In the first part of the show, Jason Hartman discusses the three primary audiences of a company and the things he likes about Warren Buffet. In the interview segment, he welcomes Tren Griffin, Senior Director of Strategy at Microsoft and author of “Charlie Munger: The Complete Investor.” Tren shares why he wrote the book and the Munger philosophy of decision-making. He also explains the principles of value investing, aligning your investments with interests, and the Munger/Buffett fundamental – Get Rich Slow.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer, and entrepreneur who’s owned properties in 11, states had hundreds of tenants and been involved in 1000s of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day, you really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:03
Welcome to the creating wealth show. This is episode number 583. That’s 583. And this is your host, Jason Hartman, thank you so much for joining me today. It has been a tremendous ride and a tremendous privilege to be talking with you for so many years, to have so many of you supporting the show and coming out to our events. And it’s great to just meet you in person. Of course, we’ve got our Orlando property tour coming up Orlando, Florida in a few a couple of weeks. Well, it’s what, what, three weeks or so here, I guess. I’m looking forward to seeing many of you there. And it’s just it’s just been a real privilege. So I just wanted to express my gratitude. And once again, say thank you, to all of you in 164 countries worldwide. I mean, what an amazing privilege listeners in 164 countries. Wow, I am honored and humbled. It’s it’s just a great privilege. So I am glad you keep finding value in the show. And I thank you so much for listening. And for telling your friends about the show. And for reviewing the show, please go on iTunes, Stitcher Radio, and review the show and we’d love your feedback. And we’re gonna dive into it today.
So our guest today will be Trent Griffin. trend Griffin. He’s an upper level person with Microsoft. Of course Bill Gates, the founder of Microsoft is best friends with Warren Buffett. So Trent, knowing this and being involved with these guys, he decided to write a book about Charlie Munger. Now you’ve probably heard of Charlie Munger, certainly you’ve heard of Warren Buffett, Charlie Munger is kind of I guess he’s the number two guy you know, he’s a warren buffett’s right hand man. And the book is entitled The complete investor. And you know, me, I’m no fan of this stock market. I’m no fan of Wall Street. I think it’s the modern version of organized crime, because it is. But I do one thing I really do like about Warren Buffett, and I remember about 12 or 13 years ago, when I was really working on getting into the nationwide real estate investing business. And I, of course, had a traditional real estate company at the time, I ended up selling that company to Coldwell Banker, I had a whole bunch of traditional real estate agents working for me. And so you know, that was my background in traditional real estate for so many years. And interestingly, my career started working with a lot of investors. And then it went into the traditional side of real estate and, of course, in the traditional way, and when I say that, I just mean, you know, selling houses to people, right, like, like you think of any real estate person. But of course, I always sold some properties to investors over the years, but really wanted to be in the nationwide investing business. And as I was refining and perfecting my philosophy, I remember I read a warren buffett book, of course, there are many, and I just really, I really synced in and related to his value investing strategy, the strategy of just buying and holding assets, and you know, keeping it simple, not worrying about trading and not having to, you know, do a bunch of management and you fighting with contractors all the time and, and doing all that kind of stuff. I just really liked that philosophy. And to that end, I want to tell you that occasionally we get a a question, or I guess, really, I should say a complaint. And I got one today, that was a complaint about two properties on our website at Jason Hartman dot com.
So let me just explain my philosophy about the properties on our website. And let me if you will compare the Jason hartman.com properties to the multiple listing service. Large to Zillow, to realtor.com, or any of the other places where you can search properties and, you know, try and find properties to buy, whether they be as invested for investment purposes or for your own home. So, I just want everyone to know this, I’m not exactly sure how to explain this, but um, here’s my shot at it, okay? When you look at properties on our website, and you do some research on them, which we have taught you how to do, we encourage you to do we want you to do, please do your research. Okay. And we will help you with that. Okay, so there have been many shows where we’ve talked about it. Of course, that’s what our investment counselors do, they help you curate and pick properties. So curate. That’s a good word curated. All of the properties on our website are not curated. Okay? That’s the first thing you got to know. Now, they are far more curated than these big listing services like realtor.com, and Zillow, or any piece of junk can get on there they are, they are curated, but not completely. We just can’t do this. And we kind of don’t completely want to do it. And I don’t know if this I don’t know if you’ll relate to my reasoning for this. But but here’s, I’m gonna throw it out there, I’m just going to be very, you know, I’m always trying to be very open and transparent with people. And you know, that really is more efficient. For me, it’s, for my benefit, I’m doing it partially for selfish reasons, not altruistic reasons. Because it makes my life easier when we can nip problems in the bud. So one person was complaining that a couple of the properties weren’t in very good school districts. So I could easily reply and say, Well, look, you get what you pay for, right? I mean, these properties aren’t in my old hometown, Irvine, California, which is very high priced, and has exceptionally good schools. You know, they’re not in Beverly Hills, 90210, I’m only assuming the schools there are good. I know, there’s that sort of funky TV show about it, which I never got into. But, but you know, you would think that in high income areas, they generally have good schools, right.
So that’s the first thing, but that’s not really the thing. The real thing, the real heart of the matter is this is that our our Listing Service, our referral network at Jason hartman.com is something where we use that as a feedback mechanism for our local market specialists in the given areas. And we want some of the properties on our website, not to sell. That’s very much our goal is to not have every property on our website sell through our network. Because this is how we give feedback to the local market specialists and say, Look, our clients, they turned up their nose at this deal, because it’s just not a very good deal. Bring us properties with either better prices or better metrics, or in better areas, or in better school districts, or properties that look better and have more curb appeal or have better rehabs in terms of, you know, the fix-up work that’s been done. This is a feedback loop. So I need you as our clients and our listeners to understand that this is not a fully curated website, it was never meant to be that it is meant to be that you connect with us. You work with our investment counselors, and our investment counselors help you in being picky and saying no to this one, and no to that one. And yes to this one. And and that becomes a feedback loop. That is a hopefully a relentless mirror that feeds back to our local market specialists and says, hey, why didn’t we sell that one? Because it just wasn’t good enough for us. It wasn’t good enough for our sophisticated, educated, knowledgeable clients. It wasn’t good enough for them. So bring us something better. If you want to do more business with us, bring us better inventory, and we’ll sell it for you.
It kind of reminds me of Walmart and I’ve talked many times on prior episodes about Walmart and do you know how do you ever watch CNBC the mouthpiece for the vast Wall Street conspiracy. CNBC Well, on holidays when the market isn’t open. CNBC will run real Russians have these sort of documentaries that they do. And some of them are pretty good. And I remember one they had it was about Walmart, the reporter asked, they were interviewing the CEO of Walmart. And the reporter asked, you know, Walmart has such a bad reputation. You know, they don’t pay high enough wages, the people come in vendors, and they, your suppliers, and they, they sell products through your stores and your retail channels, or they pitch them to you. And they walk out of here with with, you know, with blood on their face, you know, they’re just beat up their beat to a pulp. And, you know, you’re just too hard on these people, aren’t you? That’s, that’s just not, that’s not fair is it? And I’ll never forget it, it has influenced me a lot. And if, of course, before I say this, by the way, you know, it’s important to have good relationships with everybody in your supply chain, whether it be your suppliers, and vendors and contractors, your local market specialists in our case, and of course, your customers, right. But the CEO of Walmart very pointedly said, Look, and this is not exactly what he said, I’m, you know, paraphrasing, but he said, Look, we are the agent of the customer, we are the agent of the customer. And we must provide the best value to the customer. That is what we’re here for. We’re not here to provide the best value. And you know, this is what he meant by it, I’m just kind of going on and on. I don’t know what he said next, maybe he did say something like this, I can’t remember, honestly. But you know, we’re not here to provide ease of, you know, ease of business, and sell all the inventory, the crappy inventory for our suppliers. We’re not here to unload that on our customers. We’re the agent of the customer.
Now, I just do want to mention something as a legal point, we’re not actually your real estate agent, we are a referral network. We’re not licensed in all the states that we refer clients to, we operate as a referral network. So we have our license in one state. And then we refer business to providers and other states. But that concept of being the agent for the customer, in and that implies, where the obligation of loyalty is where, you know, maybe not from a legal sense, but at least from a psychological sense, where the idea of fiduciary comes from. And that is, is at least how I feel when I hope everybody in my company feels that way too. We are we are here for the client. And so if some of the properties on our website aren’t to your liking, please do not buy them, we don’t want you to, we hope that 30% of the inventory on our site never sells, because that will be the lowest quality inventory, that will still be in the hands of our supplier. And you know what, it’ll give our supplier a very valid economic message that these properties were not good enough. Don’t try to unload your ugly ducklings on our network, take them to one of our competitors, who doesn’t do much critiquing, and doesn’t really care, and doesn’t operate with a real estate license. And you know, isn’t that careful and doesn’t feel that way? Take them over there. And you can unload your inventory there. And believe me, there’s a lot of those companies out there, folks. So if you want to get some junky properties, believe me, we’ve heard a lot of horror stories from people who have purchased properties through other other companies and come to us and have moaned and cried and sung the blues about them.
So we don’t want to be that company. We understand who our customer is. And it’s it’s the buyer, that’s our customer. Okay, you know, every company, I always say has really three primary audiences. What are they? They are the suppliers. The shareholders are the stakeholders, I should say, the stakeholders, and they are the customers. And can you please all of these? I don’t know. I think it’s always this sort of war and compromise with all these these three in the triangle, right? So you hear amazon.com you know, most customers love amazon.com suppliers, not so much they think Amazon takes a lot of money out and they get to decide too much on prices. And employees. I’m not so sure because I just recently read an article of course, there’s always a critic out there you never know, really the full story but this article was I think in Business Insider, and it was talking about how Amazon is a tough, demanding place to work. So, you know, it’s it’s always a compromise between these three primary entities, stakeholders, customers, and suppliers. Right? Those are the three major categories here. Go to Jason hartman.com. Check out the properties there, pass on 30% of them and know that 70% are the good ones and 30% are the bad ones. And how do you do this? You get help from our investment counselors, they will help you be picky and choosey okay?
Now, let me give you the opposite of this. You don’t want to be too picky and choosey because that’s how people like me and I’m single. Right? You know, Jerry Seinfeld just reminds me of Jerry Seinfeld. I mean, on that. Remember the show Seinfeld? Of course, it was the best written sitcom ever. If you ask me, that’s just my opinion. And if someone has, by the way, a contemporary really well written sitcom, we please suggest it to me, send us over an email or something reviews at Jason hartman.com. How about that you can send it to that address. It is it is getting pretty hard to choose stuff on Netflix and Amazon Prime and Hulu, and I don’t know what to watch anymore. There’s just too many choices. And there’s just a lot of garbage out there. But I digress. Right? What was I saying? Oh, yeah, Seinfeld. Anyway, his Jerry’s girlfriends were so cute. I mean, you know, compared to Jerry, right. And in the show, of course, he would always find something wrong with them some little funny thing that he didn’t like about them. And it was just hilarious. That was the that was the most well written show ever. You know, I heard that Seinfeld had one writer per minute for each episode. So in other words, if the episode is about what, 22 minutes long, they got about eight minutes of commercials. They have 22 writers per episode I heard. And that’s how they keep it so funny and made it so funny. I just wish someone would redo a new Seinfeld. And please don’t tell me that. What’s his name? Larry David show? No, Curb Your Enthusiasm. I’ve tried watching it. That is just not that funny. It’s, it’s just started down. He’s just way too neurotic for me. So Oh, wait, this is a real estate and financial show. Right? Oh, okay. Let’s get on with that, actually. So, Orlando property tour. Meet us there. We look forward to seeing you creating wealth seminar on the east coast. We never have these on the East Coast, that you’ll get the creating wealth seminar and the Orlando property tour. And Heck, the day before, I’m going to Disney World with my mom. So it should be a great time out there. And if you’re going early, maybe I’ll just see you at Disney World to Come and join us for that. Jason hartman.com. Click on events also meet the masters of income property coming up in January. That event is going to fill up fast as it always does that always sells out. And it will be full fairly soon. Early Bird pricing for both of these. And venture Alliance. Well, what is the venture Alliance doing? We had our great trip in Newport, Rhode Island and Martha’s Vineyard and our next trip, although it’s not formalized yet, but we’re looking at Dubai, Dubai in February. Yes, Dubai. So think about that. And if you have questions and interest in venture Alliance, talk to your investment counselor that you can reach, of course through Jason hartman.com. And we would love to talk to you about that as well. Okay, let’s get to trend Griffin, talk about Warren Buffett and Charlie Munger, the complete investor.
It’s my pleasure to welcome Tren Griffin to the show. He is a Senior Director of strategy at Microsoft, and also author of Charlie Munger, the complete investor trend welcome. How are you?
Tren Griffin 19:11
I’m great.
Jason Hartman 19:12
Good. Good. Where are you located?
Tren Griffin 19:13
I’m here in Redmond, which is a suburb of Seattle.
Jason Hartman 19:17
Yeah. Okay. I was I didn’t want to assume that. That’s why I asked. But you’re right in Seattle, right in the heart of it, or Redmond, actually. So how did you come to write this book? I mean, you know, Bill Gates and Warren Buffett are close. But what got you interested in Charlie Munger and writing the book about the you know, the complete investor philosophy?
Tren Griffin 19:36
What what happened to me was the internet bubble. And the internet bubble was a strange time. And what happened during that period is sort of reality got suspended. And I didn’t really know what to make of things. I knew there was a lot of wealth, but I didn’t know whether it was real or not. And so to ground myself, I took a think week and I took every book I could find A lot of books about Buffett because I thought he was grounded. And when I read about Buffett, I learned about Munger and monger was the guy who sort of really interested me most he was most like me. And so as a result of his guidance and his way of thinking, I was able to make a decision to sell a lot of my stock at a very good time. And so, in that sense, he’s my hero and, and benefactor, and he’s made my life better.
Jason Hartman 20:25
Mm hmm. Okay, good, good stuff. So you did your stock play. And that’s all good, you know, at Berkshire Hathaway. Warren Buffett’s philosophy, of course, is value investing. Can you explain to the listeners what that really means? And we’re gonna dive down. And I’m really excited about this in the, our discussion today, we’re gonna dive down and, and show how this not only applies, of course, to investing, but also to life in general. So tell the listeners about value investing. I mean, what really is that we’ve, we’ve heard it thrown around, give us the definition of it.
Tren Griffin 20:57
First is a stock is fundamentally a proportional share in a business, it’s a partial stake in a business. And so to understand the stock, you need to understand the business, you shouldn’t treat it, like a baseball card or a piece of paper to be traded, based on whatever people’s opinion are, if you understand the business, you understand the stock, if you don’t understand the business, then you’re not a value investor. The second principle is is basically margin to safety, which is you needed to buy, you need to buy the asset is a discount, to value and to buy at a discount to value in the value investing sense means you need to buy it at a discount to intrinsic value, which is basically the net present value analysis. And it’s, you know, it’s based on fundamental bottom up analysis. The third principle is Mr. market, which is, the market is not wise, the market offers you a chance to buy and sell assets every day and should never let it convince you that it’s wise, it’s your servant, not your master. And the final principle, which is applicable to everything in life, which is learn to be rational, learn to be dispassionate, and look for sources of bias. So in a nutshell, that’s value investing.
Jason Hartman 22:11
So does value investing mean you’re always in it in it for the long run? Or does it just means that you follow those principles you just mentioned?
Tren Griffin 22:19
Well, value investing is fundamentally based on a sort of a thesis that value and price are very different things. And over the long term, those things tend to align. But over the short term, there’s substantial differences between price and value, particularly in some assets. And in with the value investing mindset, you’re looking for basically a situation where price is a lot less than value, with a significant margin of safety, and you buy the asset. And the key thing about value investing is buying weight. It isn’t a timing mentality, you look at the asset, the asset selling at 70 cents on the dollar, or you buy it, but you don’t count on it turning around in a week or a year, or even three years, that eventually the asset will return to its real value or in essence, in excess of its real value. And Mr. market will determine that. So Seth Klarman is one of the great value investing. Personality says buy to bargain and wait. That’s the essence of value investing.
Jason Hartman 23:20
Right. Okay, so So really, by the very nature of it, it’s not a quick play, it’s not a day trade, it’s not a flip, you know, this is something you need to you need to wait for that alignment to occur. And we’ve certainly seen cases where many asset classes, of course, we’re not just talking about stocks here, real estate, businesses, you know, smaller businesses that aren’t publicly held. I mean, of course, you know, many times they’re out of alignment with the market. Of course, that’s true in art collectibles, that happens all the time. And that’s where that’s where good opportunities can lie. So how do you bring this into life in general, talk to us a little bit about that, we’ll talk more about investing, which I definitely want to do, but I’m just anxious to get your thoughts on how this applies in life, you know, whether it be raising your family making decisions, whatever, you know, investing is really fundamentally about making good decisions. And we all need to make decisions in our lives in many, many contexts. And the Munger philosophy of decision making is very instructional and broadly applicable, which is, what you want to do in life is have a two track process. And the two track processes is really quite simple. The first track is try and make the most rational decision. You can use multiple models, you’ll examine it for every angle, but you try and be rational and dispassionate. Because most mistakes are emotional in psychology, psychological. The second track is you basically re examine your decision and say, Are there sources of bias, which may have caused me to make an irrational decision and they can be because you care for the person Who was advising you or because of loss aversion, all of the things that arise because of heuristics, which we have, which are described in a discipline called behavioral economics. So be rational. Look for mistakes in your in your thinking process. And that’s ethical birdwatching, it’s in relationships with your kids or your spouse or your work. that’s a that’s a sound way to make decisions. It’s also a sound way to invest.
Jason Hartman 25:27
Why do you call your website 25? iQ? I’m curious.
Tren Griffin 25:31
Well, it’s very these days, anybody who’s in business wise, it’s very, very hard to find a short, memorable URL. And I was asked for sure, we can actually go through the process, name, a company these days, you using cues and Z’s, and misspelling and whatever. And so it was it was actually four digits. And it was available. So that’s the short of it. IQ is obviously a little bit memorable. But it was available as the short answer.
Jason Hartman 26:02
Yes, sir. Okay, good. Good. Good. So talk to us a little bit about, you know, the the markets in general. And you know, in your book, you have a chapter called the psychology of human mis judgment. You know, people just follow these crazy trends and speculations. And it always amazes me, how how people fall for these bubbles, you know, whether it be tulip mania, or anything since or before, I’m sure to what do human beings do that causes them to misjudge things?
Tren Griffin 26:35
Well, you know, the key to investing is, is to find a mistake. This is what Howard Mark says is your when you find an assets in it, and it’s mispriced, somebody somewhere has made a mistake. And the good news is for investors is people are always going to be mispricing assets. So there is an ability to outperform the market. The bad news is the people who are trying to find a mistake will also make mistakes. And so it’s sort of a contest, who’s going to make the least mistakes. And, and, and the inevitable part of it is Charlie Munger, as good as he is, Buffett as good as he is, they’re going to make mistakes, you just need to make less mistakes than the other guy. And one way to do that is to study mistakes, particularly your own mistakes. So you can learn to make new mistakes, not repeat the old mistakes. And so it’s a relative process. And so searching for certain certain sources of bias, loss aversion anchoring, there’s a whole chain of dysfunctional thinking, that leads to mistakes. For example, in tulipmania, whatever one of the strongest is fear of missing out. And this is when I found monger and this was when I was in the middle of the internet bubble, which is, the key thing about the internet bubble was everybody was afraid, they didn’t buy this stock that they were, their brother in law was going to be richer than they were or whatever their greatest fear was. And so it’s drove the stocks higher and higher and higher, because people thought, Well, if I don’t buy the stock, I’m gonna miss out. And so FOMO or fear of missing out is just one example of a psychological or emotional mistake, causing this valuation and mistakes.
Jason Hartman 28:13
Yeah, FOMO is something that is people listening have not heard that the acronym, it’s commonly used in the context of human psychology, in other parts of life, especially social media nowadays, because, you know, people look at their feeds on Facebook or wherever, and they think, oh, gosh, I’m missing this. I’m missing that. And certainly people have thought that way. In the real estate market, the stock market, every market, you know, it’s always that, certainly gold and metals have done that people many times over the years. So that that fear of missing out is it’s a big factor. In fact, I’d say it’s much more powerful. Maybe you’d agree with this, by the way, trend, it’s much more powerful than the desire for gain, you know that that fear of loss is a much bigger motivator, I think, then then that, oh, you know, there’s an opportunity I can make money versus Oh, my gosh, everybody else is doing this. If I don’t jump in, I’m gonna miss out. That’s more powerful. I believe.
Tren Griffin 29:13
It’s extremely powerful in the way Buffett puts it in mongers describe this is that it’s really envy that makes the world go around. It isn’t great at the end, and when you see your neighbor with the car, or somebody with bought the globe.com at 671 297, it just drives you nuts. And, you know, one of the key ways to not make mistakes or actually make fewer mistakes, is to really try to stay away from envy, because envy is one of those things that nothing good, good comes from envy at all. You know, it’s the one said send that’s no fun. You know, there’s no upside to it. It’s mentioned several times in the in the in the 10 commandments, you know, it’s just, it’s just something that’s just all downside. So if you can clear that out of your brain, you’re clearing FOMO out of your brain to a significant degree. So envy is something really to lead to the side.
Jason Hartman 30:04
But envy probably has, you know, an ego component to it, I get it. No, I’m certainly by no means a psychologist, but it’s a motivator to maybe creates progress. No? I’m just playing devil’s advocate with you
Tren Griffin 30:17
What so if you go through the negative heuristics, you know, all of them loss aversion, anchoring and all that, at one time in psychology, they had tremendously positive evolutionary, you know, advantage, for example, overconfidence, you know, at one point, he had something had to get you out of the cave to hunt that saber-toothed tiger, right. And your odds may have been not so good. But if you just stayed in the cave, you were gonna starve, right? And so humans naturally are overconfident. You, you humans are also naturally over-optimistic. Those are, from a societal standpoint, extremely advantageous. From an individual stock standpoint, in a modern economy, not so much. So you get somebody who’s like picking stocks or picking funds or whatever, you know, they’re much more optimistic about their chances. The psychological studies show that people are much more optimistic, after they pick their stock, or they pick their fund, then, two minutes before when they hadn’t picked it yet. It’s just a natural human tendency. But a lot of these tendencies were designed for a period of time. That is not now was designed from when we were running around a on the savanna someplace trying to avoid being eaten by some large mammal.
Jason Hartman 31:35
I assume that’s because people rationalize the decisions. They make them. But of course, some get buyer’s remorse, though, I guess that works both ways.
Tren Griffin 31:43
Well, all of these heuristics are potentially contradictory. And so what you have going in your brain is a soup of contradictory you have, you have overconfidence, and yet, you have loss aversion, you have all these things. And that’s why human beings are so, so complex and so impossible to predict, which makes markets impossible to predict in the short term is that there are all these things fighting each other, and which one wins at any particular time, is impossible to determine. And then of course, we’re also influenced by what other humans do humans like to do, what other humans like to do. And so if everybody’s buying classic cars, and everybody’s buying classic cards, or, you know, the classic one is baseball cards at one point, you know, they reached a ridiculous amounts, but everybody’s buying them because everyone was buying them until they didn’t. And then it just, it just falls apart. But trying to time that that peak is is a loser’s game, it’s a mug’s game, just to humans are too complex.
Jason Hartman 32:45
Yeah, yeah, that’s a good point. And that’s why value investing I think wins the day. You know, it, it’s really a, you know, a solid philosophy. I personally, like using that same philosophy in the real estate markets. I’m not much of a stock guy at all. And, you know, that actually leads me to a question for you. And I don’t know if you cover this at all, or even give it much thought, frankly, but I’ll just throw it out there as well, you know, what do you make of all the graft and corruption on Wall Street and, you know, these company exacts paying themselves big bonuses and the shareholders getting lousy returns? And, you know, I’m skimming the profits off the top, you know, I, I, I got to think that Munger and Buffett are, you know, very attuned to that kind of behavior. And, you know, really want to, you know, avoid investments and companies that were executives and boards exhibited. Just thought I’d ask.
Tren Griffin 33:40
Well, most of those problems are, are caused by what’s called an agency problem where the person who’s managing, or the person who’s selling doesn’t have the same interest as the, as the investors themselves. And so what what Munger and Buffett do is, they work very hard to make sure that the alignment of who they’re investing with is very low aligned with what they want to do. So for example, when someone sells them a business, jewelry company, brick manufacturing company, they love the manager to continue to run the business, because they know that person loves the business more than perhaps they love their own families. The other thing is, they like the investors who are selling out to retain significant stake. So there’s alignment of interest. And usually when there’s fraud or corruption, it’s a situation where the executives or the managers don’t have substantial buy in. So for example, in In my case, I particularly like investing in companies, where the founders were the people running the company are still involved, and have been from the beginning and have a substantial stake. In that case, their interests are aligned with your interests. I also like situations where I’m dealing with a professional money manager, where they’re working by the hour and not based upon how many transactions you do. And so I like fee based advice that’s that’s, that’s hourly based because it aligns interests. And so one of the things that I talk about in my book, Charlie Munger, the complaint investor, is that you want a situation where the manager is aligned with your interests, where their interests are your interests, and looking for that is always powerful. One of the things Munger says is, he’s been doing all this for decades. He never, he always underestimates the power of interest and the power of self interest to basically motivate behavior.
Jason Hartman 35:28
You call it an agency problem, I just call it a conflict of interest. So it’s this the same thing, right? That’s a fancy way of describing a conflict of interest. Yeah. In other words, where the loyalty lies where the agency lies, yeah, good, good. Good points. What other things do you want to share with our audience? Just maybe a question I haven’t asked you?
Tren Griffin 35:50
Well, I know, I think one of the key things about value investing is you really have to make a fundamental choice, are you going to be willing to do the work, if you’re not willing to do the work, you should buy a diversified portfolio of index funds, now you still have to make decisions, still have to choose the funds, you still have to choose. When you do your rebalancing. There’s still invest in decisions that need to be made. But a lot of people would rather be playing golf, or swimming, or hiking or whatever it is. And if you spend more time picking out your refrigerator than your stocks, then you’re probably not going to be able to outperform, and you should basically be a person who participates in the market, through indexes. If you’re willing to do the work, if you enjoy learning about businesses, you if you’re willing to read about investing and read annual reports, then it’s, it’s it’s something that you can think about, most people won’t do the work. And that’s why they should be in Vanguard or one of these low fee index fund positions. But if you are willing to do the work, then you can, you can be an active investor, most people can’t. And everybody needs to look into their own heart decide whether they can.
Jason Hartman 37:01
Now, what do you think about alternative investments to the stock market? I know that’s where your primary focus lies. But, you know, like I said, I love income property. I’m a real estate guy, like owning houses and apartments and stuff like that, you know, how do they compare? I mean, you look at Warren Buffett, and Berkshire Hathaway and this just incredible track record over the course of years. And, you know, I also want to ask you about, you know, what’s going to happen someday, when Buffett steps down? I mean, he’s getting up there. What did you think of the rest of the investment world? Or? Or do you just not even think about it. And really, it’s all about stocks.
Tren Griffin 37:37
I do think that I do think about it a lot. But again, in the book, I have another section of book where I do with a concept called circle of competence. And I believe that’s very strongly and for example, it’s just take the area that you say you like, I think it’s very domain specific. In other words, there are areas where you know, a lot, and you can get really smart if you do the work. So I have a friend who owns a lot of buildings in downtown Seattle. And he’s done extremely well. But he wants to invest in a town 50 miles away, or another city, like Seattle, he just knows the Seattle market. He knows prices, he knows everything. And he does extremely well in real estate because he stays within a circle of competence. So if you’re going to know real estate, if you’re going to know, you know, even if it’s not my thing, but let’s say you’re gonna know classic cars, you should really, really know classic cars, you should read whatever it is, and so
Jason Hartman 38:32
Pick it and know it really well and be a specialist.
Tren Griffin 38:35
Yes. And, you know, basically, there’s a saying in poker, which is you sit down at the poker table, and you don’t know who the sucker is, it’s you.
Jason Hartman 38:46
So Tren, you kind of made me think as you were talking, you made me think back to this 60 Minutes interview. I want to say a little over a year ago with Michael Lewis, you probably familiar with his books, it’s great author, flash boys being his last book, and, and on 60 minutes, he’s telling, you know, the whole world there. He says Wall Street is rigged. The little guy can’t win. And you mentioned that circle of competence. And I think that’s a that’s an excellent advice. I’m wondering, though, when it comes to Wall Street, because it’s such a giant institution. And there are so many brilliant people playing in it. And so many financial engineers, and Michael Lewis, of course, talked about the high frequency traders, can you possibly have more competence than any of these people, or the machines, the robots that are really doing the trading? I mean, no matter how smart you are, you can’t trade faster than, you know, nearing the speed of light, which is how they’re trading with these algorithms. You know, that’s a somewhat new development and in the world of Buffett’s 10 year, which is very long. Any thoughts on that?
Tren Griffin 39:52
Yeah. The key point there is the Munger Buffett philosophy that I talked about in my book is about get rich, slow. And, and so somebody doing high frequency trading doesn’t affect the value investor. In other words, if you’re day trading, if you’re in and out, you’re the sucker at the poker table, if you’re buying a stock don’t hold on for a long time, the fact that they’re jumping in and out, really doesn’t affect you one way or the other. So as long as you think long term, that stuff doesn’t really affect you. I mean, the advantages of value investing are two, fundamental, number one, you don’t need any special inside information, you’re acting slow, you’re making very few decisions, the fewer decisions you make, the better. And then the other other point is the speed advantage completely goes away. You know, Buffett doesn’t have a Bloomberg terminal in his office, you know, some of the great value investors don’t have a Bloomberg terminal. If they’re not in and out of the market, they move slow, they move deliberately, they hold longer for longer periods of time. So that’s sort of that net new technology, which allows a lot of speed. It doesn’t bother them at all, they view it as a hindrance. It’s a source of fees. For a lot of people, it’s a source of costs and expenses from their standpoint. So their philosophy is get rich, slow.
Jason Hartman 41:07
Right. Yeah. And that’s a good philosophy. You know, that’s the, that’s the reliable way to do it. It’s amazing when you when you just live a few years. And you know, you go into a few deals yourself, or you think you’re gonna get rich quick. You see people, you know, doing it, and by golly, you wait four or 510 20 years, and you see how the people with that mentality, that instant gratification mentality, they just, they just never do very well. It seems like it’s always the person who’s that, you know, it’s the tortoise and the hare, right? That I mean, you know, we should have learned that from that fable a long time ago. Of course, the tortoise and the hare
Tren Griffin 41:50
Yeah, that’s a that’s actually a parable that both of them use the, the Ant and the Grasshopper too. You know, getting rich slow is, is Charlie has this funny look as Charlie’s a very funny person. In the reason he’s funny is because he talks about the truth. And one of the things he talks about is meeting young people and young people will look at him and say, well, Charlie, I want to be as rich as you, but I don’t want it to take so long. And unfortunately, that’s that’s just not possible.
Jason Hartman 42:17
Yeah. Right. Good. Good. points. good points. Hey, so so what’s gonna happen with Berkshire after Buffett steps down, you know, I mean, these. How old is Buffet now, about 83 85?
Tren Griffin 42:30
In his 80s, and Charlie is in his 90s. So the key thing is, is they’ll never be another Warren. And there’ll never be another Charlie. But they built a culture, which has created a series of assets, which are sort of a nice, diversified portfolio. And they’ve identified who his successor is going to be. And his successor will never be as good as Warren at allocating capital. But it’s still an excellent and sound investment. So I got a big a big chunk of my portfolio in Berkshire and, and I expect it to continue. But the there there is, the reality is, there’ll never be another Warren Buffett, ever, and there’ll never be another Charlie Munger.
Jason Hartman 43:10
ever. Well, that may well be true, that may well be true. So just curious. And I don’t know if you know this off the top of your head, because you are a value investors, so you don’t stress out on day to day, week to week, or even month to month things, which I think is the right way to play it. I agree with you there. I’ve seen a lot of people get very stressed and ruin their lives over looking at the market every day. And you know, it just totally affects their whole psychology. Very few people take that into account as a cost of, you know, your investing strategy. What is the share of Burke costs nowadays? You know, they’ve got that Class A and B. I’m curious, Where’s it at nowadays?
Tren Griffin 43:46
You know, one of the great things about it is, I don’t even know, and, and, and I can’t even remember, the last time I looked at the individual price of, of one of my shares. In other words, I trade such that, if, if I if I have one or two good ideas a year, that’s a pretty darn good year. So I can’t tell you. You know, I can look it up. But honestly, I don’t even know, I know, it’s probably close to 200,000. But I honestly don’t even know. And that’s the way you know, that’s the way value investing is, which is you can name and you study the name and you and you really get to know the name and then you watch, and you watch and you watch. And occasionally you will, you will hit a price. Or you’ll go Wow, it’s time and you buy it. And then if you don’t forget about the company, you follow it intensely. But you really don’t think about the price of the share itself. And so and so the one thing about Berkshire that’s sort of unique is he doesn’t split the stock. So that number gets really, really high. But the important thing is, is I’m not checking the market every day. I’m not checking them the market every month. And if you ask Buffett, you say, well, what’s the stock market going to do in the next year? He’ll say, I don’t know. I really don’t know. And it doesn’t really affect what I do. I think over the next five or 10 years, the price of stocks will go up. Because I’m bullish on America. I’m bullish on business. I’m bullish on the economy. I’m bullish on the world economy. I’m bullish on you know, whatever it is. It it that’s long term. But on the short term, he just says, I don’t know. And I don’t even try to predict.
Jason Hartman 45:30
Yeah, right. Right. And I think I think that’s a much better way to look at it than the way the way most people do with, you know, speculation is highly overrated.
Tren Griffin 45:41
But it’s also it’s also it’s bad for your heart. It’s bad. Oh, you’re stressed.
Jason Hartman 45:45
That’s what I was saying. That was my point is that, you know, it causes divorces. And if you want to see something costly, just get a divorce, you know.
Tren Griffin 45:55
there’s the old joke, you know, the quickest way to double your money is to stay married.
Jason Hartman 46:03
Yeah, right. Yeah. Well. Good point. And, and the quickest way to become a billionaire in the airline business is to start with 2 billion.
Tren Griffin 46:08
That’s right.
Jason Hartman 46:10
Same thing. Yeah. Good points. Good points.
Tren Griffin 46:12
Same joke.
Jason Hartman 46:13
Hey, give out your website, Twitter, anything you want people to know. So they can find you and find out more about your work?
Tren Griffin 46:18
Well, yeah, if they actually want to follow me or get a sense of whether they would like to book they can go to www 25 iq.com. And every Saturday, I do a post. I have for 138 weeks in a row. So if they want to follow me on the web, it’s 25IQ. They want to follow me on Twitter, which is the only social media I really do. I’m @trengriffin. t r, e, n, G, r i, f f i, n, I have about 13,000 followers there that, that I like to interact with. And that’s a fun group. So those are the two places. I have a day job. I don’t get derive all of my pleasure from investing. But I do a lot but on weekends and evenings, I’m available at those places.
Jason Hartman 47:03
Good stuff. See, I just do want to ask you about your day job for just a moment before you go, what’s going on at Microsoft. What are, what are they working on? And what, what’s kind of some of the big, you know, just the big broad initiatives? I’m sure there’s a lot of secrets, you can’t tell us. But you know, just thought I’d ask it generally.
Tren Griffin 47:19
Well, you know, the thing about Microsoft is I really can’t talk about it, because it’s my day job. And, and I know lots of stuff that I can’t talk about, but I can say it’s a super exciting industry to be in. If you talk to both Buffett and Munger and you say, you know, basically, what would you do if you’re 20 years old today, even Stephen Schwarzman? And people like that say, Well, I get involved in the technology industry, because there’s so many smart people, it’s so interesting. There’s so much change, there’s so many developments. And you know, the, the fun of my day job is, is in all of that. You know, it’s quite a bit different from my investing world, which I do on nights and weekends. And here’s one of the last things I guess I’d leave your your viewers with, is that one of the great things about value investing is you can have a day job, you can have a life you can be retired, you have to devote significant. You want to
Jason Hartman 48:17
have a marriage?
Tren Griffin 48:18
Yes, exactly. As opposed to some day trader who’s in and out in and out and in and about investing is about being patient, moving slow, making very few decisions. And so that’s consistent with having another personal life, you know, skiing, golfing, whatever. It’s also consistent with having a job as a, as a plumber, or a, you know, a contractor or whatever, or real estate investor.
Jason Hartman 48:41
Yeah, yep, I agree. Good stuff. It reminds me of one of my favorite quotes. And forgive me, I’m probably not going to get this right, exactly. But I think you’ll I think you’ll like it. And it is this, successful people make decisions quickly, as soon as all the facts are available, and change them very slowly if ever. Unsuccessful people make decisions very slowly and change them often. And I think that’s a big difference. And I don’t mean successful people are really impulsive. I, you know, that quote says as soon as all the facts are available, so they study something, they learn it, they they make a distinct decision. They do it and they stick with it. You know, I would hope you agree that that is along the lines of the value investing philosophy.
Tren Griffin 49:27
I do. And I think Charlie would too. He’s Charlie’s got a slightly, you know, sort of derivation on that quote, which he basically says that there’s this strange paradox and that the best investors are people who are patient and aggressive. And what he means is most of the time as an investor, you should be doing nothing. You should be patient you should be working, you should be learning, you should be reading like crazy. And occasionally, every once in a while, an amazing bargain comes around. And at that point, you need to be aggressive and pounce. In this weird combination of patience, and, and, and the ability to jump in, when there’s a real bargain, you’re a real estate guy. You obviously know that in 2009. If you if you would have acted at the right time, that was a great time to buy real estate.
Jason Hartman 50:17
Oh, yeah, many, many of our clients did. And they employ, you know, 2009, 10, 11, you know, even now, you know, it’s not tapped out yet. But, you know, depends what market you’re talking about, of course, whether you know what city across it,
Tren Griffin 50:30
But this combination of patience, and being, you know, when and reading and reading and reading, you know, the thing I love about the cover of my book is, is Charlie describes himself as a book with legs sticking out, which is, you know, you really, even though you’re not doing a lot, you should be learning a lot all the time.
Jason Hartman 50:48
Good advice. Good advice. Tren Griffin, thank you so much for joining us.
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Tren Griffin 51:01
Really. Now how is that possible at all?
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