[00:03:01] Mary Buffett: I just think it’s too unattractive for him.
[00:03:04] Sean Seah: With regard to that, I wish that I’ve heard that quote much earlier before I started investing. Embarrassed to say, when I first started, I actually borrowed money to invest. In Singapore, there’s this particular investment tool called Contract for Differences, where you can leverage up to 7 times your capital.
[00:03:22] Sean Seah: And guess what? I was attracted. And back then, I think that I wanted to have that kind of leverage so that I can make money fast. I can just put 10,000 in and I can invest up to 70, 000 worth of equities. Thinking that if they double within let’s say a week, that’s where I can use 10,000 to make another additional 70, 000.
[00:03:40] Sean Seah: But I guess we all know how the story goes. I wiped out my account very quickly. And I tried jumping onto the next instrument, which was Forex trading at that point in time. And they allowed me to leverage up to 1 is to 1000. Meaning to say I can put a certain amount in, I can leverage up to 1000 times.
[00:03:58] Sean Seah: And guess what? I burst my account again. And the more times I burst the account, the more I desire leverage so that I can make the money back fast. It becomes like a revenge trading or a revenge investing. On high side, I realize what Warren mentions, what he makes, what he says makes sense. Because if you are good at investing, it is not that you do not leverage.
[00:04:18] Sean Seah: It is that you use smart leveraging. When I studied Warren, leverages a lot, but he doesn’t do it by borrowing money. He does it by buying insurance companies. Because it’s a different kind of leverage. That’s where he buys into companies that gives him float. And with that float, he’s able to use it to invest and make even more revenue.
[00:04:39] Sean Seah: And he doesn’t take on the risk of having to return the money. And you have to be caught right within a certain timeframe if you borrow money. And once you borrow the money, interest kicks in. That’s where it goes against you. Before you start, you have already lost. So I guess when we talk about leveraging, there are good kinds of leverage, there are silly kind of leverage and conventionally, most of us, we use the silly kind.
[00:05:02] Kyle Grieve: Part of what makes Warren Buffett such a great investor is that he approaches investing from a business like perspective. But let’s say an aspiring investor wants to invest in stocks with a business like attitude, but has zero entrepreneurial background. What would you suggest they do outside of, reading a bunch of business books and biographies of business greats?
[00:05:21] Sean Seah: Actually, with regard to that, Mary, I remember In fact, I took a page from your playbook. I remember Mary told me a story that when… Her kids were much younger. She told them to just invest in a certain portfolio based on, I remember you told me in the past it was a newspapers, they have all the stock ticker and you ask them to really select certain stocks and they select I think you mentioned pure berries and stocks that they know.
[00:05:45] Sean Seah: Interestingly, last year, I haggled ask, right? And you mentioned that you wish that you have actually bought those stocks. So taking a page from the playbook, what I did last Christmas when was I asked my kids to buy stocks. And they bought three stocks. The 000. So they couldn’t build a huge portfolio.
[00:06:03] Sean Seah: They bought three stocks. Disney, because they like all the Marvel heroes. Second one, they bought into Netflix because they see me watching Netflix a lot of time. Now, I listen to the podcast as well, but I spend time watching Netflix. And the third one was Alphabet because they use a lot of YouTube.
[00:06:18] Sean Seah: And guess what? The portfolio is already up by 50 percent since last year, December. So I realized that when we talk about buying stocks as an investment or a business perspective, you do not really need to read a lot of business books. My kids didn’t read business books, but they understand business as a consumer.
[00:06:33] Sean Seah: So I think that’s where we talk about that. So I remember you mentioned that, correct, Mary? About them doing the P ratio.
[00:06:40] Mary Buffett: Yeah, I mean, what’s very interesting about your story is they bought what they know, I mean, they understood and know all three of those companies that they’re talking about buying.
[00:06:51] Mary Buffett: And I think that’s really important for investors to remember is, a lot of people you hear about stocks or businesses that other people are talking about, but you don’t really know them. And people have invested in companies and stocks that they didn’t know anything about, and I think that’s completely crazy.
[00:07:11] Mary Buffett: You really should know what you’re investing in. If you’re using it, even better. But, like I said, Haagen Dazs, Burger King. All the things that my daughters wanted to invest in were things that they absolutely knew. So a lot of investors will hear about a stock or a company and they’ll just go and invest in it because someone said, Oh, it’s, I’ve made a lot of money, but no, you really should invest in what you know.
[00:07:38] Kyle Grieve: Buffett still lives by many of the principles that he’s learned from Benjamin Graham, especially in regards to investing with a margin of safety, the Mr. Market analogy, and the business owner’s mindset. But a lot of Buffett’s investing has evolved from Graham’s net nets to investing in high quality businesses like, Apple.
[00:07:53] Kyle Grieve: So if Buffett started today with the prevalence of growth companies and intangible assets, do you think he still would be drawn to the traditional low price to earnings, low price to book style of value investing?
[00:08:04] Mary Buffett: Yeah, I do. I think it’s traditional low P.E. and p. styles of investing are very good.
[00:08:12] Mary Buffett: Yeah, exactly.
[00:08:14] Sean Seah: I mean, I was looking back at the history of how this whole thing originated when Buffett, when Warren learned from Benjamin Graham, one of the key things was net, and he was looking at a company’s asset value net current asset value, and trying to buy below the price. So there’s a huge margin of safety.
[00:08:30] Sean Seah: I think this is one way of evaluating whether a company is below value. Okay, if you can buy below value, excellent. Another way of looking at things which people or conventionally people call it growth investing is to compare the current value to future value. If you can see a potential future value shift, this is with a lot of I would say assumption and prediction.
[00:08:50] Sean Seah: That’s why it’s important to buy into predictable companies. And you see that as a future, like this company is going to be like five times bigger. This is also considered undervalued. If you ask me to make calculated guess, which one will he use right now, I got a feeling it will be like a mixture of both.
[00:09:06] Sean Seah: It will not be one or the other. Because looking at his portfolio right now, you do see him buying into banks, correct? Like I think he invested heavily into different, like heavy asset investments, like banks or even like oil and gas companies. And these are heavily, I would say, asset based. At the same time, he also, I mean, his biggest holding is Apple, which is.
[00:09:26] Sean Seah: Is it about 50 percent or 60 percent right now? This is a growth company, but it’s still a mixture. So I guess it doesn’t have to be either. That being said, in my opinion, I’ve also realized that the valuation of the market has generally rised over the years. I guess it’s because there’s more participants in the market.
[00:09:43] Sean Seah: And that when there’s more participants, the P D ratio, the P D ratio has risen to a certain higher level. So to find it, like maybe two thirds of the current asset value may not be as easy. That is my opinion. Even with let’s say stock screeners and things like that. That’s what I think.
[00:09:59] Kyle Grieve: So Sean, as a value investor, who’s well versed in technology, I’m interested in knowing your favorite method of finding new stock ideas.
[00:10:07] Kyle Grieve: In the book, you mentioned some great ideas such as leveraging your circle of competence, tracking the super wealthy, looking at data to find the best companies, using your shopping mall to generate new ideas, which you just mentioned, and how to clone other value investors. I’d love to know what your favorite methods are and if there’s any new technology you’re using to help you find new ideas these days.
[00:10:27] Sean Seah: I do talk about using screeners using certain websites, or in recent years, we can even use AI. It’s just interesting the kind of ideas they can give you. Like you can, I tried using, asking chat GPT or even bug. Google. Imagine you’re Warren Buffett. Right now, what are the kind of undervalued opportunities they’ll give you?
[00:10:46] Sean Seah: And you’ll be surprised what they can give you. Now, that being said using screeners, using websites, typically it is a one off kind of strategy for finding stocks. Reason being, If I use a screener, this week and next week, they typically give me the same ideas because the valuation doesn’t change that much over, let’s say, one week or even one month.
[00:11:04] Sean Seah: I get some ideas here, but my favorite kind is actually what I mentioned, like, how our kids choose investing. Invest in what you know. I bought Microsoft, I think, earlier this year when ChatGPT became something quite, I would say, quite popular, and I’m thinking, wow, who owns this? And I realized Microsoft owns this, and I have a lot of assumptions, a lot of theories, I may be right, I may be wrong, but it piques my interest.
[00:11:26] Sean Seah: So I invested into Microsoft. Good news is went up, make money from it. So my, my favorite way is still really looking around. I think it makes, okay, because I’m not someone who loves shopping. So it makes my, when I accompany my wife to the shopping center, it makes my life more bearable to like search for investment ideas while shopping with her.
[00:11:43] Sean Seah: That’s now one of my favorite method.
[00:11:46] Kyle Grieve: Yeah. So I guess, using your own experience and then maybe mixing that with just opening up your newspaper, a newspaper app and reading the news and seeing what, how those businesses are doing in the news would be a decent starting point for someone.
[00:11:58] Sean Seah: I love that. So one thing is when I read stocks that are in the news, I always feel that I’m slightly too late because it’s already in the news. So what I do is I try to find either that particular company’s suppliers or maybe competitors. Like example, something I remember way back was, I think, was it Bill Ackman, he was shorting Herbalife.
[00:12:19] Sean Seah: So the network company marketing network marketing company’s industry was being affected. I do not invest in the Herbalife, but I try to find the peripheralists, those that are surrounding it. So I managed to find other companies and I thought it was a better investment. That’s how I like to look at things.
[00:12:33] Kyle Grieve: Yeah, I like that. So basically you’re just looking for the baby being thrown on the bath water with one bad news item and then just looking at the peripherals of what else is not doing well. Yes. I like that. So Warren has a brilliant mental model for determining if a business has monopolistic characteristics that Mary outlined in Buffetology.
[00:12:51] Kyle Grieve: He’d ask if an intelligent and able competitor had access to billions of dollars, could they start a business and successfully compete with the business? If you had to guess, what percent of Warren’s private and publicly owned businesses he’s purchased in his career had monopolistic tendencies?
[00:13:09] Mary Buffett: Boy, I would say most of them.
[00:13:11] Mary Buffett: I mean, if you just think about it, Coca-Cola, the companies, if you look at the companies that Berkshire owns, most of them have monopolistic tendencies. And you ask, why did he go against this rule to buy non monopolistic type businesses like airlines, retailers, and show manufacturers? Airlines wasn’t a good buy for him.
[00:13:38] Mary Buffett: Retailers… I mean, the Nebraska Furniture Mart is from Nebraska. He knows the owner. It’s just interesting. I mean, Nebraska Furniture Mart is, there’s nothing like it. I mean, people come from all over, literally the country, to go there to shop. It’s a crazy place. Airlines, that wasn’t a great buy for him.
[00:14:03] Sean Seah: When you talk about being a monopolistic company, it is pretty subjective, I guess. So I think the indicators that we always look at in the Buffetology, we talk about net margin, okay, like gross margin. The assumption is this. If let’s say you have certain advantage over your other competitors, likely you’re able to charge higher, resulting in a higher margin, or you’re able to reduce costs significantly.
[00:14:27] Sean Seah: So it’s always back to the margin. So I guess. I remember there was one, I couldn’t remember the year, was it 2007 or 2008? There was a previously, Warren bought a lot into IBM, and at his annual general meeting, someone actually asked him, he say, what, like Warren, what is the competitive advantage? What is the economic mode of IBM?
[00:14:47] Sean Seah: And I remember his reply actually shocked me. He said that, frankly, I don’t know, but the number seems to suggest it has. That’s like economic mode. So that’s why I realized, wow, it is really subjective. And even Warren Buffett doesn’t have all the answers. If it’s really, there’s a correct answer.
[00:15:01] Sean Seah: We will be able to do a, like a, it’s like a black and white, right or wrong, binary kind of a thing, but it isn’t. And that’s why investing is so interesting. You have to make certain assumptions, make certain guesses. And make sure that even if you are wrong, you can take the affordable losses. I guess that’s how we play the game.
[00:15:17] Kyle Grieve: Mary, you had a really good breakdown of commodity type businesses that you wrote in Buffettology, which has been very helpful for me and I’m sure a lot of other people who’ve read that book to help eliminate low quality businesses. For listeners not aware of what creates a commodity type business, they are low profit margins.
[00:15:33] Kyle Grieve: Low returns on equity, absence of brand name loyalty, presence of multiple producers in the industry, existence of excess production capacity, erratic profits, and high dependence on tangible assets. So when Warren is analyzing a business, how quickly do you think he’s able to determine a business’s quality?
[00:15:54] Mary Buffett: I think it’s pretty easily. I mean, like I said, just looking at those things, their profit margin, their return on equity. Do they have a brand name loyalty? All of these are really important things. I think those all determine a business’s quality. I mean, think about a company like Coca-Cola, You understand the Coca-Cola.
[00:16:20] Mary Buffett: It’s there’s nothing I get or Apple or go ahead Seah.
[00:16:25] Sean Seah: I think he can analyze a company quickly because he choose easy companies to analyze. So it goes back to the idea where you don’t go into something so complicated where you need to really frown and really crack your head over it. If it’s so difficult maybe it’s not the investment you should invest in.
[00:16:40] Sean Seah: I’m not saying that we don’t do our due diligence Mary? I think when we were talking about Apple back in, was it 2017 or 16 when we were in LA? We were just looking and we say Apple is a good company and we invested into Apple. And a few months later, we saw Berkshire buying a lot of Apple. So it’s thinking, Oh, it becomes so obvious that it’s a strong company.
[00:17:01] Sean Seah: I believe investment should be like that. So I think, was it Peter Lynch that mentioned, if you cannot illustrate the whole business using Crayon, you shouldn’t invest. If there’s, I mean, the principle behind it is it must be so simple to really understand the business, right? I mean, for me, I can’t really draw anything with Crayon by that token.
[00:17:16] Sean Seah: I shouldn’t invest, but it’s like the point. So keep things simple. Keep things simple.
[00:17:21] Kyle Grieve: Let’s say, just going back in history, let’s say Warren finds a business that he maybe finds interesting, but he deems a low quality right now. Does he like putting these types of businesses on a watch list just to watching, maybe seeing in the future if there’s going to be a change in management or a change in business strategy that maybe it would become a viable investment later on in the future?
[00:17:42] Mary Buffett: No, I would say no. I think if it’s low quality now, No, I don’t think that management or the business changing is going to. No not the future. No.
[00:17:55] Sean Seah: I remember in your Tower of Warren Buffet you mentioned something like kissing frogs. People kiss frogs hoping that they into prince, but you just kissing a lot of frogs.
[00:18:02] Sean Seah: Just get your mouth a bad, I can’t remember the exact code, but I remember it was in a tower of Warren Buffet. So I guess like what Mary mentions, it’s not good. I mean, there are plenty of good businesses around. , go for those, right?
[00:18:14] Kyle Grieve: Yeah, absolutely. I think you guys are both right on that.
[00:18:16] Kyle Grieve: And it seems like sometimes he’ll follow super high quality business for a really long period of time. Like I know with, I think Occidental, he’s followed that business for 40 years and never bought it and just. I guess the price was right and he liked the opportunity. So he jumped on in.
[00:18:30] Mary Buffett: 40 years, like you said, I mean, what other investor do you know that you can say that about who follows a business for 40 years?
[00:18:40] Mary Buffett: Yeah. It’s wow.
[00:18:42] Kyle Grieve: So Buffett has said. I think I could make you 50 percent a year on 1 million. No, I know I could. I guarantee that. I know many people in my audience’s eyes got big when they heard this quote, given all the research you two have done on Warren Buffett’s history, can you outline what you think or guess what his strategy would be to accomplish this incredible rate of return?
[00:19:03] Sean Seah: When he said that I guess what he was trying to say is there’s a structural disadvantage having huge capital. Did he really make 50 percent per year? On high side, we can say a lot of things, correct? If I have 2, I can make 100 percent a year. Obviously, Warren isn’t someone who just shoot out statements like this as well.
[00:19:19] Sean Seah: He has indeed made like 100 percent a year, 50 percent a year. In the past, using the method of, again, what Graham talks about. So he actually bought bus company knowing a certain exit point. He even actually done arbitrage before. He has a huge arsenal of weapons inside his whole investment chest, correct?
[00:19:37] Sean Seah: Is there one particular method? I don’t think so. And I also do not think when he says 50 percent a year, it means like every year, a straight line 50%. But if you give me 1 million, I can turn it into 100 million over a certain number of years. And when you compile it, it’s 50 percent a year. That’s what I truly believe.
[00:19:54] Sean Seah: Hopefully the listeners can take this with a more I will say realistic expectation and not trying to find a holy grail. I mean, I wish I can do that as well. I don’t really think there’s something like that. It is really a philosophy of believing in what you’re investing in and knowing that they will grow your money by a certain rate.
[00:20:11] Sean Seah: It’s an assumption.
[00:20:13] Kyle Grieve: Some of the less Buffett-like investments Berkshire has made in their public portfolio recently are NewBank, which is trading at a PE around 711 with highly erratic free cash flows. Snowflake, which has never been profitable, but it’s growing its free cash flows very quickly. and Stone Co., which also has a highly erratic profitability track record.
[00:20:32] Kyle Grieve: Do you think Buffett has embraced tech, or are these more of a result of him handing off responsibility to Ted Weshler and Todd Combs?
[00:20:39] Mary Buffett: I think absolutely it’s Ted Weshler and Todd Combs. Buffett, Embrace Tech? No. I mean, those definitely seem like Ted and Todd. I can’t see Warren embracing Tech.
[00:20:55] Sean Seah: I think one thing that’s consistent about what Warren does is he invests into the right people. So like even when you talk about Nebraska Furniture Mart, or even quite a number of it, okay, Geico, he actually took control of it. But most of the time when he invests, he allows the management to continue to do it.
[00:21:11] Sean Seah: So I guess when he has his two lieutenants that join him, like what you mentioned, Newbank or even I think even Amazon, or even like a certain investment doesn’t smell like a Buffett traditional type of investment. But the way that he gives them the freedom is exactly what he does. He allows them to do what they do, and I mean, he takes it.
[00:21:31] Sean Seah: So that’s why I believe. That being said, when you talk about high P, it is not uncommon. Because even when you talk about when he bought, Nebraska Furniture Mart. I remember he paid about 50 over million for it, based on the revenue back then, or even the profit back then, it was making about 1 million plus, so it was paying about 50 times P.
[00:21:49] Sean Seah: E. ratio, back then, but it was a private company, and it was even more uncommon, because for a stock, for you to pay a high multiple, it makes sense, but for a private company to pay 55 times, it is unheard of, but what happens now is, if you look at Nebraska Furniture Mart, I do not have the latest numbers, Nebraska Furniture Mart.
[00:22:05] Sean Seah: If I remember correctly, I was reading it a few years ago, every week they are making 55 million. So he paid 1 times 55 million? Right now, he’s really bearing the fruits, so he looks into the future, so it’s not uncommon to pay high P, but embracing, again, I’m not too sure as well.
[00:22:21] Kyle Grieve: With the way that he has the help set up from Todd and Ted, are they able to basically green light any investment on their own without even asking Warren first?
[00:22:30] Kyle Grieve: I know Warren places a lot of trust in the people that he works with. Is that kind of the model that they have set up?
[00:22:36] Mary Buffett: I don’t think so. I think they all ask Warren eventually. I don’t think they just go out and make investments now. I think he has to greenlight it.
[00:22:46] Sean Seah: I’m not too sure. I’m just imagining how he would do it because I so I mean, this is the fun part where we always discuss, me and Mary, we’ll discuss that.
[00:22:54] Sean Seah: I’m just we didn’t really ask Warren before, but I’m just thinking how he will groom the next generation. I guess it makes sense for them to come up to him with the investment disease and he’ll guide them through, question them, mentor them. I would assume that he would be a very good mentor, looking at the way he, his talks on YouTube and the way he talks to us at the AGM, but whether he green light or not, I’m not really not too sure.
[00:23:15] Sean Seah: I got a feeling that he will let them test their own things. And he mentioned this, he mentioned it before. He said that we can lose money, even a lot of money, but we cannot lose a single shred of reputation. So I am from there. I’m assuming that he allows them to do things as long as it’s not illegal or things like that.
[00:23:30] Sean Seah: But what do you think, Mary? Or is he an illegal person? I don’t think so.
[00:23:34] Mary Buffett: Oh, no, you’re absolutely right.
[00:23:37] Kyle Grieve: So Sean, in your book, you and Mary has some very interesting points on portfolio management. One area that I’ve always found interesting is when to exit an investment. So in your book, you outline that when a stock appears to be overvalued, selling is obviously a rational action.
[00:23:52] Kyle Grieve: But Warren has seemingly gone against this during his career during certain times. So for instance, Coca-Cola in the early 2000s was a P.E. of 40. And like you just said, P.E. doesn’t always matter because he’s forward looking and looking to the future. But why do you think he held on to Coke during that time when it seemed overpriced to, the naked eye?
[00:24:11] Sean Seah: Again, from my opinion, understanding what Warren does, he always mentioned that the main job is to allocate capital. So I guess whenever he makes a decision of whether to buy or to sell, is where to best place that particular percentage of capital that he already invested in. So I guess even when Coca-Cola was at a P of 40 plus, the question that I would assume that he asked himself is, if I take the money out from Coca-Cola, where else can I put it that gives me a higher yield?
[00:24:39] Sean Seah: And if let’s say there isn’t a more obvious place to do that, just keep it in the place of Coca-Cola because he believes that 4 5 years later, you’ll go higher. He doesn’t time the market. He doesn’t know whether it’s going to crash and things like that. So it’s about allocation of capital. Yes, I totally agree.
[00:24:53] Sean Seah: For the listeners maybe an easier guideline was this, that I will ask myself based on after reading Buffettology and studying under Mary is, when we buy a business, we are buying a wonderful business at a fair price or hopefully an undervalued price. These are the two key reasons why you buy a business.
[00:25:09] Sean Seah: So when do we actually sell it? Again, in my opinion, it is when these two reasons for buying is no longer valid. First reason, wonderful business. If it is no longer a wonderful business, I will sell it. Now, this doesn’t mean that the business is crashing. It may be I think it’s wonderful because it is at the growth stage and it may has, it may have hit a plateau.
[00:25:28] Sean Seah: So example, I think years back I was buying McDonald’s and after I realized, wow, they can’t really expand much. Again, my own assessment. So I think it is no longer as wonderful as I want it to be. I exit at a good profit. Another thing is, it may be a wonderful business, but the price is no longer so attractive, but it’s really overvalued.
[00:25:45] Sean Seah: But again, like I mentioned where else can I put that money? If I can find a better investment, I’ll put it somewhere else. If not, the decision may be just to stay put. Yeah, Mary.
[00:25:54] Mary Buffett: Yeah, I agree. Totally.
[00:25:56] Kyle Grieve: Mary, in a previous interview you had, you talked a little bit about how value investors like having a little bit of cash lying around in case big opportunities arise for them.
[00:26:05] Kyle Grieve: So Buffett has taken that to the extremes as Berkshire Hathaway now has, 107. 38 billion or so in cash on its balance sheet. So for investors who do have cash available, but aren’t ready to deploy it into an investment, what are some short term investments they can make today to continue earning interest on those cash positions?
[00:26:25] Sean Seah: Where are you putting your 100 billion, Mary? Like the banks? What was the bank rate in the US right now? In Singapore, it’s about 3. It can go up to 3%, but it still loses to inflation, but it slows down the rate of Rudy, like the money depreciating, what is it right now?
[00:26:43] Mary Buffett: I don’t really know. It changes, but I like cash.
[00:26:47] Mary Buffett: I mean, I don’t put it in short term investments. I only like long term investments, or I have it in cash waiting for something to put it in. No short term investments for me.
[00:26:59] Kyle Grieve: And how about you, Sean? If you had cash on the sidelines and didn’t like the prices of some of the things that you saw, are you following in Mary’s footsteps there and just leaving in cash, or do you have some sort of short term strategies that you like to use?
[00:27:12] Sean Seah: Usually I will just put it with my wife to make her a happy wife. No, but jokes aside, what happens is I’m always exploring. So I do have a certain amount of money set aside. which I call it an education fund. Now, I mean, in some sense, when I say education fund means I’m investing into things that I don’t really truly or fully comprehend, but I just really want to test them out.
[00:27:31] Sean Seah: So I do set aside a certain portion of it to test it out. Maybe call it a venture capital fund, which I know is a pretty high risk, but I do use like options, writing of options. getting some cash, from there. But I write really… I’m not sure whether the audiences are familiar with the idea of options.
[00:27:46] Sean Seah: writing cash secured put options that is really out of the money to make a certain percentage every single month or every week. That’s something I like to do and I’m quite familiar with that. I even tested putting a certain small amount into, okay. What do you call it? I know if you hold U S D C coins, they give you some sticking amounts.
[00:28:04] Sean Seah: I do like to test all this. Again I call it my education fund. I don’t put too much into it. The rest, as what Mary mentioned, put into cash waiting for the big, I would say, great sale, okay? Where the stocks are really cheap.
[00:28:14] Kyle Grieve: Patience and discipline has been a key attribute that Warren Buffett has expressed in large amounts throughout his investing career.
[00:28:21] Kyle Grieve: But the average investor seems to have a very hard time consistently being patient and disciplined. What would be your advice to investors looking to improve their patience and discipline for the long run?
[00:28:32] Mary Buffett: I guess my advice would be to look back at what you did or didn’t do in terms of investing and realize that if you had patience and discipline, you might have done something different.
[00:28:46] Mary Buffett: You could have held on to his talks longer. Patients and discipline are very difficult. Their personality, I mean, it’s part of your personality. Warren is patient. He’s obviously very disciplined. I think it’s very hard to learn those attributes. You can practice. But I think either you’re patient, by being patient, it’s a form of discipline.
[00:29:14] Mary Buffett: I think it’s very hard to be patient and disciplined if you’re not already doing it.
[00:29:21] Sean Seah: And I think it is worse nowadays because, last time you think about Netflix, you see, they allow you to binge watch all the shows at one time. I mean, in the past, you have to wait for the next episode the next week, you see.
[00:29:32] Sean Seah: So I think it’s getting worse for people like learning to wait for things to happen. It’s getting worse. At the same time, I was also thinking, because, like I told you, my, my kids bought into stocks. They are not extremely patient people per se, but they don’t really bother me about the stocks.
[00:29:47] Sean Seah: They just let it run. They ask me once in a while, how is it? I’ll show them. And they, okay, sure. They have the attributes of very strong investors. And I realized why is it because it’s not their money, you see. I mean, when I come to think about it, I think that when your money is being put in the stock market, it A lot of emotions is being involved and it goes into extreme, especially if it’s money you cannot afford to lose.
[00:30:08] Sean Seah: It’s just like you can be a very good surgeon, excellent, but when you are like operating on someone you really love and the risk is very high, suddenly you go crazy. So I guess it is contextual. Maybe for a start, for beginners, try to put aside money that you can lose, but it should not be something that you can lose and don’t feel anything.
[00:30:25] Sean Seah: You feel a bit of pinch of a bit of pinch of pain, but you can lose them. So you don’t make silly decisions. And when you realize that you can make wise decisions as an investor, you add on to the amount that you invest. It’s like putting on weights, right? You become stronger and stronger.
[00:30:40] Sean Seah: But initially, I guess the amount affects your patience and discipline. That’s my, I would say hypothesis. I’m not sure. What do you guys think?
[00:30:49] Mary Buffett: I think it’s very hard to teach people patience and discipline. I just think discipline is easier than patience.
[00:30:59] Sean Seah: Yeah, that makes sense. Maybe you just for your kids, just buy them a lower internet plan, then they have to keep loading their website.
[00:31:07] Sean Seah: I don’t know. Something like that. Just coming up with ideas.
[00:31:10] Kyle Grieve: Yeah, so Sean, you mentioned one thing earlier that just with the way the world is now, with technology being so prevalent, it’s a lot easier to be distracted. And it seems like people’s ability to delay gratification is at an all time low.
[00:31:26] Kyle Grieve: So with that said, though, I know some people like changing their environments a little bit, like whether that’s, not checking their portfolio often or, just removing apps that are going to make them make silly decisions. Do you have any suggestions of kind of environmental factors that people can do, whether that’s technology or whatever that can help them?
[00:31:45] Kyle Grieve: I guess, like Mary said, it’s hard to improve patience and discipline, but just things that can help you make less poor decisions.
[00:31:52] Sean Seah: I’m tempted to say, to like really cancel your Netflix subscription, but my son is a shareholder. I shouldn’t suggest that. But I guess nowadays people are becoming more aware that we have this issue.
[00:32:03] Sean Seah: And I think like even practicing mindfulness. doing meditation all these things helps, as you mentioned really don’t check your phone immediately each time just set it aside and have a certain It goes back to discipline, right? Mary said that discipline is easier than patience so you set aside certain discipline to train your patience like every day only certain periods in time you check your phone and stuff like that.
[00:32:24] Sean Seah: I don’t have a straight answer for that but I guess it’s really becoming aware and then making sure whatever that triggers your emotion to want to immediately get something the instant gratification component of it. Aim to manage it. Know that it’s there and aim to manage it.
[00:32:38] Kyle Grieve: So you mentioned meditation there.
[00:32:40] Kyle Grieve: So do you have a meditation framework that you use on a regular basis or is it kind of just whenever? Because I know a lot of people do it. I haven’t done it with any regularity yet, but I’d like to incorporate it. So how would you go about incorporating that if if you were brand new to meditating specifically in reference to improving yourself as an investor?
[00:32:58] Sean Seah: Okay, I go extreme a little bit because for me, when I try to do something like even meditation, I’ll go a bit extreme. So I, okay, this is not an advertisement. It’s not paid. I’m not paid to say this, but I bought this particular headband called Muse, M U Z E, where they give you biofeedback on how calm your mind is.
[00:33:16] Sean Seah: So it’s quite funny. You put it on, you put on your earpiece, you are, you hear like maybe rainfall, you can choose the ambience sound that you want. Can be rainfall, can be forest sound. And when your mind is very cluttered, the rainfall heavier. That’s where you realize you have to relax.
[00:33:30] Sean Seah: So there is actually practice of relaxing your mind. This helps you as an investor because you become aware that you are making decisions when you are like having a cluttered mind. You are doing things without thinking through. You become very aware how your brain is operating when there’s a biofeedback.
[00:33:45] Sean Seah: So using technology. Interestingly. Technology is the one that causes a lot of us to become very impatient, but now you can use technology to counter this as well.
[00:33:54] Kyle Grieve: And Sean, you mentioned that you’ve, have you met Warren before?
[00:33:58] Sean Seah: At the AGMs. Only at the AGM not personally. Yeah.
[00:34:02] Kyle Grieve: How many of the, do you go to the AGMs every year?
[00:34:05] Sean Seah: Quite often. Okay, I went, oh no, actually I went there once only. Realized that, after that there’s the, there’s a Yahoo streaming and I just watched the Yahoo streaming.
[00:34:14] Kyle Grieve: Yeah, I know that to get to Omaha, even for me from Vancouver, it takes forever, so I can’t imagine how hard it is for you to get there.
[00:34:22] Kyle Grieve: It must be like 24 hours or something.
[00:34:25] Sean Seah: Oh, that’s right. And you have to book the accommodation way in advance. The whole place is, by the time I go to the AGM, it’s actually quite tiring. The whole place is cold. Watching from the comfort of home is much nicer nowadays.
[00:34:36] Kyle Grieve: Are you planning on going again at some point in the future?
[00:34:39] Sean Seah: Maybe next year, but more of just for fun.
[00:34:41] Kyle Grieve: Mary, Sean, 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 the two of you, your book and your online academy?
[00:34:51] Mary Buffett: marybuffett.com for me.
[00:34:54] Sean Seah: You can search for Sean Seah on Facebook as well, and you can also look for Buffett Online School.
[00:35:00] Sean Seah: That’s where we teach the ideas of what Warren is doing, and do look, do read Mary’s books. They are the books that actually got me started into investing.
[00:35:09] Kyle Grieve: And just so for the audience, for Sean, just his last name is SEAH, just so you know.
[00:35:14] Mary Buffett: Thanks so much, Kyle.
[00:35:16] Sean Seah: Thanks, Kyle.
[00:35:18] Kyle Grieve: Okay, folks, that’s it for today’s episode.
[00:35:20] Kyle Grieve: I hope you enjoyed the show and I’ll see you back here very soon. Thank you
[00:35:24] Outro: for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. 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. Written permission must be granted before syndication or rebroadcasting.
