We Study Billionaires - The Investor’s Podcast Network

RWH016: The Best Of The Best w/ François Rochon

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Nov 13, 2022

In this insightful conversation, François Rochon, founder of Giverny Capital and an expert in value investing, shares his time-tested investment strategies. He emphasizes the critical concept of 'margin of safety' and the importance of long-term thinking. Rochon discusses how to navigate bear markets, the value of humility in investing, and highlights companies he admires. Moreover, he candidly addresses his own investment mistakes through an annual 'Podium of Errors' list, illustrating his commitment to learning and growth in the investment landscape.

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ANECDOTE

Rochon's start

François Rochon's investment journey began after reading "One Up On Wall Street" by Peter Lynch around 1992.
This sparked his interest in value investing and led him to discover Warren Buffett's letters.

INSIGHT

Margin of Safety

Margin of safety applies to valuations, business quality, management, and balance sheets.
Companies with excessive leverage can suffer during interest rate hikes.

ADVICE

Long-Term View

Have a long-term investment horizon.
If your clients don't share your long-term view, the relationship won't work.

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One Up On Wall Street

Peter Lynch

In 'One Up On Wall Street,' Peter Lynch explains how average investors can outperform professionals by leveraging their everyday experiences and knowledge. Lynch advocates for investing in companies and products that are familiar and understandable, rather than following trendy or complex investments. He provides easy-to-follow advice on analyzing financial statements, identifying different types of companies (such as cyclical, turnaround, and fast-growing companies), and maintaining a long-term investment strategy. The book emphasizes the importance of simplicity, patience, and fundamental analysis in achieving successful investments.

A Tale of Two Cities

Julius Julius Seybt

Francisco Manuel GRANADO CASTRO

Marion Leighton

federico alonso

Aedi Abraham

maxi sanchez

jaime arbe

Fred BARNARD

Laura Santamaria

Juan Ramon Torregrosa

monica alonso

Charles Dickens

Alejo García Moreno

Miguel Muñoz

leonardo pablo federico sanchez alonso

J. J. Bernier

Salustiano Masó Simón

Victor G Ambrus

Jose perez

Hablot K. BROWNE

Published in 1859, 'A Tale of Two Cities' by Charles Dickens is a historical novel that contrasts the lives in London and Paris during the late 18th century. The story revolves around characters such as Charles Darnay, Sydney Carton, and Lucie Manette, each dealing with love, sacrifice, and the profound societal changes brought about by the French Revolution. The novel critiques both the conditions leading up to the Revolution and the Revolution itself, highlighting themes of resurrection, sacrifice, and the potential for positive change. Dickens's vivid portrayal of the social disparities and political unrest of the era, along with his iconic opening lines, 'It was the best of times, it was the worst of times,' make the novel a compelling exploration of human resilience and societal issues[3][4][5].

The intelligent investor

Jason Zweig

Benjamin Graham

Written by Benjamin Graham, 'The Intelligent Investor' is a seminal work on value investing that has inspired millions since its original publication in 1949. The book emphasizes the importance of distinguishing between investing and speculation, calculating the intrinsic value of companies, and maintaining a margin of safety. The revised edition includes updated commentary by Jason Zweig, who provides modern examples and insights to help readers apply Graham's principles in today's market. Warren Buffett, a disciple of Graham, has praised the book as 'the best book about investing ever written'.

The Science of Hitting

John Underwood

Ted Williams

This book, written by Ted Williams and revised in 1986, offers comprehensive advice on hitting in baseball. It includes detailed illustrations, anecdotes from Williams' career, and concise coaching on various aspects of hitting such as thinking like a pitcher, developing a smooth line-driving swing, hip and wrist action, pitch selection, bunting, and hitting the opposite way. Williams, who was the last player to break the .400 batting average barrier, shares his analytical approach and emphasizes the importance of practice and adjusting techniques to achieve mastery in hitting[1][2][3].

Beating the Street

Peter Lynch

In 'Beating the Street', Peter Lynch explains his strategies for investing, emphasizing the importance of understanding the companies behind the stocks. He advises investors to focus on what they know, avoid macroeconomic predictions, and maintain a concentrated portfolio of well-researched stocks. Lynch provides practical advice on finding undervalued companies, doing thorough research, and making disciplined investment decisions. The book is a follow-up to his earlier work, 'One Up On Wall Street', and offers insights into his successful investment approach[1][3][4].

The Count of Monte Cristo

Alexandre Dumas père

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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