The Margin of Safety in Investing

This chapter explores the concept of the margin of safety in investing and business management, emphasizing its significance in evaluating investment quality and financial stability. It details the speaker's transition from engineering to investment management, highlighting lessons learned about resilience, patience, and the importance of intrinsic value. The narrative includes reflections on past investment mistakes and the necessity of a disciplined approach to achieve long-term returns.

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IN THIS EPISODE, YOU’LL LEARN:

02:51 - How François Rochon began his market-beating investment journey three decades ago.
08:12 - How the “margin of safety” concept guides him in business, markets, & life.
10:14 - How to succeed by investing in great companies at reasonable valuations.
12:12 - Why it’s critical for investors to have a long time horizon.
15:37 - How to become a better investor by cultivating humility & preparing for disappointment.
16:48 - What he learned from Warren Buffett about the importance of owner’s earnings.
21:47 - Why François resists the temptation to overpay, even for great companies.
25:12 - Why he highlights his investment mistakes in an annual list called the Podium of Errors.
34:03 - How to survive & thrive by taking a middle-of-the-road approach to diversification.
38:30 - Why he believes that market predictions are a waste of time.
40:24 - How he handles bear markets emotionally & uses them to improve his portfolio.
43:10 - Why he loves companies like CarMax, Visa, Alphabet, & Markel.
47:56 - How the president of Constellation Software embodies everything he seeks in a leader.
53:59 - How the best businesses remind François of the beauty & uniqueness of great artworks.
1:11:24 - How he was influenced by studying & meeting investment icon Peter Lynch and what François learned from investing legend Lou Simpson.
1:21:49 - How the best investors succeed by straying from the tribe & forging their own path.
1:15:44 - How it helps him to read broadly about philosophy, art, science, history, & psychology.
1:26:16 - Why it’s rational, not naive, to be an “unwavering optimist.”
1:35:16 - Why François believes that persistence & patience are the key to human achievement.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
François Rochon’s Montreal-based investment firm, Giverny Capital.
Giverny Capital Asset Management, his U.S.-based partnership with David Poppe.
PanzaCollection of art built by Count Giuseppe Panza, one of François’ heroes.
William Green’s book, “Richer, Wiser, Happier” – read the reviews of this book.
William Green’s Twitter.

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