VALUE: After Hours (S02 E08): Buffett Buys $SPY, Charlie Munger Dunks on Bill, The $DJCO Experience

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Summary

In this episode of the VALUE: After Hours Podcast, The Three Amigos Of Investing Taylor, Brewster, and Carlisle chat about:

  • Why Is Warren Buffett Buying S&P 500 EFT’s?
  • Daily Journal Corp Meeting Notes 2020
  • Ian Cassel – Will Berkshire & DJ Corp Annual Meetings Become Ghost Towns Without Buffett & Munger?
  • Michael Green’s Thesis On The Rise Of Passive Investing Causing A Melt-Down
  • DJCO – The Transition From Publishing To SaaS
  • Charlie Munger Dunks on Bill
  • Switching Strategies – How To Stop Yourself From Becoming An Investing Whore
  • It’s Incredibly Difficult For Companies To Maintain A Competitive Advantage Over The Long Term
  • How To Choose The Right Investing Strategy For You
  • Tobias On How To Cook A Steak Properly

Here’s an excerpt from the episode:

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Full Transcript

Jake Taylor:
All right. Hey, welcome back to After Hours. I’m one of your hosts, Jake Taylor. And joining me today as always is Toby Carlisle and Bill Brewster. Toby, what’s your topic for today?

Tobias Carlisle:
In the most recent 13 here from Berkshire Hathaway there is a $24 million purchase of the spy, the S&P 500 ETF. Its utterly baffling and I want to know what’s going on.

Jake Taylor:
If we had one of those cheesy radio show type of things I would be hitting a siren on them like… Bill, what are you going to talk about?

Bill Brewster:
Am going to talk a little bit about Daily Journal as a potential investment and we’ll touch on me getting dunked on by Charlie.

Jake Taylor:
Oh, my favorite topic and my segment is going to be also on Daily Journal and some of my notes from it. And also we have a high quality of mailbag so let’s get into it.

Bill Brewster:
Big mailbag.

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

Why Is Warren Buffett Buying S&P 500 EFT’s?

Tobias Carlisle:
Lets get on the… So first topic off the bat today, everybody’s gone through the latest 13F of Berkshire. They’ve seen it and he’s got a big holding in Biogen, which some smart guys got there first. But more importantly, he’s also got 24 million which is like the interest that they earned before lunch on the cash pile. They’ve bought Spy, which is the index, the ETF of the S&P 500. What is going on?

Jake Taylor:
No idea. It’s hard to imagine that with that size of the bet that that’s Buffet, but also it makes no sense as a bet for Todd and Ted with the way that they’re compensated, which is any alpha above Spy. So would you put in your tracker within your portfolio if you were trying to outperform it? Like you’re just basically guaranteed to get it? I don’t know. That doesn’t make any sense to me at this point.

Bill Brewster:
Yeah, I don’t know how big he would like to go when he… I mean, he’s a guy that swings when he swings, but maybe he’s doing this as like a little, what do they call them? Easter eggs and the video game where it’s like this is how things are going to start to go. He has been asked for a long time about keeping cash in an Index. He has said in the past that might be a really smart strategy. I have wondered why he doesn’t have more in an Index over the past years. Some of that’s resulting, I guess, but at some point that entity is so big. Getting some levered ETF exposure maybe isn’t the worst idea for them.

Tobias Carlisle:
But doesn’t that create the problem that the time you’ve been saving this cash up, waiting for the opportunity to deploy it when the market gets cut in half. How does it help you to have your cash cut in half at the time that the market gets cut in half?

Bill Brewster:
I don’t know that that’s really what he’s doing. I think he’s waiting for the elephant and I guess he had one apparently that was in the sniper sites or whatever two Decembers ago.

Tobias Carlisle:
Tesla probably just got too expensive.

Bill Brewster:
Yeah, definitely probably.

Jake Taylor:
Makes sense.

Bill Brewster:
Well, you want to own the utility grid and all the cars, right? So obviously yeah, yeah, that’s right.

Tobias Carlisle:
The future.

Jake Taylor:
The math checks out there.

Bill Brewster:
Yeah. That checks out what you are-

Tobias Carlisle:
You got to earn that stuff to get a mark… the stage.

Bill Brewster:
But maybe the size of the deal that he was working on sort of told them hoarding cash above this number just doesn’t make sense then buy your own shares, buy them.

Tobias Carlisle:
There we go. That’s a better idea.

Jake Taylor:
Berkshire has always, in my mind been sort of a supercharged S&P 500 better on America, better cap allocation than average. Probably better patients than average.

Tobias Carlisle:
Better return on invested capital than the average company and currently available at a cheaper price. So why would you buy a second rate version of yourself when you can buy your stock back?

Bill Brewster:
Maybe he thinks he’s so good as second rate version of himself is pretty good.

Tobias Carlisle:
So I got a couple of… But he’s got access to the first rate one and he knows it even better.

Bill Brewster:
That’s right. So I don’t know.

Tobias Carlisle:
Do you want to hear my conspiracy theories?

Jake Taylor:
Yes, please.

Tobias Carlisle:
Okay. This is not so much a conspiracy theory-

Bill Brewster:
Do you want me to get the hat, the tinfoil one?

Tobias Carlisle:
Tinfoil on for these for this one.

Bill Brewster:
I’m already aware of them.

Tobias Carlisle:
So the first one is not so much a conspiracy theory, but it’s just like, it’s a balancing… They’ve got some sort of derivative exposure somehow and they need to have a balancing-

Jake Taylor:
Some hedge.

Michael Green’s Thesis On The Rise Of Passive Investing Causing A Melt-Down

Tobias Carlisle:
… under the new rules you need to do something like that. I have no idea. That’s just my theory. The other theory, now this is real tin foil hat territory. So I’ve got Michael Green coming up on the show in a few weeks time, interviewing him this week. Michael Green says that Buffet knows that…. So Michael Green’s got this theory that we’re transitioning. As we transition to passive sort of taking over the market, there’s a tipping point where the market can’t absorb the marginal dollar that goes into it. And what that causes is this exponential ramp and then a crash. And so-

Jake Taylor:
So he’s hedged the ramp with a $24 million position?

Tobias Carlisle:
But then somebody said this even before Buffet had… Even before the 13F had come out Green said, “This is why Buffet advocates for an S&P 500 allocation for everybody who’s…” When after boss Buffett passes on for his kind of heirs and so on. He says, “Find a low cost S&P 500.”

Jake Taylor:
That’s trade money.

Tobias Carlisle:
So Green says-

Bill Brewster:
So, here’s-

Tobias Carlisle:
… because…

Bill Brewster:
Here’s what I want you to ask Mr. Green. He also has said that there’s going to be a liquidity problem, so why would Buffet want to get everybody that he loves into a liquidity trap down the road?

Tobias Carlisle:
Yeah, that’s a good question.

Bill Brewster:
Maybe that question’s not as smart as I think it is, but I’m smart.

Jake Taylor:
I’m sure Munger would tear you apart just like earlier this week or last week.

Bill Brewster:
I know. Later on, later on we can get into that-

Jake Taylor:
Dramatic foreshadowing.

Tobias Carlisle:
I tweeted the suck because I was kind of interested in what everybody might think about. I was kind of trying to get people to talk about Grains Theory. Instead what everybody said was, because he said Buffett’s being disingenuous about his real reasons for putting people into the S&P 500-

Bill Brewster:
True that. You can’t say that about Buffett. It can be just people’s minds.

Tobias Carlisle:
That’s exactly what happened. Nobody could-

Bill Brewster:
Somebody talked about religion.

Tobias Carlisle:
I even tried to explain to people that that’s what I was trying to do but literally I would say don’t focus on that part of it, focus on Green’s theory and their response was, “He’s being disingenuous.” He’s not being disingenuous because he’s Buffet. You’re right. It just can be people’s thinking of-

Bill Brewster:
They are incapable of having a rational conversation once you invoke the name.

Tobias Carlisle:
That’s true. It is religious and I’m basically here too.

Bill Brewster:
So is…

Jake Taylor:
Yeah, I tried to do a very cartoonish version of explaining that problem that Green talked about in my last quarterly letter. And it is a pretty scary thing to imagine what it might look like for if you’re not participating in the madness.

Tobias Carlisle:
Are we seeing it now?

Jake Taylor:
We may have been seeing it for the last five years.

Tobias Carlisle:
Because when you look at-

Bill Brewster:
I don’t think things are that nuts yet guys.

Tobias Carlisle:
But we look at… Okay.

Bill Brewster:
I think that there are certain examples of risk on assets that are nuts.

Tobias Carlisle:
Microsoft, Shopify-

Bill Brewster:
That I don’t think…

Tobias Carlisle:
… Tesla.

Jake Taylor:
I always think like Argentinian bonds and-

Bill Brewster:
I’ll tell you what I think is going on.

Tobias Carlisle:
Greek Treasury.

Jake Taylor:
Greek trading at 1% from like 50%.

Tobias Carlisle:
Trading tighter than US, ridiculous.

Bill Brewster:
That stuff’s nuts. I don’t…

Tobias Carlisle:
But that’s not S&P 500.

Bill Brewster:
I think that what is going on, this is why I have my pin tweet right now. That guy SkeleCap his boss once told him at the top, everybody’s time horizon extends to infinity. And then he said, unfortunately he forgot to invert and realize that at the perfect bottom, everybody’s time horizon extends to a day.

Tobias Carlisle:
It’s exactly right.

Bill Brewster:
I know. And I think that’s what’s going on with a lot of these names is people are just like in 10 years, think about what it’s going to be. And they might-

Jake Taylor:
That’s true about the liquidity side too think about that.

Bill Brewster:
That’s right. You got to live through some shit to get through 10 years and you got to hold it.

Tobias Carlisle:
I actually think that that is the real answer. And I agree with you 100% but that doesn’t… I cannot find the argument that shows why Green is wrong. I just frankly cannot. And so that means that I have to kind of accept that he’s probably right. I’ve had Corey Hofstede’s taken a look and said that it should show up in more illiquid names. I frankly don’t… I can’t fully understand Green’s point. And so I can’t refute it at all, even though I feel that it’s wrong and I think that your explanation Bill is the better one.

Bill Brewster:
I like that you think my explanation is better because it… as a very smart man.

Jake Taylor:
I’m recording this on my journal. Bill was right.

Bill Brewster:
So I’m going to pat myself on the back real quick. Yeah, I don’t know but that is what I think is going on. I think with a lot of these assets that the current… This isn’t like some genius take of mine, but the current free cashflow yield in order to buy the equity, you must be saying that it’s going to grow for a very long time and the far out duration. And I think that after a long time of people not really remembering what pain feels like in a true economic sense and I’m at least in the financial industry, I think people are just so willing to… All the pitches that I hear like, “Oh, don’t worry about it’s just like five to seven years out. It’s going to be really reasonable. And-

Tobias Carlisle:
I think the oddest thing-

Bill Brewster:
I think that is the symptom of where we are more than what people actually believe.

Tobias Carlisle:
The oddest thing about this boom or this bubble is that I do think that the market has almost got the ranking of the stocks. Like it is the very best, fastest growing, biggest, most cash generative, highest margin businesses that are getting all of the attention. Which is why if you’re like a compounding value guy, you’ve done exceptionally well and rightfully so like you’ve figured it out, you’re getting paid for it. It’s an incredibly difficult market for a guy like me who is like a deep value guy. And I don’t want to make the transition to compound turn particularly not when I think that the train’s well and truly left the station. The time to be a compounder was 2009, 2010.

Bill Brewster:
Yeah. I’m giving a talk and part of what I’m going to talk about is my somewhat of my transition to more of a garpy mindset, which is really just summarized as in the past, I really discounted the future. And I think I did that to my detriment. And I think I need to at least be willing to accept that the future is somewhat no… Nothing in the world is knowable. So I don’t know why I over weighted the present as much as I did and discounted the future as much as I did. Which is really what’s going on in my head. But I said in some of my slides, I was like, “I think I might be making this transition at exactly the wrong time.” That’s the fear, but knowing that you sort of try to put up some barriers around your yourself and-

Tobias Carlisle:
The private is concerned if the private reverses himself with gunnery Sergeant will only beat him harder. That’s Full Middle Jacket I’ve misquoted it.

Bill Brewster:
I think just… from that.

It’s Incredibly Difficult For Companies To Maintain A Competitive Advantage Over The Long Term

Tobias Carlisle:
But roughly run. Jake you heard that somebody asked about the paper that we were talking about last week where you said, this is the… Can you explain the paper?

Jake Taylor:
Sure. It was it was just an observation of what was it like? Well, I don’t have my notes in front of me-

Tobias Carlisle:
It was like 10,000 companies over 20 years 30 years.

Jake Taylor:
It was a lot of companies over a decent time period and it looked at how long was their competitive advantage sustainable. And they use different metrics to kind of identify it and they pick the best ones in each industry. So it was like adjusted a little bit for each industries, like sort of natural state of order. But the sustainability of being on the top was incredibly low. Like more than 10 years it was something like 5% or then 20, it was down at like a half of a percent, wherever the…

Tobias Carlisle:
Gone into the matrix.

Bill Brewster:
The matrix is swallowing them.

Tobias Carlisle:
You went to the funnel point when you’re in the matrix.

Bill Brewster:
Right… was about to give everybody the pill.

Jake Taylor:
I took the wrong pill.

Bill Brewster:
That’s right. Yeah.

Tobias Carlisle:
We all did. Maybe not Bill. Maybe Bill’s taking the red pill right now or whatever it is.

Bill Brewster:
I don’t know. I hope I’m not taking poison.

Tobias Carlisle:
Just what was the last point?

Jake Taylor:
The last point that it was it’s incredibly difficult to be on a very, very longterm term to a have a sustainable-

Tobias Carlisle:
Over 20 years. It was like 0.05% or something, which is like one company or three companies or something.

Jake Taylor:
Yeah, no, it was more than that because of they studied so many, but it was like, you have a one and 200 shot of if a base rate of picking something with 20 years worth of sustainable competitive advantage-

Tobias Carlisle:
That just means it earns more than that it’s cost of capital run.

Jake Taylor:
Well they had-

Tobias Carlisle:
A better than average ROI-

Jake Taylor:
I don’t know the exact methodology. Yeah. Better than all their competitors on different metrics. So the takeaway would be for us, like all of these valuations are predicated often on 10 sometimes further out cash flows. If you’re imagining that you are going to be the smart one that picks one in 200 and you’re better than everybody else at this game, then kudos to you. I just question if we can all be that good.

Tobias Carlisle:
Is there a revolution going on? OSAM had that paper saying when the car came out, whatever it was, 26 to 41 there was a period of time where if you look at price to book value it gets absolutely smashed through that period of time value investing doesn’t work for those 16 years. Are we now in a 16 year period where the whole economy transitions to that software layer being built out. And if you on the software layer, then you’re making money. If you’re not, then you just… And that was one of the statistics that I saw yesterday. If you exclude, I think Facebook, Amazon, Netflix, Google or FamG or one of those acronyms from the market, the earnings are down seven and a half percent year on year, which is a lot.

Jake Taylor:
Yeah.

Bill Brewster:
Yeah, you could throw that in with the Japan GDP print. That was pretty scary too.

Tobias Carlisle:
So 6.3. Down 6.3?

Bill Brewster:
Negative. Yeah. And that was like pre coronavirus. So yeah. The interesting thing that I’ve been thinking about, I’m sure other people had been thinking about it for four years, but I’m slow. So bear with me is the amount of efficiency that is in these bigger organizations. And like a lot of the times when people talk about data, I think it’s just total nonsense. But I do think that some of the bigger organizations that have the capability to come in and analyze the data, I wonder if that like moat, for lack of a better term, is just getting wider and wider and wider because you’re not going to be able to enter and compete without some sort of informational edge. And when that’s sole proprietary and it’s so hard to analyze.

Bill Brewster:
Because a lot of people are like, “We have so much big data.” It doesn’t matter if you don’t know what to do with it. The ability to actually analyze it I think is where there’s going to be real defensibility. I just sort of wonder if these bigger companies are getting so efficient that it’s just very, very difficult to compete with and combine that with regulatory capture and you’ve got some nice-

Tobias Carlisle:
The big tech companies?

Jake Taylor:
Does that like the oil is the new information or information is the new oil kind of idea. And… Are they Saudi Arabia and we’re?

Bill Brewster:
I don’t know. This is where I think like Marcelo Lima is correct to advocate on behalf of Facebook because Facebook is able to get through the data and deliver insights to the small guy that would not otherwise be… He wouldn’t have to. So if they can sell that data to the small guy, then maybe that guy can actually compete.

Bill Brewster:
I don’t know exactly where the cutoff is, but I remember Mark Cuban talking recently about, he just said AI is super, super tough and the big four are really the four that can get there and you just need a lot of brute strength and a lot of willpower and smarts to be able to analyze vast quantities of data. So it’s just something I’ve thought about because you look at the persistence of margins and it’s either consolidation, which I think is somewhat overplayed, but there’s some truth in that. Or there’s something that’s making these guys just hard to compete with. I don’t know.

Jake Taylor:
Doesn’t that kind of ignore history though as far as innovation goes and like the lack of predictability about it and it’s come from a garage somewhere. Usually a not a giant corporation that’s supposed to be the one that’s has all the resources?

Bill Brewster:
Yeah. I think it also ignores nature. Things grow and then they die.

Tobias Carlisle:
It is very hard to see how you compete with something like YouTube for example.

Bill Brewster:
Yeah.

Tobias Carlisle:
Or even Google as such.

Bill Brewster:
Well that’s the thing the internet. The internet trends towards a winner and sometimes you get a second player that’s somewhat close or whatever, but like think of marketplaces. Ebay dominated that and there’s no… Facebook has a shot like that they have the… That’s a big enough audience that they could get it done but I don’t know. A lot of this stuff does appear to be winner take all.

Tobias Carlisle:
All right. I think that’s a good point. What’s your topic Jake?

Daily Journal Meeting Notes 2020

Jake Taylor:
I thought we’d just do some riffing on the daily journal meeting that we went to last week or when was it? Very recently.

Bill Brewster:
It’s probably a good time for me to apologize to the people that last week I told not to ask Munger for life advice. I still do stand by somewhat I said. My tone was not right and I should probably get some nuance.

Tobias Carlisle:
What happened?

Bill Brewster:
No, with me at Daily Journal or generally speaking?

Jake Taylor:
Let’s paint the picture first though. Bill shows up and he’s coming from the beach. He’s wearing like a hoodie and shorts and flip flops. And everyone else is dressed up to come pray at the altar and Bill out of the gates first question of the day is Bill. And so what did you ask him, Bill?

Bill Brewster:
I asked him-

Jake Taylor:
Short version.

Bill Brewster:
… something along the lines of whether or not value investors should be focused on US companies because many of them are quality and I gave them too much wiggle room and I should have just limited it to quality companies because my theory of the case is becoming that the deep value behavioral bias is going to be arbed away by ETFs and Argos. So if you want to survive quality and having a differentiated view on that part of the business is a good way to do so.

Tobias Carlisle:
Quality can be up to it.

Bill Brewster:
Yeah, you need to have some sort of insight that you’re focused on that a computer can’t figure out.

Tobias Carlisle:
But a computer can figure out and at this point if whatever factor you’re trying to figure out, if it’s quality and value, if you think that’s the way forward there’s an ETF that does that. If it’s momentum and value, there’s an ETF that does that. And you think that you’re some unique little snowflake identifying these things, you’re not. You’re subject to the factors like everybody else is. And it’s just that your factor at the moment isn’t sort of, or is either having a good run or a bad run.

Bill Brewster:
Yeah.

Jake Taylor:
But look at this back test bro.

Tobias Carlisle:
Yeah. I mean that’s almost like the how you know that it’s not going to work as if it’s working up to this point. You need to find something that worked really well up until about a decade ago.

Bill Brewster:
Yeah.

Jake Taylor:
So, yeah. One of my notes that I had from the meeting was that Monger said that Chinese companies are stronger than the US companies, which I’ve found to be actually kind of a surprising statement myself.

Bill Brewster:
They’re backed by the government. So you got that going for you.

Jake Taylor:
Yeah, that’s fair. But-

Bill Brewster:
I’m not sure. I understand why. I even felt like he dunked on me a little. I’ve listened to it twice.

Jake Taylor:
You loving it.

Bill Brewster:
I’m not sure that he necessarily would have disagreed if I had phrased my question better.

Tobias Carlisle:
How would you have phrase it better?

Bill Brewster:
I would have excluded the US part because it gave him an out that like you just watched so many years of listening to people ask them questions. They find the thing in the question that they can get out of the question and they do it. And then it allows them to go into their spiel and I’m disappointed in myself.

Tobias Carlisle:
Counselor, that’s why you don’t ask a question that you don’t already know the answer to when you are addressing another attorney then too.

Bill Brewster:
Oh my God.

Tobias Carlisle:
Of course he was going to duck it.

Bill Brewster:
I know.

Tobias Carlisle:
Just put the gloves up and lean back on the on the ropes and just let you have your go and then he came alive.

Bill Brewster:
It’s upsetting.

Jake Taylor:
So another couple quotes, maybe you guys want to riff on these. If you’re uneasy, welcome to the club.

Bill Brewster:
I’m very easy.

Jake Taylor:
Most are disappearing rapidly.

Tobias Carlisle:
That’s is an interesting one.

Jake Taylor:
Yeah.

Tobias Carlisle:
I disagree with that for the reasons that we’ve just discussed. I just think that’s same as it ever was. It’s always somebody’s castles is falling into the ocean and somebody else’s building, a new one that’s not going to be breached for a decade or two decades, or a generation.

Bill Brewster:
I was talking with somebody who I would name, but I’m not sure he wants to have this attributed to him. But he said that moats are in his view, people say moat way too often, and it’s really just operational excellence and execution. And I think that’s probably right. There aren’t that many businesses that are endowed with winning. The inevitable so to speak.

Tobias Carlisle:
That’s what Buffet calls them franchises to distinguish them from just wonderful companies. There are some that do have that whatever it is, genetic protection and there are other… Most of them don’t.

Bill Brewster:
Yeah, I think that’s right.

Jake Taylor:
Other other takeaways for me, look for a game where you’re wise and they’re stupid.

Tobias Carlisle:
That’s hard.

Jake Taylor:
That’s really, really hard. I don’t know what you in them on these days.

Tobias Carlisle:
I think I’m doing that but that’s just not working. So I’ve got to go back to the drawing board on that one.

Jake Taylor:
Yeah. What’s your game Bill?

Bill Brewster:
I don’t know. I do know. I try to be patient. I look for certain situations and I try not to bet frequently. And as I have gotten better at doing this, my turnover has lowered and I began to think more like truly long term and I am hoping that the church that I prayed to is the right one because that’s what I have bet on.

Jake Taylor:
I also think you do a lot more work than a lot of folks.

Bill Brewster:
Yeah. I don’t know. I don’t look at nearly as many names as most people do. I think I look more deeply-

Tobias Carlisle:
I think you are deeply. I think you look more deeply. Yeah. That’s what I think.

Bill Brewster:
We’ll see. Those guys, the thing that is tough about their strategy is when you wait and you wait and you wait and you wait, then you really got to bet big and like even Buffett sort of blew his wallet a little bit too quickly in ’08 ’09. It’s very, very hard once they get to their size, especially to deal with the cash drag on the way up and then be like, “No, I’m the one that at the bottom is going to deploy everything.” And I think the opportunity costs of patients in a holding cash portfolio I’m not sure it makes sense to me. At least with myself, I’m not trying to come at them. I pray to their church.

Tobias Carlisle:
The hardest thing about timing is that the market has got more expensive over time or however you cut it. So for example, price sales today, it’s the highest price to sales we’ve ever seen in the market. There’s a Bloomberg article by John [Authurs 00:26:53] he says, “the reason is that margins are very high and we haven’t had a draw down for a very long time.” But that’s been true. So if you use Cape, whatever you want to use and you can get data going back to… You can get DJA. That’s Dow Jones like the reconstruction of the Jones Industrial Average. Pre the Dow Jones industrial average going back to like 1880 or 1860 or something like that. And you can run it forward using Cape to see where would you be invested, where would you not be invested?

Tobias Carlisle:
And then you can put… So here’s the median, here’s one standard deviation, here is two standard deviations. Basically it’s just got wider and wider as you’ve gone along. So it’s been harder and harder to time because it gets more expensive each cycle. Now I don’t know if that’s like the same observation that 700 years of-

Jake Taylor:
Interest rates.

Tobias Carlisle:
… of interest rates going to zero or if it’s just, that’s acyclic al top. I don’t know the answer to any of those things. I’m just telling you what I can see in the data. Like today’s the most expensive that it’s ever been.

Jake Taylor:
And then down at least last time around wasn’t down as far as other down times either. We came back down to sort of like average and then went back up from there.

Tobias Carlisle:
Like a golf ball with a concrete path.

Jake Taylor:
It was-

Tobias Carlisle:
It was rapid.

Bill Brewster:
Did it feel that way though? To the young ones listening. It was brutal.

Tobias Carlisle:
Like those two last quarters before it bounced like each, like down 13% but that’s almost vertical free fall. It’s that hard to get investment-

Jake Taylor:
And the caps too, like when you come off of the numbers get big also. Like it’s not just the amount of wealth that is repriced is a very large number at that point. You know one thing that’s interesting you were talking about Buffet and timing and I find it interesting where he came into the capital structure on a lot of those deals, like he came in with preferred a lot more than-

Tobias Carlisle:
Convertible…

Jake Taylor:
Yeah, that was a little bit not quite.

Tobias Carlisle:
Showing his hand a little bit. Yeah. I agree.

Bill Brewster:
Yeah. Even like traditional franchise, which I know it’s eroded over the last decade, but like Harley Davidson, he didn’t even take the equity and he took debt which if you’re going to bet on a brand, he’s a traditional brand guy. I could see how he would or how someone would think he would take the equity, but he just wasn’t having it. Which I also, it’s a freaking discretionary toy. So in the middle of the depression, how people really going to be buying motorcycles probably not, but-

Jake Taylor:
But space trips for sure.

Bill Brewster:
Oh yeah.

Tobias Carlisle:
This might be the only place can go to get away.

Jake Taylor:
I’m ready to see what’s on the dark side of the moon.

Tobias Carlisle:
No one’s good.

Bill Brewster:
To the duration comment earlier. I remember having conversations with people back then who oh I didn’t need the money when I invested and everything looked good and now I might actually need the money because I’m losing my job and what should I do with the money in the market. That is not the time to have that conversation with yourself. Like that’s a good way to lose money for a long period of time.

Tobias Carlisle:
I was buying nets because I thought if everything goes to zero when we liquidate at least you get some money back with these guys.

Bill Brewster:
There you go.

Tobias Carlisle:
And other people were saying you should buy better businesses when it’s like this it’s like ah, you don’t know if this is business is still going to be operating. It felt pretty real at the time. It felt like this could like is this going to be a 29 stock crash. Like this is a credit crisis. This is not your average draw down. The market is going down but industry is seizing up. Credit is seizing up. Banks are failing, like this could be a real thing.

Bill Brewster:
Buffet said it was financial Pearl Harbor. I don’t think he used that term lightly. I think back then I was into Ron Paul. I think if I had gotten my way, I’d be living in a very different world right now and I’m not sure I’d like it.

Tobias Carlisle:
You’d have earned a lot of gold.

Bill Brewster:
That’s right. Yeah. Some big guy that lived on my block would end up holding the gold. That’s right. But I would have made the right decision.

Tobias Carlisle:
Any more anymore gold from the DJ committee?

Jake Taylor:
He said that a couple of his tricks were one to take the high road and you have a moral duty to become more rational.

Tobias Carlisle:
How do you take the high road? What’s that mean?

Jake Taylor:
I think maybe it’s-

Bill Brewster:
They go low we go high. That’s what the Obama’s would say, sorry to all the Republicans I just triggered… No, I don’t know but this is what I was sort of ranting about last week. Like it’s not genius to tell people to act like good humans and like the parenting comment be a good example. Yeah, no shit. Like that was my high school. That was our theme.

Tobias Carlisle:
Valedictorian speech?

Bill Brewster:
It wasn’t even that. Lead by example was what the saying of the high school was. He’s not like some sage in that way. And also, and Charlie, if you’re listening, I’m sorry.

Tobias Carlisle:
Charlie listens.

Bill Brewster:
Am sure he does.

Tobias Carlisle:
Bill and Charlie and Warren, we’ll get together with Orson.

Bill Brewster:
Dude, they just did talk about how great we are. They’re three of the 10. And he has said, my kids think that I’m a book with two legs. Like I don’t want that to be my legacy for my kids. And-

Tobias Carlisle:
I think you are a cell phone with T.

Jake Taylor:
Oh yeah.

Bill Brewster:
That’s right. And that’s a real problem. So maybe that’s the lesson to take out of that is-

Jake Taylor:
You’re a Robin Hood account with two legs.

Bill Brewster:
I’m a Twitter Twitter fiend.

Jake Taylor:
Yeah.

What Happens When You Give Your Child Their First Chocolate Milkshake

Bill Brewster:
Speaking of fiends, my kid got a chocolate milkshake yesterday at Epic Burger. The look on his face, I swear he was a drug, like he was like cracked out-

Tobias Carlisle:
That’s a first time.

Bill Brewster:
The chocolate shake. I was like, this is messed up. I’ve got no worry.

Tobias Carlisle:
It is kind of fun when you give them a first big, like my daughter got her first juice box, I remember that distinctly, which you like at a birthday party at three or something like that. And it was just, she just stopped and drained it to the bottom just the whole-

DJCO – The Transition From Publishing To SaaS

Bill Brewster:
More down. I’m going to piggyback Daily Journal real quick and, and sort of make this a long segment and co-opted is my own. I want to believe those guys are going to win. And I love all of them but you’ve got Munger up there talking about how he doesn’t even know how to use the Google machine. And if you’re recruiting talent, they say that there’s… He goes, “I wish we could say we’re swimming in talent, but we don’t have enough.” It’s like, “Yeah, dude, you’re running sort of a tech company. The CEO is 80. You don’t know how to use Google. I just don’t know how that entity attracts talent.”

Tobias Carlisle:
Gets cheap. Some deep value guy gets in there and takes it over and transforms it.

Bill Brewster:
Maybe.

Tobias Carlisle:
It’s got to get cheap first though.

Bill Brewster:
It’s arguably not that expensive. I was watching somebody did a manual of ideas presentation on it in 2019. It might be on YouTube now, but look, the scuttlebutt the guy did was really good. They do have some positive free cashflow finally the revenues are ramping from the subscriptions and then the other revenues, which is like payment, velocity stuff that comes through, they get a skim on that. So good things are starting to happen. But I just…

Tobias Carlisle:
Its software is a service.

Jake Taylor:
It’s kind of pretty full price though for that SaaS business it’s tucked in there.

Bill Brewster:
It seems like it. You can’t look at the rest of SaaS and be like, “Oh, it’s 15 times.” That stuff’s growing like a weed. Daily Journal now whatever they create is going to be sticky. So that’s worth a lot but the growth-

Jake Taylor:
What do you think about the idea that they’re kind of pursuing there of going into places that are hard to get into as its own kind of moat working with governments specifically?

Bill Brewster:
Yeah, I like it. I pulled up there is a contract if you just like Google Cook County Journal Technologies and I was going through that and just sort of seeing what the implementation looked like. It’s not easy. It appears very tough. I didn’t get the billing structure and all that, which is what I really would’ve liked. I’m sure you can find it though because it’s all….When you’re dealing with governments it’s all… if I cared I would do it. I’m not sure I care.

Tobias Carlisle:
I have a confession that I bought Daily Journal co in about 2000 and maybe it was eight or nine not knowing that Charlie Munger was involved.

Bill Brewster:
Yeah. There you go.

Tobias Carlisle:
Because…

Jake Taylor:
Yeah you got that security’s per portfolio for less than the price of the stock at that point.

Tobias Carlisle:
And then I sold it for like 100% PO thinking that that was all the money you could make of it.

Jake Taylor:
Thinking you’re a genius.

Tobias Carlisle:
Yeah, then found out, “Oh, Charlie is in there oops.”

Bill Brewster:
Somewhat related because the securities portfolio to the people that think that I dunk on them for graph tech and parye following, watching Buffet sell lows is not put a great feeling in my stomach. He is rarely wrong on financials.

Jake Taylor:
But Daily Journal’s not unloading.

Bill Brewster:
That’s true. The Daily Journal is not where the real money is.

Jake Taylor:
Yeah.

Tobias Carlisle:
Do you guys want to decide?

Bill Brewster:
They’re off a lot. I think they had like this is off memory, but directionally it’s right. I think they’re down from 430 million shares to like 360 ish in Wells.

Tobias Carlisle:
I’ve got some mailbag questions. Should we? We’ve got a big Mail bag.

Bill Brewster:
I got a mail bag too, so let’s do it.

Ian Cassel – Will Berkshire & DJ Corp Annual Meetings Become Ghost Towns Without Buffett & Munger?

Tobias Carlisle:
So actually, the first question was the first topic that we discussed and that was from arbitrage in 92 from the YouTube comments, which which we read. That was a good question. This is a mailbag question from the great man Ian Cassel.

Jake Taylor:
Hi Ian.

Tobias Carlisle:
Not to be a Debbie downer, but I wonder how many algos they sit, the short book share, the second Buffet passes away and DJ Corp with Munger. I would expect both of those events to turn into ghost towns to DJ Corp immediately and Berkshire within five years. What do you guys think about that?

Jake Taylor:
People love the community, especially for Berkshire and I think they… Bill, do you go to Berkshire? How much of a percentage of why you go is to hear Warren and Charlie and how much of it is to catch up with friends that you see that one time a year?

Bill Brewster:
0%. Warren and Charlie, 3% the video at the beginning and then the rest to catch up with people that I don’t see often.

Jake Taylor:
Okay. So-

Bill Brewster:
But now a lot of that’s because they’re on YouTube. So I do eventually watch the meeting, but I never go. If I’m ever there I go to the second story. There is like… It’s like a quarter way-

Tobias Carlisle:
Don’t give it away because that’s enjoying your…

Bill Brewster:
My bad, my bad. At 4:00 AM and I just go and I sit down with everybody else. It’s the best thing I’ve ever done.

Tobias Carlisle:
I hate that feeling will come back in a lecture.

Bill Brewster:
Everybody’s super polite to each other. No one is really a dick about seats. It’s a joy.

Jake Taylor:
So for me it’s probably more 50-50, I would say I enjoy hearing them live. There’s a different energy than when I watched the videos. And it’s not that there, the message is different, it’s the medium. And how I absorb it. It has more gravity when it’s live for me. So it’s still 50-50 for me. But we all still are going want community and maybe something else pops up to take its place, but I’m not sure what that would be at this point. And I’m still going to want to go. Especially, I’ll hear these other guys that are behind, like they picked him for a reason and he’s not gonna pick dummies that aren’t going to interesting things to tell us.

Tobias Carlisle:
I still don’t think it’s going to be as popular.

Jake Taylor:
No, it won’t be as popular. It’ll be a true value play at that point again.

Tobias Carlisle:
I still think Berkshires, the company does very well for the reason that it’s a better collection of businesses than the S&P 500 so it’ll be comparable to that and they’ve got smarter guys in there or at least guys who are thinking that way. We don’t know exactly what their track record is…

Jake Taylor:
What do you think about this Terry Smith comment about how there’s no reason to have it anymore and it should be broken up.

Bill Brewster:
I think people are going to hate when I say this, but I would not mind them selling off some of those businesses and making some sort of calculated decisions on which ones still sort of satisfy the hold forever.

Jake Taylor:
What do you want them to spin off?

Bill Brewster:
I don’t know everything that’s in there, but I do think that there’s some stuff that is probably irrationally held onto and I think that it’s fine and I don’t know that it matters all that much. What I don’t want is for the insurance company and the utility business to ever depart. That to me is such a good combination of tax shields and efficient debt. But I think Terry’s probably got some point there and I think Todd and Ted are smart enough to do it in the right way. However, their roles sort of get… If they leave then you might have some issues.

Tobias Carlisle:
I don’t think they’re leaving over.

Bill Brewster:
I hope not those guys-

Tobias Carlisle:
You don’t take the gig in the first place. Maybe you do. Maybe you just think, Oh, I’ll be there for 10 years and then I can go and-

Jake Taylor:
I’ll buy SPY and I’ll-

Tobias Carlisle:
I’ll be the golden Berkshire.

Bill Brewster:
Does the Pope leave the church after he becomes the Pope. I think that’s why you went there. I shouldn’t say that about the pope.

Tobias Carlisle:
The… very, very wealthy and successful at the time they took the gig there. And so it wasn’t like they were doing it… One of them was buying one grand lunch with him two years in a row.

Bill Brewster:
Yeah. And I think they’re good guys. I think they’re doing it because they like Berkshire. We’ll see how charismatic they are. I mean that matters and how forthcoming they are and how willing they are to share their minds. I think that’s a big part of Berkshire, but it’s like a classic network effect. If we all keep going, it’s going to be a sweet ass event. The Friday night is awesome. I enjoy Saturday getting rowdy in Omaha like that. I never thought that I would say that in my life, but I like it. The Markel brunch on Sunday is great. It’s a great weekend.

Jake Taylor:
Sunday night dinners, always my debriefing time. It’s like my go to.

Bill Brewster:
Now you’re going to have our 10 fans all over you at dinner.

Jake Taylor:
I know. That’s okay.

Tobias On How To Cook A Steak Properly

Tobias Carlisle:
I think the hot tip for anybody going to go is that Buffett’s favorite steak is garbage and you want to get something that tastes a bit better.

Bill Brewster:
Really.

Jake Taylor:
The T-bone double hash Browns.

Tobias Carlisle:
I don’t mind so much but it was fun. It was just I grew up in a beef cattle area. I like a good steak and it’s got to have a big char on it and it’s got to be pink on the inside otherwise just throw it away.

Bill Brewster:
Yeah.

Tobias Carlisle:
I like kissing what you bet the cut but just that’s what I want.

Bill Brewster:
I used to eat it bleeding like purple.

Tobias Carlisle:
Blue rare. You like a blue rare?

Bill Brewster:
I used to, now I can’t. My stomach can’t handle it. Anyway, I digress. What-

Jake Taylor:
I got one about Daily Journal, is that does anybody show up after?

Bill Brewster:
No. I don’t think so. I do love me some LA though. If Kauffman were to take it over, I would sit there and listen to Kauffman speak for as long as he’s willing to speak. That guy’s awesome.

Tobias Carlisle:
We’ll throw a value off to Rouse live to replace the DJ committee.

Jake Taylor:
That’s fun.

Tobias Carlisle:
DJ Co started out with like 10 people showing up to those meetings. I went to the first one when they transitioned away from… It used to be-

Jake Taylor:
Wesco.

Tobias Carlisle:
Yeah, Wesco. Maybe there were like 120 people in a little room. It was pretty small.

Jake Taylor:
Yeah. We were at one point going into Daily Journals office and I was like sitting on some guy’s desk in the lobby. He’s trying to work and I’m like knocking a stapler over.

Bill Brewster:
I think that was like four years ago is the last one in that facility.

Jake Taylor:
That got a little cramped.

Bill Brewster:
Yeah. Munger drove his Bentley up. That was dope.

Tobias Carlisle:
It was cool. And it was really smoke. I had Jason Zweig to the right of me and somebody else might’ve been my provider of my lift… So it was pretty good. This feels right.

Switching Strategies – How To Stop Yourself From Becoming An Investing Whore

Bill Brewster:
Zweig is a cool dude? I met him once and I was like, “I really like you and you can write really well.” All right, so this is a question about style drift if I could summarize it. He said, in honor of Valentine’s day here’s sincere Mailbag question. I’ve been faithfully and happily married to one woman over 23 years. However, when it comes to my portfolio strategy, I’m the most promiscuous guy you’ll ever meet. I fall in love with one strategy and then completely ditch it for the next.

Bill Brewster:
I’m smitten with indexing right up until the concentrated temptress bats are eyes and I come running.

Tobias Carlisle:
Great question.

Bill Brewster:
Why am I such an investing whore?

Tobias Carlisle:
I thought we’d just go to a first Munger life question.

Bill Brewster:
I know I’m destroying my own gains chasing returns like skirts. Why can’t I settle down and commit the nice strategy next door?

Tobias Carlisle:
That’s a question for you and your own personal God. I think that’s a-

Bill Brewster:
I didn’t take the person intentionally. I thought it was a pretty funny question… we struggling.

Jake Taylor:
Are you writing your own Mailbag questions right now?

Bill Brewster:
I outdid myself.

Jake Taylor:
This is submitted from Bill’s journal. I don’t know who that guy.

Bill Brewster:
Yeah. No, I don’t know the answer the question is really tough. It’s very hard to stick to a strategy when it’s not working and I think that’s the essence of investing.

Tobias Carlisle:
I have managed to do it but it’s creating massive cognitive dissonance so it’s hard. I know we’re not through the other side yet, so I might give in and convert.

Jake Taylor:
I mean there’s always-

Tobias Carlisle:
Possible.

Jake Taylor:
There’s always something very attractive about that other side. That is-

Tobias Carlisle:
The one that’s winning.

Jake Taylor:
And it makes sense.

Tobias Carlisle:
The one that is making money.

Jake Taylor:
It’s like, of course that’s going to be winning. Of course, that’s an attractive proposition until it isn’t.

Tobias Carlisle:
I find that a few market cycles. That’s the way to sort yourself out. Just go through a few market cycles, see a few cycles… all the way through the cycle.

Bill Brewster:
Yeah. And what you can stick with like the Greenblatt thing of I would never be able to stick with momentum if it went wrong, like just make so much sense to me. It’s gotta be the strategy for your style bot or for your person personality.

Tobias Carlisle:
One of the things that Corey Hoffstein said in our interview that I thought was really interesting, he said momentum is not monolithic. Momentum is this moving feast at sometimes it’s low volatility, sometimes it’s quality, sometimes it’s deep value. And I thought that is really interesting. Maybe that is why because if you look at the momentum factor, it is the most robust factor.

Bill Brewster:
It’s the one that’s always catching the trend… chick.

Tobias Carlisle:
It’s in it.

Jake Taylor:
It’s the Leonardo DiCaprio of strategies.

Tobias Carlisle:
The thing you have to know though is-

Bill Brewster:
Find Christianson in high school.

Tobias Carlisle:
It is the thing that gets taken out to the woodshed and destroyed when the market goes down. And then it doesn’t work for a year afterwards. So you have to really know the strategy to do it properly. You can’t be the guy who gets into it light cycle.

Jake Taylor:
Then you end up with syphilis. That was a daily a old joke-

Tobias Carlisle:
Of dysentery. What’s the Daily Journal check?

Jake Taylor:
Oh, Munger. Just was talking about a delaying gratification. And if you can’t do that it’s a disadvantage and in the investment world, and also you can end up with syphilis.

Tobias Carlisle:
Don’t know what to say there. Do you guys have any-

Bill Brewster:
I love when Buffet gets pervy too. He says some stuff that’s like, Oh my God.

Jake Taylor:
I’ve heard through the rumor mill that he likes to tell a dirty joke and that doesn’t surprise.

Bill Brewster:
I’m sure he does.

Tobias Carlisle:
He tells dirty jokes publicly.

Bill Brewster:
That’s right. He loves them.

Jake Taylor:
Or maybe…

Bill Brewster:
Very good at.

Tobias Carlisle:
At the bottom of the 74 or maybe it was a summer, I think it was 74 somebody said to him, “How do you feel right now?” Because Munger was way down. He’s like an over six guy in a whole house something like that.

Bill Brewster:
That’s right. Yeah.

Tobias Carlisle:
That’s pretty aggressive. Do you guys have any more insight? I’ve got one more mailbag question here.

Jake Taylor:
I wish I had a better answer for that. I guess that’s just life, right?

Bill Brewster:
Try to stay faithful and learn a little bit more.

Tobias Carlisle:
Yeah, that’s a good idea to read the Buffet biographies, see that it works. Read other business biographies pounded in. Here’s my… I’ll see other-

Bill Brewster:
Things is like there’s just not a right answer. I mean, you can see in different asset classes. I don’t care if it’s real estate, I don’t care if it’s stocks whatever, different people win different ways but I don’t think anyone can win playing other people’s games. I just fundamentally don’t think, I was a reasonably good golfer. I would never do well if I was trying to play the other guy’s game.

Tobias Carlisle:
What about in Bloodsport when Jean Claude van Damme adopts a different fighting style of each person who he can front until he gets through to the end.

Bill Brewster:
So that’s a really good point. And what I would say to that is until I could see him fight Steven Seagal, I’m not sure that I can actually answer the question.

Jake Taylor:
Yeah. That’s a good point.

How To Choose The Right Investing Strategy For You

Tobias Carlisle:
Okay. Here’s my mail bag questions Sibestyon the side. How did you come up with your definition sort of following on from our last discussion, but how did you come up with the definition of your personal stock universe? I think he meant strategy. There are several methods in the world to search for stocks, growth, value, momentum. How did you decide where to apply your method?

Jake Taylor:
Well I saw how well it was working for everyone else in late when value had its absolute heyday and then you get sucked into it and then you’re too dumb to get off of it and here we are. Sorry, that’s a little overly pessimistic, I’m joking.

Tobias Carlisle:
What’s the truth for me at least.

Jake Taylor:
There’s some truth to it, but it just made sense to me. And that in a fundamental like deep in your bones kind of way where it’s hard to imagine it not being anything other than that. It just made sense to me and I couldn’t… I guess it wasn’t smart enough to find something else that made more sense for a different time period.

Tobias Carlisle:
You got infected?

Jake Taylor:
Again?

Tobias Carlisle:
You get inoculated, you’re the inoculated investor?

Jake Taylor:
Yeah. Yes.

Bill Brewster:
The thing is I have just never seen anywhere in the world that owning businesses and assets has not been a good strategy over the long term. So then the question becomes, well, how do I want own those? And I find the world of qualitative research to be a fulfilling one. I enjoy doing it. And the way of thinking about owning a stock like a business is just something that makes a lot of sense to me. So after three years of reading and thinking and questioning everything that I know, it was an easy decision.

Jake Taylor:
Bill, do you think that, we’ve talked about this before in different contexts, but if you’re… Is there anything to be said about picking the companies that you just want to root for, to win? Like the people, the cultures? I feel like sometimes with deep value there’s not as much quite to root for there and you’re just like, “I’m buying this because it’s just stupidly cheap.” And I don’t even care if it goes out of business, but I just want to get a rerating on it. Whereas maybe some other investments you could make where you just like, “Man, I just want these guys to win, they’re doing things the right way.”

Bill Brewster:
Yeah. So this question, I will answer it two separate ways. If you’re in a hedge fund, I think you owe a duty to your people that are investing with you to do exactly what you told them you would do and earn the highest return. If you are running your personal portfolio and you’re going to follow these businesses, I think it’s more fund on things that you are rooting for and that you understand and that you use. Like I own some Phillip Morris, I can tell you owning that is not particularly exciting to me, doing research on cigarettes sales is not something I love.

Tobias Carlisle:
You’re not ready for those guys to succeed?

Bill Brewster:
Not really, no. And honestly I should probably look into cannabis a lot more because I am rooting for that. I think it’s a better mousetrap for what people need and I think it’s a lot healthier and… There’s Swedish Match is a company that some of the dads around here are using Zinn a lot, that’s where I might look into, it’s like nicotine patches. But that serves a need and delivers a product in a safer way. I would not be upset. I don’t have this, I’m not going to touch nicotine thing but like just my mom smoked her whole life like rooting for cigarettes in any way, shape or form is just like sort of offensive.

Jake Taylor:
Yeah. I think it’s cheap. So what about AB InBev in that same model?

Bill Brewster:
I guess I’m more okay justifying beer, but I do think alcohol is one of the most dangerous drugs ever invented. So it’s somewhat hard for me to-

Jake Taylor:
Root for that.

Bill Brewster:
Yeah.

Tobias Carlisle:
Was alcohol invented?

Bill Brewster:
I don’t know how… Somebody had-

Jake Taylor:
Discover it.

Bill Brewster:
… Yeah discover it. But I think it’s impossible to argue to me that people don’t destroy their lives in one night when they’re too drunk or I mean, the amount of harm that is inflicted on society from alcohol and how ubiquitous and widely accepted it is, is one of the things that makes my head explode.

Jake Taylor:
It is very interesting that we are so blazay about that.

Bill Brewster:
Yeah. It’s basically cocaine. I mean, not really, but like sort of, I mean like you drink a lot, you do crazy shit. And like people are like, “Eh, it’s legal.” So whatever it’s okay. I mean I don’t know.

Tobias Carlisle:
I’d have to save that for another podcast.

Jake Taylor:
Well. All right.

Bill Brewster:
All right.

Jake Taylor:
Is there any part of you that wishes to want to root more for your investments?

Tobias Carlisle:
I mean sure? I love Shopify because I can see that it’s a really great business and I like Toby Rokie. I’ve listened to his how I built this podcast a few times and I follow him on Twitter. I just think he’s a humble, smart dude who’s trying to do the right thing and absolutely crushing it while he’s doing it. And so I really want him to succeed, but just can’t get there to spend the money on it at the moment. And I think that you get an opportunity at some stage where it’s a little bit cheaper. And I think that’s true of a lot of these companies, so constellations, same thing, love Mark Leonard, think that he’s doing the right thing in this. Still haven’t quite figured out whether the buy it four or five times get a 30 times multiple in the market is sustainable or not. Whether that gets OPD away.

Tobias Carlisle:
But I’m interested in successful, unusual characters and I would love to back them. I wish I found those guys a little bit earlier. It’s a good argument for like becoming a Ian Cassel star Microcap investor. Try and find those intelligent fanatics which read that book kind of is having this profound impact on me at the moment. I’m thinking about it a lot. Trying to think about, and some of the discussions that we’ve had about Peter Kaufman, I think that there’s something to the way that those guys have arranged their lives that is compelling. And I don’t want to say too much at the moment because I want to do a fall. I may write a book about it and I’m going to do some other stuff too. But I think there’s some very powerful truths in the-

Bill Brewster:
Kauffman’s, the man folks. If you don’t know Peter Kaufman, do some research on him.

Jake Taylor:
There’s hard job.

Bill Brewster:
He doesn’t see it. He doesn’t seek the spotlight so it’s pretty tough. But-

Tobias Carlisle:
That’s true also with Mark Lennon making it hard.

Bill Brewster:
That’s true. I guess I’m not familiar with Mark. When you talk to people that know Peter, not one of them says anything bad. That’s a hell of a legacy.

Tobias Carlisle:
The discussions on Mark Leonard like in the globe and mail are hilarious. They’re don’t know if he’s English or South African but that’s how will they know him?

Jake Taylor:
Does he have an accent?

Tobias Carlisle:
I have no idea. I’ve never heard him talk.

Jake Taylor:
I don’t think I have either.

Bill Brewster:
I’m not sure he’s not Santa Claus after that picture.

Tobias Carlisle:
He may be.

Bill Brewster:
Yeah. His investors.

Tobias Carlisle:
We’re running out of time Jen says spin a good one. As much as I’d like to extend it on, we’re down to like three listeners at this stage of the proceedings.

Bill Brewster:
Thanks for sticking with us.

Tobias Carlisle:
Let’s see you next week.

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