We Study Billionaires - The Investor’s Podcast Network

RWH023: Defensive Investing In Dangerous Times W/ Guy Spier

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Mar 19, 2023

In this engaging discussion, Guy Spier, a renowned hedge fund manager and author of 'The Education of a Value Investor,' shares insights from his successful investment journey. He addresses the systemic risks posed by geopolitical tensions like the war in Ukraine and explains how emotional equilibrium aids his investment decisions. Spier elaborates on the importance of internally funded growth and the dangers of relying on external capital, while emphasizing the psychological effects of market volatility and the need for a disciplined approach to investing.

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ANECDOTE

Move to Switzerland

Guy Spier found New York City too stimulating, which affected his ability to focus on investing.
He moved to Switzerland for its calm and predictable environment, which he finds conducive to long-term investing.

INSIGHT

Swiss Quality and Investing

Swiss culture values quality, durability, and longevity, which aligns with Spier's investment philosophy of finding high-quality, enduring companies.
He is drawn to the "set and forget" nature of Swiss businesses.

ANECDOTE

Resisting the Tech Bubble

During the tech bubble, Spier resisted investing in overvalued companies despite FOMO.
He changed his password to "new economy" to remind himself to study these new types of businesses.

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The education of a value investor

Guy Spier

In this book, Guy Spier narrates his early career struggles in investment banking on Wall Street and his transformation into a value investor. The book covers his experiences working at D.H. Blair, his education at Oxford and Harvard Business School, and the significant influences of Warren Buffett and Charlie Munger on his investment philosophy. It also emphasizes the importance of authenticity, continuous learning, and ethical considerations in investing. The book has been translated into several languages and has sold over 175,000 copies in English.

World order

Henry Kissinger

Fooled by randomness

the hidden role of chance in life and in the markets

Nassim Nicholas Taleb

In 'Fooled by Randomness', Nassim Nicholas Taleb discusses the pervasive influence of chance and randomness in our lives and financial markets. The book argues that humans tend to underestimate the role of luck and overestimate the role of skill, leading to biases such as hindsight bias, survivorship bias, and the narrative fallacy. Taleb emphasizes the importance of recognizing and coping with uncertainty, and he critiques the tendency to seek deterministic explanations for random events. The book is part of Taleb's Incerto series, which also includes 'The Black Swan', 'The Bed of Procrustes', 'Antifragile', and 'Skin in the Game'.

Richer, Wiser, Happier

How the World's Greatest Investors Win in Markets and Life

William Green

In Richer, Wiser, Happier, William Green draws on interviews conducted over twenty-five years with many of the world’s greatest investors. The book highlights that the most successful investors are mavericks and iconoclasts who question conventional wisdom and think rationally, rigorously, and objectively. They maximize their odds of long-term success in markets and life by drawing insights from diverse fields such as neuroscience, economic history, psychology, philosophy, and more. Green explains how these investors can teach us not only how to become rich but also how to improve our thinking, decision-making, risk assessment, and resilience, and how to turn uncertainty to our advantage.

The Protestant Ethic

and the Spirit of Capitalism

Max Weber

Max Weber's "The Protestant Ethic and the Spirit of Capitalism" explores the relationship between the rise of Protestantism and the development of modern capitalism. Weber argues that the values and beliefs embedded within certain Protestant sects, particularly Calvinism, fostered an ethos of hard work, frugality, and rational economic behavior. This ethos, he suggests, contributed significantly to the accumulation of capital and the emergence of capitalist systems. The book examines historical and sociological factors, analyzing the impact of religious ideas on economic practices and social structures. Weber's work remains highly influential in sociology and economics, prompting ongoing debates about the interplay between religion, culture, and economic development. It challenges simplistic explanations of capitalism's origins, highlighting the complex interplay of various social and cultural forces.

The Seven Laws of Power, How to Get Power in Business

Hamilton Helmer

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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