Tom Gayner: The Key To Success In Investing Is To Survive

During his recent interview with Boyar, Tom Gayner discussed the key to success in investing is to survive. Here’s an excerpt from the interview:

Host: You’ve been in this business for quite a bit and one of your early mentors told you the key to the success in the investment industry is to survive the first 30 years.

Gayner: Thanks for reminding me about Mr. Reynolds. The gentleman you referred to as a mentor was a guy named Ned Reynolds and he worked at Davenport and Company in Virginia, which is where I started in the investment business. He was a spectacular mentor to me in so many ways.

That particular comment that he made to me was unsolicited. He just happened to be standing next to me one day and randomly said that. There were so many things that I can remember him saying that really weren’t part of a conversation, just statements, but that is one of the ones that stuck with me a tremendous amount.

Now, the reference to 30 years, I think what he meant is generation. One of his other sayings was, “What you want in life is a young doctor and an old broker.” What he meant by that is that the day you graduate from medical school, in many cases, that’s going to be your peak level of technical knowledge of what’s happening in the world of medicine.

Then you’re out practicing and you learn different things, but in terms of staying on top of exactly what’s new, that might have been your peak moment. If you’re a broker, if you’re in the investment business, an investment advisor, counselor, it should be that each day that goes by, you should learn something and you should be a little smarter, a little better, a little wiser that the next time you see it.

His point was that 30-year generational time frame. Normally, you’re seeing things for the first time through the first 30 years, and then you’re seeing the same thing the second time around.

You look in today’s market, all the things that happened, I mean, that are still unfurling with the FTX situation. Every financial story like that seems to unfold in roughly similar lines. There’s something that comes along, it’s new, it’s now well understood because it is new.

It is described in very sophisticated terms or seductive terms such that money goes in, and at some point somewhere along the line, somebody wants to take a little bit more money out than what’s coming in and things seem to go sideways.

That has happened over and over and over and over again. Once you’ve seen it once or twice or 300 times, you should be a little bit better about not falling for the next time around or handling it better. That’s really the essence of what he was talking about through that story of lasting the first 30 years. I think there’s an epic amount of wisdom in that.

There’ve been some nuances to that. For instance, in the ’08-’09 financial crisis, by that time I’d been in the investment business about 25-ish years. I had told that story several times and good friend of mine reminded me of that. He was roughly the same age as me and he says, “Tom, I was hoping by the time we got to 25 years, we could round up to 30, but I guess we’re going to have to live through it.”

We did and we got through it, and now I’ve been at Markel for 32 years. It was basically year 30 at which time the COVID pandemic hit, and that was new to me. I had read about pandemics, but I had not had any firsthand experience with it. It did feel new. I’m hoping at this point we’ve crossed through the list of things that, at least you have had some familiarity with by the time they had come around.

This is a business where there just, is literally no substitute for experience. You can read about things, you can study things, you can be diligent, you can do your homework, but until you feel the visceral gut punches of what it means to live in a volatile market or not know what the next day will bring, you just don’t have the skills to be, an expert is not exactly the right word, but someone who can calmly deal with the circumstances you face.

The good news is, whether the 30 is a round number, whether we’re rounding or using truncation, I’m at least over 30. I think I’ve seen a good number of the things that one is likely to see and it just, it helps you have perspective about things.

You can listen to the entire discussion here: