Protecting Against Investment Temptations

This chapter explores the importance of creating practical checklists to safeguard against investment pitfalls, influenced by Warren Buffett's principles. It emphasizes the value of internal cash flow for growth, critiquing reliance on external capital and highlighting the need for fundamental performance metrics.

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William chats with renowned hedge fund manager Guy Spier. Since launching the Aquamarine Fund in 1997, Guy has beaten the S&P 500 by 200 percentage points & the MSCI World index by 364 percentage points. He’s also the author of “The Education of a Value Investor.” In this conversation, Guy speaks candidly about the challenges he’s facing, including his fear that Russia’s war in Ukraine could escalate, creating a systemic risk for investors. He explains how he’s positioning his portfolio to survive & prosper in these perilous times, & he shares practical advice on how to maintain equanimity amid all this uncertainty.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro

03:56 - How living in a calm & predictable environment helps Guy Spier to invest better.

12:04 - How he resisted the temptation to buy overvalued tech stocks during the recent bubble.

26:11 - Why we must beware of the psychological effects of rapidly rising or falling stock prices.

30:04 - Why Guy refuses to invest in any business that can’t fund all of its growth internally.

44:18 - How going to Berkshire Hathaway’s annual meeting helps to reinforce rational behavior.

53:57 - What Warren Buffett told Guy Spier & Mohnish Pabrai about the perils of debt.

1:13:04 - Why Guy regards the war in Ukraine as a potentially systemic threat to investors.

1:11:56 - Where he’s investing in order to survive & prosper in these times of heightened risk and why he’s invested heavily in China, despite the political & economic dangers.

1:13:55 - Why he’s avoiding weaker countries, including Indonesia & the Philippines.

1:15:01 - How he wrestles with the tricky question of whether to trim or hold his winners.

1:18:17 - Why he’ll never short another stock.

1:19:31 - How he constructs a portfolio that helps him to maintain his emotional equilibrium.

1:43:35 - Why he diverged from Mohnish on the risks & rewards of investing in Turkey.

1:59:08 - What Guy & Mohnish have learned from the stunning success of their friend Li Lu.

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.
Listen to William Green’s 2022 interview with Guy Spier on How to Build Enduring Wealth (RWH009) or watch the video.
Listen to William’s 2022 interview with Guy on High-Performance Habits (RWH010) or watch the video.
Listen to William’s interview with Ray Dalio on the “Richer, Wiser, Happier” podcast or watch the video.
Guy Spier’s book, “The Education of a Value Investor” – Read reviews of the book.
Guy Spier interviews William Green about his book, “Richer, Wiser, Happier.”
Subscribe to Guy Spier’s Free Newsletter.
Guy Spier’s podcast and website.
William Green’s book, “Richer, Wiser, Happier” – read the reviews of this book.
William Green’s Twitter.

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