YouSaid · the spoken record

Fred Martin

lines on the record: 117
first: 2023-01-08
most recent: 2023-01-08
sittings or episodes: 1
sources: podcast

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“This was App I don't have you talked about that capacity for you in terms of looking at balance sheets as a right-left brain balance. I don't have the capacity to put that risk out of my mind enough. It would impede my ability to execute because I would be thinking about falling. I would even, first of all, I wouldn't even try to do that because that risk profile is beyond, he had to be able to literally dissect every risk on the way up, you know, different hand holds, everything else, all the experience he's had, like you're saying, massive preparation. But it's one of the greatest athletic feats of all time, but it's also one of the maybe the greatest risk management exercise of all time. And so we started, I started by ejecting to have it in there because I thought, we don't want to have people think about falling off the cliff. But then I made a 180 and we're going to we're using the theme from him. And I'm going to take your quote and give it to Rob because we're going to try to get that in there because I think that.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“That's happened. So, excitement in the cockpit, I call it fast hands. I don't like to fly with guys with fast hands because they'll push the wrong button. That's a bad idea flying. So I love his advice. When you get in the jam, slow down. Think about it. You're safe where you are right now. And it's true investing. Think about it. Think about it. You don't ever have to be in a rush to lose money. You really don't. And it's Buff always talks about waiting for the fat pitch to come over the plate. Just, you know, just wait. There'll be other ones coming. Just slow down. It's a really good way to think about it. Just slow down.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Because you don't want to overreact. Rarely is it life threatening the first part? You can make it life threatening. One of the extreme examples, and it's happened in the past is you're lifting off in a two-engine plane, right? And just as the plane hits a certain speed, you rotate, you lift off, your engine quits. So fly the plane, wind the clock, fly to a safe altitude and deal with it. Even if you have an engine fire, deal with it when you get to altitude. Why would you do that? Because you don't want the guy in the right seat.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“To the top of this, but he had to really do risk mitigation to make it. And it's true investing. As you move up the food chain, as your performance gets better, you better really manage the risk because it'll kill you. I'm still turning my head over on his comment about be patient. It's true investing. You know, we have a, I went to Fly School years ago and one of the buzzwords was when the things you train for in flight school is you train crews, which is kind of interesting, but you also, you train when stuff goes wrong, a red light on the cockpit starts blinking. First thing you do is look at it, right? And it's not fun, right? Something's going wrong. But there's a saying, wind the clock. Just let it blink, just wind the clock.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Fascinating guy. Well, I just, because if you look, he had a binary outcome, but he also had the ability to practice over and over again every climbed it, climbed it, climbed it, right? Anyway, I mean, he stacked a lot of things in his favor. It doesn't guarantee that he didn't fall, but boy, he sure did a lot of risk mitigation. He also, there is another idea that we're also debating, and that is, and Buffett said this many times. It is possible to get the market return. You can buy in India, an S&P 500 index, but anybody can do it. When you try to get an excess return, the field gets really narrow and it becomes all about process and implementation and the ability to take intelligent risk if you're going to do superior results. Because if you tried to do superior, you may end up with inferior results. So this kid had the potential to rise.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“I thought, oh my goodness gracious, this guy, he's got the risk me are going in his head. He's not ready. It's not right. And he knows that this isn't the right day. And just think of the humiliation he must have felt in the sense of deflation. Because you don't just show up when we're having a climate. You build to it, you're all fired up. You start up there. And you have to probably up and go, not right.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Now, he also is part of the thing, one of the things that struck me as so profound in the whole thing is I don't know if you remember the movie, he was going to climb and he got prayer way up and said, this isn't right. And he went back down again. I don't know if you remember that. And I remember.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Robnikowski, who's your right hand chief investment officer. He starts with free solo, and I freak out about it because I'm going, you know, wait, wait, we're not talking about falling off cliffs here. But as I started thinking about it more and more, and about a month ago, I called Rob up and I said, I think I'm not looking at this right. This guy was one of the greatest risk managers of all time. And we need to look at it. I need to look at it differently and say, my goodness, he took this thing with a binary outcome and he made it. And there were a thousand little threads to make that. And so this has to do, this is really deep stuff. But what this has to do with is risk and risk mitigation. And what's in your control and what's not in your control. And so what he did is he systematically, he climbed it many times. He was a very sturdy climber. He was physically fit. And he practiced those moves with a rope over and over again.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Friends of his. So during the most Oh my God. Okay. So it's funny. So Rob is working on, he's spearheading the piece on risk. This has been in our hands for years, right? This idea of trying to get better. And I really believe if you really want to learn something, well, teach it, you know. And so the teacher always learns the most. And so he writes this thing on.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“But it's no, but it's absolutely knowable to avoid valuation risk. It is absolutely knowable that, you know, I would say to you that just having said P ratios are not a super leading edge, but they're not unimportant, okay? Or price of sales, you can do back of the envelope. You know, we're not experts in Tesla, but we did back of the envelope calculations. It's an auto company, gave them margins and all that stuff. It all looked at the auto business, and you can do rough analysis and you can try to figure out what it's worth. So you can know how well priced your portfolio is. You can know that. But there are lots of things you cannot know. And I think what you have to do on stuff you don't know is live your life carefully enough. So if you're wrong on that, you can survive.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Every way I can, I try to teach clients like I'm getting calls. What do you think about the market next year? I say, I have no idea. I just can't imply that I know what's going to happen next year. I might have an opinion, but I got about a 50-50 chance of being right. But I just try to, everything I do and everybody here keeps trying to say we don't know what's going to happen over the next six to 12 months. We don't know. We don't know. We know we have great stuff.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“And it is just so what you try to do is one of the great things I've learned from Buffett is he's a teacher. He's always teaching. He's just incredible at how he can take complex things and make them simple, right? So we spend a lot of time teaching our customers, educating, educating, exactly what you're saying. Look, we don't know when it trues up. It's going to take patience. If you do it enough times, they start to have confidence because they've seen this happen over and over and over again. And so we have a high credibility bullshit with our clients. But at least one or two or three always get restive. You know, when is it going to happen? When is it going to happen? And I think it's the reason, it's one of the reasons why I'm willing to tell people exactly how to do it, knowing how hard it is. Because you don't have any control over it. You can control the quality of your work. You can control what you want to pay for something. But you can't.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Working at a piece right now, William, on navigating bear markets because I've been through nine of these two giant ones and a bunch of doozies like this one. And you always get late in it whenever we idle where we are in this one. You wonder, is it ever going to, you know, when does value kick in? And Ben Graham says, that's one of the mysteries in 1955, I think. He was testifying to Congress. And they said, what turns bear markets? And he said, that's one of the mysteries of our business. Eventually, value takes over and it turns. But there's never a green light that comes on and says, okay, kiddies, it's time to come in the pool. I mean, there's no free lunch on this stuff. And I think one of the hardest parts about what we do is the fact that we do not have control over when the intrinsic value and the stock price begin to true up. Because you can go for several years and have that happen.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Gives you clarity. It also in 08, where we showed a 25% plus expected return, we said, hey, you got to own them. So you build time series in there. So just to play it where it is today, we entered the sell-off at the end of last year. We had about a 14% expect return on our midst with the down market. We're pushing 20, which is not as high as 08, but really high. We're all in because it's just too good a return. So it gives you that clarity. We're not debating like, oh, interest rates are up. Should we raise the hurdle 8 to 15? Because rates are up. I don't think so. Every time you introduce some other variable into a model, you have a whole debate and everybody gets confused. We think 12 is a good number.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“That's crack. Yeah. I mean, just think about the clarity you have. It's all against a hurdle rate, right? So we had stocks in 21 that had a negative expected return over the next seven years where those were largely sold.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Fire us. We've priced our fees off that, by the way. If we do 15 in smalls, we're going to be a superstar. And in fact, over our history through, I think last month, we were, I think about 12 on our myths, almost dead in 27 years, which is kind of amazing when you think about publishing that. It leaves us vulnerable if the market's going to do 15 for three to five years. We're probably going to get some heat from customers, step it up before doing 12. But what it does do, it's very simple. It's very straightforward. We've used the same hurdle rate since we started. No debate about it. So it's just a judgment call.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, we use soap. So the last step is to simply look at the price of the market value of the company and you figure out the future market value and you say, okay, working assumption not unfair. Is it over time the stock markets, say, a weighing machine short term? It's a voting machine. So intrinsic value and stock price tend to true up over time, okay? Maybe not perfectly, but tend to true up that way. So the last step is to say, okay, the stock's here. We think, you know, it's going to be worth something in the future. In the mids. And this is a key point that I'd like to make. We need a 12% higher annual component return to buy a mid-cap company. 12% or higher. We need 15 or higher for smallest because it's riskier. That's why we put that in there. Now Y12, there's nothing magic about that except here's a working assumption. If we do 12% for you, you're probably going to keep us. If we do six, you're probably going to.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, sure. And that's where we spend the group time on the model. And we've gotten, you know, it's not. How big is their addressable market? What's the competitive landscape? All those kind of things. So we're trying to look at this thing. And I would say in our process, we spend in the group meetings, we spend 90% of time with them. We're trying to get as clear a pictures as we can as achievable picture of what it's going to look like in seven years. And people have said, you guys look like a private equity firm. And I said, yeah, but we charge a lot lower fees. But that's all. By the way, we lose a lot of companies to private equity firms because they're looking at probably the same data we're looking at.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“So, the first stage is understand what you own. You know, again, let's parse this out. Let's not have around us look at a company and already start thinking about building a forecast because you're going to skip the other steps. So what's executive compensation like? How do they make money? What kind of business do they have? What are their margins? How good are they? All those kind of things. And if you can't figure out how they make money, leave it for somebody else. I mean, there's a basic humility in saying to save us with Enron. We looked when Enron hit 10 bucks a share on its way to zero. Because look like an interesting business. We looked at it. The financial statement was so complicated. We just threw our hands up and said, we can't understand this one. We'll let somebody else have it. So the idea is this isn't the forecasting effort that comes next. This is an understanding effort. Can we figure out how they do business?”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Of value. And I believe that you can get better at how you figure out value. We use a probability weighted expected return now that we probabilistically figure out what they're worth. We're not trying to be an accurate forecast. We want an achievable forecast. There's a big difference between those two And so there's a lot of things you can do. You can get better at this. And I think we are getting more and more skilled at making forecasts, which means that we're getting better at the expected return.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Subscription model intuit and autodesk. We held them to earnings collapsed because you pushed the revenues out, expenses are still there. So for a year or two, the earnings go way down, but the lifetime value of subscription is higher than shrink rep software. Okay, so I thought we did a great job of saying we're never going to violate the principle, but we will be open to thinking about it and broadening our understanding as opposed to debating the principle. And I can't tell you because all this stuff takes emotional and mental bandwidth, analytical bandwidth. If we're debating prices, what you pay and value is what you get, but this time it's different or whatever. The idea of the price of it is relatively easy. Look at the market value of the company, you know, figure out what the total value the company is in seven years. And if it has a high enough expected return, it's a can to buy. I mean, that's the easy part. The hard part is this whole notion.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Keep back checking yourself, right? Keep challenging yourself. And so we're a value investor ultimately. We're buying growth companies, but we pay a lot of attention to value. A lot of the value investors have imploded the last 15 years. And here's our guess. They thought the best measure of a cheap stock is the price earnings ratio. One of my guys, Rob, is a breeding guy. We started thinking about, is the P ratio the only way to think about the value of a franchise? How about free cash flow? How about the fact that America is a much more asset-like economy now? And so they don't have to put as much back in a building, so free cash flow is higher. Yada yargins are better, yada, yada, yada. How about companies like our holdings that sell only the royalties to the designs for the smartphones, right? I mean, so we expanded our notion of value out. We had two companies that shifted from shrink reps.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Not It's not random. They're rules of the game. And so the number one rule is price is what you pay and value is what you get. Well, okay. So let's unpack that. Okay. The hard part of that is what's a company worth? And that sounds like, Fred, that's like investing 101. But let's unpack that a little bit more. If you say to yourself, we are going to be focused and we're going to do one more twist because we're buying growth companies. We're going to push out a future value. We're going to make a forecast. And we're going to make our decision. Look at the stock price today, but we're going to see what it's worth out seven years. We're going to go past an economic cycle. Okay, so we're going to do a little bit of forecasting. We can talk about that. But we're going to build this intrinsic value thing in our heads. We think in seven years that cup forget the stock, the company is worth X. Okay, that's what we're going to do. One of the things that I've learned that that's opened us up to do, because you always want to.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“It is. It is. Let me preface that by sort of responding to what reading Ben Graham did for me was, say, there is a path you can systematically invest in markets. Without knowing all the pieces of it. And Buffett comes along and takes his stuff. He was the one that took Ben's stuff and put it into practice and articulated it beyond that in a way that makes perfect sense to people who are serious about long-term success. So what they did for me is say, you can do this. There is a path”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“What is an area of interest for you is being able to very perceptively pull out from money managers the good ones what it is that they do. And I mean, it's a gift. And so I think you're following your gift, you know, but if you try to come into money management. And you're not understanding that there's a big difference between audit financial statement and an unaudited statement. And that's like, for me, it's like a neon sign, you know.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“You're perceptive in saying, and the truth is when you start off as a money manager, you don't really know if you're going to be good at it, right? You're just a young guy and you're trying hard. And for you to realize that mostly you don't have the interest in it. So I gave you an example. I have spent until the last month, no time on cryptos. I went to my young guys and said, what is it? It's a currency. Well, it's not an investment. Let's not worry about it. I'm fascinated now. I'm reading everything I can about FTX because I'm fascinated with the autopsy. I'm fascinated with learning.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“So having a facility for numbers is a huge gift, right? Because, you know, and having a high math aptitude. And this is really strange. I remember where I grew up in a small town. I'd be walking home and cars would go by and I'd watch the license plates and I would jigger the numbers around to add them up and subtract Adam together so I could get to zero. I mean, who does that?”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Well, no, what I didn't tell you. So my time at Tuck School was pretty useless. I only remember two things sort of about it. One is that one time they had a guy, a money manager, come from Boston, from some Boston firm to give a night talk. And I was just enthralled. It was one of the few things I remembered about touch school. The other thing was that we had to take a statistics course and I had a freakishly high aptitude for statistics. And I remember going to the final exam in my grade, my score going into final was 20% higher than the next guy in the class.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“I'm eating that. I think it's really a great book. I mentioned to you that I had such a mixed feeling. You really got us and I like to be a little bit under the radar, which was a little bit disconcerting, but that short section on me, you got it so accurately that I wanted to find out what you wrote about everybody else. I read the book. I really was really, I'll read it again, one of these, probably the next year. So I'll read it again because I think it's quite valuable. I had an insight I was going to.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“First of all, one of the things I really, really enjoyed about your book was your own personal sort of reaction to the people you were interviewing. I thought it was fantastic.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Other deals coming. I just don't think it's irrational to think that you're going to sweat every investment in your portfolio. You're never going to let your guard down on any investment. I don't care how big it is. You're going to, because you can't, you just have to be pretty anal about it. It's a point of view, but I think you've got to check everything out. You got to keep asking questions.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“99 or 2000 to 05, it didn't have an audited financial statement. And yet, professional investors were buying the stock. And it just seems to me that you have to be a skeptic and you can't let your guard down ever. And you can't buy something because a funny story by this client is still a client and he would always got a retirement hold in Florida. And the worst thing to just go out and play golf with retired CEOs because I always have some hot story that they know anything about, but they think it's going to go up a lot. And he was always telling me about the smart money. And I finally had enough. And I said to him, you know, if you look at our track record, we're the smart money. And he never brought it up again. But how much taking tips from people, you know, or you? All the smart guys are buying this or, you know, all these people are in it. Or I think part of what happened with like FTX, he got in the deal flow, you know. And so if you're Sequoia, you got to buy the deal because you got to.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“I got out of the Navy, and my wife and I were up on my dad's boat. He had a boat in Michigan, Lake Michigan, when Nicole came saying the firm had gone under. So I was like, I mean, we're right there, you know, and he was a tough guy and he was an optimist. So he weathered it. But it was like, wow. And my mom, to her credit, you know, forgave him for it. But it was, you know, it was a blow. My takeaway was you got to do your homework. You have to be a skeptic. You got to check stuff out if it doesn't make sense. Don't do it. I'm fascinated right now with, and I don't see these people at Sequoia, but they invested in FTX. And FTX didn't have all the financial statements, at least for the balance sheet. That just fascinates me. How could you invest in something without audited financial statements? And I know if you remember Fannie Mae from Went Under an 08, but I think from...”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Is it different this time? Of the laws of financial gravity inverted this time? Is it different? You know, I just think that the idea that you can never, I call it keeping your sense of balance when you're investing. If you always say price is what you pay, value is what you get. You're on balance if your portfolio is well priced. You have to understand that you're almost always going to be at some state of discomfort. That's just life.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“My point of saying it to you is valuation is one of the easiest things to compute. You can be pretty accurate. It's also one of the hardest things to cope with because you have the chasing on the way up. You know, we spent countless meetings explaining to clients why we weren't going up as fast as the wrestle mid growth index and showing the overvaluation of the index and all that stuff. And then you get to the backside and now we have a different set of concerns is, you know, how high is the Fed going to raise rates? What's next year going to be like? And we get carried down whether we like it or not with the general, not as bad, but we get carried down. So I don't want you to any way, shape, or form. I'm not looking for sympathy. This is part of the business. This is what it's about. And you have to suffer and you have to be uncomfortable in my opinion if you're going to be really good at it. You have to keep questioning yourself thinking, you know, is this time?”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“That's right, it's a face doc. And by the way, at $80 a share, it's still one of the great success stories in American history. I mean, it will still be worth $250 billion plus as a startup, which I think is remarkable, but it's not at its peak. It was the market value of Tesla was greater than the market value of all the other auto companies in the world combined. And so it was.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“It absolutely does. But I think you're on really a key point, which is it's still very uncomfortable. You're still going to experience. So, you know, we get mixed complaints from clients. They would complain about their got a cold not too long ago from a client. Oh, you know, I paid huge gains and I've down this year, right? And I got them calmed down. So they blame us a little bit. And I have to sort of say to them, you got to put your big boy down song because I don't make the tax laws. So it's uncomfortable. And you kind of having the idea that the backside of this isn't going to be pretty if Tessa goes through, I think it hit 4, 11 at the peak or 407, it's 124 today or something like that. And our guess is to guess it was maybe worth 80.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“There's still overpriced stocks around and they'll eventually sell whatever value they should sell at. So I think we did better this time, but it's still miserable. I mean, I'm watching the markets and we're down. We're not down. We're down, I think, 18 or 19% from the peak of November last year. It's not too bad. But I'm looking at the carnage everywhere. I don't know if you see in Tesla today it's getting just destroyed in the market. So we don't have the waterfalls of clients that others are experiencing. We've had a couple of bad stocks, but you always do. But it's still miserable. I hate it.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“We go into this and we have some stocks that are too expensive, and they have huge unrealized gains, and we have a lot of taxable clients. So what do you do? And we sold outright a bunch of them and trimmed a lot of them and de-risked the valuation of the portfolio. So we enter this year with good investment value above our hurdle rate, if you will, and the down market just elevated our return. But we don't have an overpriced portfolio or not, so we're not worried about that.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“I lost my temper. I said, look, I have a thick skin I can take a lot of heat, but you at least have to be accurate in how you're criticizing me because you don't know what you're talking about. The lead doctor in the group, watch this three years later, follow me out after I came down three years later out to the car and thanked me and said, you saved us. And I can't thank you enough. And so they didn't fire us. But I was just taking a beating. This time, and I'm going to put 07 aside for a second because that was, I think, the basis of 07 was the craziness, the financial system. I think the financial system, it wasn't so much overvaluation. It's just that the system was this close to collapsing. The one that sticks in my mind is 20 and 21. And I have to say, I think we did a best job I've ever done in the face of that, okay? Because the reality is that”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“So that was the people that were trying. I went down to see some doctors in Northern Iowa and I lost my temper, which I rarely do at a client. And they were criticizing me, telling me, like, you're saying at the time we were doing 17%, but everybody knew 25% a year was in the bag.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Are you especially just to go way back? Because we've had customers for a long time. A lot of the people that were arrested, we started with a funny story. I think they started with a couple 200 or 300,000 45 million now, okay? They fired me in 99. So they started with 200,000, they probably had 10 million at the time or something like that. They fired me. And they're wonderful people. And I called them up. I said, I'm tearing this letter up. I don't accept this. We have too good a working relationship. You can't fire me. And they, they said, we'll talk about it. They talked about overnight and they said, we changed our mind. We're staying with you. And they're still customers. So it wasn't that I had at that time. We raised our minimums after we had more money to run. But we used to have a million dollar minimum. And one of my things that's been meant the most to me is I've taken a lot of people that were hardworking people and made them a ton of money.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“He said, I want all your money, which I thought was just my opinion, but there's a hubris there that's pretty extreme. So that was kind of the first time I saw actually managing a business and managing portfolios, the blowback. I had clients sticking stocks in their portfolios. Two or three clients didn't fire me, but they stayed mad at me for at least a decade or longer. One guy fired me. His wife stayed with me, and now he's a fan again. 20 years later, okay. And another guy was just mad at me. Part of it was they were embarrassed that they stuck stocks in there. They got killed, you know, because stocks they stuck. Yeah, I would let people put one or two in. That was about it. But it was miserable. I hated it.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“They're going to sell back to what they should sell for. So you can't diversify that away. It's also easy to quantify. It is actually easy to quantify. You can tell when something's like way overpriced. It's just really hard to deal with it for a variety of reasons. I didn't have this happen in 73 because I wasn't a portfolio manager, but I just observed and I took advantage of the backside of it by finding stocks that were really cheap and making a lot of money with them. So that was okay. 99, 2000 was the worst period of my career for a variety of reasons. I just started DGI 97. I was getting fired all over the place. There was a money manager in Akron, Ohio named Oshlager Oak Associates, which was the Kathy Woods of this cycle. And I had a whole bunch of clients in Akron and they were firing me and reinvesting in this guy. And of course, he took him down 80 or 90%. I had beautiful.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“There have been really three times in my lifetime where you just hit really extreme overvaluation. And so that's not a large statistical sample to learn from. So I would tell you that I have, I think quantitatively I learned a lot from it. I'll explain that in a minute. Emotionally, I don't know. You know, it's just, it's miserable, okay, because the backside is always really miserable like we're going through right now. So what had prepared me for it did something, and I mentioned we're working on a magnum opus on wrist because I think the whole grandma always said, man, it's a risk and a return will take care of itself. And so one of the, you know, not all risks are the same. So overvaluation is a risk you can't diversify. If you have 25, a stock 25 stock booleo that's overvalued all the stocks or 50 stocks, you're going to lose money. I don't care. Eventually.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“He was the head of the trust department. He was a brilliant guy. Loved him. He was a fabulous guy. He's had to worry about the face.com. All of their earnings were from their unconsolidated subs. And it was an expensive multiple. It was like, so, you know, I just watched, but I thought, wow, okay.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Real value and the price of a stock. And it was compressed in a two year time frame from the end of 73 to the bottom of the market in 74.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Data points and I watched the Xerox. All rightylists next to me was following Xerox, and it was $140 stock and it was going to make $2.35. I remember that. So that was about 60 times earnings. They would lease copiers on a three-year lease, double declining balance depreciation. So sales were slowing, but earnings were still going up because depreciation was running off. And the stock, I think, went from 140 to something like nine. And then there was a mortgage insurance company called MGIC. And the star analyst was covering it, not me. And it was $100, going to make $2. So it's 50 times earnings. It dropped to 50 and he pulled the string and all the PMs jumped in and the bottom did six. I'm watching this, okay? And then from that point on, I started making a lot of money in stocks. I never stopped. And I think it was, I saw the dichotomy between the company.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Let me preface that just a little bit by saying that because my dad was a stockbroker and I got fessed, I was a saver and I got fascinated with the markets. I think I bought my first stock when I was 10 or 11. So I had spent 15 years trying to figure this out without really, I was reading books. I was very interested at Tuck School, but Tuck School didn't really focus on investment management or analyzing companies. So, you know, maybe the table was set. So I started Northwestern Bank and I'm a young guy and I opened a learning and it looked like price earnings ratios were pretty high. So I go to director research. And I said, Stuart, looks to me like the market's pretty expensive. And he fatted me on the shoulder and said, don't worry about it, young man. You'll learn soon enough.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT
“Effort, you have to have a process. So that might have been the trigger on that. But I don't know whether the Navy itself was so fired up on process, was very fired up on clarity, clarity communications, clarity of mission, all those kind of things.”
2023-01-08 · We Study Billionaires · RWH020: The Disciplined Growth Investor w/ Fred Martin · IDENTIFIED FROM THE TRANSCRIPT