Name: How the Greatest Investors Win in Markets and Life | William Green | TEDxBerkshires
Uploaded: 2024-06-28T10:31:07.000Z
Duration: 17 min 43 s
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My fascination with investing began when I was in my twenties.

Adverbs of degree

My brother, Andrew, and I had sold an apartment that we owned in London and I had to figure out what to do with this relatively modest windfall.

I started studying the stock market and I quickly became obsessed.

I wanted to become financially independent, but I didn't much fancy the idea of spending my life in an office, taking orders from an annoying boss.

And when I discovered the stock market, I thought, this is spectacular, I can get rich without getting my hands dirty.

There was something almost magical about the idea that you could make money just by using your mind.

I knew nothing about business or economics.

If I'm lucky, I can count to about eight with a calculator.

But I had one tremendous advantage, which is that I was a journalist, writing for magazines like Forbes and Fortune, which meant that I could actually interview all of these legendary investors who did know what they were doing.

Over the last 25 years, I've spent hundreds of hours interviewing more than 50 of the world's greatest investors, including many billionaires.

I got to do things like travel to the Bahamas to spend a day with Sir John Templeton, an 86-year-old billionaire who was probably the greatest international stock picker of the 20th century.

In the days after 9-11, when the world seemed to be falling apart,

I got to spend several days with Bill Miller, who was the most famous mutual fund manager of his generation.

The stock market was crashing, but Miller was relaxed and cheerful.

I stood beside him, watching while he bet hundreds of millions of dollars on beaten down stocks that everybody else was desperate to sell.

I remember saying to him, you've got to be so ballsy to do what you do.

And Miller said, yeah, but I've also got to be right.

So I became captivated by this tiny elite of great investors who defied gravity by beating the market over many years.

I wanted to understand what insights, principles, character traits and habits enabled them to win, and could I become more like them?

The greatest investors have taught me not only to invest better, but to think better, and possibly even to live better.

They taught me that it's all about simplicity, subtraction, and not being a fool.

One of the most famous investors I've interviewed is called Joel Greenblatt.

His investment returns are the stuff of legend.

His hedge fund returned about 40% a year over 20 years.

At that rate, $1 million turns into $836 million.

I think you'll agree it's a pretty nifty trick.

A few years ago, I'm sitting on Greenblatt's patio in the shade in the Hamptons, and we're sipping iced tea, and I'm gazing out at his magnificent view of the Atlantic Ocean.

Greenblatt is looking suntanned and relaxed.

He's wearing jeans and loafers with no socks.

And I say to him, what's the secret of investing?

He says, William, it's incredibly simple, and it all comes down to this.

He says, figure out what a business is worth, and then buy it for much less.

I'm looking at him, and I'm thinking, this is so cool.

Here's this guy who's cracked the code of how to beat the market.

He's distilled all of the complexity of investing into one simple principle.

I don't need to waste my time trying to figure out whether the stock market is going to rise or fall.

I just need to value a business, and then buy its stock for much less than it's worth.

The fact that this is simple doesn't mean that it's easy.

And when I started to think about this honestly,

I thought, well, I don't actually know how to value a business.

I'm not even that interested in valuing businesses.

So I shouldn't be buying individual company stocks, because this is not a game that I'm equipped to win.

And if there's one thing I've learned from the greatest investors, it's that you don't want to play games that you're not equipped to win.

The more I started thinking about simplicity, the more I realized that it's a huge advantage to have a few simple, robust, deeply held beliefs, a simple set of guiding principles.

Why? Because we live in an extremely confusing world, and these simple principles can help us, they can guide us through the fog so we don't get too confused.

I began to realize that the ability to keep things simple is actually a superpower.

It's one of the secrets of success, both in investing and life.

Then I started to get excited, because I realized everywhere I looked, I found more examples of simplicity, in fact, thousands of years.

For example, I remember studying the Old Testament and learning that it contains 613 commandments.

And I thought, who can remember so many rules, let alone obey them all?

That's when I realized, well, this is why we needed a top ten list, the ten commandments.

But if you actually try to list the ten commandments, how many of them would you get right?

Thou shalt not kill, thou shalt not steal, thou shalt not covet thy neighbor's wife.

The last time I tried this, I got three out of ten right, but I graded myself dishonestly and gave myself six out of ten.

And I was wondering, does that actually violate one of the ten commandments?

And then I thought, I don't know, I can't remember.

But then I realized, I remembered that there was a great sage 2,000 years ago who taught the most simple and timeless thing of all.

The sage's name was Hillel, and he said he was asked to teach the entire Old Testament in the time that he was standing on one leg.

And he replied, do not do to your neighbor what is hateful to you.

The Old Testament actually sums this idea up in just three Hebrew words, which translates as, and you shall love your neighbor as yourself.

Over the years, I saw that many of the greatest investors have this ability to simplify the game of investing.

But what I also discovered is that they lead surprisingly simple lives.

I remember spending a couple of days with a famous investor named Tom Gaynor at his office in Virginia.

And it felt really like being in an extremely peaceful library.

At one point, Gaynor said to me, how many times have you heard my phone ring?

And I thought, actually, I haven't heard the phone ring more than once in the entire day.

Well, Gaynor had actually consciously removed all of these distractions that could break his focus.

Another time, I was with an investor named Laura Gerrits, and she's one of America's leading investors in foreign markets.

And I said to her, how do you structure your time?

We're sitting there eating sushi in a restaurant in New York, and she says, well, every Friday is a creative day, and I don't schedule anything at all on Fridays.

And basically, she just goes to sit by a stream near her home in Utah, and she reads a book, she writes in her journal as a way of synthesizing her thoughts.

And Gerrits has traveled to about 75 countries, but she told me one of her favorite places on earth is a tiny, tiny island just off the coast of Australia, where there are only eight houses.

And she often retreats there with a stack of books, and she said, you actually have to get your groceries taken over there with you on a boat at the start of this trip.

And she said to me, there's no internet access.

Her telephone, her cell phone, rarely works when she's there.

But she said, that's just fine, because her disconnection from the noise and the hubbub and the mayhem and the frenetic pace of modern life is actually part of her competitive advantage.

It frees her up so that she can think, so that she can concentrate on the simple essence of her work, which is to analyze companies and to think about countries and stocks and what the future holds.

What I started to realize is that all of the greatest investors have this obsession with reducing mental clutter so that they can focus on what's most important to them and what they're best at.

And one way that you could describe this is actually the art of subtraction.

And this idea of the art of subtraction has had a profound impact on my own life.

Like all of us, I'm constantly bombarded by emails and phone calls and Twitter notifications and Zoom meetings and all these other guilt-inducing reminders that I should constantly be doing more.

And whenever I'm feeling scattered or stressed or overwhelmed,

I remind myself of what I've learned from Gaynor and Gerrits, which is, I don't need to do more.

I think about the few simple priorities that really will make a difference in my life.

Writing, reading, meditation, spending time with my family, exercise.

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How the Greatest Investors Win in Markets and Life | William Green | TEDxBerkshires

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