How did Mohnish Pabrai inspire Guy Spier? An interview in the Aquamarine Fund's office in Zurich

hello YouTube I just learned what guys yeah from Monster bride and charlie munger so you can learn it too and if you like it subscribe thank you I [Music] nice to meet you in Zurich thank you for inviting us to your library Tolman it's a pleasure and it's also a pleasure to see German quality and precision being used I should have expected it I was still mildly surprised and trying my best very well thank you I wanted a name the topic of our first part of our interview becoming guys beer and I want to ask some questions that are more broadly yeah and let's just start with it what mistakes made you the investor you are today how much time do you have our to talk about hours and hours and hours you know I think that so and by the way for the listener they should know that I didn't know what these questions were beforehand actually it's it's a key approach to life is to take your mistakes and learn as much as you possibly can from them and it's actually only through our mistakes that we become who we are I say that I wrote about it in my book the mistake that I made to go and work for somebody that I did not respect and admire not only did I not in respect and admire him I think that some of his behaviors exhibited the worst of what the financial markets are that that taught me an awful lot but it only taught me an awful lot because I if I was able to find a way to get into a state of mind where I was willing to learn from that and I think that the worst thing that I see from time to time in people is that they feel like when they've made a mistake that's it and mistakes are the most beautiful blessings or if you see mistakes as the most beautiful blessings then you will get the opportunity to improve it alone so that was certainly I don't think I would have discovered Warren Buffett I don't think I would have become an investor I think I may have done many other things but it was the fact that I was sitting in that office in Wall Street in downtown Manhattan and was just thrown back on myself that gave me the space to start exploring other things so that certainly was the biggest mistake but I think that the mistake that most recently so we go from one of the first mistakes that I made to the most recent mistake I've talked many times about investing in Horsehead holding and I think I got some new insight into that recently which is actually really important so I've had a couple of investments in my portfolio that have performed horribly over the last year or two but it doesn't bother me in the slightest because I sized them right and that I could not have foreseen many of the things that happened at Horsehead Holdings but I could have sized the investment right and the investment was clearly wrongly sized and I think I've become much more aware of how important it is to size your investments to the right degree and we all know the kelie formula but so we kind of know it in theory but put into practice is an art that I'm learning more about how long did it take for you to find this blessing or this dealing with mistakes as a blessing so I think that where it started for me and it's why I kind of when I meet people who haven't lived in the United States I kind of want to encourage them to go live in the US because I think that the u.s. it's sort of in the air this idea of succeeding against the odds and using failure to succeed and at the time that I was at D H Blair I'd been living in the US two or three years so I was starting to really absorb that what exists at site-geist so it just exists in the atmosphere but then I discovered Anthony Robbins and Anthony Robbins has been a controversial figure many people don't enjoy either his seminars or other things about him but I found that he gave me just what I needed which was the ability to reorient my brain to see failure and to see mistakes and see setbacks in a different light and in a certain way so many times when something bad happens we have this natural and very fast reaction in our body to start feeling bad about ourselves and it's almost a timing issue that we have to get there before that sets in and stop it and I actually just to give an example not to do with investing you go out running now today I went running this morning before I saw you but it's a beautiful day but what if you got running and it starts raining there's a body reaction that says oh it's raining I shouldn't go running let's go home you need to step in before at that and say yes rain yeah get a different reaction going your body and if you can start that so I think I started learning that from Tony Robbins now 20 years ago and there are all sorts of places to learn it I mean neuro linguistic programming I think is really really powerful just studying the use of words it's the people you get around I get I got very angry at somebody a couple of days ago who started feeling sorry for me because my children are no longer in my home they're in boarding school and I got angry at her for even starting to start feel feeling sorry for me or to encourage those feelings inside me because not because I wanted to be angry with her because I want to get myself as far away from those kinds of influences I don't know if that's helpful that's very helpful you mentioned like that he copied some concepts for you work and you thinking what other constants and people did he copy I mean so I think that the so I think we have to copy everyone all success that we see all the time and I think that the biggest thing for me is not so much who but getting to the idea that we should copy so there's this idea that we get at universities and at schools that your work has to be original and in an academic setting that's absolutely true that we should not plagiarize other people's work but the minute you get into the world of business actually copying or as Mohnish Pabrai says cloning is the ultimate thing to do is the thing that we don't do enough of and one of the many things I didn't understand is that there's a strange thing that happens is that when you copy other people when you copy success you actually make it your own so it's actually in a certain way not copying it's learning from other people that if I just stop and think I mean most recently for me something that I think that I don't know if I've been focused on it but I think that there's a calm I've been so in my book I wrote about how I wasn't into meditation and it wasn't really something for me and then people wrote I apologize and then so in my book you'll have to cut it in my book I wrote about how meditation wasn't really something for me and and then a lot of people wrote to me and said guy you've got that completely wrong meditation is certainly something for you and this is like now the books 5 years old so this slowly this thought slowly populated down on me and I started trying I did not consciously but I started thinking more about some of the more thoughtful quote meditative investors that I know and so I reached out and spent some time with a guy called Josh Harris off recently Josh is a very thoughtful guy and his meditative in the Sun we spend far more time I think thinking than I do another guy that I reached out to is somebody who's no longer a professional investor his name is Nick sleep and I just recently had lunch with him in London I really enjoyed seeing how he creates a quiet environment around him and and then there's somebody else that you have to go interview if you'll give you an interview this Sarab Madan who finally he's gone to work at Markel insurance he works closely with Tom Gaynor now he finally connected me up with some people who gonna teach me for personal meditation so I'm gonna be Tolman at the beginning of November he's spending ten days with zero contacts with anything other than my own mind and so I think that just spending time well if you admire somebody you want to be like them and if I try and pull people all of those three people I admire for all sorts of reasons and if you pull them into your life then you start the ideas that will enable you to copy them pop up naturally and I know that in the case of saaremaa Don for example he'll be one of the first people that I get in touch with after my 10 days of Vipassana meditation because he'll be curious to find out and now it have become a little bit more like him in that regard actually funnily enough the first guy who got me going on that is a is a German guy hi mal Schultz he told me and it's funny he saw my value ex conference he sat down with me and he said guy I know you don't think it but you should go and do some personal meditation and now he does said that about four or five years ago maybe three years ago four years ago so now finally I'm going I'm quite excited as you can see so cloning or copying people happens just from being around them and finding ways to be around them yeah sorry these are long and meandering questions it's it's great it's very 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i9 house mid Kidner in New Jersey on delight of Fagin our vas pistol beast of Brooklyn Manhattan or the New Jersey the artist Allah died on Van Roy to Mitch fog nozzle bestowed Archie was also acidophilus to England oh it's been a lot eases our nominee indebted to it we feel elated they identity from Fein lightest is complex which people had the biggest influence on you yeah so you know I've talked about I feel like I want to go in answering this question I want to go further than just renaming people who've had an influence me on me that I've talked about but just to summarize briefly there's no question that my father's had a huge influence on me and we can go into why you know we all all of us who are in this community are enormous ly grateful to Warren Buffett and Charlie Munger and and you know for me the the learning curve that I went up when I met were Mohnish Pabrai was enormous in fact I write in my book I would hold on to that today that in a certain way I learned more from Mohnish Pabrai than I learned from Warren Buffett and the proximity to Mohnish Pabrai helped me enormously I would say that even though I don't know Charlie Munger and he's not a friend or anything there are some things in Charlie Munger that I react to I hate to say it slightly negatively so I don't agree with Charlie Munger that it's wrong to read fiction funnily enough I saw Charlie Munger say that and I specifically decided that even though I had not read a lot of fiction I would start reading more fiction that there was more for me to learn from fiction and that I wouldn't want to die without having read certain books I would tell you that now I've been married 15 years my wife has had an enormous influence on me just an enormous influence she has some qualities so she far more than me for reasons I'm not ashamed of but I wish it didn't exist inside me I am much more aware when I meet people than my wife of who they are what position they hold how wealthy they are and I and while I wish it didn't happen my reaction changes based on that knowledge my wife is not like that she treats everybody the same and I think that over 15 years I've become much better at that and so my wife has had an enormous influence on me what did you learn from Mohnish Pabrai can you maybe name three things yeah so so one is and not much has been written about this is there's an art to cloning so if you copy the wrong things you're not actually cloning what you should be cloning so if I want to copy Warren Buffett or if I want to become more like Warren Buffett because I want the success that he has in the world I could choose to the same clothes as him or I could choose to drink diet coke but that's not really what makes Warren Buffett Warren Buffett I mean it's fun and it's funny to do and there's nothing wrong with it and it's harmless but you want to be a kind of a close student and observe what it is that I admire in this case what is it that I admire and Warren Buffett and how can I copy what he does and drinking diet coke might not be the most important thing so for example in the case of setting up an investment partnership one of the things that I failed to plug Warren Buffett in was this zero management fee naught and 25 and I did not realize you know there's no point drinking with diet cokes although Coca Cola's or eating the peanut brittle if you're not going to clone those far far more important things so figuring out what to clone in somebody what is what is relevant and what is not I think is one extraordinarily important thing that I learned from for Mohnish Pabrai the second thing that I would go to is it's not a consid I learn it from Mohnish Pabrai the you've sort of so in order to achieve success practical success in life you need to figure out I'll on pramana Sh'ma I need to figure out what behaviors can I engage in consistently that are going to work over time but then so the one thing is to learn those behaviors and then the next thing is to do it consistently over a period of years and I saw Mohnish Pabrai doing that in various ways not just not just doing certain behaviors consistently but building an organization that will do it how do you build an organization that makes the world happy that you exist you know a book that influenced me a lot that I I think that all value ambassadors should read is is by a guy called Tony Hsieh called delivering happiness and basically he builds a pose around the idea that what he wanted to do is is have a company that quote delivers happiness but unlike many people he scaled that up and how did he scale that up what did he do he actually had a system in hiring the customer service reps early on that if they didn't meet certain criteria that he wanted in the employees he'd pay them to leave he'd give them a two thousand dollar check to walk out the door so he had some unusual ways of building an organization that does what most of us think so I learned in in a second lesson I learned from Mohnish Pabrai you know how to scale up so it's not enough to read in a book this is a good behavior my writing thank you notes is a good behavior sending holiday cards is a better good behavior you need to discipline yourself to do it and even better you need to scale up an organization to do it when I say an organization that doesn't need to mean hundreds of people it could be a small team of four or five people and if you look at if I look at the behavior of Debbie bosonic obviously Warren Buffett selected her but she helps amplify Warren Buffett so you know she's doing for Warren Buffett what he could not do for himself and so we all need to find people who can help us to scale up what we want in the world so that's a second huge lesson that I learned from Mohnish Pabrai and and sort of like searching around my mind to pick a third lesson and my mind is blanking but let's see if I come up with then we could commit to lessons oh well no I'll give a third one and and so I will give you a theory which I see mohnish doing in practice and I think that we all know the theory but the lesson of doing in practice is something that I'm still not very good at but at least I know what I am aiming for and the the theory is this so a a false-positive is much more expensive than a false negative what does that mean if I hire the wrong parson that's a false positive it is going to be far more expensive for me then to not hire a great person so to say no to somebody who actually turns out to be a fantastic parson doesn't cost us anything because we said no and they're out of our lives but to say yes to somebody who turns out to be a negative in our lives is extraordinarily expensive because it just takes time to get rid of them and sometimes you can't get rid of them for y'all so that means that we need to be extraordinarily biased towards saying no it's okay to say no to something that turns out to be okay but and I have an element inside me that wants to be fair and wants to be inclusive and want to bring all sorts of people into my life who end up being false positive so that's the theory I think that what I've seen in Mohnish is Lee he's very quick very very quick to do it and he doesn't feel any sense of sort of it doesn't feel bad about having done it and and I think that I've learned to be better at that so you you kind of don't worry about the fact that I have to learn not to worry about whether the person is a good person or not it's okay to just say the person doesn't meet criteria my criteria so although this investor doesn't meet my criteria or this investment doesn't meet my criteria just one other perhaps even better lesson Tilghman so here's a lesson that I learned through Mohnish Pabrai but also from his observations of Charlie Munger this is kind of a gem this might be the best part of this conversation so we all know Adam grants idea of being a giver being a matcher or being a taker so just very briefly matches will say oh use to my back I'll scratch your back they match a taker when you do something for a taker they will say oh wow he did this for me I wonder what else I can get out of him a giver is somebody who says oh he did this for me what can I do for him what can I do for that person what can I do for that person the bottom line is that we want to be around givers so that's that's Adam grants book give and take very worthwhile book to read so now mohnish gave me an observation of charlie munger so i don't know charlie munger well but charlie munger has a very gruff exterior years he's not a friendly person to approach and what Mohnish Pabrai shared with me is that when you become a friend with him and Mohnish Pabrai is a friend with him that demeanor completely changes he becomes extraordinarily warm and generous and giving in a way that he's not in the general public and so here's the insight that is really a profound insight if you are a giver in life which Charlie Munger is you'll have a lot of people coming at you and so you have to develop often a very gruff exterior in order to keep them away and so many of the world's greatest givers are actually not particularly pleasant on first meeting because they have to keep people away for them from them by contrast takers are often the most extraordinarily friendly warm sort of like they and they have to do that in order to draw people in so the world has these kind of strange inversions where what you think you're getting is not actually what you're getting the nicest talking person at the at the cocktail party may be the least worthwhile friend and the most worthwhile friend isn't talking to anybody at the cocktail party because you've got so many people coming at him I think that was a profound lesson just because somebody has a gruff exterior don't assume they're not givers to the people who close to them so yeah interesting how does a typical day or week of you look like yeah so I will describe I can describe two things my ideal day and my typical day so and I did the reason why I say that is that I am traveling more than I would prefer the reason why I'm traveling is for good reasons I my children much as they enjoy being in Switzerland have decided that they like going to boarding schools in the UK and so I'm in the UK a lot to visit them and to see them and I don't like well we're gonna figure out I will have a place in the UK we will have a place in the UK which will make it better but my ideal day I've worked out that if I'm going to do exercise I'm much happier and more relaxed and the only real time for me to get the motivation to do exercise in the morning so I try to start each day with with exercise I also I leave the shutters relatively open and I try to wake with the morning light so you know rarely I awake at 6 or 7 a.m. I might wake it 8 or 9 a.m. I allow the morning light to wake me up and I don't set meetings for the morning so I will not have any meetings before 11 o'clock if I have to have a meeting I can confirm that exactly well no I did actually have a doctor's appointment before I saw you but that's but I so I get up and I do sport if I'm doing intermittent fasting I'll try not to eat before I do sport and eat after I I've done the sport and then I then I come home after sport I shower and I really like to read in the morning so I have various places where I read and it might either be investment reading or it might just be the book that I'm reading all the books that I'm and I have a couple of places that I do that but so depending on the morning I'll try to get to the office sometime mid morning but it may be as late as 1 or 2 o'clock if I'm really enjoying the reading and what I have going on at home and then here in the office I have things usually turn very differently in that I still have at least two key people who work for me in the United States so there's quite a bit of me that's tuned into the u.s. time zone so things tend to get busy around 2:00 p.m. people are waking up on the east coast of the United States to 3:00 p.m. there's often conversations and things going on with the United States and so that's kind of a busy time for me much as I would like to nap in the afternoon and we're here in the library where I spend far too little time and that usually lasts till 6:00 or so 6 7 o'clock if my children are home were if my wife's at home I want to get home for dinner with her and then you know after dinner I will do either work or reading at home that that is my ideal day what disruptor is travel but when I'm traveling I try to keep to the same kind of routine and that it's get up in the morning and do sport then do reading and then in me and then after lunch busy work I think if I lived on the west coast of the United States and most of the world was getting up before me I might be able to spend I might change it around and the morning an early morning would be sort of busy would type work and then the afternoon would be more reading type work but but actually ever since high school I learned that the absorbing new information happens best in the morning and absorbing new ideas and concepts so it's good to read in the morning what I write incentives for you which incentives are important in life yeah I mean so something that I see a lot and it's completely understandable is that the incentive of many people is to make money get rich get richer and why do we want that we want that full security we want that for self actuation and achievement and I don't think there's anything wrong with that but I think that I feel I believe when I've looked at billionaires the motivation just to make more money when you're already rich seems to me a little bit ridiculous I mean imagine saying oh you know I I'm gonna pile up oxygen more oxygen than I could ever breathe in my lifetime why put oxygens good you know it would be like a little ridiculous for Ned and in a certain way money is a bit like oxygen that's fuel that makes things happen in the world but you can't use more of it than you need so why would you try and pile up more than you would ever need in your lifetime and so I've that's something that I've struggled with a little bit over the last few years where I suddenly realized that if you take that oxygen and energy I have around me more oxygen than I would need in my lifetime and I think that what what and I'm not saying that I'm doing a good job at it is the the motivation to make the world a safer place for myself and my children it's a reason why I like living in Switzerland it's a place that so much of my taxes that I pay here goes to really making the society as safe and a happy place for everyone to live including the plumber the electrician the guy who cleans the roads which are really really important and I have not spent much time in Germany recently but when I the UK and I'm spending a lot of time in the UK even though it's an advanced and rich society by comparison to Switzerland I think that there's an enormous amount of pain their pain because of the inequalities between rich and poor paid because people get it can't get on to a good career path and I think that the real motivation for many people who do the job that I do is to make societies healthier where there are less unhappy people and more contented and happy people and I think that Switzerland's done a great job by reputation I believe that Sweden's done a great job I think that other large democratic economies like the United States United Kingdom France for sure and quite probably Germany have a long way to go that's that's really what oughta motivate people like me if that's helpful it's very helpful thank you very much for the first part of our interview yeah yeah give it

Channel: Good Investing Talks

Views: 35,642

Keywords: Value Investing, Value Investors, Value Investment, Valueinvestment, Investing, Benjamin Graham, Warren Buffett, Charlie Munger, guy spier, aquamarine capital, long-term investing, investing mistakes, investment fails, investing fails, Mohnish Pabrai, incentives, investing, monish pabrai guy spier, guy spier zurich, swiss investors, investing legends, investing wisdom, guy spier warren buffett, guy spier charlie munger

Id: vuq8hq76nEU

Length: 36min 11sec (2171 seconds)

Published: Mon Oct 21 2019