CW 583 - Charlie Munger: The Complete Investor, Value Investing with Tren Griffin

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Welcome to the Creating wealth show. This is episode number 583. That's 583. And this is your host, Jason Hartman. Thank you so much for joining me today. It has been a tremendous ride and a tremendous privilege to be talking with you for so many years to have so many of you supporting the show and coming, coming out to our events. And it's great to just meet you in person. Of course, we've got our Orlando property tour coming up, Orlando, Florida in a few, a couple of weeks. Well, what, three weeks or so here, I guess I'm looking forward to seeing many of you there and it's just, it's just been a real privilege. So I just wanted to express my gratitude and once again say thank you to all of you in 164 countries worldwide. I mean, what an amazing Privilege. Listeners in 164 countries. Wow. I am honored and humbled and it's, it's just a great privilege. So I'm glad you keep finding value in the show and I thank you so much for listening and for telling your friends about the show and for reviewing the show. Please go on itunes, stitcher radio and review the show and we'd love your feedback and we're going to dive into it today. So our guest today will be Tren Griffin. Tren Griffin. He's an upper level person with Microsoft, of course. Bill Gates, the founder of Microsoft, is best friends with Warren Buffett. So Tren, knowing this and being involved with these guys, he decided to write a book about Charlie Munger. Now you've probably heard of Charlie Munger. Certainly you've heard of Warren Buffett. Charlie Munger is kind of, I guess he's the number two guy, you know, he's Warren Buffett's right hand man. And the book is entitled the Complete Investor. And you know me, I'm new, no fan of the stock market. I'm no fan of Wall Street. I think it's the modern version of organized crime, because it is. But I do one thing I really do like about Warren Buffett. And I remember about 12, 13 years ago when I was really working on getting into the nationwide real estate investing business. And I of course had a traditional real estate company at the time. I ended up selling that company to Caldwell Banker. I had a whole bunch of traditional real estate agents working for me. And so, you know, that was my background in traditional real estate for so many years. And interestingly, my career started working with a lot of investors and then it went into the traditional side of real estate. And of course, in the traditional. And when I say that, I just mean, you know, selling houses to people, right? Like you think of any real estate person. But of course, I always sold some properties to investors over the years, but really wanted to be in the nationwide investment business. And as I was refining and perfecting my philosophy, I remember I read a Warren Buffett book, of course, there are many. And I just really, I really synced in and related to his value investing strategy, the strategy of just buying and holding assets and, you know, keeping it simple, not worrying about trading and not having to, you know, do a bunch of management and fighting with contractors all the time and, and doing all that kind of stuff. I just really like that philosophy. And to that end, I want to tell you that occasionally we get a question or I guess really I should say a complaint. And I got one today that was a complaint about two properties on our website at Jason hartman.com so let me just explain my philosophy about the properties on our website and let me, if you will, compare the jasonhartman.com properties to the multiple listing service at large, to Zillow, to realtor.com or any of the other places where you can search properties and, you know, try and find properties to buy, whether they be for investment purposes or for your own home. So.

I just want everyone to know this, and I'm not exactly sure how to explain this, but here's my shot at it, okay? When you look at properties on our website and you do some research on them, which we have taught you how to do, we encourage you to do, we want you to do, please do your research, okay? And we will help you with that. Okay? So there have been many shows where we've talked about it, of course, that's what our investment counselors do. They help you curate and pick properties. So. Curate. That's a good word. Curated. All of the properties on our website are not curated. Okay? That's the first thing you got to know now. They are far more curated than these big listing services like realtor.com and Zillow, where any piece of junk can get on there. They are curated, but not completely. We just can't do this and we kind of don't completely want to do it. And I don't know if this, I don't know if you'll relate to my reasoning for this, but here's. I'm gonna throw it out there. I'm just gonna be very, you know, I'm always trying to be very open and transparent with people and you know, that really is more efficient for me. It's for my benefit. I'm doing it partially for selfish reasons, not altruistic reasons, because it makes my life easier, but when we can nip problems in the bud. So one person was complaining that a couple of the properties weren't in very good school districts. So I could easily reply and say, well, look, you get what you pay for, right? I mean, these properties aren't in my old hometown, Irvine, California, which is very high priced and has exceptionally good schools. You know, they're not in Beverly Hills. 90210. I'm only assuming the schools there are good. I know there's that sort of funky TV show about it which I never got into. But you know, you would think that in high income areas they generally have good schools, right? So that's the first thing, but that's not really the thing. The real thing, the real heart of the matter is this, is that our listing service, our Referral network@JasonHartman.com.

Is something where we use that as a feedback mechanism for our local market specialists in the given areas. And we want some of the properties on our website not to sell. That's very much our goal is to not have every property on our website sell through our network. Because this is how we give feedback to the local market specialists and say, look, our clients, they turned up their nose at this deal because it's just not a very good deal. Bring us properties with either better prices or better metrics or in better areas or in better school districts or properties that look better and have more curb appeal or have better rehabs in terms of, you know, the fix up work that's been done. This is a feedback loop. So I need you as our clients and our listeners to understand that this is not a fully curated website. It was never meant to be that. It is meant to be that you connect with us, you work with our investment counselors, and our investment counselors help you in being picky and saying no to this one and no to that one and yes to this one. And that becomes a feedback loop that is a, hopefully a relentless mirror that feeds back to our local market specialists and says, hey, why didn't we sell that one? Because it just wasn't good enough for us. It wasn't good enough for our sophisticated, educated, knowledgeable clients. It wasn't good enough for them. So bring us something better. If you want to do more business with us, bring us better inventory and we'll sell it for you. It kind of reminds me of Walmart. And I've talked many times on prior episodes about Walmart. And do you know how. Do you ever watch cnbc, the, the mouthpiece for the vast Wall street conspiracy? Cnbc? Well, on holidays when the market isn't open, CNBC will run reruns of these sort of documentaries that they do. And some of them are pretty good. And I remember one they had, it was about Walmart. The reporter asked, they were interviewing the, the CEO of Walmart, and the reporter asked, you know, Walmart has such a bad reputation. You know, they don't pay high enough wages. The people come in, vendors and they, your suppliers and they, they sell products through your stores and your retail channels or they pitch them to you and they walk out of here with, with, you know, with blood on their face. You know, they're just beat up. They're beat to a pulp. And you know, you're, you're just too hard on these people, aren't you? That's, that's just not, that's not fair. Fair, is it? And I'll never forget it. It has influenced me a lot. And of course, before I say this, by the way, you know, it's important to have good relationships with everybody in your supply chain, whether it be your suppliers and vendors and contractors, your local market specialist in our case, and of course your customers, right? But the CEO of Walmart very pointedly said, look, and this is not exactly what he said, I'm, you know, paraphrasing, but he said, look, we are the agent of the customer. We are the agent of the customer and we must provide the best value to the customer. That is what we're here for. We're not here to provide the best value. And you know, this is what he meant by it. I'm just kind of going on and on. I don't know what he said next. Maybe he did say something like this, I can't remember or honestly. But, you know, we're not here to provide ease of, you know, ease of business and sell all the inventory, the crappy inventory for our suppliers. We're not here to unload that on our customers. We're the agent of the customer. Now, I just do want to mention something as a legal point. We're not actually your real estate agent. We are a referral network. We're not licensed in all the states that we refer clients to. We operate as a referral network. So we have our license in one state and then we refer business to providers in other states. But that concept of being the agent for the customer, and that implies where the obligation of loyalty is. Where, you know, maybe not from a legal sense, but at least from a psychological sense where the idea of fiduciary comes from. And that is at least how I feel. And I hope everybody in my company feels that way too. We are here for the client. And so if some of the properties on our website aren't to your liking, please do not buy them. We don't want you to. We hope that 30% of the inventory on our site never sells because that will be the lowest quality inventory that will still be in the hands of our supplier. And you know what? It'll give our supplier a very valid economic message that these properties were not good enough. Don't try to unload your ugly ducklings on our network. Take them to one of our competitors who doesn't do much critiquing and doesn't really care and doesn't operate with a real estate license and, you know, isn't that careful and doesn't feel that way. Take them over there and you can unload your inventory there. And believe me, there's a lot of those companies out there, folks. So if you want to get some junky properties, believe me, we've heard a lot of horror stories from people who have purchased properties through other, other companies and come to us and have moaned and cried and sung the blues about them. So we don't want to be that company. We understand who our customer is and it's. It's the buyer that's our customer. Okay. You know, every company, I always say, has really three primary audiences. What are they? They are the suppliers, the shareholders or the stakeholders. I should say the stakeholders. And they are the customers. And can you Please, all of these. I don't know. I. I think it's always this sort of war and compromise with all these. These three in the triangle. Right. So you hear Amazon.com you know, most customers love Amazon.com suppliers, not so much. They think Amazon takes a lot of money out and they get to decide too much on prices and employees. I'm not so sure because I just recently read an article. Of course there's always a critic out there. You never know really the full story. But this article was, I think, in Business Insider, and it was talking about how Amazon is a tough, demanding place to work. So, you know, it's always a compromise between these three primary entities, stakeholders, customers, and suppliers. Right. Those are the three major categories here. Go to jasonartman.com check out the properties there. Pass on 30% of them and know that 70% are the good ones and 30% are the bad ones. And how do you do this? You get help from our investment counselors. They will help you be picky and choosy. Okay, now let me give you the opposite of this. You don't want to be too picky and choosy because that's how people like me end up single. Right? You know, Jerry Seinfeld just reminds me of Jerry Seinfeld. I mean, on that. Remember the show Seinfeld? Of course. It was the best written sitcom ever, if you ask me. That's just my opinion. And if someone has, by the way, a contemporary, really well written sitcom, will you please suggest it to me? Send us over an email or something. Reviews Jason Hartman dot com. How about that? You can send it to that address. It is. It is getting pretty hard to choose stuff on Netflix and Amazon prime and Hulu, and I don't know what to watch anymore. There's just too many choices and there's just a lot of garbage out there. But I digress, right? What was I saying? Oh, yeah, Seinfeld. Anyway, his Jerry's girlfriends were so cute. I mean, you know, compared to Jerry. Right.

And in, in the show, of course, he would always find something wrong with them, some little funny thing that he didn't like about them, and it was just hilarious. That was the. That was the most well written show ever. You know, I heard that Seinfeld had one writer per minute for each episode. So in other words, if the episode is about, what, 22 minutes long, they got about eight minutes of commercials. They have 22 writers per episode, I heard. And that's how they keep it so funny and made it so funny. I Just wish someone would redo a new Seinfeld. And please don't tell me that what's his name Larry David show. You know, curb your enthusiasm. I've tried watching it. That is just not that funny. It's. It's just sort of dumb. He's just way too neurotic for me.

So. Oh, wait, this is a real estate and financial show, right? Oh, okay. Let's get on with that, actually. So Orlando Property Tour. Meet us there. We look forward to seeing you. Creating Wealth Seminar on the East Coast. We never have these on the East Coast. You'll get the Creating Wealth Seminar and the Orlando Property Tour and heck, the day before, I'm going to Disney World with my mom, so it should be a great time out there. And if you're going early, maybe I'll just see you at Disney World, too. Come and join us for that Jason hartman.com. click on events. Also, meet the masters of Income Property. Coming up in January, that event is going to fill up fast, as it always does. That always sells out. And it will be full fairly soon. Early bird pricing for both of these. And Venture Alliance. Well, what is the Venture alliance doing? We had our great trip in Newport, Rhode island, and Martha's Vineyard and our next trip, although it's not formalized yet, but we're looking at Dubai. Dubai in February? Yes, Dubai. So think about that. And if you have questions and interest in Venture alliance, talk to your investment counselor that you can reach, of course, through jasonhartman.com and we would love to talk to you about that as well. Okay, let's get to Tren Griffin. Talk about Warren Buffett and Charlie Munger, the Complete Investor.

It's my pleasure to welcome Tren Griffin to the show. He is a senior director of strategy at Microsoft and also author of Choice. Charlie Munger, the Complete Investor. Tren, welcome. How are you?

I'm great.

Good, good. Where are you located?

I'm here in Redmond, which is a suburb of Seattle.

Yeah. Okay. I didn't want to assume that, so that's why I asked. But you're right in Seattle, right in the heart of it, or Redmond, actually. So how did you come to write this book? I mean, you know, Bill Gates and Warren Buffett are close. But what got you interested in Charlie Munger and writing the book about, you know, the Complete Investor philosophy?

Well, what happened to me was the Internet bubble. And the Internet bubble was a strange time. And what happened during that period is sort of reality. Got suspended and I didn't really know what to make of things. I knew there was a lot of wealth, but I didn't know whether it was real or not. And so to ground myself, I took a think week and I took every book I could find, a lot of books about Buffett because I thought he was grounded. And when I read about Buffett, I learned about Munger. And Munger was the guy who sort of really interested me most. He was most like me. And so as a result of his guidance and his way of thinking, I was able to make a decision to sell a lot of my stock at a very good time. And so in that sense, he's my hero and benefactor and he's made my life better.

Okay, good, good stuff. So you did your stock play and that's all good. You know, at Berkshire Hathaway, Warren Buffett's philosophy, of course, is value investing. Can you explain to the listeners what that really means? And we're going to dive down and I'm really excited about this in the, our discussion today. We're going to dive down and, and, and show how this not only applies, of course to investing, but also to life in general. So tell the listeners about value investing. I mean, what really is that? We've, we've heard it thrown around. Give us the definition of it.

First is a stock is fundamentally a proportional share in a business. It's a partial stake in a business. And so to understand the stock, you need to understand the business. You shouldn't treat it like it's a baseball card or a piece of paper to be traded based on whatever people's opinion are. If you understand the business, you understand the stock. If you don't understand the business, then you're not a value investor. The second principle is basically margin of safety, which is you needed to buy, you need to buy the asset as a discount to value. And to buy at a discount to value in the value investing status means you need to buy it at a discount to intrinsic value, which is basically the net present value analysis and it's based on fundamental.

Bottom up analysis. The third principle is Mr. Market, which is the market is not wise. The market offers you a chance to buy and sell assets every day and should never let it convince you that it's wise. It's your servant, not your master. And the final principle which is applicable to everything in life, which is learn to be rational, learn to be dispassionate and look for sources of bias. So in a nutshell, that's value investing.

So does value investing mean you're always in it for the long run or does it just means that you follow those principles you just mentioned?

Well, value investing is fundamentally based on a sort of a thesis that value and price are very different things. And over the long term those things tend to align. But over the short term, there's substantial differences between price and value, particularly in some assets. And with the value investing mindset, you're looking for basically a situation where price is a lot less than value with a significant margin of safety and you buy the asset. And the key thing about value investing, it's buy and wait. It isn't a timing mentality. You look at the asset, if the Asset's selling at 70 cents on the dollar or you buy it, but you don't count on it turning around in a week or a year or even three years, that eventually the asset will return to its real value or in excess of its real value. And Mr. Market will determine that. So Seth Klarman, who is one of the great value investing personalities, says buy the bargain and wait. That's the essence of value investing, right?

Okay. So really, by the very nature of it, it's not a quick play, it's not a day trade, it's not a flip. This is something you need to wait for that alignment to occur. And we've certainly seen cases where many asset classes, of course, we're not just talking about the stocks here, real estate businesses, you know, smaller businesses that aren't publicly held. I mean, of course, you know, many times they're out of alignment with the market. Of course that's true in art collectibles. That happens all the time. And that's where, that's where good opportunities can lie. So how do you bring this into life in general? Talk to us a little bit about that. We'll talk more about investing, which I definitely want to do, but I'm just anxious to get your thoughts on how this applies in life, whether it be raising your family, making decisions, whatever.

Investing is really fundamentally about making good decisions. And we all need to make decisions in our lives in many contexts. And the Munger philosophy of decision making is very instructional and broadly applicable, which is what you want to do in life. Have a two track process. And the two track processes is really quite simple. The first track is try and make the most rational decision. You can use multiple models, you examine it from every angle, but you try and be rational and dispassionate because most mistakes are emotional and psychological. The second track is you basically reexamine your decision and say, are there sources of bias which may have caused me to make an irrational decision. They can be because you care for the person who was advising you or because of loss aversion, all of the things that arise because of heuristics which we have, which are described in a discipline called behavioral economics. So be rational. Look for mistakes in your thinking process. And that's applicable broadly. It's in relationships with your kids or your spouse or your work. That's a. That's a sound way to make decisions. It's also a sound way to invest.

Why do you call your website 25 IQ? I'm curious.

Well, it's very. These days, anybody who's in business finds it very, very hard to find a short, memorable URL. And I was.

That's for sure.

You can actually go through the process, name a company. These days, you're using Q's and Z's and misspelling and whatever. And. And so it was actually four digits.

And it was available. So that's the short of it. IQ is.

Obviously a little bit memorable, but it was available as the short answer.

Yeah, sure. Okay. Okay, Good, good. So talk to us a little bit about, you know, the markets in general. And, you know, in your book, you have a chapter called the Psychology of Human Misjudgment. You know, people just follow these crazy trends and speculations. And it always amazes me how, how people fall for these bubbles, you know, whether it be tulip mania or anything since or before, I'm sure, too. What do human beings do that causes them to misjudge things?

Well, you know, the key to investing is to find a mistake. This is what Howard Marks says, is when you find an asset and it's mispriced, somebody somewhere has made a mistake. And the good news is for investors is people are always going to be mispricing assets. So there is an ability to outperform the market. The bad news is the people who are trying to find a mistake will also make mistakes. And so it's sort of a contest who's going to make the least mistakes. And the inevitable part of it is Charlie Munger, as good as he is, Buffett, as good as he is, they're going to make mistakes. You just need to make less mistakes than the other guy. And one way to do that is to study mistakes, particularly your own mistakes, so you can learn to make new mistakes, not repeat the old mistakes. And so it's a relative process. And so searching for certain sources of bias, loss aversion, anchoring, There's a whole chain of dysfunctional Thinking that leads to mistakes. For example, in tulipmania or whatever, one of the strongest is fear of missing out. And this is when I found Munger and this is when I was in the middle of the Internet bubble, which is the key thing about the Internet bubble was everybody was afraid if they didn't buy this stock that their brother in law was going to be richer than they were or whatever their greatest fear was. And so it drove the stocks higher and higher and higher because people thought, well, if I don't buy this stock, I'm going to miss out. And so FOMO or Fear of missing out is just one example of a psychological or emotional mistake causing misvaluation and mistakes.

Yeah, yeah. FOMO is something that if people listening have not heard that acronym, it's commonly used in the context of human psychology in other parts of life, especially social media nowadays because you know, people look at their feeds on Facebook or wherever and they think, oh gosh, I'm missing this, I'm missing that. And certainly people have thought that way in the real estate market, the stock market, every market, you know, it's always that certainly gold and metals have done that people many times over the years. So that that fear of missing out is, it's a big factor. In fact, I'd say it's much more powerful. Maybe you'd agree with this, by the way, Tren, it's much more powerful than the desire for gain. You know, that, that fear of loss is a much bigger motivator I think, than, than that, oh, you know, there's an opportunity I can make money versus, oh my gosh, everybody else is doing this. If I don't jump in, I'm going to miss out. That's more powerful.

I believe it's extremely powerful. And the way Buffett puts it and Munger's described this is that it's really envy that makes the world go around. It isn't greed, it's envy. And when you see your neighbor with the car or somebody with bought the globe.com@6 and went to 97, it just drives you nuts. And you know, one of the key ways to not make mistakes or actually make fewer mistakes is to really trying to stay away from envy. Because envy is one of those things that nothing good, good comes from envy at all. You know, it's the one Sid Sin that's no fun. You know, there's no upside to it. It's mentioned several times in the, in the, in the Ten Commandments. You know, it's just, it's just something that's just all downside. So if you can clear that out of your brain, you're clearing FOMO out of your brain to a significant degree. So envy is something really to lead to the side.

But envy probably has, you know, an ego component to it. I get, you know, I'm certainly by no means a psychologist, but it's a motivator too. Maybe it creates progress. No, I'm just playing devil's advocate with you.

Well, so if you go, if you go through the, the negative heuristics, you know, all of them lost aversion anchoring on all that. At one time in psychology they had tremendously positive evolutionary.

Advantage, for example, overconfidence. At one point something had to get you out of the cave to hunt that saber toothed tiger. Your odds may have been not so good, but if you just stayed in the cave, you were going to starve. Humans naturally are overconfident. Humans are also naturally over optimistic. Those are from a societal standpoint, extremely advantageous. From an individual standpoint in a modern economy, not so much. So you get somebody who's like picking stocks or picking funds or whatever, they're much more optimistic about their chances. The psychological studies show that people are much more optimistic after they pick their stock or they pick their fund than two minutes before when they hadn't picked it yet. It's just a natural human tendency. But a lot of these tendencies were designed for a period in time that is not now designed from when we were running around on the savannah someplace trying to avoid being eaten by some large mammal.

I assume that's because people rationalize the decisions after they make them. But of course some get buyer's remorse, though. I guess that works both ways.

Well, all of these heuristics are potentially contradictory. And so what you have going in your brain is a soup of contradictory, you know, have you have overconfidence and yet you have loss aversion. You have all these things. And that's why human beings are so, so complex and so impossible to predict, which makes markets impossible to predict in the short term is that there are all these things fighting each other. And which one wins at any particular time is impossible to determine. And then of course we're also influenced by what other humans do, humans like to do. What other humans like to do. And so if everybody's buying classic cars and everybody's buying classic cards, or you know, the classic one is baseball cards, at one point, you know, they reached a ridiculous amounts, but everybody was buying them because everyone was buying them until they didn't and then it just, it just falls apart. But trying to time that, that peak is, is a losers game, it's a mugs game. It's just too, humans are too complex.

Yeah, yeah, that' a good point. And that's why value investing I think wins the day. You know, it, it's just really a, you know, a solid philosophy. I personally like using that same philosophy in the real estate markets. I'm not much of a stock guy at all. And you know, that actually leads me to a question for you. And I don't know if you cover this at all or even give it much thought frankly, but I'll just throw it out there. You know, what do you make of all the graphs and corruption on Wall street and you know, these company execs paying themselves big bonuses and the shareholders getting lousy returns and you know, them skimming the profits off the top. You know, I, I, I, I gotta think that Munger and Buffett are, you know, very attuned to that kind of behavior and you know, really want to, you know, avoid investments and companies that, where executives and boards exhibit it. But just thought I'd ask.

Well, most of those problems are caused by what's called an agency problem where the person who's managing or the person who's selling doesn't have the same interest as the investors themselves. And so what Munger and Buffett do is they work very hard to make sure that the alignment of who they're investing with is very aligned with what they want to do. So for example, when someone sells them a business, jewelry company, brick manufacturing company, they love the manager to continue to run the business because they know that person loves the business more than perhaps they love their own families. The other thing is they like the investors who are selling out to retain significant stakes. So there's alignment of interest and usually when there's fraud or corruption, it's a situation where the executives or the managers don't have substantial buy in. So for example, in my case, I particularly like investing in companies where the founders, where the people running the company are still involved and have been from the beginning and have a substantial stake in that case, their interests are aligned with your interests. I also like situations where I'm dealing with a professional money manager where they're working by the hour and not based upon how many transactions you do. And so I like fee based advice that's, that's hourly based because it aligns interests. And so one of the things that I talk about in my book, Charlie Munger, the complete investor, is that you want a situation where the manager is aligned with your interests, where their interests are your interests. And looking for that is always powerful. One of the things Munger says is he's been doing all this for decades. He always underestimates the power of interest and the power of self interest to basically motivate behavior.

You call it an agency problem. I just call it a conflict of interest. So that's the same thing, right?

It's a fancy way of describing a conflict of interest.

Yeah. In other words, where the loyalty lies, where the agency lies. Yeah, good points. What other things do you want to share with our audience? Just maybe a question I haven't asked.

Well, I think one of the key things about value investing is you really have to make a fundamental choice. Are you going to be willing to do the work? If you're not willing to do the work, you should buy a diversified portfolio of index funds. Now you still have to make decisions, you still have to choose the funds. You still have to choose when to do your rebalancing. There's still investment decisions that need to be made. But a lot of people would rather be playing golf or swimming or hiking or whatever it is. And if you spend more time picking out your, your refrigerator than your stocks, then you're probably not going to be able to outperform. And you should basically be a person who participates in the market through indexes. If you're willing to do the work, if you enjoy learning about businesses, if you're willing to read about investing and read annual reports, then it's something you can think about. Most people won't do the work, and that's why they should be in Vanguard or one of these low fee index funds positions. But if you are willing to do the work, then you can, you can be an active investor. Most people can't. And everybody needs to look into their own heart, decide whether they can.

Yeah. What do you think about alternative investments to the stock market? I know that's where your primary focus lies, but, you know, like I said, I love income property. I'm a real estate guy. I like owning houses and apartments and stuff like that. You know, how do they compare? I mean, you look at Warren Buffett and Berkshire Hathaway and this just incredible track record over the course of years. And you know, I also want to ask you about, you know, what's going to happen someday when Buffett steps down? I mean, he's, he's getting up there. What do you think of the rest of the investment world, or do you just not even think about it? And really, it's all about stocks.

I do think that about. I do think about it a lot. But again, in the book, I have another section of book where I deal with a concept called circle of confidence. And I believe in this very strongly. And for example, let's just take the area that you say you like. I think it's very domain specific. In other words, there are areas where you know a lot and you can get really smart if you do the work. So I have a friend who owns a lot of buildings in downtown Seattle, and he's done extremely well, but he won't invest in a town 50 miles away or another city like Seattle. He just knows the Seattle market. He knows prices. He knows everything. And he does extremely well in real estate because he stays within his circle of competence. So if you're gonna know real estate, if you're gonna know, you know, even if it's not my thing, but let's say you're gonna know classic cars, you should really, really know classic cars. You should read whatever it is and.

So pick it and know it really well and be a specialist.

Yes. And, you know, basically there's a, there's a saying in poker which is you sit down at the poker table and you don't know who the sucker is. It's you.

So, Tren, you kind of made me think. As you were talking. You made me think back to this 60 Minutes interview, I want to say, a little over a year ago with Michael Lewis. You're probably familiar with his books. It's great author, Flash Boys being his last book. And on 60 Minutes, he's telling, you know, the whole world there. He says, wall street is rigged. The little guy can't win. And you mentioned that circle of competence. And I think that's a, that's some excellent advice. I'm wondering, though, when it comes to Wall street, because it's such a giant institution and there are so many brilliant people playing in it and so many financial engineers. And Michael Lewis, of course, talked about the high frequency traders. Can you possibly have more competence than any of these people or the machines, the robots that are really doing the trading? I mean, no matter how smart you are, you can't trade faster than, you know, nearing the speed of light, which is how they're trading with these algorithms? You know, that's a somewhat new development in the world of Buffett's tenure, which is very long. Any thoughts on that?

Yeah, the key point there is the Munger Buffett philosophy that I talk about in my book is about get rich slow. And so somebody doing high frequency trading doesn't affect the value investor. In other words, if you're day trading, if you're in and out, you're the sucker at the poker table. If you're buying a stock, don't hold on for a long time. The fact that they're jumping in and out really doesn't affect you one way or the other. So as long as you think long term, that stuff doesn't really affect you. I mean, the advantages of value investing are two fundamental number one, you don't need any special inside information. You're acting slow. You're making very few decisions. The fewer decisions you make, the better. And then the other, other point is the speed advantage completely goes away. You know, Buffett doesn't have a Bloomberg terminal in his office. You know, some of the great value investors don't have Bloomberg terminals in the office. They're not in and out of the market. They move slow. They move deliberately. They hold longer, for longer periods of time. So that sort of, that new technology which allows a lot of speed doesn't bother them all. They view it as a hindrance. It's a source of fees for a lot of people. It's a source of costs and expenses from their standpoint. So their philosophy is get rich slow, right?

Yeah. And that's a good philosophy. You know, that's the, that's the reliable way to do it. It's amazing when you, when you just live a few years and, you know, you, you go into few deals yourself where you think you're going to get rich quick. You see people, you know, doing it, and by Golly, you wait 4, 5, 10, 20 years and. And you see how the people with that mentality, that instant gratification mentality, they just, they just never do very well. It seems like it's always the person who's the, you know, it's the tortoise and the hare, right, That, I mean, you know, we should have learned that from that fable a long time ago. Of course, the tortoise and the hare.

That's actually a parable that both of them use. The ant and the grasshopper, too. You know, getting rich slow is. Charlie has this funny. The book is Charlie's a very funny person. And the reason he's funny is because he talks about the truth. And one of the things he talks about is meeting young people. And young people will look at him and say, well, Charlie, I want to be as rich as you But I don't want it to take so long. And unfortunately that's, that's just not possible.

Yeah, right, Good. Good points, good points. Hey, so. So what's going to happen with Berkshire after Buffett steps down? You know, I mean, he's. How old is Buffett now? About 83, 85.

He's been to say these. And Charlie's in his 90s. So the key thing is there'll never be another Warren and there'll never be another Charlie. But they built a culture which has created a series of assets which are sort of a nice diversified portfolio and they've identified who his successor is going to be. And his successor will never be as good as Warren at allocating capital, but it's still an excellent and sound investment. So I've got a big chunk of my portfolio and Berkshire and I expect it to continue. But.

The reality is never be another Warren Buffett, ever. And there'll never be another Charlie Munger, ever.

Well, that may well be true. That may well be true. So just curious, and I don't know if you know this off the top of your head, because you are a value investor, so you don't stress out on day to day, week to week, or even month to month things, which I think is the right way to play it. I agree with you there. I've seen a lot of people get very stressed and ruin their lives over looking at the market every day. And, you know, it just totally affects their whole psychology. Very few people take that into account as a cost of, you know, your investing strategy. What does a share of Burke costs nowadays? You know, they've got the class A and B. I'm curious, where's it at nowadays?

You know, one of the great things about it is I don't even know and I can't even remember the last time I looked at the individual price of one of my shares. In other words, I trade such that.

If I have one or two good ideas a year, that's a pretty darn good year. So can't even tell you. I can look it up, but honestly, I don't even know. I know it's probably close to 200,000, but I honestly don't even know. And that's the way, you know, that's the way value investing is, which is you pay a name and you study the name and you. And you really get to know the name. And then you watch and you watch and you watch and occasionally you will, you will hit a price or you'll go, wow, it's Time, and you buy it, and then you don't forget about the company. You follow it intensely, but you really don't think about the price of the share itself. And so. And so.

The one thing about Berkshire that's sort of unique is he doesn't split the stock. So that number gets really, really high.

But the important thing is, is I'm not checking the market every day. I'm not checking the market every month. And if you ask Buffett, you say, well, what's the stock market going to do in the next year? He'll say, I don't know. I really don't know. And it doesn't really affect what I do. I think over the next five or 10 years, the price of stocks will go up because I'm bullish on America. I'm bullish on business, I'm bullish on the economy, I'm bullish on the world economy. I'm bullish on, you know, whatever it is that's long term. But on the short term, he just says, I don't know. And I don't even try to predict.

Yeah, right, right. And I think, I think that's a much better way to look at it than the way, the way most people do. It's, you know, speculation is highly overrated.

But it's also, it's also. It's bad for your heart, it's bad for your stress.

That's what I was saying. That was my point, is that, you know, it causes divorces, and if you want to see something costly, just get a divorce.

You know, I mean, there's the old joke, you know, the quickest way to double your money is to stay married.

Yeah, right. Yeah, well, good point. And the quickest way to become a billionaire and the airline business is to start with 2 billion.

That's right.

Same thing. Yeah, yeah, good points, good point.

Same joke.

Hey, give out your website, Twitter, anything you want people to know so they can find you and find out more about your work.

Well, yeah, if they actually want to follow me or get a sense of whether they would like the book, they can go to www2.com and every Saturday I do a post. I have 138 weeks in a row. So if they want to follow me on the web, it's 25 IQ. They want to follow me on Twitter, which is the only social media I really do. I'm trengriffin. T R E N G R I F F I N. I have about 13,000 followers there that, that I like to interact with, and that's a fun group. So those are the two places I have a day job.

I don't get drive all of my pleasure from investing, but I do a lot. But on weekends and evenings, I'm available at those places.

Good stuff. Hey, I just do want to ask you about your day job for just a moment before you go. What's going on at Microsoft? What are they working on and what's kind of some of the big, you know, just the big broad initiatives. I'm sure there's a lot of secrets you can't tell us, but, you know, just thought I'd ask you generally.

Well, you know, the thing about Microsoft is I really can't talk about it because it's my day job and I know lots of stuff that I can't talk about. But I can say it's a super exciting industry to be in. If you talk to both Buffett and Munger and you say, you know, basically, what would you do if you were 20 years old today? Even Stephen Schwarzman, people like that say, well, I'd get involved in technology industry because there's so many smart people. It's so interesting. There's so much change, there's so many developments. And, you know, the fun of my day job is in all of that. You know, it's quite a bit different from my investing world, which I do on nights and weekends. And here's one of the last things I guess I'd leave your viewers with is that one of the great things about value investing is you can't have a day job, you can't have a life, you can be retired, you have to devote significant.

You can have a marriage.

Yes, exactly. As opposed to some day trader who's in and out and in and out and in and out by investing is about being patient, moving slow, making very few decisions. And so that's consistent with having another personal life, you know, skiing, golfing, whatever. It's also consistent with having a job as a, as a plumber or, you know, a contractor or whatever, or a real estate investor.

Yep, yep. I agree. Good stuff. It reminds me of one of my favorite quotes. And forgive me, I'm probably not going to get this right. Exactly. But I think, I think you'll like it. And it is this. Successful people make decisions quickly as soon as all the facts are available and change them very slowly if ever. Unsuccessful people make decisions very slowly and change them often. And I think that's a big difference. And I don't mean successful people are really impulsive. That quote says as soon as all the facts are available. So they study something, they learn it, they, they make a distinct decision, they do it and they stick with it. You know, I would hope you agree that that is along the lines of the value investing philosophy.

I do, and I think Charlie would too. He's, Charlie's got a slightly, you know, sort of derivation on that quote, which he basically says that there's this strange paradox and that the best investors are people who are patient and aggressive. And what he means is, most of the time as an investor, you should be doing nothing. You should be patient, you should be working, you should be learning, you should be reading like crazy. And occasionally, every once in a while, an amazing bargain comes around. And at that point, you need to be aggressive and pounce. And so does this weird combination of patience and, and, and the ability to jump in when there's a real bargain. You're a real estate guy. You obviously know that in 2009, if you, if you would have acted at the right time, that was a great time to buy real estate.

Oh, yeah, and many, many of our clients did. And they, boy, you know, 2009, 10, 11, you know, even now, you know, it's not tapped out yet, but, you know, it depends what market you're talking about, of course. What, you know, what city across.

The combination of patience.

And being, you know, industrious and reading and reading and reading. You know, the thing I love about the COVID of my book is Charlie describes himself as a book with legs sticking out, which is, you know, you really, even though you're not doing a lot, you should be learning a lot all the time.

Good advice. Good advice. Tren Griffin, thank you so much for joining us.

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