TIP661: LESSONS FROM BEAR MARKETS

W/ RICHARD LAWRENCE

19 September 2024

On today’s episode, Clay is joined by Richard Lawrence. Richard is the Founder and Executive Chairman of Overlook Investments, a leading value-oriented investment firm in Asia that he founded in 1991.

Over a 30-year time period, Overlook compounded capital at 14.3% per year — a remarkable record of growth that is a testament to their consistent ability to find and invest in Asia’s best companies.

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IN THIS EPISODE, YOU’LL LEARN:

  • Why the 1980s was the most transformative period in Asia’s history.
  • Key lessons that Richard learned from his father, who owned an investment firm in New York.
  • Why Richard prefers to invest in the most simple businesses.
  • What Richard learned from having his apartment ransacked after publicly calling out a management team his firm invested in.
  • What was happening during the Asian financial crisis that made it an economic nightmare for businesses all throughout Asia?
  • Why Richard regrets ever listening to Buffett’s advice on ignoring the broader macro environment when investing in great companies.
  • How Richard helped Taiwan Semiconductor improve their capital allocation decisions.
  • Why Richard generally prefers dividends over share buybacks
  • What led Richard to recommend TSMC’s stock to Warren Buffett?
  • Why Overlook has started to bet big on China.
  • Richard’s view on the current macro situation in China.
  • The biggest misconceptions that US investors have with respect to China.
  • How Jeremy Grantham influenced Richard to be more mindful about the environmental risks that lie ahead
  • And so much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Clay Finck: On today’s episode, I’m joined by Richard Lawrence. Richard is the founder and executive chairman of Overlook Investments, a leading value oriented investment firm in Asia that he founded in 1991. Over a 30 year time period, Overlook compounded capital at 14.3 percent per year by betting on Asia’s best companies.

[00:00:20] Clay Finck: Over that same time period, the S&P500 grew by around 10.4 percent representing roughly 3.9 percentage points in alpha per year. At that rate, 10,000 invested in Overlook at the beginning of 1992 would have compounded to roughly 551,000. Versus just 194,000. Had you invested in the S&P500, even David Swenson recognized the talent in Richard as he invested a portion of the Yale endowment fund in overlook early on.

[00:00:51] Clay Finck: Richard has a fascinating story and I’m very excited to shed light on it during this episode. During our conversation, we cover why the 1980s was the most transformative period in Asia’s history, why Richard prefers to invest in the most simple businesses, what Richard learned from having his apartment ransacked after publicly calling out a management team his firm invested in, what was happening during the Asian financial crisis that made it nothing short of an economic nightmare for businesses all throughout Asia.

[00:01:19] Clay Finck: Why Richard regrets ever listening to Buffett’s advice on ignoring the broader macro environment when investing in great companies? What led Richard to recommending Taiwan Semiconductor’s stock to Warren Buffett? Why Overlook has started to bet big on China? Richard’s view on the current macro situation in China, and much more.

[00:01:37] Clay Finck: Without further delay, I bring you today’s chat with Richard Lawrence.

[00:01:39] Intro: Celebrating 10 years and more than 150 million downloads. You are listening to The Investor’s Podcast Network. Since 2014, we studied the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Now for your host, Clay Finck.

[00:01:45] Clay Finck: Welcome to The Investor’s Podcast. I’m your host, Clay Fink. And today I’m thrilled to be joined by Richard Lawrence. Richard, I greatly appreciate you joining me here today.

[00:01:47] Richard Lawrence: Oh, Clay is fantastic. I thank you for the invite. I’m delighted to have a chance to sit for an hour and talk with you.

[00:01:49] Clay Finck: I am as well. So for those in the audience who might not be familiar with Richard, he’s put up these exceptional returns at his firm, Overlook Investments.

[00:01:53] Clay Finck: Over a 30 year time period, Overlook has compounded at 14. 3 percent by taking a concentrated approach investing in Asian markets since the early 1990s. And achieving this level of returns for over 30 years is certainly an impressive achievement. And it’s been done by just so, so few in the investment industry, but it didn’t come without its fair share of difficulties, which we’ll be getting into in today’s conversation. So Richard, I thought a good place to start was in one of the most pivotal moments in your investment career. It was in 1985, you landed in Hong Kong during what you called the most transformative period in Asia’s history. You wrote in your book titled The Model, I would often say I would rather be lucky than smart.

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