YouSaid · the spoken record

John Harris

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57
first
2021-06-15
most recent
2021-06-15
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1
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podcast

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  1. “I'd say one big pattern match for us for successful investments is when you look closer and closer and the picture actually looks better. That's very rare. The overwhelming majority of the cases we start to really dig in and do our homework and the situation that you are so excited about starts to look less and less appealing. Every once in a while, the closer you look, the better the picture gets. And that's typically, I'd say our batting average in those situations tends to be super high.”

    2021-06-15 · Invest Like the Best · John Harris - Resilience and Imagination - [Invest Like the Best, EP. 230] · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Numbers, it's just helpful for me to understand sort of how a business works, what's driving the profits, what are the key financial drivers of a business or a business model. But I very rarely make forward-looking models. And if I do, they're super simple. Never do DCFs, don't do screens because I think one thing I've learned and I think as a firm we've learned is that the numerical part of what we do is the easy part. Looking at a bunch of numbers on a sheet of paper and sussing out what might be an interesting investment, that's easy. A lot of people can do that. What's really hard is to figure out through exhaustive qualitative research is to figure out whether what looks so good on paper is really as good as it looks. And a lot of time the closer you look, the less attractive the picture gets. It's like one of the people like the mosaic rule.”

    2021-06-15 · Invest Like the Best · John Harris - Resilience and Imagination - [Invest Like the Best, EP. 230] · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “We don't do them. You know, I think to each their own, right? I mean, for some people, I think that's a very useful construct, and probably people who use them well would say, look, I appreciate while I'm doing the exercise that this is not what the future is going to look like, but it helps me to conceptualize the business or understand this or that or the other thing. And I'm super, super respectful of that because I'm a big believer that investing is way more about the heart than the mind. And you need to find a way of doing what we do and looking at the world. that is comfortable for you and works for you. And I think it's different for every person. There is no right way. And if that's part of your right way, then great. But at least for me, and I think for a lot of them, speaking for a lot of people on our team, we just don't do that. I mean, I very rarely build a model, frankly. The extent of the Excel work that I do personally as an investor and have done for a long time is I tend to like to spread out historical.”

    2021-06-15 · Invest Like the Best · John Harris - Resilience and Imagination - [Invest Like the Best, EP. 230] · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Potential for accelerating growth, I can be really, really right. You assemble a portfolio of those and you can do pretty well.”

    2021-06-15 · Invest Like the Best · John Harris - Resilience and Imagination - [Invest Like the Best, EP. 230] · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “That asymptotically declining curve. And it's going to sustain at a high rate for a long period of time. There are some businesses also that accelerate for one reason or another. That's a very bold prediction to make, and I think it's very hard for the human psyche to sort of wrap a brain around the idea of making that bold bet. But there are a lot of fortunes in our business that I think have been made by people who've been open-minded enough to appreciate scenarios or situations where at least that's possible. And I think have understood that, hey, I won't always be right. But if I can find situations where the possibility of accelerating or sustained high growth exists, and I can make investments in those businesses in an asymmetric way where if I'm wrong, I won't be too wrong. But if I'm right about that,”

    2021-06-15 · Invest Like the Best · John Harris - Resilience and Imagination - [Invest Like the Best, EP. 230] · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Maybe sometimes you just make it a fault assumption that they say flat, maybe you assume slight rises over time. But it all tends to be very linear. And it's interesting that people make these simplifying assumptions because pretty much anybody who's invested capital for a significant period of time will tell you they've learned from experience that the world is nonlinear. It never works the way you draw it up in a DCF. Everybody knows that. And yet nobody seems to assume it because it's just scary. You don't know what the future is going to hold. And there are some businesses where I think our experience has shown us and that we believe if you do enough homework and you get to understand the business well enough every once in a while. And always by any stretch, but every once in a while you can find a business where you can have confidence that actually the growth is not going to follow.”

    2021-06-15 · Invest Like the Best · John Harris - Resilience and Imagination - [Invest Like the Best, EP. 230] · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Well, I think it just has a lot to do with the fact that it's hard to stare into the future and know what you're looking at. We're basically in the business of predicting the future and predicting the future is not easy. And the further you go out into the future, the harder it is to predict. And I think the natural, and I think to some extent understandable human bias is to apply some basic heuristics as you look further and further out into the future to simplify what is an inherently incredibly complex picture. So the most common heuristic that I think people apply when they start trying to estimate the way a business will perform over the long term is they assume some kind of asymptotically declining rate of growth. If the business is growing at 15% a year today, then it'll probably grow at 12% next year and then 11, 10, 9, 8, 7, 6, 5, 4, 3. That's how the typical like DCF looks. And then maybe the profit margins of business.”

    2021-06-15 · Invest Like the Best · John Harris - Resilience and Imagination - [Invest Like the Best, EP. 230] · IDENTIFIED FROM THE TRANSCRIPT · source