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Tobias Carlisle

lines on the record: 82
first: 2025-10-31
most recent: 2025-10-31
sittings or episodes: 1
sources: podcast

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“Likewise, Stig. Thanks so much for having me on. I always love chatting to you. And I can't tell you how grateful I am for you, for you continuing to host me and have me on. I really appreciate it. So thank you very much. And thanks to everybody for listening in”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“It's on Amazon. Only Amazon at the moment, I think. So the Kindle version is released on October 14th and the hardcover and paperback are currently available. This is a hardcover of, this is the first hardcover book I produced in them. I'm very proud of that cover. I think it's a good looking cover. It'll look good in your bookshelf”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“That's what makes investing so hard that it's not a sort of first order game, it's a second order handicapping. It's not just what you think, it's what you're getting, what price you're getting for what you think. And that's what makes it hard that you have to make your decision on a risk adjusted or opportunity adjusted basis. And I talk about that a little in the book too, how you calculate that risk adjusted weighting, how you think about finding that the bet that you want to put on and it involves that second order of thinking.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Make the point in one of my other books, Quantitative Evaluation, that if you took two stock markets, I think this is from 1900 and this is from the triumph of the Optimus study, which is an Elroy Dimson Marsh book. They updated every year. And I think they said in 1900, if you'd looked at England versus China, you looked at the rate of growth in China was off the charts. And England was basically stagnant. And you would then forehave, well, I'll invest in China rather than England. And it turned out that it was an English century relative to China. In any case, they did much, much better. And who knows the reasons for that? Maybe it's the rule of law or focus on shareholder. Who knows? But it wasn't clear that it was going to be that way because China grew its economy hugely over that period, whereas England didn't grow much at all. But the stock market did better in England than it did in China.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“The next 20 years, whereas the rest of the world just kind of has to keep on muddling through and it'll do pretty well because of the valuations are so much better. A lot of different ways to think about it, but I think that thinking about it from a via negativa in a worst case scenario is not a bad approach either. That's a good way of doing it, thinking about the ways that you could go wrong and then avoiding those ways of going wrong. So as you point out, Greg Abel's untested, but additionally, you know, Americas had a very good run. So the international bet might be the good one, might be the best one.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Might be a quarter or something like that, might be 25%. So the same thing happened to Japan in the 1990s where it was 40% of global market capitalization, but it was only 20% of global GDP. So in a funny way, you're already getting that bet on that you think that it's going to be an American century or two centuries, even though you're having an international bet. And I think that's probably the better one because that's a bias that most people have. They only invest in their home country. They don't invest internationally. And for America, for Americans, that's been the right bet for the last 10 years or so, but that could easily reverse and it could be an international decade or two from here. It's sort of set up to be an international decade because the international portion is undervalued. The American portion is overvalued. The American portion has really got to do something extraordinary to sustain in its market capitalization waiting.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“It's very true, but I would say that if that is the thought process, then you need the international version of the S&P 500, whatever that is, Acqui or VT or whatever the international version of that is, because there's no guarantee that it's a US-dominated world 200 years from now either. You need exposure to probably you need exposure to China, you need exposure to Europe, you need exposure to these other places probably the way that it looks now is it looks like it probably will be America for another long period of time, but that's not guaranteed. And I think you're already expressing that bet if you buy ACWI or you buy one of the international market capitalization way to float adjusted ETFs because there's a huge concentration in the US beyond its GDP contribution to the world. So I think the market capitalization waiting for the US might be 60% globally at the moment, whereas the GDP contribution”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“50 and then it's the hundred have outperformed by virtue of the fact that they're big. And so Michael Green says it's flows to those businesses. But it's not the first time that it's happened. It's happened repeatedly throughout the data. And so it's been this big growth market which makes anybody who's equal weight or value oriented or a fundamental investor or not expressing their or international has sort of suffered in comparison to these things but it is cyclical and it's not secular. The secular bet is for smaller value potentially international over these more concentrated big growth US. So I think that my bet is that in the long term we go back to the way that it was and so I think that that will benefit Berkshire probably more than it benefits the rest of the S&P 500 even though they've done pretty well over the last 10 or 15 years too.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“See it in 2000 from 1991 to 2000. It was very much a big growth market. And since 2015, it's been very much a big growth market. And so now we're at these levels of extreme outperformance of the 100. And these things have happened many times before. The nifty 50, exactly the same idea. That was just the biggest 50 companies outperforming everything else. And even though they were exceptional businesses, they had this very long period of underperformance because they just got too expensive. Same thing happened in 2000. Microsoft, Walmart, Costco. All of these businesses were big and exceptional businesses and continued to be exceptional businesses for 15 years after 2000. But the stock prices went down because they just got too expensive for their businesses. And I think the same thing has happened now. There's a handful of these businesses. And it's a magnificent seven. And then it's the...”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Be that opportunity to deploy at lower prices, which they will manifest at some point. It's a little bit hard looking at because we've gone through a very, very long period. It started in about 2015, which has been, much like the late 1990s. It's been a very big growthy market. And the bigger you are and the growthier you are, the better you've done. You can look, there's a hundred years of stock market history going back to 1926. And you can look at the performance of the largest 100 stocks in the S&P 500 versus the S&P 500 itself. And clearly, the smaller stocks have outperformed the larger stocks to the tune of about 0.8% a year compounded over a hundred years. So it's a very, very big margin of outperformance. But during booms, the S&P 100, the biggest stocks have outperformed the S&P 500.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“The restricted stock units or their options. And then they pour the levers that you can pull, you know, take on more debt, buy some assets, buy back some stock. That will make the stock price go up. But it doesn't make the business itself better. It makes the business more fragile. And then that fragility gets revealed only when there's a big crash. And so if you're only there for four years as a CEO and you pull those levers and you jump out with your 100 million or 200 million dollar paycheck, then you've done fine. Stock price has gone up, but the business is more fragile at the end of your tenure. Then you've failed the shareholders of that business. Whereas you couldn't say that at Berkshire. It's as strong now as it's ever been. And if anything, it's optimized for a crash. It's the other way around. He's got $300 billion in cash. He's waiting for something to happen. He could deploy that cash long into suboptimal opportunities and do better now. But he would ultimately do worse because there would”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“So you can take advantage of opportunities when they arrive in a distressed form. So I think that Berkshire is really best of breed in the S&P 500, even though now it's very, very big. I think durability and endurance are undervalued as qualities in businesses. And that's why Japan is a much better example. They may be undervaluing efficiency there. You need to strike the right balance between efficiency and durability. And that's a very messy, hard question to answer. And it's got to only be answered on a business by business basis. But I think that Berkshire is really durable. Berkshire is really built for endurance. A lot of the S&P 500 businesses, they're carrying too much debt. There's too much share issuance. They turn over their CEO's way too often. So they don't really have that. They get a big payday.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Invested capital. I think that it couldn't be run more efficiently. I do think that most of the businesses in the S&P 500, efficiency is not really the problem. I think that to your point, and I think that the pandemic did reveal this a little bit, that probably the fault of US business has been trying for efficiency over or optimization, over endurance and durability. And all of that, the efficiency is the way forward most of the time. But then you run into periods of time like the pandemic or like 2008, 9 global financial crisis. And we'll have, inevitably, we'll have something like that again in the future, probably sooner than we think. When those things manifest, efficiency doesn't help you. You need to be durable. And that would mean maybe what you would call a lazy balance sheet, not as much debt as you could possibly borrow. Maybe you carry a little bit of cash.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Which is an extraordinary amount of dilution, too. That's a big dilution headwind to get over every year. So the metrics are a little bit harder to trust for some of those businesses. Whereas I think Berkshire, you know, they buy back the stock when it's cheap. They really only issue stock when it's expensive, like the Jen-Ree example where there was a specific reason for doing that share insurance. So I think that the philosophy is very important. And that's really you're writing, you know, the jockey on the horse is important. The horse is important and the jockey is important too. And the jockey in Berkshire, like I think Greg Abel is unproven that this point, but philosophically he sounds like he's aligned with Buffett. And I think that there's enough of a community of people who have expectations about the way that Berkshire will be run that it will continue to operate. I think that I always think of Berkshire as sort of the example that you could hold up and say, how does something compare to Berkshire in terms of the way that they run the business, its returns on?”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's a great question. That's a hard question to answer because, in a sense, Berkshire has become like a diversified. It's a diversified conglomerate. It's like a diversified ETF because they've got this exposure to every facet of the economy, probably what they are is a little bit underweight. Tech relative to spy, because that's where all of the returns in spy have come from. I do think that the philosophy in Berkshire is the right one and I don't know that the philosophy throughout all of the S&P 500 is the right one in the sense that they'll buy back stock when it's cheap. Whereas if you look at the S&P 500, they tend to buy back stock to goose the share price, so they wouldn't be buying back stock when it's cheap. They're buying back stock either to push the share price up when it's already expensive or because they're trying to mop up the option issuance, which in some of these companies runs at 15%.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“At some point. So that's, I think that's an example of getting these big long-term trends working for you rather than trying to, you know, maybe trying to buy the liquidation that you can make money in liquidations as well. And then you can do very well in that. I'm not saying you shouldn't do that and that maybe that idea doesn't apply there. But in terms of the business, that idea of like aligning with the tailwinds, I think is a strong one.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Trading away oil and gas. Its energy is going to be a part of business going forward, and now's an opportunity to buy it reasonably cheaply. So I think that's an example of it's a cyclical business. It's not a secular headwind. It's a cyclical headwind, which would at some point could easily turn into a cyclical tailwind. And if you read any of the literature on any of the industry literature on energy, it's clear that it's going to be consumed more so in the future than it is now. We're having a little demand. There's a demand issue because I think there's a little global recession going on and you can see that outside of the AI CapEx beneficiaries, the other 497 of 493 of the S&P 500 and the S&P mid caps and the small caps are all in this little earnings recession started in 22, but that will work its way out. And you're getting this opportunity to buy these things cheaply right now and they'll return to their long run trends.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Or higher interest rates, or something that is impacting it in a cyclical sense, that you can, you know, eventually that's going to go away or that problem's going to be solved. It's just that right now, and most investors don't want to look ahead two or three quarters, let alone a year or so. Energy might be another one. Energy companies are trading very, very cheaply right now. This is, you know, I've written the book so that it can be. I'm trying to write a timeless book, but I do think that those principles all apply in the immediate moment. One of them is you're looking for businesses with tailwinds and they have some, and energy is something that we're going to continue to use energy. The economy is as energy intensive or more so as it has been over since the Industrial Revolution, we're becoming increasingly energy intensive, and oil and gas is a big part of that. Any substitutes for oil and gas become additions. They're not...”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Don't be in the boat with holes in it. So that's what he did. He sort of got out of this textile business and then got into insurance and seized candies and all of these businesses that had tailwinds, as he calls them, rather than headwinds. And I think that that's a good idea as an investor to be looking for businesses that have the tailwinds rather than the headwinds. It's hard sometimes to separate out cyclical headwinds from secular headwinds. And that's the real art of investing is to find things that it's got some, it's had some very near term stumble that's affected the share price and it's made it available for a price that means the Ford returns are better than they should be for a business of this quality. And so that's the way I think about it. You're looking for businesses that have tailwinds or at least that whatever little niche in the economy that they occupy, they're going to continue to occupy that niche into the future. And this tariffs.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“I use this in the last chapter, and I sort of only touch on it very briefly, but I talk about it as a, when you think about Berkshire Hathaway taking over, or when you think about Buffett taking over Berkshire Hathaway when it was originally, it was a textile manufacturer and it was facing competition from domestic textiles, but also from international textiles and was basically unable to earn its cost of capital. And buffet contrasted it with another competitor that continued to reinvest in that business and they did become increasingly efficient. But every efficiency gain was canceled out by the international competition could just do it more cheaply still. And so that competition, every dollar that they reinvested continued to earn subpar returns. And at some point, Buffett says, you know, it's better to be in a boat. I'm slightly messing up that term, but he says you want to be in the boat where you're not having to bail out. Just switch boats.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Which I think is great ideas. But that's in a military context. And then Buffett, I think, turns it into a business and life philosophy where he talks about it using these. And they're all things that you would want in business partners, things that you would want to show that you possess as well, which is just being honest, being forthright, conducting yourself in this fair manner. And then ultimately that is a, you know, the reasons why you might do that is because that's the right thing to do. But I also make the point that it's strategically smart to do these things. And ultimately, I think people who don't follow those rules get found out just through a pattern of behavior of doing it to enough people. It catches up with them eventually. So there are good strategic reasons for behaving well. Aside from the morality, which is just that you should do the right thing, which is the point I make in the book.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“I think writing the book, a lot of the ideas in the book I will be very familiar to people who've studied Buffett or just, you know, as you go through life, you will encounter these ideas over and over again. And I think it's really a lot of it is common sense. But I just, I liked using Sun Tzu and Buffett to illustrate these ideas because I think that it makes it a little bit more concrete. And often I've thought something and then I've seen Buffett articulate it and I think, yeah, that's exactly what's how I think about it too. That's the right way of doing it. And I found the same thing with surprisingly with Sun Tzu because it feels like it's this really military aggressive book, but that's not really what it is. It's this, it really is about, it's quite a humane book and it's about seeking peace through largely conflict avoidance. But if conflict becomes unavoidable, then he's got these ways of doing it with minimizing the harm.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Those Japanese firms. And I think that that's what I try to illustrate in that part of the book. It's a little bit more woo, I get. It's a little bit less concrete. It's a little bit harder to understand. But I think equally it's a very powerful idea and it's one that I really have and I'm trying to sort of use in my own life a little bit”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“That these things will play out, aligning himself with these conglomerates that were very similar to Berkshire in many ways, conducting business with a very, very long, you know, that's famously the Japanese think in terms of decades and centuries and millennia in their investments, which is why they subjugate the shareholders to the employees and to their business partners, because they're thinking very, very long term in terms of durability that they'll support their business partners if they get in trouble and there's an expectation that their business partners would support them if they got in trouble. And so I think Berkshire is a great example of putting these positions on, trying to do the right thing, and then aligning yourself with probably the way it's going to play out anyway and just making sure that you're not sort of in conflict and you're allowing it to play out without sort of interfering all the time. And I think if there's anybody who sort of buffet says this favorite holding period is forever. And so there's this sort of philosophical alignment with...”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“The art of war is one of these foundational documents that comes out of Taoism, which is this philosophy of written down in several books Tao Di Jing, The Zhuang Zi, the Art of War is one of them, that it sort of explains these principles in, they tell these little Lao Tsi, which is literally translates as old master. So he may be not mythical or legendary rather than a real person. We don't know. But he gives these little discussions, these little sort of poems about how to think about the right way to behave, like being cautious and careful and respectful. And then letting things follow the sort of natural path, the natural way that they're going to play out. And I think that Berkshire Buffett's investments in Apple is a good example of that, where there's just a way that these things will play out. And he just aligns himself with the natural flow. So again, just avoiding conflict and trying to find these thoughts.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Then you'll be recognized for that and your partners will respond in kind and they forged this quite deep ties with these Japanese trading conglomerates and they're doing Berkshire does deals now with these guys. So Berkshire's able to use its balance sheet and its excess capital and its cash to do deals with the Japanese businesses. I think Greg Abel has been sort of further deepening ties with them. So Berkshire's Buffett's reputation, Berkshire's reputation, which has developed over a lifetime of doing this is this sort of strategic and this has been quite well known for a long time, but it's this strategic benefit where people want to do business with Berkshire and they'll do it at a, they'll give Berkshire better terms and they'll give anybody else because they want to be associated with Berkshire and that's a very powerful idea and the other idea is that this is the most woo version of it but basically that there is this idea in”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Dividends to the tune of $700 or $800 million a year on this virtually costless debt. So he's able to, it's called a positive free carry. He's positively carried in this position, earning $700 or $800 million every year, while these positions appreciate at the same time against zero percent debt. I think it's one of the most incredible transactions sort of ever done. And it's non-recourse to Berkshire so it falls over, it doesn't impact Berkshire, it might impact their holdings in Japan. But as it happens, it's been an incredible performer and it's returned a great deal to Berkshire. But I use it as an example of two things. One is that there's this idea in Sun Tzu called following the moral law, although sometimes they call it the way, which is this sort of slightly woo sounding term. But the idea is that if you behave in this sort of honest and forthright,”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Dividend so that dividend yields are 6, 7, 8 percent, 9% on these shareholdings. And at the same time, government debt in Japan is a negative number or very low number and corporate debt is very, very low as well. So Berkshire itself is able to borrow in Japan for zero percent interest rates, which is crazy. It doesn't really make a lot of sense, but they're able to do it. And so he puts on this deal where he buys five of these big trading houses and he finances it with zero percent interest rates, debt denominated in yen. So he eliminates any of his currency issues. So if the yen weakens against the dollar or strengthens against the dollar, it doesn't matter at all because the yen denominated assets are supported by yen-denominated debt. And then he's getting a carry on top of that. So the dividends get paid out and he receives.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Employees and customers somewhere else down that path. It's meant that they're very survival focused. They're very durable. They've been around for a long time and they plan to be around for a long time. And I think that there's been some recognition in Japan that they're two shareholder unfriendly. And so they've had these reforms that started a little while ago under Prime Minister. I think it was RB. I think I said that in the book. And those reforms have sort of gathered steam and the Japanese stock exchange is trying to implement these reforms in various different ways, trying to make them more shareholder friendly and more responsive to shareholders and to get rid of the cross-shareholdings and do a payout a little bit more of what they earn so that shareholders are getting a reasonable return on investment. As all of this is going on, Buffett has sort of recognized this opportunity hiding in plain sight where these things are paying out. They're trading at single digit multiples of earnings and then they're paying out half of what they earn.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Combined with the complexity of their shareholdings in these businesses because they often had cross shareholdings, very hard to figure out what was going on in them. They've traded at a big discount to probably what they're worth for a long period of time. And they're very hostile to outside investors. They've really run for management. It's not a criticism of the Japanese method of doing business is one that I have a great deal of respect for because they look after their employees and their partners possibly to the exclusion of their shareholders. Whereas that's sort of anathema in the...”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Let me just discuss very quickly the last third of the book, the last part, which is when he made the investment in the Japanese conglomerates, I always messed this up, but I think they're called shogo sour or shogo shower. I always get those two confused, but they were set up during the Meiji era because Japan is resource poor. And so they needed some connection to the rest of the world to develop to find some resources, basic materials, energy and so on. And then they vertically integrated, so they got the processing facilities and they've built these sprawling conglomerates that really touch all these different parts of, I forget exactly how I discussed it in the book, but they've got grain elevators in Australia and they've got oil and gas fields and processing facilities in the Middle East and this all throughout the world wherever these resources might be found. And the complexity of the business”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“That's the way Buffett thinks about it. So that's his conception of risk in return. Risk is overpaying for something, or risk is paying for something that has a heavily indebted balance sheet or it's got some off-balance sheet liabilities or it's got some event that could occur that could make the business a zero or it's got a business that doesn't earn enough money to justify its assets or it's got a business that's vulnerable to competition. Those are his ideas of risk rather than the volatility of the stock. And then the cheaper that the business is relative to your estimate of value, the less risky it is and the greater your return. So in that instance, lower risk means higher return. And so that breaks the modern portfolio idea. But I think Buffett's success and as a sort of matter of logic that makes complete sense to me that that's the better way of investing. So that Buffett's conception of risk and reward.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Market that doesn't always work out. There are plenty of take unders, as they call them, rather than a takeover. It gets sold for less than it's worth. That happens quite regularly. But you sort of relying then on the management team being sensible. And if the management team is buying back stock, I think that's a very strong signal. If you think it's undervalued and they're buying back stock, they probably agree with you. They're doing the right thing by the other shareholders. So there's your pretty strong estimate for value and the stock being undervalued. Your risk is that you get taken under but your risk is mostly that you can see that the value is discounted. So there's a lower risk the bigger the discount because the return is also greater than. So it sort of breaks that modern portfolio theory idea of risk in the sense that the more undervalued it is, the less risky it is, but also the greater the return that is available.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“That's the most extreme valuation. There are other valuations that you might say, let's look at this on a going concern basis if it continues on as a business and think about how much we could earn into perpetuity. That's a hard thing to do because you've got to estimate growth. How long is this thing going to earn excess returns? Those are difficult assessments to make. But I prefer this method. So I use the acquirers multiple as my way of thinking about these things, which is basically looking at what an acquirer would pay for this business in its entirety. And then looking at where it's trading now. And so I look at, I want to cashy balance sheet or at least a balance sheet that is not in any immediate risk of financial distress or bankruptcy. And then that's sort of downside risk. If it doesn't work out, you've got some downside protection and then your upside is what somebody will pay for this business in a negotiated transaction, which assumes that you get fair value.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Thinks about it is slightly different. He says that you can find a valuation for these businesses, so a net net valuation is the most extreme valuation, which says that if we were to end this business now and liquidate this business, not as a going concern, but for scrap, basically, what could we get out of it? And you get $100 on the dollar for the cash, you get some amount of money for the receivables, you get some amount of money for the inventory. You discount the inventory because you got to go and sell it. You discount the receivables because you might not collect it all. And you discount the assets outside of that because they're harder to sell as well. That gives you a net current asset value because that's what we're talking about. Looking at all the net current assets, looking at all the current assets minus all the liabilities, and then you're trying to find something that's trading at two-thirds of that number, because that gives you a 50% return if it all works out.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Or earnings that are going down will also reverse course, or at least you'll be across a basket, you'll be compensated for holding these things. Because when they do reverse course, they're so wildly misvalued that the price will go up. So that's the idea of risk and reward sort of as it's taught at a university level. When you start investing in the market, it's pretty clear that the behavioral thing is much more prevalent. And you can see it, for example, now there's clearly there's a little mania going on, particularly in relation to AI stocks and quantum stocks in some other little hot areas of the market. And then on the other side, there's a whole lot of stuff that's not participating. Energy is as cheap as it's been relative to the index since 2020 when oil was negative $37. So oil is at $60 now. So the idea of risk and reward being sort of combined together in that way is that's part of the literature. But the way that Buffalo”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Gentlemen who sort of came up with this pricing model, the way that they think about it is any like a value stock generates this sort of excess return over the market, which shouldn't exist other than the fact that there's this uncompensation. There's a risk there. So they're riskier. That's the only way it works. There's another competing idea, which is this behavioral finance idea, which is the one that I subscribe to, which says that people overreact to the market. So when they see the earnings are going up or the stock prices going up, they just extrapolate that forever. And in literature, those guys are known as naive extrapolation investors. And then there are the people who invest counter to that. And so they are mean reverting investors, basically. They say that this excess growth in share prices or earnings or whatever will reverse course. And the other way around as well, the stocks that are going down.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“In modern portfolio theory, in the way that investment is taught at university level, the idea is that risk and return related in the sense that the only way you can generate more return is by adding more risk and under modern portfolio theory, the definition of risk is volatility or volatility relative to the market volatility. So more volatility means more covariance to the market portfolio, but basically that means volatility. And so the only way you get more return is by taking on more volatility. And you can also then lever your return, which adds risk, but also adds return. And there's no escaping that matrix. Anytime you're earning more return, it's because you're taking on more risk. And so the fama French, the”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Isn't working. And so maybe you can extricate yourself before it all really turns out very bad. And so that's one of the, I did that, I know how these positions should work out. If they don't work out, there's a reason why we should be able to identify it before it becomes a zero at least.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“They're looking for to at least determine whether they're right or wrong on the investment. And so Buffett knows exactly how this thing works. They're going to buy back stock. They're going to go through a cycle of iPhone. They're going to remain a dominant consumer products business. And the stock is going to do very well as a result because they earn very high returns and invested capital. I don't understand IBM as well in that context, but good investors know how these transactions work out. One of the things that Sun Tzu says is if you know how you're going to win and then you fight, then it works out. If you start to fight and then you try and work out how you're going to win, that's how you lose. So he's saying go in and know what how you win before you fight. Otherwise, don't fight. And that's one of the things that don't put the position on unless you know how the position works out. And at least then it also tells you if it's not going to work out, you know, because it's the thing that you're watching.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Where before the new iPhone is announced, it gets a little bit cheaper because it looks like the sales are tailing off and then the new iPhone gets announced and they make more money and their returns and invested capital leap. And that's what happened, the returns and invested capital leap. Does everybody got a stimmy out of COVID and went and bought a new iPhone? Apple was a big beneficiary, became very, very valuable again on a return on invested capital basis, but now it had a much smaller share holding out there, which Berkshire had a big chunk of, and that's how you get a Forex on a giant company. I used that to sort of illustrate a few of these ideas, and that's this idea of winning without conflict. And also this idea that Sun Tzu says, and this is, I think this is the biggest difference between good investors and people who are newer to investment, good investors know how an investment works out. They know why they're buying this thing and what”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Away from that was that Buffett had obviously understands Apple and he had seen Apple out there and saw the value in it, but it had this problem with it, which was the one that the two activists had identified. And their idea was we'll push this to get changed and that will result in a sort of catalytic event and we'll revalue the shares. Buffett's idea is that why don't you just wait until the opportunity has perfected itself and it's perfected itself when that cash hole, when they figure out what they're going to do with that cash holding, because then it shows that management's thinking about that. And Apple has famously consistently bought back stock now through all of that entire period. And so a lot of Berkshire's return is a combination of holding stock while the undervalued shares are bought back, which increases their holding without them having to buy any more stock. But also that it had gone through that Apple goes through this sort of cycle.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“And I think that he was regarded as being his experience was all in the manufacturing side, so he was going to streamline the manufacturing side. And this was a little bit out of left field. But I used it as an example of some of the principles of Sun Tzu. One of them is that, and this is this idea that I really love this idea. He calls it victory without conflict, which is really, there's a lot of different interpretations of what that means. One, like the most direct interpretation is obviously that he means victory without conflict, which Einhorn and Ikhan were in conflict with Tim Cook and Apple and they were writing letters and running these activist campaigns through the media, saying that it was a mistake to have this sort of cash on the balance sheet. Really nothing changed. Ultimately, Tim Cook agreed they did a little bit of a buyback. The stock went up Einhorn and I can't sort of backed off and it became quiet. And in that intervening period, that's when Buffett bought his big shareholding in it. And I think that what I had sort of taken away.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“I think it's an iconic deal. I use it. It's one of the first one that I mentioned in the book because I contrast it with, because I'm in deep value, which I'm glad you raised that earlier, because in deep value, I talked about the Ironhorn icon deal, or at least in Acquirer's Multiple, I talked about that deal. Because I thought that was a great example of company with one obvious problem, which was just too much cash on its balance sheet, which was a not entirely Apple's fault because they had all of that cash was overseas, and if they bring it back to the US, they've got to pay tax on it as they bring it back. And so it was sort of trapped overseas a little bit. But Einhorn had an idea for how you could release it, and he called it the eye prefs, which are these funny preference shares that paid out a little dividend attached to that cash holding. And then ICANN said, don't, that's too complicated. Don't do that. Just buy back a whole lot of stock. And I think there was some initial resistance to it because it was just after jobs had passed away and Tim Cook had stepped into the role, or at least Tim Cook had stepped into the role. And he was fairly new.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Return four times in pretty short order, which nobody else in the world could have done that deal. I think there are a lot of private equity firms in the world that wish that they'd done that deal because you could put a lot of capital to work and earn a lot of fees on a great return on a pretty liquid investment. But he did it. And I think that was an illustration of pure skill rather than there's an element of luck in there as well, but identifying it and correctly characterizing it as a consumer products franchise and his arguments for why it was a good deal, I think not being technology more consumer franchise. I think that that's the only time that I sort of, I mentioned IBM as a loser, but in the context of that giant winner. So it's hard to find deals whereby if it hasn't done well, I think IBM might be the only one that sort of springs to mind at scale. I know that he's done some smaller deals for the shoe businesses haven't worked out and so on.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“That you've got to go to South Africa to find a Chinese investment sort of tells you that it's a little bit of luck in there. Whereas Buffett Steels, I've chosen the ones that are very late in his career where he was well known. And I think Apple is a great example of that, that Apple's products were ubiquitous by that point. Everybody knew about the iPod or the iPhone or had a laptop or a desktop computer or something like that. They knew about Apple. It was one of the biggest companies in the world. Buffet was very well known. Berkshire was very well known. Anybody could have done that deal. But Buffett put 40% of Berkshire's assets into Apple after ICANN and Ironhorn had had an activist campaign to get it to pay its cash. So it was already very, very well known in the news. And then that $40 billion was a material part of Buffett's asset. Berkshire's assets. It was a big chunk of Apple.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Actually, I have Right. So I only mentioned IBM very briefly in the context of him sort of shaking off what was probably a mistake and then investing in Apple. And I call Apple the greatest trade ever. And the reason, and I do acknowledge in the book that it's a little bit in the eye of the beholder, it's like modern art. Like it's not everybody thinks it's the greatest trade ever because there are other probably proportionate winners. So I think that the NASPAS deal for 10 cent is an enormous winner, but then you've got to go to a South African listed equity that put a big chunk of money into a Chinese equity. And nobody would know what NASPAS is if they hadn't done that. That's kind of what they're famous for. And that's completely skewed the shape of the South African Stock Exchange as a result. But you can find these examples of very profitable deals where people put a little bit of money in and had to become wildly successful. But I think that the fact that...”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“The example of talking to younger people who he knew, and he would say, Would you give up your second car or your iPhone, which is a $2,000, seemingly very expensive, a lot of money to pay for like a little consumer gadget. And almost everybody said, or everybody said I'd give up my second car before I'd give up my iPhone because it's so important. And so I think he understood then that it was a consumer products franchise. And once you own an iPhone, then you probably own a laptop and you might own an iPad or an iPod. you own the iPods. What do they call that? AirPods, AirPods.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Something as he says, I understand it if I know where it's going to be in 10 years time, if I can work out how it's going to earn its money and defend its economic advantages for a decade or more. And if I can't understand that, I don't understand the business. And it's not really whether it's a technology business or not. But he had done the IBM deal and been criticized and it hadn't worked out when he found Apple. And Apple, I think I just saw this tweet. I didn't include this in the book, but I saw this tweet recently where I think it was John Scully, who was the CEO who came in after Steve Jobs. And he said Steve Jobs' idea had been to turn Apple into this consumer products business, which was just lunacy because Apple's not a consumer products business. Apple's a technology business. And it's funny to put that in the context of Buffett saying, I don't think of Apple as a technology business. I think of Apple as a consumer products business.”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT
“Think that I needed a deal that was misunderstood but then worked out quite well. And so I think the main failure that I can always think of is IBM. And I didn't cover IBM because I think that that was pretty well criticized at the time and perhaps the reasons why it was criticized bore out. And Buffett was the criticism was probably that IBM wasn't as attractive as he thought it was because it transitioned to a consulting business, although consulting business is potentially a very good business to be invested in because it doesn't require a lot of CapEx. But then the main criticism was this was a technology business that he's not a technology investor and he's misunderstood something about this technology business. And I think that Buffett himself would say that he avoids technology not because it's not understandable, but the way that he describes being able to understand”
2025-10-31 · We Study Billionaires · TIP764: The Art of Buffett w/ Tobias Carlisle · IDENTIFIED FROM THE TRANSCRIPT