Bill Priest, a seasoned investor and Vice Chairman of TD Wealth, shares insights from his six decades in finance. He discusses the dangers of complacency among investors and highlights the importance of free cash flow and cost of capital. Bill expresses concerns about stagflation and suggests maintaining cash reserves to weather economic storms. He also warns against overinvesting in growth stocks and offers caution regarding investments in China, all while praising the unstoppable rise of AI.
Bill Priest emphasizes the importance of free cash flow and effective capital allocation as essential indicators for future investment returns.
His experiences across various market cycles highlight the necessity for adaptability and maintaining a robust balance sheet amidst economic uncertainties.
Priest advocates for effective leadership rooted in open communication, empathy, and decisive action to foster a collaborative work environment.
He cautions against complacency, especially in growing concern over stagflation and the ongoing risks in specific markets like China.
Priest underscores the value of lifelong learning, encouraging investors to remain curious and open to new knowledge throughout their careers.
Deep dives
The Impact of Community Support on Success
The speaker expresses deep gratitude for the support received from readers and followers regarding the release of their book, 'Richer, Wiser, Happier.' They emphasize the importance of community engagement as a significant factor in the book's success, highlighting how warm responses from readers affirm the value of their work. This encouragement not only adds personal fulfillment but also plays a crucial role in promoting the book to a wider audience. The speaker acknowledges that feedback received from the community has the power to influence and inspire the direction of their future endeavors.
Profound Insights from Bill Priest's Career
Bill Priest, a highly respected figure in the investment world, shares insights from his six-decades-long career. He highlights the lessons learned from various market cycles and emphasizes the importance of prudently positioning investments to navigate uncertain economic climates. His experience with both successful ventures and challenges across multiple markets offers valuable wisdom for aspiring investors. Priest's journey reflects the significance of adaptability and continuous learning in achieving long-term success in finance.
The Influence of Upbringing on Financial Mindset
Bill Priest recounts his upbringing in a small Ohio town, detailing how his family background shaped his work ethic and approach to money. His father instilled a strong sense of responsibility, emphasizing the necessity of earning rewards through hard work. This upbringing, marked by trials and support, laid the groundwork for Priest's later success in finance. The importance of familial values in nurturing a productive mindset is a pivotal theme in Priest's narrative.
The Foundation of Investment Thinking
Priest discusses the cornerstone of his investment philosophy, which revolves around the significance of cash flow and management's ability to allocate capital effectively. He stresses that free cash flow serves as a critical indicator for future shareholder returns. By focusing on how businesses manage their resources, Priest believes investors can gain a reliable understanding of a company's potential. This approach not only aids in making informed investment decisions but also emphasizes a long-term perspective.
Navigating Market Volatility and Uncertainty
In addressing market volatility, Priest shares his experiences during significant downturns, including the 2008 financial crisis. He underscores the necessity of maintaining a robust balance sheet and being prepared for unpredictable challenges. His strategy includes diversifying investments and having sufficient liquidity to weather storms, preserving the ability to seize opportunities that arise during downturns. By cultivating resilience and adaptability, Priest demonstrates how investors can position themselves favorably in times of uncertainty.
The Role of Leadership in Investment Firms
Priest emphasizes that effective leadership is fundamental to the success of investment firms. He believes that leaders should foster an environment of open communication, where team members feel empowered to express differing viewpoints. The importance of empathy and the capability to make decisive actions are highlighted as essential traits for successful leaders. Through his leadership approach, Priest aims to create a culture where knowledge sharing and collaboration thrive.
Learning from Historical Business Challenges
Reflecting on Credit Suisse's journey and eventual decline, Priest provides a cautionary tale about the importance of corporate culture. He details how the integration of different companies can lead to conflicts if cultural alignment is not prioritized. The lessons learned from his experiences at Credit Suisse highlight the challenges of maintaining a cohesive vision amidst acquisitions. He advocates for strong management practices that prioritize unity and strategic alignment to sustain long-term success.
The Importance of Lifelong Learning and Curiosity
Priest believes that a commitment to lifelong learning and curiosity is crucial for continued success in any field. He encourages individuals to remain open to new experiences and to actively seek knowledge, regardless of their age. By weaving this mindset into one's professional life, leaders and investors can navigate complexities more effectively. Priest's appreciation for literature and diverse perspectives underscores the value of broadening one's horizons for both personal and professional growth.
Values That Shape Legacies
As the conversation concludes, Priest reflects on the legacy he wishes to leave behind, emphasizing compassion and responsibility. He advocates for leaving the world better than one found it, highlighting relationships as the most important aspect of life. The desire to be remembered as someone who uplifted others resonates in his narrative, demonstrating a commitment to meaningful connections. Priest’s insights serve as a guide for others to navigate their professional journeys while cherishing personal relationships and community influence.
In this episode, William Green speaks with Barron’s Roundtable member Bill Priest, who is Vice Chairman of TD Wealth and founder, Chairman, and Co-Chief Investment Officer of TD Epoch. Bill is the co-author of several books, including “Winning at Active Management.” Having prospered for six decades in the financial markets, Bill has seen it all. Here, he talks about his core investing principles & why he believes investors are too complacent in the face of mounting risk & fragility.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro
06:50 - How Bill Priest fell in love with the stock market.
40:30 - Why he focuses relentlessly on free cash flow & cost of capital.
41:11 - How he goes about analyzing a business.
48:41 - Why growth stocks may start to struggle.
50:47 - Why he’s worried about the threat of stagflation.
59:16 - How investors can protect themselves from an unknowable future.
1:03:36 - Why AI is unstoppable, not just another bubble.
1:07:35 - Why he’d be “very careful” about investing in China.
1:15:38 - Why you should keep ample cash to ride out difficult times.
1:17:20 - Why his exposure to equities is much lower than usual.
1:21:16 - How to be a successful leader.
1:57:16 - What he’s learned from his daughter about happiness.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
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