RWH067: Prudent Investing In Perilous Times w/ Matthew Mclennan
Key Takeaways
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Prioritize survival over getting rich quick
“One lesson that I've drawn from all of these discussions is that really the first priority for investors should be simply to survive and stay in the game, even in extreme conditions, instead of fantasizing about getting rich quick in the short term. As Matt once told me, you want to be structured to participate in the march of mankind, but to survive the dips along the way.”
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Accept that absolute truth is often unapproachable
“He introduced me to this notion that life is actually more complex than the sort of simple games or truths that I was trying to unravel and that much of truth is unapproachable. And in fact, it wasn't until I was in college and many years later reading other works that I realized that this was a sort of a whole field scientific methodology.”
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Distinguish between quantifiable risk and true uncertainty
“I became pretty interested in Karl Popper who wrote about the notion of falsification... and I remember Fish's work when he talked about the difference between risk and uncertainty. Risk being something that you can narrowly quantify with statistics and uncertainty being where you don't even know what the range of distributional possibilities are.”
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Seek financial freedom to ensure personal independence
“I think despite the fact that I had a really fortunate childhood in terms of being very happy and being exposed to a lot of thinking and life experience, we didn't have a lot of basic necessities. And so I think there was a motivational force of wanting to live a more comfortable life, not for material purposes per se, but for a sense of personal freedom, not feeling encumbered by one circumstance.”
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Understand the limits of mathematical investment models
“As a child, I always liked puzzles and trying to crack the code... I think he could see very clearly that I like to get to an absolute truth, like the proof of a mathematical equation. And he introduced me to this notion that life is actually more complex than the sort of simple games or truths that I was trying to unravel and that much of truth is unapproachable.”
Episode Description
In this episode, William Green talks with Matthew McLennan, who oversees about $130 billion at First Eagle Investments. Matt is head of the firm’s Global Value team & a portfolio manager of its Global Value, Global Equity, International Value, International Equity & US Value strategies. Here, he explores how to build resilient wealth by patiently holding a “non-uniform” portfolio of scarce assets that should endure & prosper even in difficult conditions. This episode provides a time-tested survival strategy for investors looking to navigate this period of extreme uncertainty. IN THIS EPISODE YOU’LL LEARN: 00:00:00 - Intro00:02:14 - Why Matthew McLennan thinks investors should prepare for turmoil.00:17:43 - How to construct a resilient portfolio by thinking like a gardener.00:19:38 - Why Matt loves businesses with scarce assets in mundane industries.00:23:02 - Why survival is the key to investment success.00:23:33 - How cash & gold provide a ballast in the event of unexpected storms.00:26:28 - Why he’s wary of a highly concentrated investment strategy.00:51:07 - How patience has become a powerful edge in a hyperactive world.00:57:17 - How to build long-term success by focusing on process, not rewards.01:05:28 - How to think better by harnessing our right-brain capabilities.01:23:05 - Why “what’s hot today” is likely to produce terrible investment returns.01:25:10 - How studying wine & playing backgammon help him as an investor.01:29:04 - Why he favors a team-based approach, instead of being a lone wolf. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community. Learn how to join us in Omaha for the Berkshire meeting here. Inquire about William Green’s Richer, Wiser, Happier Masterclass. Thucydides’ book, History of the Peloponnesian War. Daniel Yergin’s book, The Prize. John Cochrane’s book, The Fiscal Theory of the Price Level. Peter Matthiessen’s book, The Snow Leopard. Iain McGilchrist’s book, The Matter with Things. David Galenson’s book, Old Masters and Young Geniuses. Charles de Montesquieu’s book, The Spirit of the Laws. Stephen Wolfram’s book, A New Kind of Science. Winston Churchill’s book, My Early Life. William Green’s book, Richer, Wiser, Happier. Follow William Green on X. Related books mentioned in the podcast. Ad-free episodes on our Premium Feed. NEW TO THE SHOW? Get smarter about valuing businesses through The Intrinsic Value Newsletter. Check out our We Study Billionaires Starter Packs. Follow our official social media accounts: X | LinkedIn | Facebook. Try our tool for picking stock winners and managing our portfolios: TIP Finance. Enjoy exclusive perks from our favorite Apps and Services. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: HardBlock Human Rights Foundation Plus500 Shopify Netsuite Vanta References to any third-party products, services, or advertisers do not constitute endorsements, and The Investor’s Podcast Network is not responsible for any claims made by them. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm