Frederick "Shad" Rowe: "The Evolution of a Short Seller to a Long Only [...] | Talks at Google
So. Shan I thought maybe we could begin with how. You got started on the investing, journey. Well. My. Father was in the advertising business for most of his life and he. Recommended to me that I buy some central Airlines with some money I made this summer in a construction job so. I bought 200, shares of central Airlines a tunic or four for. Fifty dollars and. I, met the chief executive, officer whose name was from armies and. He. Came over to my parents house, one. Time it had dinner and my mother's dog bit his wife on the nose. They. Didn't they didn't leave but, they. Were showed he was a good sport and resilient. So. So that was something of a funny way the stock went up it was required about a year and a half later by central. Airlines then, by Frontier, Airlines for, $14. This year so these, are the 25 cents turned into $14. Pretty quickly and. I think that I just thought this bait sitting out in the Sun carrying. Forms around and. I was hooked for life and I that was a good. Success to start with I had a lot of failures after that but kind, of figured it all out eventually, maybe I have I don't know why. So. Did, you start investing, guy to be good well. I bought little size by ear some nod by stark and he's. Hearing something inviting start getting a very good investment system. Because. You hear from people that don't know what they're talking about they. Take awhile to figure out who didn't know whether to augment who didn't, but. You. Know I was always fascinated by and always interested in it and. You. Know, kid. Around about myself up my. Wife but took me to this event every year called art about town and. You would bid on paintings, and I would have bet on paintings for less. Than I figured the frame value was less than. The frame venue variance the frame rate is not as a valium difference so so. They. Would say well did you make money did I said no I never saw there's, a ring recognize a penny and. They're all horrible, but. Like they said some cheap frames. Wow. Yeah. I think somewhere. In the, mid 70s, you all just started a. Banking. Or a brokerage. For. This firm called Schneider Burnett in Hickman. And, I was, a syndicate, manager I did the new issues I look. At the new shoes and try to get the firm into the deals and. Then I I, left, there and you don't want to start my own firm which. I call row and company investment, banker slash banker investment. Banker slash brokers really. Were just a brokerage firm and did. A little investment banking but not much and then. I, did. That and traded for the firm's account and made a little money and and then. In 1985. Decided, that startup fund to, share the joys of short selling which I was doing a lot of because. The the the the, skyline, of Dallas are just pure cranes like he's here now but. Uh you. Know they're see-through buildings everywhere and I figured something bad was gonna happen and so. You, know I started short salary we. Start selling stocks. Or, real estate, well. Stocks and the bank stocks roasted, stocks mostly. Related stocks, what. Was the thesis that the thesis was it was it was terribly over built in there everyone was gonna go broke because, absolutely, right on and. They did and, so I. Wouldn't. Say that was fun that was good, to be right.
The. Fact that I'd saved my money in wait other things really broke down and. Made some great buys and shut. Down you, know every. Dark cloud has a silver lining kind, of deal so. I I kind of done you, know it's just a matter of which side you're looking at it. Do. You think getting, the timing right was, important, with the, chart setting of course it was sure and. You. Know and you know you, know what I found though was it you. Buy stock and it goes down the much he loses the money that you put up and. As it goes down and with some more you have a smaller. Problem and you don't worry about I'm. Gonna be short a stock he. Goes up you're just sick can't breathe, because. You can't have unlimited love potato you could die and be, incapacitated and, lose every day every time you have. There's. A there's an overpriced stock service I took for a while. But. Anything they've. Ever been shorted Microsoft, and, they, said that, every couple nights they say hold for a better exit point, well. Hell they what they lost all their money. So. It's not another good solid medicine. When I was doing it the. Interest rates were high real. Rates were high and. Brokers. Hall was about one of the prime. Was so. Have you put up Treasury bills and then shorted stock you get the. Brokers call on the short, position we, wouldn't mean that you would be up 15% when you started it. Was pretty good and, now of course you have to pay to borrow them so. You're down when you start so there's a big difference there I didn't, figure that out until later but that's. Why it was boy was attractive, and taxes. Also howtechs. The girl also have to say their same. Taxes on dividends, and interest in short, sales and short. Swing, profits, and long term profits everything, was tax the same so. It didn't matter and so that was one another little added factor hey, plus, you've really never had to cover you. Could you could take the million and and. And. Pair, the trades off you know be should. Put a shirt gonna, cover it versus the boxers and main even buy it back hold, of long position a short position all that 25, cents a share some never. Expected, could, you explain that a little bit Chad for us sure you could you. Could, you. Know you could be, surety versus a boxer, you, know the box of stock do you. Would borrow. The shares the, G, Basha and, deliver them against your chakras in general hold them against your short position so. You would have covered, but. Not recovered, but you everything, be blocked out you just keeps the text money and. The day that was outlawed in the tax world of 1985, and but. That was that was made a little bit better business in so. You were getting paid to borrow the taxes for favorable yeah, and the. Market was not fair, you about your according to you know a lot.
More Retail investing than then there was hey last, few years so. Not a smart oh so. Why. Did you give up short selling, well. It becomes all-consuming you, know you you're you, know you, think if you feel better about it as you get older but it hurts worse and. My. Mother kind, of typically, you know we're just always trying to be optimistic about things and she said well, she said she don't worry I'm sure something terrible will happen. You. Know and I'm the, only better but but. Uh that. Was sort of the idea you know you're looking for bad outcomes all the time which. It. Was a happier. Life if you're looking for good outcomes. And. So after you give up short-selling you, moved on to finding small local. Companies. In Texas. Well. Actually in the time. Between. Central. Airlines I also own small coming home Southwest, Airlines when they had three and then four airplanes are so, how'd, Mesa better the airline business only something about advertising. Business, a little bit because my father and so. Sort of set up to own, some things on those lines and and. You. Know I find, that you know one kind of door leads to another and everything is kind of connected we're all connected, and. So. Before. My father and you, have much more, friendly. Toward now than I was where he's alive unfortunately, but, uh. You. Could kind of get a feel for different businesses so. And. Then the shorts would eventually, turn into long that I bought, back it. Was short WPP, group in. 1991. And then covered in nineteen and cover 91 and then in a buying it and, not. On it and in. Southwest Airlines I did very well on so. When did you buy your first shares. Of stock about, 1974. 1974. In the madness bottle, of Marsala I assume you, still have the same shape no no no no in the same years I saw the most open. The. Stuff is very valuable. Would, you know, how. How much the revenues have compounded by or the stock price is compounded by since I bought it I always probably 27 percent of the aged 20, percent over 30 is. Amazing what it does what was it about Southwest that got your attention well no marme is he's the same guy that was a head of central Airlines hey and, so I felt like I knew him and. You. Know obvious to me that they were doing something better faster cheaper they were flying between Dallas and San Antonio in Houston on. A tight schedule and doing it for not, much more than the price of a bus ticket so. The traffic was expanding they were stimulating, the market it was growing and they. Did that everywhere they went all over the United States and and now, they've gone them wrong and you, know it's a it's a better story they have one airplane that they fly is, through, an engine out that's, was, on the news indictment, it. Was a. Just. A, once-in-a-lifetime. Kind, of deal and it. An airline is very needle because there's only really and, there was a Joan loss and all these years. Then. It runs what broke all the time, but. They didn't put their customers purse they put themselves first and. Employees. To treat, everybody well yeah. So, around 15. Years ago maybe a little older than that. You change their outlook again, focusing. On companies that can scale new. Things faster, better cheaper yeah, for the customers, yeah how, did this change happen, and maybe give us some examples. Well. It's a Fargo you. Know kind of a. Man. Out kind of feeling you know if, you own a stock, in our company you're. Kind of a second. Rate. Compared, to the management you know you know they, don't always tell you the truth and they're manipulated, again but. You know if you think the company's really done some for the stakeholders, for the shareholders for. The customers, and. For themselves you feel a lot better about it so, you feel I feel better than the best revived invested in coming like that and. Some, better faster cheaper and four, and not to the customer and to, the delight. Of the customer and, be. On a scale that if it works and another. Thing the ever done thing I did I did this to me PP group I told you about work Martin, Sorrell just left he got fired but. Uh he. Said that, for. The globalization, is a misnomer that the better word is Americanization.
People. All over the world really want to live the way we do here I know, you believe that I think, there's something to it and. Some. Of it's a success. Here can, be a success elsewhere and. It's certainly been the case of Airlines. Of Starbucks. It's. You. Know Amazon the other all these companies operate. Throughout the world and you. Know used. To talk about the law of large numbers well, how you need to own, a stock that as a large number because there are a large number of people in the world and. A large number of. Square. Miles to cover and you got to get out there before. Someone beats you to it I think, he's big companies have a huge advantage now rather. Than being cumbersome, Oaks like they used to be. They're they're. Really big. And strong and powerful and they just win-win-win. Hey. So following, up on that chat recently I think you wrote about the. Necessity of large numbers yeah maybe not that, large numbers are not just needed to compete. For to actually succeed front right so. Can you talk to us a little bit about that what why do you think large, numbers are a necessity and maybe give us an example of a company that, you. Think as efficiency going for it he. Talked about Google can we I'm. Saying. Well. All of them really you know Southwest Airlines down is going to Mexico they're going in the Caribbean they're. Big enough to do it and. No. One wants it aside and let, Southwest. Into them what they did didn't, settle and you can happen again as, people are just smarter, you. Don't think that I think that the, board compositions, have changed I think. That they were more, attentive, and then, the kind of dull and. I have seen out chief executive officer sits, there and acts like a dictator there, over and women on the boards have helped I think and. There's. A small visibility, it's hard to be. Off-base, secretiveness people used to be I, think the governance is better and I think the. Opportunities, are better perceived and investors. Aren't any smarter and. Matha. That you know that, that kid says widget is improved. And. And I think you've, also stressed on the efficiency day shads. And, you say that Costco is not just efficient but elegant oh, yeah.
That's Great yeah. It's fun to be there fun. To shop there you, save money you. Get great products you get a great value, see. The same people there and. Other. Things I think the shopping is a little is a storm an adventure 10 fun they, put things in the store just to get you back how. Did you approach Costco, as an investment decision. Did. You well. I like going there okay. As it as probably simple as that, I thought. If I like it other people probably like it and they do hey. You. Want to save money when I get good day you. Don't care about the brand name them in, the. The. Right. Over the kindle is that you. Know that's a good said great great style that Cullen, yeah. And, I'm. Losing my mind here but yes, it's really good everything like everything about it I, one. Time I added it was in his investment, group and and. The. Deal on the dinner we're going to was at the person had the worst bottle of wine had to buy dinner and. So I went and I could take a bottle of wine that my wife had picked out from. Constellation, Brands I can't remember name of it but it was a 92. On the, my. Observer board or something and. Anyway. I heard the waitress if he complains and this, wine is flawed the, cork is no good and. And, and. He didn't put it he didn't wrap it up mister kinfolk so I know what it is alright, I give up it's me I'm on my, dinner then. I wrote a letter. To, Jim. Cynical, saying. I had. This horrible experience and in. The. Galley they doctor and Constellation, Brands sent me a gift certificate you. Know for. Constant. Giving my money back you, know, I just made a huge profit on it and. Bought. More stock, and. I did the same thing to McDonald's, and talk about something terrible happened there and I got a formulator, back sorry. For your bad experience, and then, it's nothing. But. You know, that's the sort of heroic response she's going overboard. You know bending, over backwards to make people happy and. It's uh the. Customer comes first you get ahead and then you might even behind. Hey. So I think when. He said customer comes first I'm reminded of another you, know another one of your nice characterizations. About stage. One companies, teach to companies and stage three companies and these aren't to do with size. Of the company or age of the company their. Custom. Stage one everything's new you're doing something better faster cheaper for. The customer your stock is soaring can't, give us examples of each stage well, well, any any, little commended tanks off Southwest. Airlines has been you got a stage one though career, and saying. It. Stage two is maybe like a Starbucks. Where they start selling tea. In different. Food and trying, to mix up the kind, of getting more money from the same person okay, and, stage, three is most. Airlines and banks and everything else well. There's no question they're not to get you, so. How, do you detect this the this you know change between stage two and stage three well. I'm a customer it's, like you are miss, obvious in it. That's. Right thing so. What, are the hallmarks, shadow for great business. Like. Me stage two stage one, kind of business well, well, I would love the fun of it is it was a very very better faster cheaper okay. On a scale that could be taken globally that I'd seen it work in the United States that. Great management you know I don't know how you defined that but you know what when you see it and, some. Valuation, that was you. Know somehow, you could think, was reasonable, hey. And uh it. Would sound like that I was. Left for the other day about that David. Allan Coe song, you. Know what. Was it yeah. I think your song is perfect but iam said anything about mama trains, are being, drunk. Or falling, off the bus or you. But his all the ingredients are there for, public and just like that increase our therefore perfect star and. You're always looking for the perfect star, do. You do you focus on capital intensity, at all when you look at a great company of everyone, to everyone. Capital, intensive nacelle how, to use that balance sheet is that are those things you look at well, I look at it but I presume, they know more than I do so I don't I'm not too judgmental about so.
Let's Invert that a little bit do they call, Jacobi, and Charlie Munger so what, are some things you want to avoid in a business well. If you were just a short on that one same thing you know it's. Not doing something better faster cheaper saying something worse than irritates, people okay. They don't like it and business is going down and. It. No, pun potential, overseas because there's no potential the United States and. It you, know weren't it be a perfect inversion, are. There industries, or sectors that, you would avoid. Well. I don't think that way I think the ones that would be attracting date okay. And. Clearly. In. Technology. Is an arien homebodies. Kind of interesting because all the mothers living at home and my, parents were getting tired of them and I, think I'll buy houses at some point, technology. And home or home, building, are sectors yeah just making it up you, got the whole in the modern home you love the smart home Hey and. Yeah. So I don't, know this guy that runs out runs. Out. Pull. T pull. Table yes yeah and then uh yeah. I don't think it matters too much but they're all gonna have it and, we're the technology finally brought in the house - hey bring the mass into the modern age if. I can continue and you know one of another Charlie, Munger is oh. We. Learn more from our mistakes than from our successes I don't, know a lot too. So. After, short-selling we know once you move to being, along and we consumer focused investor, what, uh one, or two mistakes you've, made, that. You want to talk listen, I, don't want our man and. The, smaller companies, I have. There's. A company - called employers Kaizen the insurance company that then, workers compensation. And there's, a cheap, cheap stock and it always been a great company and had. A great balance sheet and the mansion wouldn't talk to me and. I presumed that meant that was so good they didn't want to share the information and. So. I, bought. It and they wouldn't return the phone call it and went broke. That's. A bad example or, a good example of that. Okay. Another. One you, know had some success with Southwest, Airlines several times and. I got very sick Greyhound buses and. Even my wife said what are you thinking about you. Know no one rides a bus and and. You. Couldn't say that no one was on the buses because the windows are tinted, so. That was a painful one. So. You, probably picked up a lot of trading. Techniques as a short seller looking at you know price volume, maybe, margin, calls technicals. No. I didn't or anything. Do you look at anything. Other than the. Couldn't customer, experience, and fundamentals, in you invest in a business well. It's not as if the stock is off for the wrong reason, okay, that's. Always a good one. They're. Panicked about submission, the shares are panicked over something shouldn't be panicked over, that's. A good reason to do it then. You got a better better you get a better bargain that one but I think in the long term and. Then make that much difference when you mind and you buy the right company. So. Let's. Focus on that a little bit the, valuation, date how. Do you approach valuation. Exciting for a business, what. Does an upper-bound you're willing to pay how. Do you record that. Well. I'd wanna see. How you could pay ten times what you thought I was initially gonna earn would. Be okay with me. If. You had pretty, high degree of confidence in it because. With interest rates where they are and. You've got to compete and think what you can do with your money and if, people, say the little mark very overpriced and the, Nasdaq sales at thirty three times earnings or whatever it sells out well.
You, Know what's, the yield on a ten-year, government 3%, that's, thirty three times earnings and that's the most they're gonna earn, so. The companies every chance to earn a lot more thought thing stocks, and prodded cheap. Relative. What. You knew the money real. Estate in any matters. Farming. What I don't know what you're gonna do when. Your choices are limited you know stock is, its. People it's real estate its capital, its machines. It's put. Together by smart people and working, and creating, value and, growing. Pretty. Exciting and then exactly oh very much now but it will. They. Don't let it through so. Once you buy a stock, ideally shed, you. Never want to sell it and you, write you know very well, that. Selling. Creates two problems right. The. The, tax problem, and the problem pay taxes then you can replace the investment, right you'll, be right twice hey. I got. A on a grill gross are going to be right once. So. But. Sometimes, you still have to say and. Do, you sell because the situation, changes or do you sell also. Sometimes, because the price runs up too much how. Do you think well I've done that a little bit of that you. Know this WPP, group which, i bought. Years ago I sold, summon, two, thousand and sometimes I got crazy price and didn't get it all sold but I kept it and, then, you. Know I knew Martin Sorrell and watched. Him but then I watched other companies come along like like, you. Know this one and. You, know there was a button that didn't, hurt their business very badly so, I've actually sold it, and. It made a good sales to you. That. Would be reason you know if the business. Is fundamentally, change about technology, or. Buy, something that they haven't done. That, would be the reason to sell it or the management's banners in it there's. Something change that you know you can see but not because it didn't, show. Relative strength or something crazy like that, shout. If you can shift gears a little bit you've. Spoken about the need for pension. Funds to be simple. And investing process right, and recently. They've been incidents of funds. That have invested, in exotic. Foreign agriculture. And things, that didn't work out well, why. Do you think this happens and. What. Can be done to improve this. You. Have your think of yourself as a stock I think. It helps you know you, have more money coming in than going out hopefully, and. You're already near to buy stocks and your, state grows and. You get a better job or you don't get a better job but you spending. More singing. Lesson you're saving and. You grow up and and you're, gonna be a rich old guy or, girl. Or whatever and. That's. The way it works these. Pension funds have more money going out than coming in, and. Compound, interest is, the eighth. Wonder of the world but what's working against you you, can't beat it that's, what's happening these pension funds are they, promise more than they can deliver and. So they're they're. You, know saying they're making money or they're only 75. Percent funded or something like that but really. They're gonna go broke and. You. Can be an alarmist about it and yeah I got fired as I was a chairman that expansionary board for 12. Years or something, and. You. Know the, governor. Parrot finally fired me get there neither listen tired here mate but. Uh your. Compound interest is a wonderful. Thing that I'm on your side and a terrible thing to have working against you. Do. You think that's likely to change in the coming yes the way oh sure. Sure sure it'll change like, settle. Come up in the west. Or. The east or Murr doesn't know, this they're. Immutable laws. I'm. Gonna change the way little beggar and go change. People. Get hold of other people's money they like it it gives them power, they.
Want To be smart. So. Shed, one of the books I think that have really, influenced you has been the money masters, by, John, Kane yeah, what. About the book influenced, you another. Well. He's a good buddy manager and and. He. Understood the distinction investors. Were making in their minds just. A good survey and nothing's changed since then no. One had ever studied investment managers before they were just kind, of like clerks or something then they became kind of kind. Of a, larger-than-life, sometimes, and it. Became interesting to people but. They. Got financing yeah he's very thoughtful, and whenever. I said. Afterwards. Taking all these people value. Misters and all. This how did you became a growth. Stock manager and like zero, price, he. Said that. The. Investors, are really kind, of glorified, accountant, sir looking. At the gap between their perceived value and what the assets are worth. And, its, market capitalization trying, to close the difference and, then. They did they got to go buy some males so. It's a constant turnover process if you ever make a mistake you. Pay a lot of taxes and you've lost all your money but. A gross stock investment we just said said. That suited his nature and, really kind of futurologist. And. Looking. In the future and trying to figure out what's going to happen he, said that suited his nature so. That's what he did that. Makes perfect sense to me, he. Requires, fewer people and seems to be right a couple of times in your life. When. We speaking earlier with. But, with one of your colleagues Trey, you. Spoke about the spectrum of investors, short, sellers, activists. Lovely investors, do you want to share that I was. Saying that that uh short. Sellers really think that the smartest people on earth then. They're much smaller than these management's, in it and. They're. So smart and they risk their whole stash. To. Prove. Them right and they lay a young broker and. Nervous breakdown or to shoot themselves I mean I don't get Friendly's killed himself but. Uh it's. A terrible life and then. The next ones are the. Activist. Investors activists, think they're smarter than management say they're gonna tell them how to do it and. So, they they just get in there and start saying. Do this do this do that and we. Want to sell the company and we'll, make these fees and and. Then the. Value in the, value investors have already talked about but. Uh you. Can rank them all and then the growth stock investors just think this. Company is smarter than I am they know the business better than I do but it's a great business implement, I mean now get out of it so that's, how you have a slight anaise there, you. Want to put yourself on the side where you have an advantage where they don't so. If you perceive, that there's, a long term teacher for the business they're. Doing something better faster cheaper and for the customer you. Invited a reasonable price and, and. If you're wrong you can sell it that's, a pretty good deal, and. That's. One other thing I want to take. I. Guess. I want, to get a little personal with this question for you so, around, two, decades ago you were diagnosed with Parkinson's, you know shortly after which you consider shutting down your fight yeah right, um but, then you chose not to shut it down and maybe, you should walk us through that and. Also, after that you've stated that having. Parkinson's has actually made you a a better. Person. Can. You. Mile. J Fox I'm on this board he calls up Parkinson's, a gift that keeps on taking, but. I think it makes you a little humble and, more. Appreciative of what you did have going right need. To make adjustments to it but. Uh my. First reaction was what the hell is going on here, I thought, well I'll deliver my favourite shut the fun down and. I gave a lot of the money back I got. Some stocks that were hard to get have they're a liquid and, so, I dragged my feet and then decided, that and what we also am I gonna do I change, my mind it have had a good record ever since but and, a good record the whole time but but. Uh. Yeah. It's uh. Changed. Your life a little bit and. You. Appreciate the things, that go your way and things, that no, you don't worry as much about.
We're. In to say I'm. Completely. Pleasant personality is not and. Then. But. You know I think investing, is a matter of finding. Out who you are and. Where you fit in the world and, that all fits together you. Know I don't know saying it is but you, don't know who you are that's Doc Martens an expensive place to find out. It's. True but. If you fit your nature with. Your investment style and it. Makes economic sense and probably. Do pretty well if. You think of yourself as a stock, we're. Getting more coming in than going out and so you're doing something with the money in, other words you're managing your cash flow, you're. Gonna be in a rich old guy from. Girl or whatever, and. That, makes, sense to me so. I feel like I've got the, game. Is going my way and I feel like that's what anybody. Thought about it should go, and you know in the television the, stocks under accumulation, it's bringing. Out it's bringing, down it's lacking support I'm. Showing up selling I'm cell by cell by cell just, pay a lot of commissions and and. Dinner, spreads and lose your money, and. Talk, more oh. So. Sad before, we you know we open it up to the audience for questions I want. To ask you one question that we ask all our guests, um what. Is some advice you would give the. Personal investor someone who's starting their journey today. Maybe. Investing the first few dollars, and, trying. To make compounding. Work for that. I'd. Say the same things, who. Are you what do you like, you. Know cheerleader. You up. Boomer. You. Know you went to home team the winning one the home team to lose and. Pay companies you like you, like the management I think, they have a bright future you like dealing, with them think, they're good people and just said it said, I've known it and think. Of yourself as a partial owner of a business just like you're, the owner of your entire business which is your life, so. That's kind of more above it 101 and combine. My little pop, psychology. In. My experience, and that's what I would do and that's what I'm trying to do. It. Make sense no, thank, you say thank you so much for fun, baby all right I think we'll, open it up to audience questions and, I have a few more in case we have time at the end of the good. Thank. You for your talk that's. Very very. Inspiring. So I have question about the large number if a method city I was, wondering if you think. There's. The. Risk of you, know the anti chasity, once, the company goes large like, a and the. Large member, goes sharonsutera, time, is a terrifying aspect, of it. Usually. They usually. The. Litigation starts coming when they're. Trying to use the government to protect themselves from. Competition. Or, something so, I I, don't know it'll be interesting you know I watched, that. Other companies go today talking on the television, about. About. Its issues, and problems but. I think that. These. Congressmen and and these, legislate, legislators, are they're, so busy if. They don't have time to understand anything very clearly and. You. Know the business is still good it'll probably survive, and do fine. And. They have the, elderly they have constituencies. That people. Vote and. So. I don't I don't worry about it too much I'm worried about something but not too much I think, it's overrated. Never. Does that make sense, thanks. For your question yeah it makes sense Thanks. You, talked about better. Faster, cheaper what. Is one, business, that's better faster cheaper that, you would like to own but you don't because, of price or whatever the reason.
And. I, have a second part question every goes at bottom. What. Is something that you owned in the past that is no longer better faster cheaper and why. Let's. Say, McDonald's. And. Then. They're getting beaten by lots. Of people now and. How. Petsmart which. Started. Selling very expensive products so you save money but. Your dog up they, could, take warehouse, stores and. Bottle, down and had, more functions in them but. It was nice got a company at what. They could do to the dog earner to you how they get tricky and. But. Really I'm just trying to find the ones that are good and hold him. Eyes. I sell identity P which I don't know what to make 33, times over a million. The. Reason was was a the. Competitors, online, competitors, were doing. A better faster cheaper and. Getting more for the money and, then. You watch you watch regular television and the ads aren't for drugs that you. Know you the. Suspects might be that you'll die crying for your mother. They're. Just terrible. Off-putting. And. So, on I add that applies, to you directly did, you and you only see it's. It's uh structured to. Tell you something's you want to hear is what seems like a better deal to me I. Think. It also written. About. Carmack's. Which which back in the day was you, know excellent pricing right but the discoverability, no, yeah. The range is gone. Because. Everybody knows what everybody paid for everything, because. Of the internet. So. One last, question. We. Had mr., Schwab visited, us, I think about two years ago from Charles. And, he talked about how in. His words. Charles, Park continues to, deliver. Their, services, to their customers better. Faster cheaper how do you think about Charles pop say compared to city law which you do on, the. Final, tier, Oh Tito yeah I got a good price on tier oh I'm ready to get out of it but do. You think Charles, Schwab does better faster cheaper you. Are in that industry so probably you know better about hotel well I think that I think that right now the zero price probably was better because they're focused. On growth companies, and the, market and paying the premium that is certainly capable of paying for those companies you know. I can remember I was not, in the market at that time but the, nifty 50 you. Know or in, difficult. Companies. That would. Always be in people's portfolios regardless. And always grown to now sold 110 earnings. 1973. So. I think that sort of thing could happen again we. Have a world 50 world nifty 50. Weren't. Worried you know you need to have a Bitcoin woman held, the. Coca-cola stock used to be like Bitcoin or. The. Technology companies are like that. I. Think. That could easily happen. And. I think that that.
These. Companies can make the equity you know they know more about the business, is an idea, and. They can buy, them for stock or Bob for cash and. Everybody turns into a warren buffett you know. What. Are we learning for more above it I mean he started out with you. Know, selling. You. Know delivering, papers and turn that into, becoming. The richest guy in the world for a while and. What. Did he do he just had. An obsession with money and and. Never. Spent it and just compound count down count down it I, always. Wonder about nonprofit. Investments. And. When I think of Buffett. Talk gates and a lot of lots of big investments. You. Know is it in the context, of philanthropy, versus, giving away versus actual investment, and being able to manage it and I, always wondered what, the. Processes when, the rich decide, to. Go one way or the other and I'm just curious to hear, your thoughts on. Our, humanizing money. Philanthrophy. Or, you. Know investment, and change then, the context of logic good, how. Do how do you misters think about it I, think about all the time. Sometimes. Out I'm, usually, usually. Disappointed, by what I discover, about what it what was really happening I mean. You. Know people get old and they won't have hospitals, know better they want to invest in health care and. The health care people are just charging. More every year and it's become too big a burden. And. I complain about it but yeah. I think it's an issue you know die, with all your money, and. You'd. Rather have easy, to decide what to do with it then have someone else decide what to do with it certainly. Certainly. Anyone's gonna do better than the government probably I. Think. It's a big issue. We. Don't live forever. Because. We all think we will. Yes, ma'am hi I, wonder what's your advice about the, risk. Controlling. For personal, matters who don't, have meant, much time to. Investigate. It was going on in Nuuanu case well. You big nine nine percent investors if you just bought the S&P 500 index, from. Vanguard fidelity. Or something like that. From. Us people oughta do they. Wouldn't worry about the individuals I started they put nine percent your money in those index funds and and. Then play, with the other money just like your play money and have fun with it. Be, my advice I, really. Enjoy your sort of a. Three-stage. Model and. How companies sort of get fat and then get lazy and then yeah you know get, eaten yeah. One, question I have is. You. Know how. Frequently, the companies that you've purchased you know turn into a. Different, stage or you obviously. You're trying to buy ones that always stay in stage one and that's, first case they end up in stage two but pears are successful, in stage one that leads to problems mm-hmm. It's like what people it's just exactly like a person. And. You. Know at some point I mean. You know the, company is successful it wants to do something else and, then videos do something else that didn't make him in the first place, and. This is exactly the same thing so. You want to have them make. Enough money so that you're comfortable you get your knees take care of but that's enough probably unless. It becomes a game or an obsession. What. Are you right exactly, it's, the same thing as it was a person. Can. I ask you a brief, follow-up which is in. A. Profile. Of you from 2016. You mentioned that you. Aim to have about 15 stocks in, your portfolio at, any given time and you sort of sell-off, the worst-performing one, every year and try to replace it yeah, and that. Incidentally. You also mentioned that by concentration, only. About, six of them, make up about 70%. Of the actual portfolio by value is that, a fairly constant sort. Of performance. Because what, happens is, Nathan, I like. That I'm. Probably about 1213 stocks and most ember in. Less, money than very few stocks but. The. You. Want to be diversified to the point that you got the odds in your favor but not to the point that you don't keep up for them. And. If they I'm. Being a little bit more disciplined about that I used to be but you. Know it's hard to sell stock once you have a profit in it it's. Hard to sell it pay the taxes make up the net worth and pay. The dealer spread and make the damn money back, so. What you tended isn't gonna me every company's in low, cost. But. You know if you want to step, out you gotta sell. Them. And. They. Got to fit, what. You really think is happening I mean I don't I was. Saying the same thing ten years ago but my portfolio has completely turned over since then and. The. Reason is I have better companies now I think not, one.
As. Companies, grow the culture is very difficult to maintain right. Especially. When bureaucracy. Creeps, in. What. Made you believe that Southwest. Will continue. It's. Called continue, keeping its culture in future. Its. Culture. Well. We've. Got to get guy Gary Kelly Dale he's running it they've. Always had good chief executive officers but. It's a it's. Hard to change the culture for them it's, a are changing, for the worse as, are change for the better and. You. Know I like to pick on American Airlines but it just seems like they invariably. Do the exact thing that I wouldn't done won't wanting to do when. I'm changing a reservation, Southwest. They let you change them and change your time burned. Airlines you have to pay by another ticket by. The time they tag their penalties. And everything else on you it. Was stupid I don't understand it and. Yes. So. Who's. Your is your, fidelity. Owed to its own to your customer I mean, the shareholders you know you got stakeholders. In any business and you got to train them Ryan, and. A, lot. Of times these professional, management's get hold of these companies and they. Think they're the, to be served they need to serve themselves first, and everybody. Can see that and they. React against it and. They don't share in the business and they don't they we go on which. Is fine I guess I made. It makes plenty of money but they, could have made more than that more fun and contributing. To society rather than then. Not. If. I may ask another question, I. Understand. The foreshore cellar is hard. Also because of you not only need to get your cities right you also need to get your timing right right, at the value investor, you know I guess, you not, supposed to time, the market and, we know it's very hard, but. I keep honoring because. For. Example as right, now we are in like a late cycle of a. Part of the cycle, I wonder. Being. Understanding we should not come in the market of one if there's a strategy you. Think you. Know an investor would deal, slightly, differently, then you know the beginning of the cycle I, don't. Know it's kind of a. Cycle. I found, that from you I don't. Know that we are at all I, don't. Have any idea I think that that. Uh, from. The time I've been in the business people general, public's attitude is much. Less interested in the stock market and. These. Are there fewer shares or fewer companies that are public there. Are but. They're better companies, now they're, better run and. Just. As competitive but they make more money the profit vetti's higher, and. I think stocks are a heck of a deal run, it what else you can do with your money. And. Get. A few those other things right you know the better. Faster cheaper and for the customer, and. The. Light of the customer and. Once the United States it can be taken internationally. I'll. Tell you miss, and. When you find them I hope you'll tell me tell me about it. Alright. I think uh I think, we're out of time thank you so much dad for it we're. Going speaking with us I think we should all pretty. You. You.