[00:03:16] Todd Finkle: And nobody knew about his father back then, that was in 1976. Berkshire’s stock price was $89 a share. I had to look that up because I didn’t even know. And he had a baseball cap and ripped up jeans, just a normal guy. He was on the yearbook staff. The photographer and just the nicest guy you’d want to meet.

[00:03:39] Todd Finkle: After high school, I ended up going off to college. And he went to Stanford and he inherited $90,000 from his grandfather when he died from his farm that they sold. And his father gave him an opportunity to go ahead and either, he could do whatever he wanted to do. $90,000, I don’t know what that would be in today’s dollars, that’s in 1977, that’s a lot of money.

[00:04:06] Todd Finkle: So what Pete did… And his father’s always preached this, is his father’s not a big fan of higher education. By the way, none of his kids got college degrees. That was an interesting tidbit that I learned in writing the book. However, in the past he has said he’s really abused higher education and I think he’s mellowed out over the years on that.

[00:04:30] Todd Finkle: Now he says that higher education is okay for the right person. He’s not completely against higher ed, but so Pete just dropped out and he just studied music. That’s what he loved and that’s what he wanted to do. And Warren had no problem with that because he was very supportive of his kids. So that was, my first exposure to the Buffett family was Pete in high school and I was at Central High School, which was an open public high school and his other Susie and Howie, which are the other children, went to Central High School and their father went to Central High School.

[00:05:10] Todd Finkle: And Charlie Munger went to Central High School as well. This is a high school that was different in those days. It was open to anybody in the whole city could go there and their math department was one of the best in the country. And when I was a sophomore, they would continuously place in the top three in the country, which was.

[00:05:31] Todd Finkle: Unbelievable, considering Omaha was not a big town, and these people, some of these people there were just brilliant kids. One of the kids, I won’t mention his name, but he went to MIT, and then he went to Stanford, and now he has been the CEO of two public companies in Silicon Valley, so those were the kind of people that Pete was hanging around with in high school, which is very indicative of what Warren tells us to do is hang around with people that are better than you, right?

[00:06:03] Todd Finkle: So Pete was kind of doing that back then in high school. I’m sure Warren was telling him that growing up. So I ended up going away to school and I got an undergraduate degree. I got exposed to investments really for the first time when I was out in California visiting a friend of mine. And then I was getting a degree in life sciences and I was almost done, so I kind of wanted to change my major and I decided not to, but I loved investments.

[00:06:31] Todd Finkle: I’ve always loved investments, even though I’m a professor and I study entrepreneurship and everything, investments has always been a very important thing for me and I’ve managed my own money my whole life. Maybe six months, I let somebody else do it and they lost money. So I took the money back. I ended up getting a degree and I went on and got a job at Xerox Corporation as a marketing rep.

[00:06:57] Todd Finkle: Back then Xerox and IBM were the two best places to become a marketing rep. And I learned how to sell, which is really important in life. I learned that at a very young age, unfortunately, and I made a lot of money. Unfortunately, I hated it. I hated working for a Fortune 500 company. It just wasn’t my cup of tea.

[00:07:18] Todd Finkle: I grew up with an entrepreneur. I did entrepreneurial things my whole life just because I learned at 23 that money was not the answer, Kyle. So I was kind of confused and I read a whole bunch of self help books on happiness and trying to find my place in the world. And I went back to investments. I started this investment partnership with my friend, Mark Gould, who’s now in Chicago.

[00:07:44] Todd Finkle: And so we invested for a couple of years and we went up and down and one week we were talking about what color our Porsches were going to be in the next week, what graduate schools we were going to go to. We ended up going to graduate school at Wisconsin and we both got our MBAs there and he got into M& A and now he’s an entrepreneur.

[00:08:03] Todd Finkle: And I ended up going to Wisconsin and got an MBA and I interviewed at the Chicago Mercantile Exchange. I used to date the Senator’s daughter, Susie Zirinsky, from Omaha, for the state of Nebraska. And her mom really liked me, for some reason, I don’t know why. And she had a connection on the Chicago Mercantile.

[00:08:28] Todd Finkle: So I was lucky enough that I had a connection. I used the connection. I went down there and I interviewed. And at the end of the interview, I was all excited and everything. They told me I’d start out as a runner. So this was in 1989 and I had a bunch of student loans that I had to pay off. Even though I had a business while I was going to school, I was paying out of state tuition.

[00:08:50] Todd Finkle: And as a runner, you only make 7 an hour. This is in the old days, and people run back and forth from the pit and you go to the checker and then the checker calls up to the trader. and everything, and it seemed like a lot of fun, and I really wanted to do it. Unfortunately, I couldn’t, because I didn’t have the money in order to do that.

[00:09:10] Todd Finkle: And that’s an area where I disagree with Buffett. I’ll throw in some critiques of Buffett there. He says, do whatever you want, do what you love, okay? Don’t worry about the money, basically, is what he says, just do what you love. And the problem with that is that’s not realistic. And my example right there is, I don’t mean to get down on a worm about this, but sometimes you don’t have the support of a family that can support you to do what you want to do.

[00:09:40] Todd Finkle: You have to rely on yourself. So I had to look at something else, even though I really wanted to do that really bad. And so I went back up to Madison where I was living and I had a business and I was wondering what the next step would be, and I had a long conversation with a professor for about two or three hours, and if you find a professor that really cares about you, you’re very lucky, and I had one that did care about me, and he started laughing at me about going to work for somebody else.

[00:10:12] Todd Finkle: He goes, Todd, you’re an entrepreneur. You’ll be looking for a way out after one week. I think you should look at becoming a professor. Because it’s very entrepreneurial, you’re an entrepreneur, focus on whatever you want to focus on and teach pretty much what you want to teach as long as you hit on the topics that they require you to do.

[00:10:33] Todd Finkle: I ended up going into entrepreneurship. I was an entrepreneur, I had a passion for it, even though I had a passion for investments as well, but I did entrepreneurship. Now, entrepreneurship at that time… Only had two schools that offered PhDs, so I was lucky that I was able to go in that direction because I, by the time I got out of school, I was a hot commodity.

[00:10:58] Todd Finkle: The problem was, is there were no jobs. Because there were only two schools that were offering a PhD. So I had to wait a while in order to get a job. And so I stayed in Academia 34 years. Now it’s been, I’ve been in Academia and it’s been good to me. You have a lot of freedom and independence and you just have to find the right place and the right people, the right culture where you fit in.

[00:11:23] Todd Finkle: And now the Piggott Professor of Entrepreneurship at Gonzaga University. Back in 2007, back around to your question, I know I’m going kind of a long way here Why write a book on Warren Buffett? Why write a book on Warren Buffett? It never really came to mind. I was first exposed in 2007 to what he was doing in Omaha through my cousin, Steve Nogg, who was friends with Susie Buffett, who I interviewed for the book.

[00:11:56] Todd Finkle: He said, Todd Buffett’s bringing kids. Schools to Omaha for a day. And he goes, I think you should apply. And so I applied just a one pager. And I said, I knew his buff, his son, and we were doing some really cool stuff, nonprofit stuff. We started a separate nonprofit with six other schools. And I got rejected right away.

[00:12:19] Todd Finkle: They said that the line was too long. Don’t even bother to put my name on the line, but I really kind of wanted to go, but I wanted to, more than that, I wanted to learn about Warren Buffett. This, who is this guy? How did he become so successful? What’s his secret sauce? All that stuff. I wanted to learn everything that I could about the guy.

[00:12:40] Todd Finkle: So I wrote this case study during the Great Recession. And so everybody else was probably having a heart attack during the Great Recession while I was writing a case study about Warren Buffett learning about everything. And so as soon as it got published, I went ahead and I had this epiphany. I went and I sent it to Warren and see if we could get invited to go visit him for a day.

[00:13:03] Todd Finkle: And so I sent it to him. And within 10 days, I got a letter back saying, he’s a, thank you for, I’ve got it right on my wall up above me. Thank you for writing such a great case study about me. I’m bringing you guys up in November of this year. And this was November of 2009. As a matter of fact, the weekend that we were there was the weekend that he bought BNSF.

[00:13:28] Todd Finkle: And all these people, the radio station, not radio TV station people were chasing him around everywhere, but he really focused on us, the students, because he loves teaching. It’s one thing about Warren is he said that he’d be a teacher. If he wasn’t doing what he’s doing right now, and really he is a teacher with all the stuff that he writes and he’s always talking all the time.

[00:13:51] Todd Finkle: So we ended up spending a whole day there and we went to a couple of his subsidiaries and two and a half hour Q& A, which is in the book. I did this three times. I’ll just talk about this time three times and all the Q& A’s are in the book. which are valuable and primary research, as they say, to differentiate my book from other books on Buffett, but the students, they had a great time, everybody thinks, okay, the best thing about going to see Buffett was probably learning about how to make money, but really that what they said was.

[00:14:25] Todd Finkle: The best thing was, is how to be a better person that they got out of it. And that was really eye opening when I heard that from them, there are a number of things that he said that just had a lasting impact on my life for somebody who’s 21 or 22, not as much. So for me, maybe for you, Kyle, the most important decision you make in your life is who you marry.

[00:14:50] Todd Finkle: I wish somebody would have told me that when I was 20 or 21 years old. And they were all there and they heard it. And he said that really early too. So they wouldn’t forget it. And another thing he said, we were up there on his floor. He has this area on his floor. Kind of a big room where you can have like meetings and stuff like that.

[00:15:12] Todd Finkle: And he threw us all in there and I was in the front row and I remember that he was looking right at me when he said this, he goes the most successful business people that I’ve met in my life are not the people with these high powered degrees. But they’re the people that have the most business experience that think way outside of the box.

[00:15:33] Todd Finkle: That is something that has stuck with me and that I teach to my students every semester. And what a powerful statement that is. Yeah, so we did that and I ended up going to Gonzaga after that. I immediately went on the market because doing something of this magnitude, I was in the papers, I was on the radio and everything, and I did this three times.

[00:15:55] Todd Finkle: I wrote five articles about Buffett and this was over a period of about nine years. And after about nine years of doing this I had all this material on him and I’m from Omaha and I had a lot of talks with some of my best friends that are finance guys. Most of my friends are finance guys and one’s, a chair of investments and another used to be the chair of the Connecticut University, Connecticut finance department.

[00:16:24] Todd Finkle: And they were all telling, they were laughing at me when I told him I was thinking about writing a book on Buffett. They thought I was crazy. I’m an entrepreneur, and I’m looking for where’s the edge, where’s the niche, and I did my homework and I looked at all the books, and in my opinion, of course, I’m probably biased here, there weren’t that many really quality books on Warren Buffett.

[00:16:49] Todd Finkle: The last biography was in 2008. That’s 15 years ago. A lot has happened in 15 years. And I differentiate my book, I’m from Omaha. I know a lot of people, and I knew Pete and all these friends and I can tell you some stories about the people that got really wealthy in Omaha that, and I interviewed Susie Buffett through somebody that I knew, my cousin.

[00:17:18] Todd Finkle: And one thing that I was always disappointed in all these Buffett books was is they never really gave you an example of a company and took you through the whole valuation process. And it took me a long time to do this. You have to remember I’m a liberal arts guy. I got an undergrad in life sciences, so I’m learning all this stuff on my own too.

[00:17:40] Todd Finkle: But that’s just proof positive that anybody can do this if you’re willing to put in the effort. And so I go through on chapter six and I go through a couple of case studies on GEICO and Apple and I go through the entire process that Berkshire started buying Apple. And then I look at what he would be doing before he would purchase it and looking at all the metrics and the financials.

[00:18:05] Todd Finkle: And I describe what they all mean, so somebody with a life science degree can understand this stuff, and then I go through a discounted cash flow, and again, I define everything, and I talk about all the different metrics in there, and the interest rates that you use, and how it can affect the valuation of a company.

[00:18:27] Todd Finkle: And that’s not easy stuff. Maybe the people that are in finance think that’s easy or they can just plug it into a computer, but I was doing all this stuff by hand. I’m old school. I’ve always had the opinion of instead of relying on a computer and Warren’s probably the same way I’m old school, except for he can do it in his head.

[00:18:49] Todd Finkle: And I think Charlie Munger always says. That, Warren said, one thing I didn’t tell you at lunch, when we went out to lunch, when we visited Buffett, I sat right across from him and the only question I really had for Warren was, how do you value a company? And Warren goes the discounted cashflow.

[00:19:07] Todd Finkle: And so I’m sitting there and I’m waiting for more. And he goes so I said, I asked him again, I go, Hey, how do you value a company? And he said the same thing at this kind of cashflow. So I knew that had to be in the book and I wanted to make sure that I gave an actual real world example because I never really got it out of any of these books.

[00:19:30] Todd Finkle: Even Hagstrom didn’t do it, but I like Hagstrom. I’ve met Hagstrom and he. He’s a great guy, but even he didn’t do it, and I think his book might be the best book related to the financial aspect of Berkshire Hathaway and Warren Buffett. So that’s my rationale on doing that, and I did a chapter in the book on his mistakes.

[00:19:53] Todd Finkle: That’s another chapter that I never saw anywhere in any of these Buffett books. There’d be an occasional mistake here or there, but there wasn’t a chapter on his mistakes. And so I did a lot of research and came up with 21 of his biggest mistakes. And then I wrote another chapter, thanks to the help of a friend of mine, who’s a CFA, Matt Koffler, and a really smart guy.

[00:20:20] Todd Finkle: And he really pushed me to do a chapter on the biases, behavioral biases. And so I, I spent that was my last chapter that I did, and I spent a lot of work doing that. And I kind of combined behavioral biases with Buffett’s mistakes, and I looked at what caused Buffett to make these mistakes, what biases, so we could learn from his mistakes and not do them ourselves.

[00:20:45] Todd Finkle: That was another differentiation. Added a chapter, my last chapter was focused kind of on FinTech. But that changes like every hour and I’m sure that’s way outdated by now, but it was interesting to learn about FinTech and what’s going on and look, looking at what China’s doing when I wrote the book, they were way ahead of us.

[00:21:08] Todd Finkle: It took me 14 years to write this book. Nine years of kind of, doing the whole going to see Buffett and going to the shareholder meetings. I went to 14 shareholder meetings while I was doing, I was getting a lot of exposure or somebody on our board of directors at the university saw me.

[00:21:29] Todd Finkle: Getting, he saw me doing all this stuff. And so he wanted to meet with me and have lunch. And he said, at the end of it, he goes, how’d you like to fly to the shareholder meeting on my private jet? And I said, no, I’m too busy that day. No, I said, oh yeah, that sounds like great. He goes, so pick out 60 year students and we’ll go fly to the next shareholder meeting.

[00:21:48] Todd Finkle: So we did that three years in a row. And that was just fantastic. They just love that. How’d you like to be 20, 21 years old and doing that? That’s something you’ll never forget for the rest of your life. That’s something I never, I’ll never forget for the rest of my life. But the shareholder meetings are just fabulous too.

[00:22:07] Todd Finkle: I mean, if you haven’t been to a shareholder meeting, you’ve got to go. It’s like a rock concert. And a cult. There’s something else. I can’t remember. It’s crazy. It’s it’s nuts. And the people there are really nice people and very smart people. And I talk about that a little bit in the book as well.

[00:22:27] Todd Finkle: And I have a chapter on all my meetings with Buffett, the three trips that we took as well. I’ll let you ask me another question. That was a long time. 

[00:22:37] Kyle Grieve: Warren’s obviously a legendary thinker, but I don’t think many people know that he’s really loved being on his own and thinking since he was a really young child.

[00:22:45] Kyle Grieve: Warren once said, and I quote, I like to work by myself, where I could spend my time thinking about things I wanted to think about. I could be sitting in a room thinking, or I could be riding around flinging things and thinking, and by flinging things, he was referring to I guess, newspapers delivery on his bike.

[00:22:58] Kyle Grieve: So where do you think he learned this importance of thinking while being such a young, at such a young age? 

[00:23:04] Todd Finkle: Before I answer that, I’ll tell you kind of a story related to that. One of the best parts about writing a book is all the people that you meet, and from all over the world, and so this lady contacts me, and she goes, we knew Warren when he used to ride his bike in Washington D.C. and delivering papers, and so she told me the name of the street where he used to do it, and the name of the dog that used to chase him down the street. And that was pretty funny. It’s stuff like that makes it really a lot of fun, the people that you meet is awesome, but Warren, he came from a family of entrepreneurs, his grandparents on both sides were entrepreneurs.

[00:23:49] Todd Finkle: His father was entrepreneurs. They owned a grocery store and a print shop on the mother’s side and farmers going way back when they were in France. So there’s entrepreneurship in the blood and for my research and being a professor of entrepreneurship, what we learned through a survey. is that people that come from families of entrepreneurs are more apt to be entrepreneurs.

[00:24:16] Todd Finkle: So those are some reasons there, but also, he grew up during the depression, the great depression, and his family was in turmoil. And he started really, from what I understand, I’m not so sure everybody knows this, but he started at age four selling lemonade. on the neighbor’s driveway, and then he moved up to sell gum, and then pop, and he was relentless.

[00:24:42] Todd Finkle: He was just relentless, and the drive had to have come primarily from being brought up in the Depression, and his father lost his job, and he lost all the money that the family had. I have said this several times, that I think he has the poverty effect. I don’t know if he’s ever gotten rid of it. He probably won’t.

[00:25:05] Todd Finkle: But all the different entrepreneurial ventures are just fantastic. All the things that he does and he’s thought outside of the box. My favorite one is the pinball machine. He bought pinball machines and he was putting them in barbershops. And the reason why that stands out for me is that when I was a kid, 11 years old, 12 years old, we used to ride up to Benson.

[00:25:27] Todd Finkle: There’s an area in Omaha called Benson. There was a barbershop up there and they had a pinball machine in there. Whenever I talk about Warren Buffett, I think of that pinball machine and Benson, as a kid going there. That’s genius. On one of the trips that we made to go visit Buffett, I gave an assignment to my students to come up with a new product with the intention of trying to get invited to go visit Buffett.

[00:25:51] Todd Finkle: And one group came up with the idea of a Warren Buffett pinball machine, which was brilliant. And it was a lady that was a religious studies major and a minor in entrepreneurship. It was her idea. And we didn’t have the time or the money in order to do that, but we just did a design. And to make a long story short, of course, we got invited back to Omaha after we did that.

[00:26:14] Todd Finkle: And that was awesome. But all the entrepreneurial things that he does, he was relentless, man. And he kept on doing it. He made 76, 000 by the time he graduated. And he still graduated 16th in his class when he was in Washington, DC, where his dad was a Congressman. And that never stopped. His entrepreneurial stuff just never stopped.

[00:26:35] Todd Finkle: He, after he graduated from high school, his dad really kind of pushed him to go to college. He didn’t want to go to college. And he ended up going to Penn, and then he wanted to drop out of Penn after one year. One year he said he wasn’t learning anything, and then his dad said, give it another year, and then he dropped out after his second year, and then he went to Nebraska, and he had 50 people working underneath him delivering papers while he was going to school full time.

[00:27:03] Todd Finkle: Thinking about that, and what I did in college, what I was doing, and what he was doing. I mean, I certainly wasn’t even thinking about doing something like that, and my dad owned a bar growing up and I was bartending while I was in college undergrad. That’s how I was making my money in undergrad.

[00:27:22] Todd Finkle: Yeah. And then he after got his degree, applied to Harvard and they rejected him. And then he applied to Columbia after he read The Intelligent Investor and he ended up studying under Benjamin Graham. And that’s where he really started to blossom there. He got the only A plus anybody’s ever gotten under Benjamin Graham when he taught there at Columbia.

[00:27:44] Todd Finkle: And then he wanted to go work for Benjamin Graham on Wall Street, but he got rejected by Benjamin Graham because he only hired Jewish people because the Jewish people weren’t able to get jobs anywhere else at any of the other banks. So Warren went back and worked for his dad. His dad had his own investment business in Olaha, so he went back there and he was selling stuff, but he still kept in touch with Benjamin Graham, and one of the things that really stands out from Warren, if you want to get on Warren’s good side, is be persevere.

[00:28:16] Todd Finkle: He loves people that have perseverance, and he loves people that are creative. You wouldn’t think a guy like Warren would love people that are creative, but he does, he really does. I’ve learned it the hard way. So he kept on persevering, he wanted to work for Benjamin Graham, and he eventually got up there, I think, after five years.

[00:28:36] Todd Finkle: He worked on Wall Street with Graham for a couple of years, and he became a millionaire, and he went back to Omaha. And he wanted to go ahead and retire on just, take a couple of college classes and read some books and live off of the money that he made on Wall Street. And his family wouldn’t let him do it.

[00:28:54] Todd Finkle: His family came up to him and said, no, you’re not retiring. You’re going to manage our money. And over the next 13 years, he started seven partnerships and they averaged 36 percent a year. And then he stopped doing that because he didn’t see any opportunities after that. And so he was honest enough to say that to him.

[00:29:15] Todd Finkle: He could have still charged the money. and taking their money. But he was, he’s not that type of guy, he’s got a lot of integrity. But he bought Berkshire Hathaway, which was his biggest mistake of his investment career. The reason why he bought Berkshire Hathaway was that He had shares of it, he invested in it, and the CEO of Berkshire Hathaway was willing to buy his shares, I think it was, can’t remember the exact number, but he gave a commitment that was like 12.

[00:29:48] Todd Finkle: 50, and it came back in the sheet of paper 12. 50 below that, and Warren just flipped out. He was really mad and his father passed away five days before that. That led to him making the worst decision he’s ever made and a mistake that he learned from the hard way. It’s related, I think, to temperament, which is what him and Charlie always talk about is the most important thing in investing.

[00:30:17] Todd Finkle: is your temperament, which is related to biasness. He ended, he got really mad and he just bought this guy out and he fired him. I can see Warren going out and having a great steak that night, the night that he fired that guy. But the problem was, of course, it was a bad industry to get into.

[00:30:34] Todd Finkle: And Warren being Warren, he didn’t want to lay off these people because they had nowhere to go. So he kind of hung on and he hung on and he eventually dumped it, I think in 1985. But he didn’t, that’s kind of the Warren way. He doesn’t like to lay off employees. He cares about people. He really does. As Susie said to me when I talked to her, the people just don’t understand how much he cares about other people and about social justice or injustices as well and a woman’s rights and things of that nature, and his foundations hit on all that stuff that he’s giving all of his money to.

[00:31:18] Kyle Grieve: So let’s look at some of his biggest influences. I mean, his father obviously was a huge influence on him, but another one other than also Benjamin Graham, like you already mentioned, but one of the lesser known ones I would say is Philip Fisher. So he had a very big impact on how Buffett basically evolved away from investing in, his traditional cigar butts that I learned from Benjamin Graham and kind of transitioning to quality compounders.

[00:31:40] Kyle Grieve: So I’m interested in knowing what key concepts did Warren Buffett learn from Fisher that caused Buffett to transition away from the non investing strategy that had worked so well for him for a very long time. 

[00:31:51] Todd Finkle: Charlie really loved Phil Fisher. Charlie really pushed Warren to go in that direction. And Charlie, there are some things that Charlie has done a great job of Berkshire and that was one of them.

[00:32:05] Todd Finkle: That and he pushed Warren to buy See’s Candy. They probably wouldn’t have bought See’s if it wasn’t for Charlie. Fisher is known for his scuttlebutt methodology. He wants to buy companies, for the long term. He doesn’t want to have a lot of companies. He’s into maybe having 10 at the most so you can keep track of them.

[00:32:26] Todd Finkle: He’s not just looking at the financials like a Benjamin Graham, and he really wants quality companies that you can hold for the long run. And he looks at the sales team, he’ll look at the R& D, he’ll look at all the different facets and the management team as well. And I’m not so sure that Warren was doing that as much before.

[00:32:46] Todd Finkle: He was smoking on puffing on a couple of cigarettes here and there, but he wasn’t looking at the totality of it. And. And that’s a great book that he wrote. Everybody should read that book. What’s it called? The Uncommon Stocks and Common Profits or something like that. Yeah. Something along those lines.

[00:33:06] Todd Finkle: Yeah, focusing on solid modes, having a margin of safety, all that stuff is something that Phil Fisher was into and Buffett really took a lot of the stuff that he’s doing today from Phil Fisher, kind of, and Charlie brought in some of this stuff as well. 

[00:33:22] Kyle Grieve: Outside of Fisher, like you said, Charlie Munger was, a massive driving force in Buffett’s evolution towards buying quality businesses.

[00:33:29] Kyle Grieve: Warren seemed to really understand Munger’s views that in order for them to scale Berkshire Hathaway, the cigar butts just wouldn’t work because you can’t make a lot of money off those for a long period of time. Charlie has said that Warren would have eventually come to the same conclusion without ever meeting Charlie, but you know, Charlie, he’s a very humble guy sometimes.

[00:33:48] Kyle Grieve: So I know it’s impossible to quantify, but how big of an impact do you think Charlie has had on Warren Buffett and Berkshire Hathaway? 

[00:33:55] Todd Finkle: That’s a hard question, because I’ve been to all these shareholder meetings and I listen so closely to these guys, like you’re at church or something. It’s really hard to know, like I gave those two examples earlier, but Warren is a firm believer in giving credit to others.

[00:34:14] Todd Finkle: He doesn’t have a big head. He doesn’t need to take credit for everything. And so I just wonder sometimes that he’s always giving all this credit to Charlie, but who’s coming up with the ideas? I don’t know, but obviously it’s worked for them. So who am I to say anything? But he’s a genius. Their, his kid, he has, I don’t know, seven or eight kids.

[00:34:39] Todd Finkle: Charlie does. And my wife is from Palo Alto and I met her through the internet. And when I went out there one time to visit her, she was a middle school counselor in Palo Alto and Charlie Munger’s grandson was at the same school. So I sat in on a class with Charlie Munger’s grandson. And let me tell you something.

[00:35:02] Todd Finkle: He is the spitting image of Charlie Munger. It was pretty funny. That’s just a story there. I love Charlie. I have a chapter in the book on Charlie. I initially had two chapters on Charlie and they told me that I needed to cut it down to one. But I love that chapter. It goes through his whole life and talks about his entrepreneurial ventures.

[00:35:25] Todd Finkle: He had an investment company that he ran and he got great returns. 

[00:35:30] Kyle Grieve: It’s interesting about Charlie and Warren. I mean, they’re both so humble saying, investing’s super simple, anyone can do it. But, you just think about the stuff that these guys have done and it’s okay, I understand, a lot of it, you like to simplify things for everyone else, but like you said, they’re, I think they’re both geniuses.

[00:35:47] Kyle Grieve: And there’s not a lot of people like Warren and Charlie and I think just the amalgamation of having them together has just been lightning in a bottle. 

[00:35:55] Todd Finkle: But they always say that being a successful investor is not that hard. They always emphasize that and they’ve been doing that for years.

[00:36:04] Todd Finkle: Just buy, keep on buying and hold it for the long term. And Buffett says, if you’re not involved in the markets every day. 90 percent SPY index, low cost, 10 percent short term bond index. And he says, that’s what his wife is going to be inheriting from him. And he said that, again, I went to all these shareholder meetings, but he didn’t start saying that really until about eight years ago, he wasn’t talking about that at shareholder meetings before.

[00:36:33] Todd Finkle: I don’t understand why maybe he was before. I started going, but he really started to hit on that. Maybe after the great recession, he started to hit on that. Yeah, he says, if you’re not involved in the markets, you’re at a disadvantage, information wise. He’s worked on Wall Street. He knows what’s going on Wall Street.

[00:36:53] Todd Finkle: That’s all I’ll say about Wall Street. 

[00:36:56] Kyle Grieve: So since Warren has been in business and investing now for over 70 years, it’s impossible for him to have not encountered some major crises. Can you discuss how Buffett has performed during some of these crises that he’s lived through? 

[00:37:09] Todd Finkle: The dot com bust. I remember that vividly.

[00:37:12] Todd Finkle: I remember the market going up and up before it busted, and people were going on TV and lambasting Buffett, making fun of him, and then it collapsed, and then the NASDAQ went down like 73%, and Buffett, was probably laughing all the way to the bank. Berkshire was up 30%, so he just sticks to his guns.

[00:37:36] Todd Finkle: Sticks to what he knows, value investing, everything is going down. He’s probably buying some stuff. That’s an example that I remember really vividly. And then the Great Recession. He came on in 2008, you probably remember this, and he wrote an op ed in The New York Times and said, buy now, buy US stocks now.

[00:38:02] Todd Finkle: And I think the market was down 38 percent at that time, something like that. I didn’t buy because I always remember him saying, nobody knows what’s going to happen over the next year or two years. It felt like a depression, and I didn’t want to lose my money, I should have bought, even a little bit, because he, it was Warren Buffett.

[00:38:22] Todd Finkle: Today I would do it if he did that, but it went down another 20 percent after, even after he did that. And it bottomed, the S&P bottomed on March 9th, 2009. I believe it was 53%, something like that, that it bottomed and he was down about 50 percent during that time at his worst point, but hey, what Charlie say, they go, Hey, if you’re not willing to take a 50 percent loss in your stocks, you shouldn’t be in the market.

[00:38:53] Todd Finkle: We should be in a CD or treasury or something like that. And I think that they’ve gone down like 50 percent three times. I always keep that in the back of my head too when I’m investing is am I willing to lose half of my money, and a lot of it will be dependent on the individual, if they’re younger, like you, you can afford to lose 50 percent and still come back for me, I can’t afford to lose 50%.

[00:39:20] Todd Finkle: So that’s dependent on the individual and their situation. And lately was COVID. And I record all of it. Whatever Warren says, I record it. I’ve got everything recorded and I’ve got stuff recorded on my TV right now from him. And I’ll go back and I’ll listen to it. And he said, don’t do anything. Cause I remember he was on CNBC with Becky Quick.

[00:39:46] Todd Finkle: And she asked him, and he just said, don’t do anything. And that was like the day that it was down 3%. And then the next day it was down another 3%. He’s never been through something like this before. That was a first for him, but it turns out that he was right in doing that and not doing anything. I don’t know what I’m going to do when Warren dies.

[00:40:07] Todd Finkle: He’s my mentor on what to do and a lot of this stuff. I mean, there’s other guys that I listened to that are really bright guys, but the thing about Warren that you get that you don’t necessarily get with everybody is, he’s got your best interest at heart. He has integrity. He’s not going to be lying to people for his own benefit.

[00:40:28] Todd Finkle: That’s why I think they bring him on TV when we have all these crisis because they know that he’s going to give it to us straight. And he’s going to help all of us to manage our money and help us through the, these trying times. 

[00:40:43] Kyle Grieve: So Warren has frequently discussed how important investing in your circle of competence is, but the more you learn, the more your circle widens.

[00:40:50] Kyle Grieve: So with that said, what do you think the primary reason for aversion to technology stocks? I mean, he’s so intelligent. You think he could have learned that if he really wanted to, but yeah, I would love to know. Is it just that he just doesn’t like them? What’s the main reasoning behind that? 

[00:41:02] Todd Finkle: If you go back, I think if you listen to some of his older interviews, he always abuses technology.

[00:41:09] Todd Finkle: He’ll never touch technology and da. I don’t think that’s true now. And I think a big reason why is because he hired two new CIOs, co CIOs, Ted Weschler and Todd Coombs, who are more tech savvy, obviously, because they’re younger. And they started to buy Apple in 2016, they bought Amazon, and one thing I never understood about Buffett is forever he’s been telling the world that Jeff Bezos was the best manager in the world.

[00:41:44] Todd Finkle: And I remember giving a presentation at the University of Iowa and telling them about that back in 2016 or something like that and he still didn’t buy Amazon and you know how much Amazon’s gone up But eventually, you know after you got Ted Weschler and Todd Coombs in there, you know Then they started to get into tech.

[00:42:04] Todd Finkle: They started to buy Apple I don’t think that the big positions in Apple were bought by them because they’re only managing 15 billion a piece. I think the big positions were Warren with Apple. And then they started to get into they bought Amazon and they got into some FinTech stuff, a snowflake. They got in on the IPO.

[00:42:26] Todd Finkle: I don’t know that much about Snowflake, but I don’t even know how well they’re doing. I haven’t really checked them that much. New Bank and another company, I think that’s down in South America, related to FinTech. So they’re slowly getting into that. And I think that’s kind of the future for them when Warren does pass away and Charlie is, they’re going to be more into tech.

[00:42:47] Todd Finkle: And the question maybe I have for you is, are they going to have the green light to do whatever they want, or is there going to be somebody that’s going to be looking over their decisions because, they have a new couple of new board of director members that are both financial guys, they manage money, Wally Weitz and Chris Davis, they’re going to be seeing all that stuff.

[00:43:10] Todd Finkle: I don’t know. 

[00:43:11] Kyle Grieve: Yeah, I mean, you’d think so. And it kind of makes, FinTech at least kind of makes sense because Buffett has such a long history of investing in banks and understanding the financial sector so well that maybe melding that with technology kind of makes sense and still is somewhat in their circle of competence.

[00:43:25] Kyle Grieve: Yeah, I don’t know. I mean, Greg Abel, who obviously is going to take over, he definitely, he’s not going to make the investment decisions because, he doesn’t have any edge over Ted and Todd. Yeah, it’s going to be really interesting to see how that plays out. 

[00:43:37] Todd Finkle: We had a talk at the last Berkshire meeting.

[00:43:41] Todd Finkle: I was invited to be on a panel at the Gabelli Funds Research Conference, and I was up there with Chris Blomstrom and Adam Mead, who just wrote a book on Buffett, and Max Sykes from Gabelli, and we were talking about a lot of this stuff. We were talking about what’s going to happen to Berkshire after Warren passes away, what’s going to happen to the stock price after he passes away.

[00:44:06] Todd Finkle: And these guys are really convinced that they’re going to be okay because Abel they all really like Abel. But what you were saying, I think Abel is more of an energy guy. That’s what he’s been brought up in. And so Abel will probably be doing acquisitions related to energy because his expertise is not really in tech.

[00:44:25] Todd Finkle: Yeah, I was kind of surprised everybody was really positive on Buffett, even at the last shareholder meeting. Basically, I don’t know if you were there, but at the last shareholder meeting, Charlie and Buffett basically said, and Abel was there, by the way. Basically said, you’d have to be a fool to mess this up, but we’re leaving you.

[00:44:48] Todd Finkle: And he didn’t say it towards Abel, but they were just talking in general. 

[00:44:53] Kyle Grieve: Yeah, it’s going to be really interesting. I think that their assets, especially in energy and transportation they’re just, they’re really good assets and they’re not going anywhere. 

[00:45:00] Todd Finkle: And he keeps on buying Oxy. I’m not really 100 percent sure what’s going on there.

[00:45:06] Todd Finkle: The only thing that I could think of is that, there’s not going to be as much oil, so he’s looking 20 years down the road because that’s the way he thinks. He’s not thinking, Oh, what’s the market going to do tomorrow? He’s looking 10, 20 years down the road. 

[00:45:21] Kyle Grieve: Your book also, you, which you already mentioned, had a really good chapter about Buffett’s mistakes that I really enjoyed because I love looking at mistakes, especially mistakes that really smart people make, because if they’re capable of making it well, then so am I.

[00:45:34] Kyle Grieve: So you mixed a lot of mistakes of omission with mistakes of co omission, which I really appreciate as well. So out of all those mistakes that Warren made, which do you think was the most painful and why? 

[00:45:44] Todd Finkle: The most painful for him was buying Berkshire because he lost including opportunity costs anywhere from 300 to 500 billion.

[00:45:53] Todd Finkle: That was definitely the most painful for him. But you know, then there’s losses of omission. Google, he had an opportunity to get in on the IPO of Google and he passed on that. Amazon, they didn’t get in into that until late in the game. They didn’t get into Microsoft. I know he has his reasons for that, but that was another big one.

[00:46:18] Todd Finkle: There’s a whole bunch of them. And then the whole airline thing, the whole airline debacle. debacle, or whatever you call it. That’s just crazy. He goes back and his initial investment with US Air and he talks about, oh, he just hates airlines. He goes on and on about hating airlines and he talks about them all the time at the shareholder meetings about, oh, he hates airlines.

[00:46:41] Todd Finkle: And then he buys airlines right before COVID. That’s pretty funny. Probably not so for him. 

[00:46:48] Kyle Grieve: I liked that part in your book where you mentioned that he calls himself an air holic. I laughed at that. There was another part of your book that really stood out to me was the part about how Berkshire Hathaway has no master plan.

[00:47:00] Kyle Grieve: Buffett basically just kind of been showing up, deploying capital as he saw fit at incredibly high returns, and then allowing compounding to work its magic. So how is it that Warren has basically got to where he is today without ever really having, a master plan or a plan for the future? 

[00:47:17] Todd Finkle: Warren Buffett, every morning he reads like seven papers, and I’m probably just waking up in the morning and he’s already read seven papers.

[00:47:26] Todd Finkle: His ex, not his ex wife, but his first wife passes, passed away from cancer, and she used to say that what he’s looking for is an edge over the common person over you and I, if we read the same thing, what can he pick out of that article or out of that paper that the common person wouldn’t pick? And that’s where he gets a kick at being just smarter than other people.

[00:47:54] Todd Finkle: So his master plan, I don’t think he has a master plan, stay within your circle of competence. He follows companies and he’ll follow them for 20 years, 25 years. And he’ll wait for the right time to get involved with them, but you know, they have to be a business that he knows about, that he understands, and he talks about that all the time within a circle of competence and that really lowers the number of companies that are available now, he has 148 billion in float money from insurance.

[00:48:29] Todd Finkle: And what is he doing with that? Every Monday morning, Everybody morning. This is what he says. He goes right to the treasuries or T bills online and buys T bills. That’s what he does with all of his money. And why not? I mean, you’re getting over 5 percent on those T bills right now. I bought some the other day for 5.

[00:48:51] Todd Finkle: 6 percent or yeah, 5. 6%. That’s not bad. The market premium on the S&P is 5%. That’s one thing about Warren is he was just laughing about that at the shareholder meeting about how much money he’s making in these T bills. Every Monday he goes, that’s probably the amount of money that they collect every week and then they go right into the T bills.

[00:49:12] Todd Finkle: There’s a lot to be said there. He was a net seller of stocks last semester or last quarter. 

[00:49:19] Kyle Grieve: Todd, I’d like to thank you so much for joining me today. Before we close out the episode, where can the audience connect with you and learn more about you and your book? 

[00:49:26] Todd Finkle: You can connect with me on LinkedIn.

[00:49:29] Todd Finkle: I’ve got a private website, toddfinkle.com. I’ve got Twitter @ Todd Finkle. I’ve got my university account and you can just go on there and hit Todd Finkle at Gonzaga University. And you can buy my book through Columbia University Press or on Amazon or all the bookstores that are out there. It’s all over the place.

[00:49:51] Todd Finkle: And I had a great time today, Kyle. It was a lot of fun. I probably could go on for another couple hours with you. We had fun. 

[00:49:58] Kyle Grieve: Yes, we did. 

[00:49:59] Kyle Grieve: Okay, folks, that’s it for today’s episode. I hope you enjoyed the show, and I’ll see you back here very soon. 

[00:50:05] Outro: Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network.

[00:50:13] Todd Finkle: Every Wednesday, we teach you about Bitcoin, and every Saturday, we study billionaires and the financial markets. To access our show notes, transcripts, or courses, Go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network.

[00:50:35] Todd Finkle: Written permission must be granted before syndication or rebroadcasting.