I’m an equity guy. I only want to hold equities because it’s the only thing that I feel like I understand or have a little bit of an edge. It’s like a guy who… If you’re a professional Hold Them player, don’t sit down for PLO but don’t sit down at the Blackjack table. You got to do what you know how to do and for me it’s one thing, I know equities and so I can get… I don’t look at equities and think, “Well, this equity’s going to give me 7%.” I look at the equity like, “Well, it’s got some cash, it’s got some assets.” I get a feeling for each one of them and so I want to invest on that basis so I know that…

Jake Taylor: Do you actually specifically look through to the… Do you kind of think like my percentage ownership of this company…

Tobias Carlisle: No.

Jake Taylor: … therefore makes my balance sheet look like this.

Tobias Carlisle: No, no, no. I’m not bringing their assets onto my balance sheet.

Jake Taylor: Okay.

Tobias Carlisle: No, no, I don’t, but I just look at each one as it’s own risk adjusted bet. That’s how I’m thinking about it and so I’m just making sure they’ve got excess cash, they’ve got some assets, they’ve got some cashflow. I feel like that’s… And if the management has some evidence of buying back stock, I feel like if the market really gets beaten up, use the free cashflow to buy back some more stock, we’re probably going to be going ahead even though, on paper, we’re probably down. As an investor, I’m going ahead through a period like that.

Bill Brewster: I mean, you know the tough thing on something like this is… Like we’re podcasting. We live this stuff, right? If it’s a listener, I don’t know how much you live this stuff and I would just really encourage people to, however much risk tolerance you think you have, back off of that number a little bit because there’s nothing worse. The bad decision was sort of made earlier and there’s nothing to do now, so…

Tobias Carlisle: Now’s the time to think about it. At the top of the market, now’s the time to think about it.

Bill Brewster: That’s right. So, sort of…

Tobias Carlisle: If you’re down 50% next year, how are you going to feel? Can you survive after that? And maybe it doesn’t recover. Maybe it does a Japanese style swan dive and it’s 25 years away, that’s what you’ve got to think about. It doesn’t necessarily look like 2009 when it bounces like a golf ball off a concrete path.

Bill Brewster: Yeah. And if you underperform…

Tobias Carlisle: [crosstalk 00:47:11].

Bill Brewster: … a little bit, who gives a shit? What are you really trying to compound for?

Tobias Carlisle: Glory.

Bill Brewster: It’s not like some race against Buffett… Yeah, well, then you’re probably going to get your face ripped off at some point, right? So, get ready for the punch.

Tobias Carlisle: All right, I got another question. This is a two parter, so buckle up. “Given the best investors are wrong even one third of the time.” I think that’s wildly bullshit.

Jake Taylor: Generous.

Tobias Carlisle: I think the best investors are wrong one half of the time. “Should we just invest based on a multiple alone or can we do better using a checklist and trying to understand the business dynamics?”

Tobias Carlisle: Yeah, let me be clear, you can definitely do better trying to understand using a checklist and trying to understand the business dynamics. I would never just use the multiple one and I don’t… my screeners don’t do that, I don’t do that, but after you guys.

Jake Taylor: I think it’s… I think there are a couple smart ways of doing it. Like it’s a sliding scale of concentration, for me. How much do I have to really understand about the business to how much would I be willing to concentrate in it. I think if you use more of kind of like a Walter Schloss approach where it’s… He probably had a hundred stocks at any given time and all of them were just… let’s just say low, some multiple, whether it’s PE, book…

Tobias Carlisle: Why press the book, yeah.

Jake Taylor: Something, yeah.

Tobias Carlisle: You think he was more than book?

Jake Taylor: I think, yeah. If I recall correctly, they looked at some other stuff than just that. He was a tiny bit more sophisticated, I think, than people give him credit for. And if you’re today’s Walter Schloss, then kudos to you. As Bill likes to say.

Bill Brewster: He is today’s Walter Schloss.

Jake Taylor: So, that’s kind of one end of the spectrum of things that I think are intelligent to do. You’re just very diversified, you’re owning a basket and really what you’re kind of doing is approximating the value studies that have done so well.

Jake Taylor: Now, on the other end of the spectrum, you concentrate, you know everything about the business, you know the sock size of the CEO. In jest a little bit there, but I do often wonder, and maybe this kind of goes into it a little bit more, but I sometimes wonder when I’m doing really deep due diligence on a company, am I adding to the relevant knowledge at a slower clip than I’m adding to my confidence in the idea?

Tobias Carlisle: Right.

Jake Taylor: And am I… There’s got to be some crossover point where I’m not really learning anything that’s that useful for understanding the business and the returns, but I am adding to my confidence that I know everything about this. And that, I think, is actually… You can find yourself in a problematic place.

Bill Brewster: I was just listening to an Adam Robinson, Tim Ferriss podcast about this exact issue where horse handicappers to better or as well with like three pieces of information as they do with 40, but their bet size goes way up with 40. So, I would… I don’t know. I think, you got to figure out what you can stick with. I think that if you’re going to be a discretionary investor, you got to do enough of your own research that when the market tells you that you’re wrong, you’re not looking at the stock price to figure out if you’re wrong. Because in my opinion, that’s the best way to lose money out there.

Bill Brewster: Whatever that is for you, I have no idea. Right? I know, for me, it really depends on the idea. I mean, the airlines took me like seven months to get my head around. I’ve been stuck on this freaking restoration hardware thing forever. I’m probably not even going to buy it and I’m still doing it. And then there’s been other things that I’ve bought literally in a day, but it’s been because it’s been something I’ve sort of followed and then one day it just clicked. So, it’s not really just a day, but… I don’t know. Just…

Bill Brewster: Fact is, you got to be able to stay. Staying power, in my opinion… You own a business, so you can’t get scared by the price of the business and sell the business.

Tobias Carlisle: I put that study into quantitative value, the horse racing study, and there’s another interesting one as well where I think it may have been on betting on college football games, so they asked a whole lot of kids, “How closely do you follow college football games?” And they found the ones who did follow it. Then they got what data points do you look at to determine who’s going win? And they collected all those data points, then they randomized them, so everybody eventually got the same data about each… the game, the matchup, but the order in which they were given the information varied and what they all tended to do was they anchored on the first bit of information that they got and then they didn’t update as they went along. And then there’s that other one, the horse racing one, where just the more information you get, you don’t get more accurate, you just get more confident.

Tobias Carlisle: So, I think it’s really interesting when I read The Snowball, the thing that really stood out to me is the way Buffett analyzes a company. Basically, what he’s doing is looking for a reason not to invest. He’s just combing through and, what I’ve heard, is he doesn’t like the CEO, so that’s gone. Doesn’t like whatever, some arrangement, gone. Doesn’t like something, gone. Like he’s trying to find a way to reject and that’s kind of interesting because I think that you probably only need three bits of information, maybe you need six, to work out whether you want to be long. And then you should have a list, and I know that Mohnish Pabrai does this as well, he’s got a list and I think there might be 80 questions on it and he goes through the 80 questions, trying to cut something out. I think that’s an interesting way of investing, I think that’s a smart way of investing.

Jake Taylor: Yeah, Munger’s actually talked about Buffett’s disqualifying checklists and…

Tobias Carlisle: What’s on it?

Jake Taylor: It’s… Doesn’t like the CEO, too much tail risk, and I think profit margins. And those three things, if any of those are… he decides he doesn’t like it, there’s not balancing out anything else that he could look at. He just moves on. He’s done. So, there’s no like, “Oh, but I really like this other part,” and now you start… it’s starts getting complicated in your head of weighing the pros and cons. He has just deal breakers and those… He just abandons ship right away, doesn’t even go on anything else.

Jake Taylor: So, I think that’s a pretty interesting thing of putting together your own disqualifying checklist that it probably keep you out of talking yourself into some… the occasional bad idea.

Tobias Carlisle: Part of the reason that I invest the way I do, which is more systematically than you guys do, but it’s because there’s a great book. I think it’s called Winning The Loser’s Game and it’s about tennis at a professional level, when you see it television, those guys are trying to hit winner, right? You can’t win if you can’t hit a winner because they don’t make many errors, but at an amateur level, you win by not making errors.

Jake Taylor: Just get the ball back over. Let them make the mistake.

Tobias Carlisle: Exactly right. You just let the other guy make the mistakes and I think investing… Like if you can just remove the unforced errors from your game, you’re right up there in elite company. You don’t have to have a brilliant insight, you just have to not vaporize part of a portfolio.

Bill Brewster: I think about investing like I think about fantasy football a lot. So, like you can blow your entire fantasy football year if you get a high draft pick wrong. You’re not going to win it, but you can…

Jake Taylor: You can lose it.

Bill Brewster: … definitely blow it. And then you can win if some of the later round picks really sort of develop into something that you didn’t see. So, especially with my bigger positions, I try not to lose.

Tobias Carlisle: More certain, rather than more upside.

Jake Taylor: Low variance outcomes.

Bill Brewster: And then I had… I mean, I don’t run like… I have a tail of some positions that I hope can sort of surprise me to the upside.

Jake Taylor: Sleepers?

Bill Brewster: Yeah, that’s right. And that’s where a lot of my portfolio churn is found, too, because maybe the guy had to get sent out. We’ll see you later, go work on yourself. SO, I don’t know, but that’s my theory.

Jake Taylor: I think it’s a good question, though. I mean, what’s… And it kind of goes back to the previous question about understanding yourself and all these questions tie together in if you’re down, do you have the conviction to buy more or do you get spooked out of it? What is it that you’re going to rest, intellectually, on the bet that you’re making? Is it that you trust that the studies will work out? Or is it that you trust that your understanding of the business is… there’s something unique about what you understand. So, you have to have something in that realm, otherwise I think you lose this game. But that something can be a lot of different things in a lot of different ways.

Bill Brewster: Yeah, well, I think that the hardest thing… I was just talking to somebody about this this weekend. The hardest thing about public market investing is every single day, somebody’s telling you that you’re either right or wrong and you have to not care what that person says. And…

Tobias Carlisle: When you say somebody, do you mean…

Bill Brewster: The market.

Tobias Carlisle: … somebody on Twitter or do you mean the market? Yeah.

Bill Brewster: Well, I mean…

Jake Taylor: Aren’t those the same thing?

Bill Brewster: It depends, right, how public you are with what you’re doing or whatever, but the market, at a minimum, you can always check and if you’re getting your satisfaction about… Whether my portfolio’s up or down, that’s a very hard game to continue to win at, I think.

Tobias Carlisle: Do you check it every day? Do you check it all day every day?

Bill Brewster: I check every day. I don’t check all day at all. I like to tell myself I just see if something big is happening in the portfolio, but I like to know.

Tobias Carlisle: You like the dopamine hit?

Bill Brewster: Yeah, I do. But, honestly, part of me knows that about myself. So, I think I’m relatively good at managing that. Somebody listening is probably like, “Oh, that guy’s an amateur and he’s going to screw himself doing that.” Well, sorry, you do you, man. Or lady. So.

Bill Brewster: We skipped… What do we think about the Geico news?

Tobias Carlisle: Let’s do that. What do we think about the Geico news?

Bill Brewster: Todd’s thinking over it.

Jake Taylor: He’s managing 14 billion, he’s now the CEO of Geico and he’s the liaison to the JP Morgan, Amazon, Berkshire healthcare initiative. Man, this dude’s wearing a lot of hats right now.

Bill Brewster: Yeah, he is. The…

Tobias Carlisle: Which Todd is it?

Bill Brewster: Well, it’s Todd and Ted.

Jake Taylor: Todd Combs.

Bill Brewster: Yeah, so Todd Combs and Ted Weschler, right?

Tobias Carlisle: Ah.

Bill Brewster: So…

Tobias Carlisle: Whoops.

Jake Taylor: Are those the same name in Australia or something? Because like every time you…

Bill Brewster: Yeah, you said it twice.

Tobias Carlisle: I don’t… Honestly, I don’t watch Berkshire that closely, it’s just not that relevant to me.

Bill Brewster: Todd and Ted.

Tobias Carlisle: Sorry. Yeah, that’s…

Bill Brewster: It’s fine.

Tobias Carlisle: My bad. Apologies.

Jake Taylor: Is it our accents? Is that the problem? You can’t recognize the difference.

Tobias Carlisle: Culturally insensitive.

Bill Brewster: I think it’s hard to figure out what it all means. I understand why he would still run the 14 billion. It’s hard to transition portfolios and if he doesn’t have a lot of churn, I would do the same thing. I don’t really know what it involves to run Geico. It seems to me like that’s a really well oiled machine.

Jake Taylor: You have Ajeet above you, too, still to… He’s in charge of all the insurance companies, os there’s still training wheels there.

Bill Brewster: Yeah.

Jake Taylor: Right?

Bill Brewster: I mean, man, I don’t even want to say this out loud, but I wonder how Ajeet’s health is and whether or not it’s time to start getting somebody under Ajeet that…

Tobias Carlisle: How old is he?

Bill Brewster: … take that over. I don’t know how old he is, but… I don’t know what I’m talking…

Tobias Carlisle: Is he not well?

Bill Brewster: I don’t know what I’m talking about here, but when he stood up and he was at the meeting, I mean he was shaking a lot and I just don’t… They don’t put those guys up, so I don’t even know the questions to ask, right? None of that’s disclosed and it shouldn’t be, he deserves privacy, but it’s just one of the thoughts that I had is like maybe this is part of getting Berkshire ready and…

Tobias Carlisle: Could’ve been nervous? I don’t know.

Bill Brewster: Yeah, could’ve been. It didn’t look it. It looked health related. But I figured, okay, well this clears sort of the way for Ted to take over the public investing and all systems go.

Jake Taylor: So does that change the handicapping on who’s the front runner for operations replacement?

Bill Brewster: I don’t think so, right? Because I always [crosstalk 01:00:11]…

Jake Taylor: [crosstalk 01:00:11].

Bill Brewster: … and like OpsCo and…

Jake Taylor: [crosstalk 01:00:12].

Bill Brewster: … InsuranceCo and then FloatCo. So, I think Ted is FloatCo, if he wants it.

Tobias Carlisle: So, we have rung all of the juice out of this week’s episode, should we declare the meeting closed?

Bill Brewster: Happy holidays, happy New Year.

Tobias Carlisle: Happy New Year.

Bill Brewster: All that.

Tobias Carlisle: We’re going to take a one week break and then we’ll be back the second week of January.

Jake Taylor: Send us your questions, please.

Tobias Carlisle: Questions to Jake, insults to Bill, and compliments to me.

Jake Taylor: Sounds about right.

Bill Brewster: Yeah, it does.

Tobias Carlisle: See you guys.

Speaker 5: (Singing)

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