RWH067: Prudent Investing In Perilous Times w/ Matthew McLennan

23:38William Green:Yeah, well, I always like to come back to Seneca's quote, where Seneca said, you know, if a man knows not to which port he sails, no wind is favorable. And so I think it really pays to know the destination in advance of setting out on the journey. and knowing that the goal is to participate in the march of humankind but to survive crises along the way is a good sort of guiding light. It tells you rather like the sailor in Seneca's boat that you need to travel a journey with some ballast. And so, that is why even though we're primarily business buyers. Typically, we might have 20%, 25%, 15 % of the portfolio in a combination of cash for short-term deferred purchasing power and gold as long-term purchasing power.

24:29William Green:So it's almost analogous to the ballast when you set out on a sailing journey, knowing that you're going to encounter unexpected storms from time to time and knowing what your destination is. And then I think it also informs us about the kinds of businesses that we want to owners of, I mentioned earlier that we like there to be some scarcity in the nature of the assets a company controls because if you control a real asset that's well positioned, well located and advantaged, it'll either garner premium rents or premium margins relative to an industry. And so you might go through business cycles but you're likely to survive.

25:07William Green:The second thing is, you know, if it's not a business that involves real assets, if you have a high market share position, It's going to give you scale economies in whatever matters for the unit economics of that business, whether it's advertising or sales course density, or whether it's the network of distribution that you have overall. And so market share advantage gives you lower fixed costs, better margins, but also an element of better pricing power. Again, acknowledging that you're going to face stormy conditions from time to time, these kinds of businesses help you make it to the other side.

25:43William Green:Also, I would say that businesses that have scarcity, either the assets they own or their market position, tend to have the capacity to be predators when times get tough because they are going to survive and they're likely still generating some cash flow. They can consolidate their market position counter cyclically and that's an unusual position to be in. And even if you're not investing in augmenting your market position, you have the option value of buying back stock when it's depressed if you have the strong capacity to generate free cash flow. So at First Eagle, aside from traveling the journey with some ballast, this notion of scarcity in the position of a company is critical for us because it gives us that positive fundamental convexity.

26:29William Green:And the key element that there has to go alongside with those is a valuation margin of safety. If you acknowledge that the future is uncertain, when you buy into a company, don't buy on the presumption that you can forecast decades of growth into the future. Buy at a valuation where not a lot of growth is being priced at all, such that if growth occurs, you get the benefit of that largely for free. And this comes back to your comment about diversification, or as we would refer to it, variegation being a source of opportunity because if you haven't paid for growth and you've got variegation in the portfolio, something's actually going to do well, perhaps unexpectedly, and you're going to capture the value of that if you haven't paid a high price.

27:10William Green:And so it provides you with a sort of free source of optionality. Now, if I compare that to an alternative strategy, which I would refer to not as resilient wealth creation, but the attempt at extreme wealth creation, it's often a very different approach that investors might take. They're going to be more concentrated, often thematically very focused. And they're going to tend to focus on situations where they perceive there to be a lot of option value beyond the apparent value today, either because they see a large addressable market and that the market's not fully pricing, or they might be buying a deep cyclical that's very cheap relative to the trailing peak level of its earnings.

27:49William Green:Now, that is an alluring strategy to a number of people. They want to get wealthy quickly. The problem with that strategy is that it's very difficult to execute with discipline. It's very difficult to take people with you on that journey given the volatility that it entails. And most out-of-the-money options tend to expire either worthless or less than the premium that you paid for them. And so one has to be careful when one looks at the track record of people who've built a lot of wealth through extreme concentration and betting on out-of-the-money optionality, that there's an element of survivorship bias in that.

28:26William Green:You're We're looking at the people who have survived out of the many thousands of people who've tried it and have not. And so I think the point you made about the power of the diversification orders in that case, variegation is a powerful one if the journey is to get there safely. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You got long days of daylight, incredible food, floating saunas on the Oslo Fjord. And every conversation you have is with people who are actually shaping the future.

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32:40Matthew McLennan:Go to shopify.com slash tip. That's shopify.com slash tip. All right, back to the show. You have a very brilliant deputy, Christian Heck, who you introduced me to a while back or had dinner with not long ago. And then I was chatting to him after the recent offsite, after one of the investors that spoke, he was saying to me that I I often focus in my interviews on people with very concentrated portfolios. And he said, you're really falling into the trap of survivorship bias because you're focusing on the handful of brilliant ones who also got lucky and survived. And he said to me a really fascinating thing that has stuck with me, where he said that during World War II, for example, if you owned a diversified portfolio of companies that people can't do without, historically, you've done well over time.

33:35Matthew McLennan:I thought there was such an interesting observation that I hadn't really thought about to the extent that I should have done, that if you have these companies that people can't do without and you have quite a lot of them, you'll sort of be okay whatever happens.

33:50William Green:Yeah, you know, I'm glad Christian had that conversation with you. And yes, he's very talented, along with Julian, Manish, Kimball, the whole team. One of the great actual sources of joy I have coming to work every day is being surrounded by a wonderful team of people. Yeah. I think one of the things that's interesting about having a great team is at the individual level on the team, they can feel that they're allocating capital on a fairly concentrated way. But a kind of a source of an additional layer of variegation in our portfolio is that we have different individuals focused on different sub-sectors of the market.

34:23William Green:So they get the benefits of specialization but at a portfolio level, we're ensuring variegation. And as to your comment about owning businesses that are necessary during turbulent times, I can't help but notice the portrait that's sitting behind you, which is of Warren Buffett. And I recall reading in his letter to shareholders in 2024, he made an interesting comment that he said, we'll typically have more than half of our wealth invested in equities because businesses can adapt to monetary instability as long as they're selling products that are demanded by the citizenry. And this is a really important insight that price equilibrium can be disrupted, whether it's an oil price shock or whether it's fiscal issues or monetary issues over time.

35:13William Green:But companies are adaptive entities. And as long as their products are desired to use Warren Buffett's terms by the citizenry, they can reprice their business in the form of satire. Now, it doesn't mean you'll be protected in the short term. You can have a few quarters of difficult earnings, but good businesses tend to adapt. And he said by way of contrast, having higher yielding cash is no protection necessarily against the runaway currency. And he identified that fiscal fall is usually the source of that. And so, ironically, some of the comments that Warren made in his annual report quite aligned to our thinking and to the way in which you framed that question.

35:52Matthew McLennan:One of the phrases that you've used over the years that I don't think I had sufficiently quizzed you about, because it's a really interesting idea, is positional assets, where you've talked about things like art and wine and prime real estate in places like Manhattan or even iconic brands as positional assets. Can you unpack that for us? Because I think there's something really important there that I've never really fully understood myself that I need to internalize better. Yeah.

36:25William Green:So often things in life or real truth tends to be paradoxical in nature. And I think one of the things that people are taught in business school is that the risk-free asset is a treasury bill or a short duration treasury security because the principal is guaranteed and the coupon is guaranteed. And you could think of these as fixed principal assets. On the other hand, you have assets that may not actually yield any cash flow today. Think about a classic old master's piece of art that is by a well-respected painter. It doesn't have a cash flow attached to it. So in traditional finance theory, it doesn't have anything to discount.

37:11William Green:It doesn't have a value. Gold or a vacant block of land are also positional assets that in traditional finance theory are kind of hard to think about from a valuation standpoint. But the interesting thing about these assets is that sometimes reality in the fullness of time can be quite different from what you would think about these assets in the near term future. So a treasury has a fixed coupon, has a fixed principle, but what it doesn't have is fixed supply. So ultimately, what's the asset of the government? The asset of the government is the ability to tax its citizens. And there's probably a real level of taxation that's optimal beyond which it starts to negatively impact the productivity of the economy, or if it's too low, you might not have social stability, which could impact property rights and the health of the economy.

38:04William Green:The government has a certain real ability of tax. If it starts running big deficits on a sustained basis, it's essentially printing more fixed claims on that real asset. And John Cochran, the economist, makes the point in his book, The Fiscal Theory of the Price Level, that it's almost like a share split. Basically if you keep issuing debt against the same real asset, the real value of that debt must go down. So, the irony of fixed principle and fixed coupon assets is that while they may be risk-free in the short term, they can be quite risky in the long term because they're not fixed in supply.

38:39William Green:On the other hand, with a positional asset, it's its fixity of supply that can make it a better store of real long-term value, even though it may be fluctuating in value in the short term and not offer a lot of cash flow in the short term. And so, a vacant block of land in a great city or on a great beach is ultimately going to be cyclical but it's going to reflect the purchasing power of people who'd like to build a house on that land long term. So it's going to participate in real income growth over time, perhaps in a more secure way than a treasury where you don't know the future supply growth of treasuries.

39:14William Green:The same can be said for gold, you know, that the total stock of gold above ground, a couple hundred thousand tons could pretty much fit into a, as Max Belmont who's one of the portfolio managers on our bull funders figured out it could pretty much, if you took the center court at the US Open and you cubed it, that would pretty much contain all of the gold that's ever been mined. It's a fixed positional asset. And the amount of new gold being mined every year, it was only about 1.5 % of that cube. And the central banks and private investors and people who desire jewelry are competing for that fixed positional asset.

39:52William Green:And so over time, even though it's volatile in the short term, its value has accreted with the wealth of the people competing for it. And so it's been a better store of value long term. And in some way, businesses are somewhere in between. You know, a great business has a bit of both, right? It can generate cash flow today. And if its market position is preserved for a long time, it can participate in the income growth of its customers over time and be a good store of value. So the best businesses combine free cash flow and preservation of purchasing power long-term. But the tricky thing with businesses are that all businesses ultimately have some amount of fade risk.

40:34William Green:New businesses get created, eat into the profit pool. And so businesses are kind of a, they're productive assets, but they have long-term fade risk and sort of like a melting ice cube. And you want to try and identify those businesses which have a slow melt rate. And then hopefully, you approach a positional asset. But I think if you would look at a chart that sort of showed 50, 60 years of financial history, you'd see that the cumulative return on treasury bills was slow and steady around 5 % annualized with limited volatility. The problem being that the cumulative rate of growth in government debt has been much higher than 5%.

41:12William Green:And so while you've had a steady return, you've had an erosion of purchasing power. On the other hand, something like gold was volatile, but it's kept pace with the growth in the stock of government debt and so it's been a better store of real value. So that's what I think about when I think about fixed principal assets versus fixed positional assets. And I think one has to be open-minded to the possibility that an asset that doesn't have cash flow today can have value today if people are going to compete for it as part of their nominal pool of wealth.

41:43Matthew McLennan:It's hard to remember in some ways, given how successful gold has turned out to be over the last four years or so, that when you built a large position in gold a long time ago, it was very, very contrarian. And people like Buffett were saying how foolish it was to own gold. And I wonder if you could just give us a sense of what you realized early on, that some of your wisest and smartest peers necessarily didn't view as so important about gold and also just the emotional difficulty of making this very large, very contrarian investment that for years you kind of didn't get rewarded for.

42:28William Green:So I guess if I had to pin it down to one thing and first let me just give credit to my predecessor, Jean-Marie Ebiard, who had always invested some amount of the fund in gold and had recognized that in extremis, gold has value as a potential hedge and it has a kind of a real monetary value to it. And Jean-Marie had often said, you know, gold is not a commodity, gold is money. And I think the criticism of gold from many luminaries has been that it's inert, it's useless. But I think the paradox of that is that the utility of gold as a potential hedge is its uselessness as a commodity because it's chemically inert.

43:16William Green:It naturally lasts forever and because it's not used primarily as a commodity, it has less sensitivity to the business cycle. So, a commodity that doesn't last forever, that rusts or rots or fades, is produced for use. So whether you're talking about oil or copper or iron ore, it's going to have volatility that tracks the business cycle. The inertness of gold gives it a naturally lower sensitivity to the business cycle and a naturally longer duration. In fact, because it's inert, it's also innate. And not much is innate in life. Great businesses, as we discussed before, they need to be managed to avoid fade risk.

44:01William Green:Even people's recent interest in Bitcoin, the Bitcoin system needs to be managed. You need to attract a vibrant community of miners for the system to self-perpetuate. Sovereigns have to be managed. An economy has to be fiscally sound and monetarily sound for sovereign paper to have value over the long term. You know, commercial real estate has to be managed, but gold is innate. And I think, you know, when we looked at a series of alternatives, we didn't find much else that was innate and also scarce and dense, so easy to store. And you know, if you were to look at a periodic table, most of the other similarly dense materials and there aren't many very useful in super alloys or in catalytic converters or as they get heavier, radioactive.

44:55William Green:And often they're brittle and not malleable and so their suitability as a defensive hedge is less. And so, I guess the best way that the insight that I came to my mind is that gold is essentially defensive land. It is the most defensive land and it's in scarce supply. And unlike traditional land that is landlocked to a given community, gold is mobile. And so, it gets competed for globally. And so, I guess I just came to a conclusion that the equilibrium value of gold over time would pace with nominal wealth, even though it's going to be cyclical. And so, it wasn't a brilliant insight per se, it was just a common sense observation.

45:40William Green:And one for which I really owe a debt of gratitude to Jean-Marie and many other members of the team who've studied this asset. And I will also make the point that because we appreciate gold, it doesn't mean that we're gold bugs per se. We appreciate gold for its role as potential ballast in our portfolios. But if you think about our approach to stock selection, which is combining both scarcity and a valuation margin of safety, the same applies to gold. If you buy gold after it's done very well for a very long period of time, it will remain a scarce asset. But if it doesn't have a valuation margin of safety, it can go a decade or two in the wilderness in terms of its real return character as it sort of converges on sort of long-term norms.

46:29William Green:And I would say as gold has recovered from being rather depressed relative to the value of equities and relative to the value of government debt outstanding to being more rationally valued. The risk reward for gold is now more symmetrical than it was when it was at a much lower valuation. We still have a decent commitment to gold in our portfolio. It's still a mid-teens percentage of our portfolios if we combine bullion and gold miners together. But I will point out that on pockets of strength, sometimes we'll sell some gold here and there so that it doesn't become an outsized position in our portfolio.

47:04William Green:Just the same way a bank might have 15 % of its assets in tier one capital and then look to lend out the majority of its portfolio in productive loans, it's not necessarily going to want to build 30 % or 40 % tier one capital. Over time, it's going to want to deploy that as productively as possible. There is a state of the world where if gold had done exceptionally well and equities have collapsed and gold is expensive relative to history, that we might choose to recycle more gold into the ownership of equities on very advantageous terms, in which case, our gold position could come down from mid-teens to the mid-single digits.

47:41William Green:We might feel the need for less ballast if risk assets are being very compellingly valued. And so I don't want to convey a notion that we're permabulls or we're gold bugs per se, but we've thought a lot about this question and it still serves a valuable role in our portfolio. But I just want to highlight for investors that having done well for some time, the risk reward is more symmetric than it might have been a couple of years ago.

48:07Matthew McLennan:I want to go back to this idea of looking for very resilient businesses for scarce assets that are likely to do well, even in relatively difficult environments. When you look at specific companies that you own, both domestically or abroad, whether it's a a Beckton Dickinson or a FEMSA or a Hoshizaki or a Grupo Mexico or, you know, SLB, Workday, things like that. Can you take a couple of them that embody the kind of durability and resilience that we've been discussing? And this is not as stock picks because this is a fast moving world. By the time this comes out in a few weeks, you know, who knows what the price will be, but it's much more to illustrate the kind of qualities you look for in a business.

48:57William Green:So I mentioned earlier on that one of the challenges for the US equity market coming into this moment of geopolitical crisis was that risk perception was low, but that's a top-down observation. Bottom-up, risk perception is not uniform. And one area that had been quite out of favor has been healthcare, but not every healthcare company is created like, and I think you mentioned Beckton Dickinson in that list of companies that you cited from our portfolio. And I think that's a good example of what we do because Beckton Dickinson is a company that has really honed its focus over the last few years.

49:35William Green:They spun out their diabetes business into a new company called Vector. They recently spun into a reverse Morris Trust in exchange for a stake in Waters, their biosciences and diagnostics business. And they've really focused their business in on what is a world-leading franchise for syringes and catheters. So every time you go to a hospital, it's likely you're going to encounter a syringe or a catheter. And they have more than half the world market for syringes and catheters. And so it's a company that has very strong market share position. And as for what I mentioned to you before, that gives it certain scale economies in manufacturing, in R &D, and it's embedded in the hospital system.

50:23William Green:And so, they are closest to the patients. They have the ability to participate in what I would call a regenerative feedback loop. They know what technology can be added to the syringe oil catheter to make it more efficacious over time because they're closest to it in the most number of locations. And it's a very strong company that's very free cash flow generative. And because health has been out of favor, it's available at 12 to 13 times earnings. And so if you invert that PE ratio, that's an 8 % earnings yield, which basically means that the market's not expecting much by way of growth for this company at all.

51:00William Green:Yet, if we think back to the conversation I had about positional assets, they have a very strong position. And over time, as more and more medications, not in pill form, but are biologicals, syringes and catheters become more important. And I would add that they're adding more software and systems technology in a hospital to deliver these things more efficiently. You can imagine AI being used such that a nurse doesn't have to walk in to monitor your dosing every hour and to look at how you're doing with that dose level. it could be monitored remotely and instantaneously. And so that's a good example of a business that has scarce intangible assets, high market share.

51:42William Green:And it's almost like a royalty on a small slice of the world economy where the market's not really expecting a lot of growth. And the company having brought focus to the business is now able to use a decent amount of its free cash flow to pay healthy dividends and to buy back stock at these depressed valuations.

52:00Matthew McLennan:That word royalty is a really interesting one that you often use. I often think of the phrase you've used in the past about how you put together a collection of eclectic royalties. Can you unpack that? Because I think it's a really elegant insight that a lot of people don't really think about. And as you're putting together your variegated portfolio, that idea of this kind of collection of eclectic royalties seems like a really elegant insight if you could explain what's going on there?

52:27William Green:Well, sometimes in investing, and I think often mundane can be beautiful. Almost everyone wants an opinion on AI because it's the focal point of market. It's the focal point of society right now. And so by definition, trying to predict which company is going to be the greatest AI beneficiary is going to be a more competitive enterprise than identifying a company that really has a strong position in a small slice of the world economy. And that's what we really mean by an eclectic royalty. And another stock you mentioned there was Hoshizaki, which I view as quite the eclectic royalty. It's the world leader in commercial ice machines.

53:06William Green:So if you go to a restaurant or a hotel or a stadium, more likely than not, you'll find a Hoshizaki ice machine there. And this is a niche technology where they've developed a reputation for the best quality. and given their scale, they have the ability to produce quality at reasonable cost. And around that core, they've been able to add to that royalty. They've expanded into other areas of the kitchen, the commercial kitchen. And the company is listed in Japan, it's not a household name. And so it doesn't trade at a premium valuation. In fact, right now, Today, the company trades at about eight to nine times EBITDA, which is well below where most LVO activity has been done in the last few years in the private markets.

53:54William Green:And in fact, they have a competitor in Germany called Rational that trades at 20 times EBITDA. And so it's an undemanding valuation, a strong market position. It is an eclectic royalty. And this is a situation where management have been great stewards of the business long term. They've really focused in on what they do best. They are very strong in that. And they are now at the margin focusing more on capital allocation. So if you have a royalty, it matters not just that you maintain that market position, but you do something sensible with the cash flow. Increasingly, they are using their free cash flow to pay dividends and buy back stock, which is quite different from a decade or two ago.

54:35William Green:The norm in Japan was to hoard their capital. They have a very strong balance sheet, but increasingly, they are able to pay good dividends and buy back stock and make small bolt-on acquisitions that give them complementary products to where their core royalty income is, if you will. It's not a royalty in the sense that you're getting a percentage of the revenues in a fixed sense, but it's a de facto royalty given the strength of their market share position, and it is certainly eclectic.

55:03Matthew McLennan:It feels like you're, I don't know if this is the right image, but it feels like you become kind of a toll collector in all of these different industries around the world?

55:12William Green:That's the mental model for us. I mean, I think you give an analogy, if you just had a sequence of numbers, 1, 2, 3, 4, 5 up to 3 ,000, only a certain percentage of those numbers are going to be what I would call prime numbers. Most numbers are derivatives of other numbers, you know, they're multiples of other numbers. And a great business is almost like a prime number, right? I mean, so by definition, there are several thousand companies that we could invest in around the world, but maybe only 10 % of those are primes that really hold that scarce market position. And I would say at any given point in time, most of those prime businesses are going to be quite fully valued because they're prime businesses.

55:53William Green:But I think this is where knowing what you're looking for makes a big difference. Because if I could give you an analogy, if you were just looking to buy a prime piece of real estate for yourself, you'd be frustrated most of the time that the apartment you want to buy is too expensive. But if you knew the prime piece of real estate you'd be willing to live in in any of the 400 major metropolitan areas of the world, at any given point in time, something would be happening somewhere that would give you the opportunity to buy your dream home at a reasonable price. And so by virtue of knowing exactly what we're looking for, but by having a global universe across all industries, we can essentially wait, let time do the work for good businesses to come into a valuation zone because of some difficult exogenous environment.

56:39William Green:And so ours is a waiting game. It's almost like the business gardener is waiting for the right time to plant the seed. And once we've bought, it might take us a decade to get a business we like at the right price. We then look to own it for the next decade. And so the cycle time is incredibly long for trying to do this at a reasonable price.

56:58Matthew McLennan:Yeah, there's so much that's important there that I want to unpack, but this emphasis on patience seems absolutely critical and central to what you do, this willingness to wait a long time until companies become cheap enough for you to buy them, and then your willingness to hold them, typically, I think, on average for about a decade. And you once said to me that no commodity is in scarce a supply or more valuable than patience. Can you just talk about difficulties of being patient in an increasingly hyperactive and impatient world where most investors simply aren't willing to wait that long?

57:34William Green:It really is difficult psychologically in a sense because we're wired in annual cycle time. If you think about the process of growing up, going through primary school, you go from one grade to another and then you go through college one year to another and then you finally get your job and you get your annual review. We're kind of wired in annual cycle time and people want results, you know, over the next year or often sooner. People are inherently impatient. And yet, interestingly enough, some of the I think most reliable sources of outperformance in markets take a lot of time to play out. You know, going back to the analogy of the garden, stuff that grows quickly isn't necessarily the best.

58:22William Green:I mean, Mollier, the French playwright said that the best fruit comes from the trees that are slowest to grow or something along those lines. And I think that is true in the world of investing because if you think about the benefits of a scarce market position, the cash flow generation cycle that I talked about before, those benefits, pricing power and more free cash flow don't really make a huge difference in any given quarter or even that much over a year, but they do accumulate over a decade. And if you're trying to align yourself to management teams that are either founders or think like founders or families that have your generational perspective, sensible capital allocation decisions don't always look like the hot choice in any given moment, but they sure make a difference over a decade by making sure that you're not taking a dollar cash flow and deploying it into something speculative or unrelated to your business, sticking to your knitting or distributing the free cash flow or buying back stock when it's out of favor, those things on a cumulative basis over a decade can make a big difference.

59:28William Green:And likewise, the degree to which a business has incumbency advantage, back to the melting ice cube analogy, if it has a slower melt rate than the typical business in the short term doesn't really affect sentiment that much. But over a decade, just being more of a positional asset will make a difference. You're more likely to participate in the wealth pool a decade from today. And then finally, if an element of the investing approach is seeking a valuation margin of safety, the 2 % or 3 % incremental earnings yield or free cash flow yield you get today by demanding a margin of safety doesn't really dominate the return in the short term.

1:00:08William Green:In fact, in the short term, what dominates returns is shifts in sentiment. risk on, risk off, they beat the quarter, they haven't beat the quarter, the Iran war is over or it's still going. These things dominate in the short term but over the long term, the power of arithmetic is ineluctable. And so if you have a higher earnings yield or free capital yield and the business does grind out growth, arithmetically, your returns will converge over time on that and so, you But arithmetic takes a long time to become statistically significant. And so all of these things require patience. Yet, I don't know what the number is off the top of my head.

1:00:47William Green:If you were to look at the average turnover or a mutual fund or a hedge fund, it probably implies less than a one-year holding period. That's renting a business. That's not owning a business. And some people do that very well. And, you know, I'm the first to acknowledge that we don't have a monopoly on the right way to think. But that's not something we do well. You know, we've basically said we are going to be patient investors because that's where we see more reliable ability to add value. And then, you know, a challenge is obviously keeping clients with you on that journey. And there can be years at a time where that is not rewarded by markets.

1:01:29William Green:And so part of the value we hope to add to our clients is staying true to a philosophy, even though in the short term, it may not be the hot dog. Let's take a quick break and hear from today's sponsors.

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1:04:54Matthew McLennan:Get started today at vanta.com slash tip. All right, back to the show. How did you handle it emotionally during that long period of 12 years or so, I guess, maybe even longer, maybe 15 years where it was just much easier to make heady amounts of money if you invested in mega cap tech and growth stocks in the US. And here were you being kind of prudent and global and patient and buying kind of dowdy stuff that was less glamorous. How did you actually handle it psychologically just being in the desert for that long?

1:05:33William Green:Well, firstly, you have to acknowledge that it's not easy. Anyone who tells you that it's easy to handle that is probably just insensitive to the cues of the environment around them. And I think you, you know, there were times when it was tough and a team of people around you are doing something that you think is prudent stewardship and when people outside that team feel like they're being let down because you're not participating in what's doing very well, you know, that can be painful because it's one of those moments where you feel like you're doing the right thing but there's no exogenous reward and then I think you have to step back from it then and say, well, what gave us conviction, I think firstly, it's that the knowledge that ultimately arithmetic does play out.

1:06:16William Green:As long as the businesses you bought weren't fading at a faster rate than the typical business and you bought them at decent prices and they had something special about them that would accumulate and manifest itself perhaps unpredictably, which it did to a certain extent over the last 18 months. And one analogy I've given is it's almost like when you're making popcorn and you put the corn kernels in the microwave or in the pot and you heat them up, it's very difficult to predict which popcorn is going to pop and when. But if the process has integrity, then most of it's going to work out okay. You'll have a few things that fizzle.

1:06:56William Green:And so, you know, one of the things that helped us get through that period was really focusing on the process, focusing on the task at hand. And in fact, you know, it's having conversations with folks like yourself that get you to think more broadly about why it is that you do what you do. And there's a book that kind of impacted me in this regard, which was The Snow Leopard by Peter Matheson. And this is a book that you and I talked about. And it's an interesting book because here's this individual who suffered an enormous personal loss and he goes off in search of the snow leopard, doesn't know whether he will find the snow leopard or not.

1:07:38William Green:But at the end, it's not about whether that mission was accomplished per se. It was actually about understanding that it's the task itself that matters. And the reward is in doing something well. And so, we spend a lot of time as a team thinking about are we doing our research well? You know, are we really thinking about business competitive advantage thoughtfully? Are we thinking about how to value intangible assets? And are we staying true to a time-tested approach? And I think focusing on the quality of the process is really the core source of stamina and realizing that it's not about getting exogenous rewards at all points through time, but there's something super satisfying to doing something that's intrinsically worthwhile and having it rewarded episodically.

1:08:29William Green:And then if anything, selfishly, we're probably luckier than a lot of other professions. I think of the art world, where by definition, if you are a cutting edge artist, it may be generations before the idea of your work is truly perceived. And so we're kind of fortunate that it can happen within a lifetime.

1:08:47Matthew McLennan:I've been thinking a lot in the last few days about the snow leopard before, you know, in preparation for this conversation, and you and I had exchanged some notes on it back, I think in probably 2023, where I think I gave it to you and you then read it in a weekend, of course, being a much more diligent student than I am, and sent me a bunch of notes on it. I was looking over some of the quotes that had appealed to both of us, one of which gets at exactly what you were just saying, where Malthuson is going in these very brutally difficult mountain environments. I guess it was in the Himalayas, right?

1:09:21Matthew McLennan:If I remember correctly, looking for the snow leopard. And so he's accompanied by all of these local Sherpas who are carrying everything. And he says, The Sherpas are alert for ways in which to be of use, yet are never insistent, far less servile. Since they are paid to perform a service, why not do it as well as possible? Yet their dignity is unassailable, for the service is rendered for its own sake. It is the task, not the employer that is served. I thought that was really interesting. It's a sort of lovely insight, right?

1:09:50William Green:It is a wonderful insight. And I think, you know, as he goes on this journey, there's almost two elements of the journey that he has to come to terms with. One is he has to become comfortable with himself. And, you know, one of the things I think that's critically important in investing is that you have to be investing in a philosophy and with a group of people where you can be comfortable in your own skin. Some people are great at a more focused, more high-octane form of investing. Other people don't want to take any risk at all and just sit in cash and are willing to suffer the erosion of purchasing power because of that.

1:10:24William Green:But knowing who you are is important and I think he has some beautiful expressions in that book where he was becoming comfortable with himself basically. And I think the term that he used was washing away the thorns and thickets, you know, fears and prejudices, you know, anger and expectations to just be comfortable with who you are. And I think the other thing that happened in that book is that despite all of the issues that he'd been going through in the lead up to going on this journey, he sort of arrived at a simple destination where he was able to just stare and wonder at the beauty of the world around him.

1:11:01William Green:And I think that's one of the things that's most motivating in the investment world because often say to my kids, I can't imagine doing a job that's more interesting. I have a wonder for the things that I get to learn all the time. You travel the world, visiting different companies, trying to craft the code one stock at a time, and then you try to make sense of events. Nothing could be more interesting. and just the wonder of being able to observe that is its own reward and source of staying power. And so I thought the book was very valuable. And in fact, it's a great book for its brevity as well, and thus my capacity to read it in the weekend.

1:11:42Matthew McLennan:Yeah, there's also a beautiful audio version that I think may be abridged slightly that he read himself as an old man in this really gravelly kind of broken voice. looking so it's it's an old man looking back on a period where he was kind of broken and was going into the mountains looking for himself and and it adds a sort of extra emotional layer to hear him reading it but there's something lovely also like like in in the descriptions about you know the snow leopard where he says at one point perhaps in the days left to us we shall never see the snow leopard but it seems certain that the leopard will see us and then he says later if the snow leopard should manifest itself, then I'm ready to see the snow leopard.

1:12:28Matthew McLennan:If not, then somehow, and I don't understand this instinct even now, I'm not ready to perceive it in the same way that I'm not ready to resolve my koan, like a Zen koan. And in the not seeing, I am content that the snow leopard is, that it is here, that its frosty eyes watch us from the mountain. That is enough. And it sounds a bit esoteric, but I was wondering what you made of that, this sense that there's there's this sort of mystery, this thing that we go out and seek and maybe we'll never solve it, maybe we'll never solve the puzzle.

1:13:00William Green:Well, sometimes the act of seeking something makes it erode into the horizon and I think the snow leopard is a good metaphor for that because it senses your presence. And so, like you would Zen Cohen, the only resolution to the puzzle is to become at peace with the fact that you may never see it because that's its inherent specialness, its ability to obey and I think that passage to me captures, you know, his coming to terms, his wisdom and it's like many things in life that, you know, you try your best to become better but you can't necessarily touch an asymptote and in fact, there was a good book written by Chicago economics, University of Chicago, I think it was, economics professor Gallanson called called Young Geniuses and Old Masters and it was centered on the art world but it was about, he came into analyzing art sort of analytically saying with the question of like, when artists paint their best work and I guess his hypothesis was it was going to be when they're in sort of their late 30s, early 40s when they had enough experience but they still had energy that they were going to create their most valuable works and he looked at the history of artists over time and he found something that was quite different but it was bimodal that typically young artists had a stunning new insight and their best works were their first.

1:14:20William Green:Or there were old masters who were chasing the equivalent of the snow leopard, never got there, were iterating towards something and their last work was their best. And I think at least for those of us who haven't been fortunate enough to have a stunning insight in our early years, there's at least the hope that you can chase some asymptote into your later years.

1:14:42Matthew McLennan:Another book that we've discussed a lot in recent years is by Ian McGilchrist, this brilliant Scottish polymath who was a fellow of All Souls College at Oxford and an Oxford literature professor. And then, inspired by Oliver Sacks, if I remember correctly, gave up being a literature professor and became a neuroscientist with this deep passion for philosophy and music. And he wrote this book, The Matter with Things, which is subtitled Our Brains, Our Delusions, and the unmaking of the world, which I've dipped into many times. But Matt, being a much better student and a more persistent person, read and sent me his notes on like 2 ,000 pages of this book or something like that.

1:15:21Matthew McLennan:Maybe not quite as much for 1 ,500, 2 ,000. It was a big book.

1:15:24William Green:This is not as brief as The Snow Leopard.

1:15:26Matthew McLennan:Yeah. Why did that have such a profound effect on you?

1:15:31William Green:It definitely rewarded the investment of time. I think it's a brilliant book. And, you know, he, as you mentioned, is a polymath. He's worked in different fields, you know, from neuroscience and philosophy. And it's a great book and it's stunning in its breadth. If I could do it the injustice of trying to condense a couple thousand pages into a key insight that really sort of stuck with me is that, you know, we've grown up in a time sort following the Scottish enlightenment where linear reductionist thinking is the perceived path forward. And I think AI is the ultimate manifestation of that, that we can construct these models to predict the next word that are going to solve all of our problems.

1:16:20William Green:And I guess he starts out the book with an analysis of left brain versus right brain behavior. And in fact, what we sort of think of as the scientific revolution and this kind of reductionist critical thinking approach is a very left brain activity. The right side of the brain behaves very differently and he provides wonderful examples of this where it's basically about non-linear pattern recognition. And a lot of psychological disorders are really involving patients that have overactive left brains and are missing basic pattern recognition, empathy, and other things that are associated with the right brain.

1:16:57William Green:But I think one of the things that it was sort of striking there is that the right brain has the ability to recognize what I would, he would sort of term sort of flow and emergence in systems and the role that we as humans have actually in actualizing potentiality and in perceiving beauty sort of like that Peter Matheson on his journey into the mountains in search of the snow leopard it. And I think it's a profound book and it's full of very thought-provoking discussions. But I think it really helped me deepen the analytical understanding of why thinking about investing as a business garden makes sense basically because the market is not a machine.

1:17:42William Green:The market can't be sort of digitized and reduced to very specific models. It's an emergent system and it's inherently complex in nature. And so, you know, I think you have to work with the elements like Seneca's Sailor, if you will, you know, rather than imagine that you sit outside the system and you can predict the wind with precision, etc. And I think this book was just so rich in its range of intellectual inquiry and so rigorous in its sourcing that But it's kind of like a lifetime of learning. And it reminded me when I read Montesquieu's Les Fries de Loire, The Spirit of the Laws, which is a great book written in the 1700s about different forms of government.

1:18:26William Green:In the preface, Montesquieu, the French philosopher and jurist basically said, don't read quickly what has taken me 20 years to put together. And I think this is a book that I've not just read once, but I've gone back to long tracks and reread and reread again. And I think it's a wonderful work. And I think you can't help but be influenced by it once you've read it in depth.

1:18:50Matthew McLennan:I think one of the things that's curious and thought-provoking is that a lot of the great investors do seem to be left-brain dominated rationalists, right? Like you look at someone like Charlie Munger, you look at someone like Ray Dalio. I remember Dalio talking about the markets as a, I won't do him justice, but talking about it at markets as a machine where if you really could study the cause and effect relationships in enough detail, you'd be able to chase it all down and it would all become incredibly logical and entirely logical. And I just think, not to diminish Ray, who's brilliant, but I just think it's not true.

1:19:29Matthew McLennan:It may actually be really useful in practical terms to guide you through a complex world, to have this kind of system, this very rational system and framework to see the world. But I think one of the challenges is this question of how you harness the strengths of the right brain and avoid the limitations of linear left brain thinking. And I'm way above my pay grade here, but I wonder if you had thoughts about that.

1:19:57William Green:Well, I think one of the challenges for thinking about markets in a linear sense, and Ian McGilchrist provides a bit of an analogy to this. I think he was talking about an ant colony, for example. linear relationships are only relate to sort of slicing time in a small moment. So, what I mean by that, if you look at an ant colony from above, it's a complex system that seems very self-organized but it's quite different, you know, at the level of the ant colony you just, you know, the ants are going out looking for food and they leave a pheromone trail when they find it and other ants pursue that.

1:20:38William Green:But then if you drill down another level and you get into the cellular dynamics of the ants, it's a complex system as well. And so where you slice that system to think about cause and effect and correlations impacts your sense of correlations. And so I think the same can be said in systems like the market where the underlying economy is complex and then markets are another layer of complexity because they incorporate expectations about the future of the economy. me. And so, it's the interplay of complex expectations and complex reality, which is sort of complexity squared. And an author who had a big impact on me early on was Steve Wolfram, who wrote a book called A New Kind of Science, and basically showed pretty conclusively that unless the system is obviously simple, it's inherently computationally irreducible and inherently almost equivalent to randomness.

1:21:31William Green:And so, I think there's enough of a complexity threshold crossed in markets that even if there are deterministic elements, they're very hard to basically rely on. And I think I would say Charlie Munger, who you mentioned, and Ray Dalio, even though they had very disciplined left-brain models, I would say both of them also have big pattern recognition. You know, Charlie talked about the Lollapalooza effects and he was very focused on the dynamics of incentives and human behavior and those kinds of elements and the role of, you know, empathy and understanding. And so, he did have both. And I'd say, you know, Ray often sees the bigger picture in terms of the evolution of different systems.

1:22:17William Green:You know, we were talking before about China and the US. Ray's had strong thoughts on that. And I think on the role of gold and the history of fiat money. And so I think on the one hand, they are looking at historical correlations. But on the other hand, I've found both of them to be very thoughtful about some of the bigger patterns that are at play. And my own take on it is that sometimes you've got to think about the elements of a system that might have a skew to them over time. While a system may be unpredictable in the short term, something like fiat money has agency costs. it's easier to stimulate in times of crisis, run big deficits, run zero interest rates than to do the opposite in good times.

1:22:59William Green:No one wants to take away the punch ball. And so even though currencies go through cycles and interest rates go through cycles, over time, most forms of man-made money have died eventually or been diluted substantially. There's a point that Ray's made as well. And so So I think number one, you have to hang on to angles that persist through the noise. They're inherently behavioral in nature. And number two, you have to resist the temptation of trying to predict everything all the time. And that brings us all the way back to where we started this conversation, which is the current events in the world and trying to develop a portfolio that can endure through uncertainty.

1:23:38William Green:And I think just recognizing uncertainty is almost like recognizing that you might not Stetis no leopit, it will certainly see you, just like uncertainty will certainly impact you. But I think if you can structure your affairs to endure it, that's perhaps the learning that I've taken from all of this reading. Rather than sort of getting too arcane about the detail, I think the central learning is that focus on getting down the slope safely.

1:24:04Matthew McLennan:I think one of the reasons why McGilchrist probably has resonated deeply for both you me is that he's so not reductionist. He's able to see every side in a way, partly because I think he was so steeped in literature and music and philosophy, as well as in science. And so he's a beautiful combination of these things. And I remember, I think that I've always loved listening to him talk. He's just got the most beautiful mind. And there was a wonderful interview that Sam Harris once did with him on the Making Sense podcast. And Harris, who's brilliant, but kind of annoys me, you know, said, you know, Harris was always obviously like the smartest guy in his class and was used to everyone, you know, conceding to his arguments.

1:24:47Matthew McLennan:And, you know, he launched into this very kind of dismissive diatribe about people who believe in some kind of afterlife. And McGilchrist, who, despite Harris's intelligence, just clearly another order of intelligence and wisdom, just came in really beautifully in this lovely kind of gentle way and talking about how little we know, I wrote this down because I loved it so much. He said, it really behooves us all to be rather humble. And then he started to explain how even something like what we know about matter and consciousness is vanishingly small. And he said, I mean, the more we know about matter, the more mysterious it becomes.

1:25:25Matthew McLennan:The reductionist philosophers and biologists come to us and say, we think it can all be explained by physics. And they think they're being very hard-nosed. And in truth, he said, it's all rather complicated. I thought that was it was just lovely. It was like this reminder from the smartest guy, this great polymath saying, it really behooves us all to be rather humble.

1:25:45William Green:There's a great lesson in that. And I think, if you don't bring humility to investing, you don't really require a margin of safety, or you don't ask for a margin of safety. If you think you can predict the future, you're going to pay up for it. And therefore, you're more likely than not to make mistakes because you're going to be more inclined to value something on your subjective view of the future over your objective knowledge of what the price is today and what the market position is today and how long something's been around already. And so I think having a degree of humility is almost a condition precedent to being a prudent investor.

1:26:25William Green:It steers you in the direction of finding scarce assets and waiting to buy them with a margin of safety and price. I think without having an element of humility, you don't feel the need to do that. And there are some people who don't have humility, but have incredible ability and that manage to survive in the markets that way. But I would say that's probably going to be the minority of people. And so, if you're approaching markets from the standpoint of it not being your primary profession or even if it is your primary profession, I think being honest with yourself about what you know and what you don't know is a profoundly important place to start.

1:27:06Matthew McLennan:Yeah, I remember, I think it was Fred Martin, this great investor who'd come of age in the late 60s and early 70s and had endured that period. He once said to me, there are two types of investor. There are humble investors and investors who are about to be humbled. And he had sort of seen it very vividly.

1:27:25William Green:Well, it is a business that humbles you over time. And that's, in some ways, part of the beauty of the business because it basically weeds out those people who are committed to it for the long term versus who dabble in the short term and until they experience their first disappointing outcome. And I think, as I mentioned earlier, I think it's, to me, one of the most interesting jobs I can conceive of. And yet, it's produced a lot of challenge along the way. And I think that it's that duality that's probably essential. I think the reward comes through learning from upsets in the journey and making sure every mistake is an asset ultimately because you've learned from it.

1:28:11William Green:And rather than expecting that you'll have no mistakes, it'd be nice to not have mistakes, but I think that's not a realistic expectation.

1:28:21Matthew McLennan:There was a lovely quote that you had sent me a few years back from McGilchrist's book where on exactly this, on this topic of adversity, where he said, nothing good is achieved without a degree of adversity being overcome. Health, resilience, courage, skill, knowledge, virtue, and wisdom are no exceptions. As Seneca is famed to have put it, a gemstone is not polished without friction, nor is a man without adversities. And it seems like the market is this kind of beautiful microcosm of life sort of embodies that principle, right?

1:28:54William Green:It really does. And I think at the beginning of our conversation, we talked about Churchill's efforts in the Dardanelles and the Battle of Gallipoli in World War I. That was a huge loss for him because he had really sort of forged ahead laterally with that. But when we think of Churchill today, we really think of what he did in World War II and what a difference he made in history and what a leader he was. But I think having survived that adversity probably had a profound impact on him in later years.

1:29:25Matthew McLennan:I always remember, I think it was in that sort of short autobiography about his early years, where if I remember this rightly, he talked about going into battle at one point. And I'm probably messing this up, but I think he should have had a sword and because he had dislocated his shoulder at some point was still injured he had a mauser pistol and as a result survived and it was one of these things where he drew this lesson from it that sometimes you know these these things that seem like great adversity at the time it turns out actually that was the thing that saved you and it just sort of reminded me there's also so much luck in this stuff like remember how he used to go on the the roof of the um the war rooms in London during the Blitz.

1:30:09Matthew McLennan:There's something incredibly courageous about it. But he could also have been killed in both of those things. Then the course of World War II would have been totally different. Those alternative histories remind you that actually things might not go your way and you better be pretty careful.

1:30:26William Green:No, it's so true. It reminds you that But the fate of like an entire country can rest on a random action. And so, you have to be mindful of that in analyzing history or in thinking about the inevitability of an outcome. And that's the key trait of a complex system is that the outcome is very sensitive to the input. And a nanosecond of change in decision could lead to a totally different outcome, not just for that person, but for our whole society.

1:31:02Matthew McLennan:So if we're looking back and trying to sum up a lot of the things that we've discussed in this conversation to give our listeners a kind of playbook for how to survive in uncertain times in a world where so many things can go wrong, if we try to list some of the lessons, it's right. Accept uncertainty, recognize that things are uncertain and they may not turn out well. Have some ballast in cash and gold or something, some anti-fragile portfolio, portion of your portfolio, own some stocks that are likely to be more durable and resilient, not necessarily the hottest, sexiest things, but likely to be durable.

1:31:39Matthew McLennan:What else? I don't want to put words in your mouth, but I'm just trying to keep score for our listener.

1:31:45William Green:I think you've hit on some of the key points here. I think I would just say that it's not just about identifying businesses that have some kind of scarcity to their market position all the assets they own but being sensitive to your entry point from a valuation standpoint. Ultimately, you're most likely to benefit from those businesses growing if you haven't paid much for the growth. And so, it's having both scarcity and value in a stock pick that helps position you for uncertainty. And I think just realizing that there's no silver bullet, you know, if you want no risk and you just sit out in cash, just know that over time, the growth rate of government debt is likely to exceed the yield on that cash and that you won't have risk short term but long term, you have the risk of impairing your purchasing power.

1:32:39William Green:So, the amount of cash that we would sit on in our portfolios if that seems logically inconsistent is only that which we think we could realistically deploy in a market drawdown. because if you have cash that you can deploy in a crisis, then the return on that cash isn't just the yield, but it's the option value of being able to buy a great business at a great price. But you have to be able to deploy it within a cycle or so in order to get that option value to exceed the dilution to cash that's coming from the supply of government bonds growing faster than the yield over time. And so being measured in cash is one part of it.

1:33:22William Green:We talked about the role of gold in our portfolios, but even that is going to be sensitive long-term to the valuation of gold. And I think the other thing to recognize is that uncertainty to the extent exists will happen to you. You will have drawdowns, there will be states of the world where you suffer a loss but if the underlying businesses have staying power and the arithmetic of the investments make sense and you have some balance that you can deploy in those weak moments, you're going to be okay long term and I think that's the key thing. I think the final thing is just the willingness to stick to it, stick to an approach as opposed to feeling that you have to do what is hot today because what is hot today is rather ephemeral and often results in stunningly disappointing returns when the market's focus shifts to something else or too much capacity goes into a new industry and low returns are generated on that capital.

1:34:24Matthew McLennan:There's so much to unpack there. I think also, I mean, one of my great lessons from watching you is that you're also, much as you're obsessed with the game and you enjoy this game, you also have kind of a rich life outside the game as well. And I remember you once saying to me, maybe it's actually kind of helpful to do lots of travel as well and read lots of books and stuff like that. And it sort of opens your mind more and actually helps you as an investor. And before I let you go, can you just talk about that a little? Because I think it's such a competitive game that there's this, you know, you have to sacrifice a great deal in certain ways to win it.

1:35:02Matthew McLennan:And I'm always struck when I look at your life, right? There's tremendous sustained intensity of effort and drive and discipline that's required, like just the amount of travel and the amount of reading to stay on top of the material. But I'm wondering how you actually set yourself up so that you also have a rich life so that you're learning other stuff, but you're also pacing yourself for a long-term investment journey and you're not just kind of burning yourself out in some blaze over 15 years.

1:35:30William Green:So I spent a lot of time sitting in front of my computer screen thinking, reading financial statements and the like. But if that's all you did, it could become a rather left brain activity to the discussion we're having earlier about in the Gilchrist. I think if the goal is to promote pattern recognition, to see the world in perhaps a way that's different from other people, I think having interests outside that field of linear inquiry is really, really important. I can't tell you, you know, just as I think about, you know, I'm a very casual player of backgammon. It's a fun game and humbling as well.

1:36:16William Green:But I think many of the patterns that emerge in backgammon have provided sort of analogies for me to have a think about portfolio construction or, you know, I love researching the great wines of the world and studying the great winemakers has informed how I think about the job of being a business gardener, the selectivity, the curation, the patience. Seeing that in a different field has helped me better appreciate what it might take in my field. I have an enormous debt of gratitude to my wife, Melanie, who has kept me socially active, you know, otherwise I might just be sort of left to my devices, my books and my financial statements.

1:36:59William Green:And in doing so, she's exposed me to a myriad of different ways of looking at the world at any given point in time and I think that's also very important and travel is the same in a sense because if you're going to Tokyo or you're going to Seoul or you're going to Paris, you're going to see the world through a different lens from just sitting in your seat in New York all the time. I think whether it's trying to sort of learn a new sport, you know, I tried my hand at picking up sculling, something I hadn't done since high school, when my daughter started getting golf lessons, I got a couple of golf lessons and, you know, these are things that I may never be great at.

1:37:35William Green:But when you take your neural wiring to a level where you're not comfortable at something, again, I think it broadens the range. And so, the way I would look at this, William, if I can sort of summarize it, is just being monolithically focused on the task at hand, as wonderful as that is, tends to produce more left brain thinking. By having this other engagement with the world, you know, in the limited spare time that you do, but being open-minded to broad fields of engagement is good for the right brain activity. And I think it helps the art side of our business.

1:38:08Matthew McLennan:Yeah, absolutely. And it's worth it in its own right. Anyway, there's that beautiful line from at Gilchrist, right? I think he said, I suspect that the appreciation of beauty is one of the things life is for, which is kind of lovely, right?

1:38:21William Green:Yeah. Just you go to a museum, follow an artist who was painting 300 years ago and research that, appreciating that beauty across time is incredibly rewarding. And indeed, in the Gilchrist sites, a number of philosophers that have come up with the notion that hugelins basically exist as a form of complex evolution so that the universe can perceive itself. And I think whether you're looking for beauty in a business or in a valuation entry point or an old master painting or the way you play a sport or a game or the relationships that you have, I think that is a uniquely human endeavor to find what's wonderful around you.

1:39:07Matthew McLennan:Yeah, the sense of wonder. I got that very much from his book. He had beautiful quote from Abraham Heschel, who wrote this book on Shabbat, on the Sabbath, a famous book, who said, and I'll end with his words, he said, mankind will not perish for want of information, but only for want of appreciation. The beginning of our happiness lies in the understanding that a life without wonder is not worth living. Kind of beautiful, right?

1:39:31William Green:It's beautiful. And one of the things that I find so motivational is, I come to the office, is that we have a team of people here who are in search of their own wonder and their different industries and their own personal lives. And I think when you get a team of people doing that for a long period of time together, it's quite powerful. I think cumulative team years is a really important element of our business. Building the guild as I think about it and that sort of shared experience helps you think about what another person may be, the way another person might be looking at a problem. They might understand your biases better than you do.

1:40:12William Green:And I think that's another element that's really important to creating an investment operation. Some investment operations are inherently kind of lone wolf operations, like the free solo climber. They're just very individualistic endeavors. But I think given the nature of our approach that requires a degree of variegation. It's a team-based approach. And I think that's an important thing to reflect on. Yeah.

1:40:39Matthew McLennan:Much to reflect on here. I've really enjoyed chatting with you as ever, Matt. It's a great joy. And thank you for everything. I said to you recently, we went out for dinner recently and I was just like, God, you've just enriched my life in so many ways. So thank you. I'm really happy to have you in my life. It's just been a really great gift.

1:40:56William Green:Thank you, William. And for the listeners here, I think hopefully you will have picked up the books that so moved me were actually recommendations of Williams. And so I think it's important to surround yourself with people who help expand the way you think. And so thank you, William. Thanks so much.

1:41:14Matthew McLennan:All right. Lovely to see you. See you again soon. Thank you. Take care.

1:41:31Matthew McLennan:and does not provide financial, investment, tax, or legal advice. The content is impersonal and does not consider your objectives, financial situation, or needs. Investing involves risk, including possible loss of principle, and past performance is not a guarantee of future results. Listeners should do their own research and consult a qualified professional before making any financial decisions. Nothing on this show is a recommendation or solicitation to buy or sell any security or other financial product. Hosts, guests, and the Investors Podcast Network may hold positions in securities discussed and may change those positions at any time without notice.

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