Afford Anything Podcast: "The World's Richest People Are Weird by Design" with William Green

Host: Paula Pant
Guest: William Green
Release Date: January 24, 2025
Network: Cumulus Podcast Network

Introduction

In this insightful episode of the Afford Anything podcast, host Paula Pant welcomes William Green, a seasoned journalist and author who has dedicated 25 years to interviewing some of the world's most iconic investors, including Charlie Munger, Howard Marks, and Sir John Templeton. The conversation delves into the unconventional traits that set elite investors apart, exploring themes of risk management, resilience, and the psychology behind successful decision-making.

The Unconventional Nature of Great Investors

William Green begins by sharing memorable encounters with legendary investors, highlighting their idiosyncratic behaviors that belie their financial acumen. He recounts meeting Sir John Templeton, describing him as both "an extraordinary figure" and "a little bit weird" (02:07). Green observes that these investors often exhibit unique habits that reflect their distinct thinking processes, such as Templeton's unconventional exercise routines and frugality despite immense wealth.

Quote:

"These guys are weird. They're these oddballs, these mavericks, the great investors." – William Green [02:07]

Survivorship Bias and Timeless Principles

Paula Pant raises a critical question about differentiating between genuine wisdom and survivorship bias when evaluating the success stories of top investors. Green acknowledges the challenge, emphasizing the importance of focusing on timeless principles rather than isolated successes or luck.

Quote:

"You think of someone like Templeton, and when I asked him to explain his success, he took me through about six lessons." – William Green [05:00]

Green outlines key lessons such as avoiding ignorance and emotion in decision-making, and recognizing the significant role of luck. He underscores the necessity of diversification to protect against personal hubris and unforeseen market downturns.

The Importance of Diversification and Concentration

The discussion shifts to portfolio strategies, where Green contrasts the advice of Charlie Munger with the practical experiences of investors. He illustrates how even the smartest investors, like Munger and Warren Buffett, can err, reinforcing the need for a balanced approach between diversification and concentrated investments.

Quote:

"I have two of the greatest investors of all time telling me that they love Alibaba, and I also told me that they love my book. So I felt like really predisposed to revere them... So even someone as smart as Munger was wrong sometimes." – William Green [08:21]

Understanding Personal Strengths and Limitations

Green emphasizes the significance of self-awareness in investment and life. He reflects on his own temperament, admitting that unlike the stoic investors he's interviewed, he is more emotional and hence chooses to steer clear of active stock-picking. Instead, he advocates for index fund investing, aligning his strategy with his personal strengths and acknowledging his limitations.

Quote:

"I'm not really equipped to do it. I shouldn't really be making these big contrarian bets." – William Green [11:11]

Simplicity and Index Fund Investing

The conversation highlights the enduring wisdom of Jack Bogle and the power of simplicity in investing. Green shares anecdotes illustrating how simple, low-cost index fund strategies often outperform more complex, high-fee investment approaches.

Quote:

"One of the most profoundly important things that I learned from Bogle is the power of simplicity. He talked about Occam's Razor." – William Green [66:40]

Building Resilience Through Self-Awareness

Paula Pant and William Green explore strategies for building personal resilience in the face of market volatility. Green outlines practices such as good nutrition, sleep, exercise, and meditation to maintain mental and emotional equilibrium. He also introduces the HALT PS mnemonic—Hungry, Angry, Lonely, Tired, Pain, Stressed—as a tool for recognizing states that can lead to poor decision-making.

Quote:

"Let me make sure that I'm living within my means so I'll be okay whatever happens so I can ride it out whatever happens." – William Green [51:36]

Life Lessons from Great Investors

Green shares profound life lessons gleaned from his interviews, emphasizing that true success encompasses more than financial wealth. It's about aligning one's life with personal values, fostering meaningful relationships, and maintaining ethical integrity. He recounts stories of investors who prioritized happiness and fulfillment over relentless wealth accumulation.

Quote:

"Having had way too much cash in his account, he would have optimized his results more if he'd been more aggressive. He wasn't trying to optimize. He survived." – William Green [24:09]

Flexibility and Avoiding Catastrophic Risks

The episode underscores the importance of flexibility in financial planning. Green advises listeners to create a lifestyle with ample flexibility and to avoid situations with catastrophic downside risks. By focusing on what one can control and maintaining a margin of safety, individuals can better navigate uncertainties.

Quote:

"And so if you can live within your means and keep adding to the pot and be smart about not trying to time the market... you'll do well over time." – William Green [34:22]

Key Takeaways

1. Play to Your Strengths:
   Success stems from engaging in activities where you have inherent strengths and awareness of your limitations. Great investors like those William Green interviewed excel because they focus on their advantages and delegate or avoid their weaknesses.

   Supporting Quote:

   "If you're 5 foot 3, don't become a professional basketball player." – Charlie Munger via William Green [74:14]

2. Focus on What You Can Control:
   In an uncertain world, prioritize managing your own behavior and environment. Build resilience through healthy habits and self-awareness to better withstand external shocks.

   Supporting Quote:

   "Set yourself up before a crisis so that you are not going to be out on the ledge because you're so over leveraged, you're so indebted." – William Green [51:36]

3. Embrace Flexibility for Security:
   The best way to handle market volatility and life's unpredictability is by maintaining flexibility and having contingency plans. Ensure that your financial and personal life structures allow for adaptability without catastrophic consequences.

   Supporting Quote:

   "Flexibility is the only true security." – William Green [77:55]

Conclusion

In this episode of Afford Anything, William Green offers a treasure trove of wisdom from interviewing the world's top investors. By embracing uniqueness, practicing self-awareness, and adhering to simple yet effective investment principles, individuals can make smarter financial decisions and cultivate a fulfilling life. The conversation invites listeners to reflect on their own strengths, build resilience, and maintain flexibility to navigate the complexities of both the financial markets and personal endeavors.

For more insights and resources, visit affordanything.com and download the free book Escape. Follow William Green on his platforms for continued learning and inspiration.