Christopher Davis: Timeless Investment Wisdom (Audio)
What this covers
They say wealth doesn't last beyond three generations. Chris Davis is living proof that sometimes, it does - and then some. Coming from a family where each generation has built their own fortune, Davis has not only achieved remarkable success as Chairman of Davis Selected Advisers but also as a Director of Coca-Cola.
What are the secrets behind this multi-generational success in the world of finance? In this conversation, we uncover the principles and strategies that have allowed Chris Davis to not only build a multi-billion dollar portfolio, but to also carry on a legacy of astute investing.
00:00 - Intro 00:20 - Lessons Davis learned from his father and grandfather 22:34 - The importance of writing things no one reads 33:05 - Davis' experiences through financial crises 48:41 - Why Davis loves managing a mutual fund 51:59 - Why Berkshire Hathaway operates with margin 57:15 - What is risk? 01:00:12 - On low-interest rates and their future impact 01:10:56 - The mismatched timelines between CEOs, companies, investors, and policy 01:18:29 - How Davis and Munger met 01:26:30 - Lessons learned from Munger 01:37:39 - Why avoiding weaknesses is the ultimate recipe for success 01:51:56 - How to raise non-entitled kids and avoid lifestyle creep 01:12:20 - On happiness 02:23:10 - Good vs. bad board meetings 02:27:44 - Three generations of wealth 02:33:25 - On success
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Chris Davis argues that successful investing and life require positioning for resilience and durability rather than predicting the future, while maintaining a discipline that prioritizes long-term wealth creation and meaningful relationships over short-term optimization.
- Prediction is futile and creates false confidence; positioning for multiple scenarios and building redundancy is the durable strategy
- Risk should be defined around client outcomes (financial independence, lifestyle preservation) not volatility, which demands conservative management even when underperforming temporarily
- Success emerges from compounding advantage over decades through avoiding blowups, maintaining integrity with stakeholders, and aligning incentives—not from maximizing returns in any single period
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Charlie Munger's concept of 'intelligent loss of sales' means that excluding undesirable customers (those more likely to commit fraud, cause losses, or create operational friction) is a valuable business practice even if it reduces total addressable market, because the quality of the customer base determines profitability and sustainability.
“Charlie's phrase was the intelligent loss of sales he said you're young and you just think more is better more is better more is better but more is not necessarily better it's who do you keep out who do you keep out of your company who do you keep out”
A durable long-term investment strategy of avoiding blowups while making reasonable returns will eventually outperform short-term optimization strategies, because multiplying any return by zero (which inevitable blowups create) is worse than consistent modest positive returns compounded over decades.
“there will always be people that are doing better in the short term so it's not optimized for short term but it is by definition it's probably the most effective long-term strategy because you can't predict the future So eventually you get a string of whatever your return is but you multiply by zero whereas somebody's always outperforming you if if you're not maximizing current returns but you're maximizing longevity but in the long run you actually outperform them”
The Kelly Criterion (betting the right fraction of your edge every time) is right theoretically, but in practice betting your entire edge every time you have an advantage is insane because you're certain to end up at zero eventually—SBF's FTX catastrophe demonstrates this, and staying in the game is more important than maximizing edge utilization.
“it's funny watching the you know the collapse of SPF and all of that but you know it was such an insane Theory to think that you know the theory would say bet it all every time that you have an advantage and if everybody did that you would get a better outcome net uh but of course it's an insane Theory uh because you're certain to end up at zero it's just a matter of when and so it it was such a disconnect in terms of this sort of mindset of you know just the complete disregard for that Kelly criteria and for that idea of living to fight”
Humans are fundamentally wired to learn through storytelling and narrative, which explains why telling stories about scientists (e.g., the Oppenheimer movie) is more effective at inspiring STEM interest than showing formulas and calculus.
“how humans think in stories and it makes sense if you think over the course of evolution how wired we are to learn by storytelling uh story listening... if we really want kids to get excited about stem and like learning science you know throwing a bunch of formulas at them and calculus it just it's going to work for some that whose Minds really can see that but I sure wish every freshman in high school or every sophomore in high school was taught the biography of science you know think of the movie Oppenheimer you know Oppenheimer will probably draw more people into physics uh uh uh you know than stem funding in high schools will”
Berkshire Hathaway's durability and resilience stem from Warren Buffett's explicit decision to manage as if shareholders have 100% of their net worth in the company, which creates a culture and set of practices oriented toward long-term existence rather than short-term optimization, even when it means forgoing leverage that could boost returns.
“there was a beautiful uh last uh interview with Charlie uh that Becky quick did... it's something that he goes to over and over is this idea as Burkshire has run with the idea that some that that from the very beginning that uh the people that were invested in birkshire had 100% of their net worth in birkshire and that really does shape the culture there”
USAA and GEICO's insurance models work because they target high-credit-quality populations (military officers, government employees) who don't cheat, allowing them to charge lower prices since they don't need to price in fraud risk.
“somebody's credit rating is a great predictor of whether they'll crash their car well because they're responsible and they tend not to cheat so is being an army officer right USAA doesn't need to know anything else about you just that you're an officer in the United States Army and they can offer you a lower price because they know you're not going to cheat... army officers is a good shorthand... Geico stood for government employees insurance company we'll just ensure government employees and we'll just we don't need to know anything else just you're government employee you have a lower risk”
Davis is dispositionally happy and tends to wake up content, which he credits to genetics (both parents and grandparents had this trait); he feels deeply grateful for this advantage but recognizes others suffer from depression despite effort.
“I know enough about unhappiness and depression to know that it's you know saying well why don't you just change your attitude does not is not going to work um and so I've I've learned enough to just simply not take it for granted but just feel deeply grateful that I tend to wake up reasonably content you know...I grew up very very lucky that way my sister my closest friend has that we talk about it a lot it's like it's and so I know enough about unhappiness and depression to know that it's you know saying well why don't you just change your attitude does not is not going to work”
Choosing friends and colleagues who 'fill in areas where you're weak' is important because it prevents you from the Peter Principle (getting promoted beyond competence); understanding your weaknesses lets you avoid destructive ones.
“a big part of it is also the choice of friends I don't mean you should choose opposites I don't think that really works Charlie once said you know the saying opposites attract they don't I do think having you know colleagues especially that you know fill in the areas where you're weak and you know by understanding the areas you're weak you you you don't keep sort of you don't end up in a Peter Principle sort of effect and it's a big part of how we try to manage the team is you know to keep people away from the areas they're weak in or at least take those away from being you know completely destructive”
Given the uncertain future, Davis owns companies that are resilient, can adapt, have pricing power, don't have too much debt, have durable global franchises, and have cash that allows them to reinvent—including Google, Amazon, Meta, Capital One, Wells Fargo, and the largest copper mines with long-life, low-cost deposits.
“I'm G to own businesses that are resilient that can adapt that have pricing power uh don't have too much debt don't have too much debt have Global you know durable have have have cash current cash that allows them to reinvent”
Warren Buffett wrote a 1965-66 letter listing five reasons money managers tend to underperform: (1) group decisions, (2) desire to conform portfolio to what other large firms own, (3) asymmetry of risk and reward (failure conventionally is rewarded vs success unconventionally is punished), (4) over-diversification, and (5) inertia; avoiding these five factors is the path to consistent outperformance.
“we have a a letter that Warren wrote in 1965 I think uh that or 66 uh that lists the reason that he believes most uh money managers institutional managers tend to underperform and uh we framed that letter and put it on the wall in the research Department because we said what we should do is just try to avoid these five things... one was group decisions that was number one uh number two was the desire to conform your portfolio and policies to what other large we well regarded firms are doing three was the asymmetry of risk and reward obviously better to fail conventionally than succeed unconventionally um four was over diversification and five was inertia”
Costco's membership requirement and classified board structure protect the company from short-term activist pressures and allow long-term management decisions, with the specific example that when Costco gapped down from 45 to 27, the classified board prevented a PE firm from bidding 34 and taking the company.
“Costco had a classified board which meant that you know only a certain number of directors could be elected each year and that operates as a fairly effective poison pill because what it means is if you wanted to get control of that board it would take you three years... it would have been easy if theoretically for uh some sort of private Equity Firm to jump in and say hey we'll bid 34 for the whole thing... that idea of private Equity being able to take advantage of volatility”
Bogle's Vanguard maintained cash positions averaging 15-40% across decades while most efficient frontier theory suggested this was suboptimal, yet investors paid nothing for this 'insurance policy' and achieved superior long-term returns with durability.
“if you were to look over the the long term you know the the cash if I remember rightly at Bow poost is sort of average between you know 15 and 40% for sort of the whole time uh I don't think there's ever been a time when it's gone maybe below 15...the idea that oh it's good to have a reserve in case bad things happen well um and yet the investors in bpost have paid nothing for that insurance policy yes there's a there's a theoretical charge because you could say well if you didn't have that and we impute the rest of the return but in a way you've gotten this incredible performance over an incredibly long period of time and have carried that”
Banks go illiquid before they go insolvent; insurance companies go insolvent before they go illiquid, because to get money out of an insurance company you have to die, crash, or have a claim—there is no bank-run mechanism for insurance companies.
“Banks go IL liquid before they go insolvent and insurance companies go insolvent before they go IL liquid and yet here was AIG going IL liquid it didn't make any sense”
During the 2008 financial crisis, AIG's collapse was shocking because insurance companies should theoretically go insolvent before they go illiquid (due to the nature of insurance liabilities), yet AIG went illiquid, suggesting a fundamental breakdown in the normal functioning of financial system structures.
“the old saying I sort of grew up with which shows you a very strange upbringing was you know Banks go IL liquid before they go insolvent and insurance companies go insolvent before they go IL liquid and yet here was AIG going IL liquid it didn't make any sense”
CEO tenure has decreased to median 3-4 years while election cycles are 4 years and policy cycles are much longer, creating a temporal mismatch where short-term focused CEOs don't align with long-term policy needs.
“I think Brian Roberts is now in the top five CEOs in the in the S&P for tenure and you know in thinking about that I think that the median tenure something like three and a half or four years whenever you get a a cycle that are uh in Conflict you know obviously we have an election cycle that is totally different than the policy cycle”
China has done some things magnificently well, including lifting almost a billion people out of near starvation poverty in a generation, and has created long-term focus as a business advantage (exemplified by Berkshire Hathaway and similar companies), but anti-China jingoism stops the US from learning from these strengths.
“China has done some things magnificently well including lifting almost a billion people out of near starvation poverty in in a generation um but one of their great strengths has been this enormous long long-term focus and of course that's been part of what's created businesses like Berkshire and Mar I mean I always I highlight Capital One because it's still run by the founder right he created that company I think in 1986 or 87 still the CEO”
Large board meetings are less effective than small ones (Jamie Dimon's insight: 'the bigger the group, the better the news'), because larger groups hide bad information and encourage performative pageantry.
“Jamie diamond famously said the bigger the group the better the news so you know that is oh that's interesting I've never heard that before yeah isn't that a good expression and uh so smaller functioning boards you know people being you know you look at what happened at places like hulet Packard and you know Intel for that matter I mean these these companies you know it's quite a well-known expression that you know a a great board can't make a great company but a bad board can ruin a great company”
Hewlett Packard and Intel boards were accountable for decades of bad decisions regarding their core strategic direction, illustrating that while a bad board can't make a great company, it can ruin a great company.
“a great board can't make a great company but a bad board can ruin a great company and uh you know I would certainly argue that both hulet Packard and kooch the boards had a lot of accountability for decades of of of bad decisions”
Humans crave competence and mastery; this is our evolutionary superpower and the basis of happiness; trying to shortcut struggle through AI or remote work sacrifices the very thing that creates satisfaction.
“you know the idea that we Crave competence we Cate it it is just you know it's it's it's been our superpower as a species you know stories as part of it but we love getting better at stuff we're tinkerers you know we we want to improve we want to learn we work together we turn little things into competitions watch you watch the way kids play you know and um and so this idea that uh uh that somehow the fact that I can push a button and AI could write my annual report uh or write a reference letter for somebody that I care about for something that they care about well I I have no doubt that that can happen I just I I think that then I'm alienated from that product”
Charlie Munger said you should structure your board of directors with people you don't want to disappoint, as psychological accountability to people you admire is more powerful than formal governance rules.
“there's so many lessons of Charlie that are were captured in including having a board of directors made up of people that I don't want to disappoint well in the mutual fund industry that's very unusual but we have a board of people that I really admire and I don't want to disappoint well Charlie said you should because they're the face of your client so have people on that board where you would feel a little sheepish to do lousy and then you'll you'll work harder”
Saint Augustine said 'For many, abstinence is easier than perfect moderation'; Davis believes he can achieve moderation in most things and uses monitoring rather than elimination to maintain control.
“what did St Augustine uh said for many abstinence is easier than perfect moderation and you know for some people that is the case I'm I'm very lucky that way I'm very good at moderation in in most things uh uh but I've watched addiction destroy people's lives”
Outsourcing thinking and writing can make you feel smarter than you are, leading to unwarranted risk-taking that you won't be compensated for because you can't see the risks you've missed.
“something is definitely lost when you you Outsource that sort of thinking and writing and you actually it's weird because I think you convince yourself you're smarter than you are and then in investing you you would take un unwarranted risks risks that you wouldn't be compensated for because you can't see them”
Super-voting shares (like Berkshire's B shares or Facebook's dual-class structure) are controversial, but justified when they preserve founder control to prevent short-term shareholders from forcing long-term value-destructive decisions.
“I do not have mixed feelings uh about uh the idea of how long-term investors get screwed by short-termism creeping in...you know Costco had a classified board which meant that you know only a certain number of directors could be elected each year and that operates as a fairly effective poison pill...by and large as investors we don't love that sort of poison pill we think it it uh um however in the case of Costco we really supported it”
Berkshire is structurally different from a closed-end fund because it is not selling at a premium to its net asset value, because investors own 100% of their net worth in it and Warren is not trying to maximize returns relative to any benchmark.
“there was a a big thing in the 80s particularly that this argument oh birkshire is just a closed end fund selling at a premium so there was a obvious trade that all these really smart people would talk about which was basically short Berkshire buy some coke some cap cities some Freddy Mack you know buy the public companies and you pick up a nice risk-free Arbitrage well of course the shorts got killed for decades”
The most aggressive type of growth investing underestimates risk adjustments because it posits huge amounts of cash in the distant future and has uncertainty both about whether that cash will materialize and about what the discount rate should be when it does.
“one of the dangerous things about you know the the most aggressive type of growth investing is it just posits a huge amount of cash in the distant future and it really underestimates all of the risk adjustments you should be making because you you there's uncertainty that you will get that but there's also uncertainty about what the discount rate should be when you get there and I I can perfectly easily see a world where rates go down to 2 or 3% for a couple years and then they're eight you you know four or five years from now”
Private equity firms tout that they are great managers but they are always looking for the exit, which means they can't do what Berkshire did (keep compounding capital over decades), because they are structurally required to return capital and create a new fund.
“private Equity loves to tout that they are great managers they are always looking for the exit you know and that is it's interesting right because Berkshire Hathaway was able to do what it did because Buffett owned so much he wasn't worried about somebody else coming in and sort of usurping control”
The SEC discourages money managers from serving on boards, which Davis thinks is a mistake because long-term investors should be represented in corporate governance; the compliance risks are real but solvable, and the loss of investor voice on boards is more costly than the compliance protection.
“I think investors are discouraged from going on boards by the regulations I think the SEC is makes a I think it's a terrible mistake to discourage money managers uh especially long-term investors uh from getting involved in the governance of the companies that they they manage and it's it's the compliance issues are real because you've got to be very careful about disadvantaging your clients or if you're burdened with inside information and but I think the importance of having owners of the businesses represented on the boards versus academics and lawyers and politicians you know you want people that have a real skin in the game”
Warren Buffett didn't create super-voting shares at Berkshire before the B shares, but the structure protects him from being forced out, which Berkshire needed to do what it did; without control, Berkshire would have been taken private and dividend out by private equity.
“Berkshire Hathaway was able to do what it did because Buffett owned so much he wasn't worried about somebody else coming in and sort of usurping control like if you think about if you scale the numbers down a lot and you take aund you know 160 billion if a private Equity Fund would see that and be like oh we're going to buy it dividend the cash out but you can't do that because structurally”
Owning concentrated positions (40% in a single stock) is rational for an individual investor but irresponsible for a mutual fund manager because individual clients cannot diversify elsewhere, whereas a concentrated personal portfolio compounds wealth far more effectively.
“my portfolio has theoretically quite a high net worth individual that would be willing to have 40% in a single stock easily wouldn't it wouldn't make me nervous at all I can't run a fund that way or I felt I couldn't and so what that meant is that if I had simply bought each stock that I ever bought for the funds in a personal account uh and held it then I simply never would have sold simply because something was getting too big right whereas in the funds I do that all the time and it's been a terrible mistake”
The efficient market joke—'A $20 bill on the street? No, someone would have picked it up already'—illustrates how shortcuts in thinking can make you miss obvious opportunities and convince yourself you're smarter than you are.
“there were things that mattered there was a $20 bill and one says are you going to pick it up he says no because if it was real it somebody would have already picked it up and this idea that sometimes by by taking that shortcut you just become it well of course I'm an old newspaper lover and so I'm heartbroken at how few newspapers I can read”
Many board meetings are focused on pageantry, process, and checking boxes rather than substantive governance; Davis would rather 'shoot himself in the face' than attend typical corporate board meetings, and this is because boards have increasingly become compliance exercises rather than strategic leadership bodies.
“the the board meetings I mean I've been I think that a lot of average companies board meetings are basically the lights go down the PowerPoint comes on there is a focus on pageantry process um uh and you know sort of checking the boxes and I'd rather shoot myself in the face I just I mean going back to the add”
Metal holding (gold, bitcoin) is the only thing that makes sense to own in the current macro environment where traditional assets (fixed income, real estate) look overpriced and policy is deeply uncertain.
“I sure as hell don't want to own any sort of fixed income instrument um and so it you real estate is scares me”
Positioning for investment is fundamentally about preparation and resilience against unknown futures, not prediction, because prediction is an intractable problem that nonetheless attracts continued attention due to human desire for certainty despite consistent failure of predictive frameworks.
“as a firm we think enormously about that idea of positioning and preparation versus prediction and so we tend to think of characteristics like resilience adaptability durability versus optimization versus it's not an optimizing sort of approach... it's probably the most effective long-term strategy because you can't predict the future”
There is a deep asymmetry of incentives in money management where managers benefit from returns that beat the index or market, while clients benefit from absolute returns that preserve lifestyle; a manager returning 10% while the market returns 12% gets labeled a failure and loses AUM, while a client getting 10% and the market returning -2% still achieves their retirement goal.
“a if if you were faced with the choice of you know you return 10% a year for the next decade and the market does 12 or you are zero and the Market's down two every money manager takes the zero but every client would take the 10 because that that is going to determine you know 10 years of zero return is not going to help them achieve their goals but you will be one of the largest money managers on Earth if you do that right and so this asymmetry of incentives”
Davis maintains a peer group of friends from childhood (baptized together as infants) who persist as accountability and reference group for raising children together, which helps prevent the lifestyle creep that comes from high achievement.
“I I definitely and and I I had a good group of kids that I grew up with and we all raised our kids together so I think we also had a peer group of friends that achieved different things in different ways...three of three of us were baptized together as infants I mean that's uh one is a partner at work of you know we've been partners for 30 years he runs all of our client side uh but there are people that that I admire and they're truth tellers and so we raised our kids all together I think that helps a lot”
One of the most important things to help clients is to get them to spend less, because it creates both immediate benefit (more savings) and deeper benefit (lower annualized spending expectations and avoiding dignity loss from dependence).
“I always say you know the number one is if you can get them to spend less that that that has just a huge benefit right because it's not that they spend less which means that they have more to save uh you know more to invest for next year or the year after that that's true but what really matters is that you're annuitizing a lower rate of spending right you're sort of creating expectations”
The problem with wealthy families trying to build character through hardship (making kids sleep in servants' wing, carry skis uphill) is that it signals they don't trust or love their kids; contrast with letting kids enjoy upgraded flights and explaining it as a result of work—kids need to see the connection between effort and reward, not punishment.
“Barry Diller tells a great story and I don't think he'd mind my telling it um you know Barry grew up in relative privilege uh he would say um you know and uh he had a friend that was from one of the wealthiest oil family amilies in LA and the parents made him sleep in like the servants wing of their mansion and he just talked about how deranged it all seemed like it it was signaling to the kids that you don't love them uh or that they're not trustworthy or there so I've I've seen just as much damage done by wealthy families trying to build character uh as I as I've seen the the the opposite”
Risk should be defined from the client perspective as the permanent loss of financial independence and forced lifestyle change, not as portfolio volatility or drawdowns, because the real risk that matters is becoming dependent on others rather than temporary market fluctuations.
“when when I speak to a client I think you know for them the risk for them is is ultimately it's ultimately becoming beholden on somebody right they don't want to be beholden on the government they don't want to be beholden on their relatives or their kids... risk is having to being forced to change your lifestyle”
His father made a crude analogy: he doesn't go to strip clubs because if he doesn't like it it's a waste of time and if he does like it it becomes very expensive, so why create an environment where you'd have to endow it; the same logic applies to Aspen, Hamptons, Palm Beach.
“my father once made a very off-color comment but I'll share it because he said you know I don't I don't go to a a a strip clubs because if if I don't like it it's a waste of time and if I do it's going to be very expensive and uh you know why do you want to create an environment where you know you would have to endow I mean think of what that lifestyle would cost”
Long-term CEOs like those at Berkshire, Coca-Cola, and Capital One (founder still CEO, created 1986-87) create competitive advantages through deep knowledge and long-term relationships that short-term CEOs cannot replicate.
“you know the tenure of CEOs can really really matter you know the old saying in nepotism is that you know a good farmer farms for his children uh I remember Freddy Heineken uh saying to me very early in my career making a comment that you know pointing at this little kid that was playing by a swimming pool and saying you know I make decisions for him that's my grandson what a huge Advantage right versus the average sort of and by the way you know private Equity loves to tout that they are great managers they are always looking for the exit you know Capital One because it's still run by the founder right he created that company I think in 1986 or 87 still the CEO um you know the tenure of CEOs can really really matter”
Children raised with parents still modeling ambitious work and engagement are more likely to develop healthier attitudes toward work than children given explicit permission to minimize work effort, suggesting the power of parental modeling over stated values.
“if there are people that develop money and it really makes them happy to have that big house well chances are that you know that they may have a view with their kids that I want my kids to have everything you know I can't think of anything better than my children living in a mansion that I produced for them and you know if it's sincere and happy I don't think that I don't think you've created a miserable child if you're a happy engaged human being... the formulas I think the you know the the falseness is what kids Sniff and and”
Writing a reference letter for someone you care about should take 2-3 hours of deep thinking to truly know them, not 4 minutes with an AI prompt, because the process of writing deepens your knowledge and creates meaning.
“I have a you know favorite nephew that you know wants me to write a letter because he wants to go to some college or something like that or a co-op board or whatever and I really want the person reading that letter to know about this kid because I really like this kid I love him and and uh so you know for me in instead of spending you know 4 minutes on the prompt and and getting something in you know to spend two or three hours you know I feel like I know him a little better at the end I feel proud to send it to him uh or to his parents but I also feel like you know it I I don't think it will be more effective”
Davis starts each day with the Psalm 'Behold, the day the Lord has made, rejoice and be glad in it' as a practice of gratitude and appreciation, knowing that tomorrow could bring bad news that changes everything.
“there's a there's a Psalm uh that begins uh behold uh uh the day the the Lord has made rejoice and be glad in it well that's not a terrible way to start each day it's just to say that you know just this is the day the Lord has made rejoice and be glad in it and uh I feel like I get i' I've had such a super abundance in my life like it is and that tomorrow you know the phone could ring and somebody could say it's malignant or they could say there's been an accident uh and uh and everything will change and uh and I don't want in that moment to regret that I didn't appreciate just how lucky I had it today the day before all that changed”
The scale and duration of recent monetary policy interventions (near-zero rates, massive quantitative easing, money printing) is truly unprecedented in human history, and the mechanism of suppressing interest rates while simultaneously printing massive amounts of currency creates a 'slingshot' effect with uncertain end-state consequences that could play out over a long period.
“The scale of what we've gone through is really unprecedented... money has a cost... we actually created that environment and that we created this environment by driving down rates and then at simultaneously printing so much that normally would have caused rates to go up would have created a lot of inflation but we created an artificial suppression mechanism by buying all that in and sort well that was like pulling back on a slingshot and nobody has any idea where this is going to end up”
Writing the insurance letter weekly (as Davis did for his grandfather) was valuable not because clients read it but because the discipline of researching and synthesizing information forced the writer to learn, and AI's ability to write the letter without human effort erodes this learning mechanism and creates alienation from meaningful work.
“he said well we write it for ourselves you know the discipline of every week going through... reporting on any company that had reported earnings what was happening with inflation what was happening with investment returns... but I was realizing in this you know coming wave of of AI... the idea of being alienated from your work uh not realizing you know it's... coming wave of... AI you know the ability... to do very good writing... the writing is not about the product for the client it's about what you learn by writing for yourself”
Your physical environment and formal dress create psychological readiness; wearing a tie and going to the office (even on Saturday) puts Davis in a work mindset, just as academic robes or school uniforms put students in a learning mindset, based on a principle that gesture and environment change cognition.
“knowing that I really try to structure my life to to avoid that and I show up in person I you know if I'm working on a weekend I just come to the office for half a day it's like a very relaxing time to be there and I can get more done in a few hours but if I'm at home you know trying to work and you know the kids are there or the like I it's not that uh it's just I want to be with them you know and and so uh physically putting myself in a different location matter it didn't matter to my dad at all he could tune out everything work anywhere but for me being um that that's sort of an easy concrete example”
Charlie Munger dresses conventionally (suit and tie) precisely because he is eccentric in other ways, so conventional dress makes people assume he's more conservative than he is, which serves his purposes.
“Charlie always talked about dressing conventionally you know wearing he said he's so Ecentric in other ways that by wearing a suit and tie people assume that he's more conventional than he is and that serves him”
The worst part of Davis's job is having to let people go when they're not succeeding in their role, but it's usually not because they're bad people—it's because they're in the wrong job and would be great elsewhere (like the person who ended up at Facebook's corporate finance function).
“that is the worst part of my job but it's not it's almost never the case that it's not because that person doesn't deserve success it's just that they're doing the wrong thing I mean if they have that credential and that work ethic and that level of IQ and processing speed and communication skill and you know value system and they aren't succeeding they're just in the wrong job”
His grandfather famously wrote at the beginning of his will 'I'm writing this myself on TWA flight 323 economy class' (underlined) to emphasize that he traveled economy, making it clear that all his wealth was being given away to charity, not left to heirs.
“my grandfather famously wrote his will in the beginning words of it say I'm writing this myself on you know twW flight 323 economy class underlined uh so you know first class was always an absolute no no it was like ordering filet Min on a menu”
Board meetings in many companies are pageantry-focused with PowerPoint presentations and process orientation, whereas effective boards (like the Washington Post) have dinners the night before with all directors attending, creating trust and enabling honest discussion of real issues.
“the board meetings I mean I've been I think that a lot of average companies board meetings are basically the lights go down the PowerPoint comes on there is a focus on pageantry process... the Washington Post so you know there's Warren was on that board and Ron Olen... they had a tradition where the night before the board meeting there was a dinner the dinner was held at the CEO's house and nobody else is invited just the directors and you sit and you have cocktails and you talk and you sit at the table and you talk about business”
Inertia—the tendency to be held captive by past decisions, either refusing to revisit past rejections when they perform well or refusing to exit positions that have declined—is a persistent behavioral trap for investors and was a recurring theme in recent team reviews.
“inertia was the theme that really ran through it we just said as a firm we really still struggle with being held captive by our past decisions um you know the we're held captive if we've you know chosen not to own something and it's gone up a lot it makes it so hard for us to revisit that uh if we own something and it's gone down it makes it very hard for us to let go”
The Davis family philosophy on raising children centers on not creating a lifestyle that children will feel like failures maintaining on their own merit, which means avoiding high-cost resort areas like Aspen or the Hamptons in favor of more modest but sustainable family traditions.
“what doesn't work is giving your kids a lifestyle where they will feel like a loser if they are unable to maintain that lifestyle on their own Merit I just think that you know if you do the Southampton Palm Beach uh uh Aspen uh like you're creating you're creating kids that either you're going to have to leave them a hell of a lot of money to maintain that lifestyle but even then even if they maintain the lifestyle they do so purely because they can brute afford it not because they are interesting or substantial people”
Wealth and material success do not guarantee happiness, and there is significant risk that pursuing a lifestyle of luxury (Hamptons, Aspen, Palm Beach, private equity circuit) creates a form of competitive unhappiness where you're always comparing yourself to others in that cohort.
“going back I'm very prone to Envy in myself I'm not proud of that I'm I'm it's a you know I can be a very competitive person and um and so a big part of checking that weakness in me uh is not to get in that pool right and so you know I don't go to Southampton not because I don't think it would be lovely and not because there aren't some amazing interesting people that I admire hugely that live there and they live beautifully there it's because if I got there I would feel like I want to be here I got to do this”
Davis's family made a trip every 18 months together since childhood; they funded it by each contributing 'one week's pay' so everyone made an equal sacrifice regardless of income, creating fairness and commitment.
“we do a trip every 18 months the same group of friends does a trip together and we've done it since we were teenagers um because we all we would spend some time together in the Summers but then everybody lived so we would always you know have a weekend where we all got together and and uh you know the the way we pay for that trip is it used to be that you know whoever you know what friend you is a teacher you know that he would dictate the the amount of the trip but you know as as I said how many times do we need to canoe down the honic can we do something more and so we all decided we would contribute one week's pay uh so it was uh you know sort of you know from each according to his ability and so everybody made an equal sacrifice and then that was the trip Kitty”
Davis's father would say ordering filet mignon on a menu is like ordering first class—absolutely not acceptable in their family culture; this shaped Davis's entire relationship with luxury spending and display.
“first class was always an absolute no no it was like ordering filet Min on a menu like like it would still I could still feel my dad's blood pressure going up if any one of us tried to order a steak at a res”
His father had a very difficult relationship with his own father because his father was so puritanical and tried to teach lessons (carry skis, dig for pool, etc.), which felt false to Davis's father and created distance between them.
“I would say my father had a very difficult relationship with his own father and I think a big part of that was his own father was so puritanical and you know would make him carry his skis and walk up the hill for the first in order to get a lift ticket or you know they're going to build a pool and so they to get out there and dig for two weekends until their hands were sort of bloody and you know the grandfather was always trying to teach them a lesson and it had felt false it felt false to my dad”
Davis has severe ADHD and is prone to distraction; he structures his life to compensate by working physically in the office, dressing formally even on weekends, and building accountability through board membership in order to avoid the behavioral patterns his condition creates.
“for me I have you know I have the motherload of all add I mean I you FR tell very hard to keep me on topic um and that's one of the reasons I love this business everything's interesting everything's relevant no matter what article I read it has some tentacles back that have investment implications”
Davis loves sailing and created a simple operational principle: 'work before play'—he only allows himself a sauna after exercising, which is an effective form of self-manipulation to overcome lack of motivation.
“Granny's rule work before play that's probably the strongest uh you know I joke that you know that is uh you know in our family six kids that people will say that over and over and over work before play well it Su it suits me I just if I and it suits me whether it's you know going to work or whether it's going to exercise you know it's there's one thing on earth I love I love a sauna and so you know I only give myself a sauna after I work out like there's no no other way I can get a sauna and so it's amazing how effective that is in manipulating myself into doing something I don't really feel like doing which is you know going and exercising”
Davis defines personal success by living his life backwards (from his funeral): having meaningful relationships with family, colleagues he admires, board positions where he can observe how great businesses are run, and knowing that people treated his firm well and got better due to their association with it.
“it for me that is one where Charlie shaped that from the beginning it's just living your funeral backwards and thinking thinking about you know well I I'll give you an image... I saw all my kids at the dining room table with their significant others and laughing and and it was this moment where I felt like I didn't even need to go in... building a place where the people that have invested their careers there have felt like they've made a difference and that they've lived meaningful and substantial lives”
The book 'Chasing Daylight' by a late accounting firm managing partner describes concentric circles of importance as health fades: starting with the firm, then relationships, then family, then spouse, with the insight that the outer circles seem most important but may matter least in the end.
“there was a a man who ran one of the big accounting firms... died very young while in fact he died within becoming a year or two of becoming the managing partner... he wrote a book called chasing daylight... he talked about these concentric circles... you know when he first found out he's like okay I've got to get the Firm secure and then you know I've got to uh work on these you know relationships... down to his immediate family and then just to his spouse and you know I think that's sort of the right mindset to think about is these sort of concentric circles and you know in some ways the Outer Circle you think it's the biggest it matters the most I have a feeling the end it may matter the least”
Davis is 'prone to envy' and highly competitive; he deliberately avoids Aspen, Southampton, and Palm Beach not because they're not wonderful, but because entering that world would trigger his envy and create an unsustainable comparison treadmill.
“going back I'm very prone to Envy in myself I'm not proud of that I'm I'm it's a you know I can be a very competitive person and um and so a big part of checking that weakness in me uh is not to get in that pool right and so you know I don't go to Southampton not because I don't think it would be lovely and not because there aren't some amazing interesting people that I admire hugely that live there and they live beautifully there it's because if I got there I would feel like I want to be here I got to do this”
Tiger Woods' strategy for the British Open was to avoid his weakness (bunker play) by perfecting his drives and irons so thoroughly that he never entered a bunker during the entire tournament, representing the principle of inversion: rather than fixing weaknesses, identify and avoid situations where they matter.
“the story which I believe is true was about Tiger Wood's first British Open... apparently uh the weakest part of Tiger's game was his sand game coming out of bunkers uh and so as the Press was following him around uh they kept badgering him about what is he doing to improve his sand game... he had said that he was working on his drives and his irons and they said why and he said because I want to avoid the sand and uh and then I believe played the entire British Open without going into a bunker once”
The desire to work remotely and minimize work's intrusion into lifestyle is common among young people, but it reflects alienation from work itself; people actually crave competence, learning, relationships, and meaning, and COVID's remote work exposed this because students felt degraded despite getting degrees with less effort.
“they were they were obsessed with this wanting to work remote you know this idea that hey uh you know I want work to to kind of be not interfere with my lifestyle... and they all had been in college during covid and so I said so you know tell tell me about covid and college and oh it sucked it sucked... and of course everyone cheated they felt so degraded by the experience... why are you so unhappy because you were alienated from The Experience... that's what we really want is so demonstrably false you know We crave competence we Cate it it is just you know it's been our superpower as a species”
The only viable path to repay accumulated debt without economic disruption is through gradual currency devaluation via moderate inflation (3-4% annually) sustained over a long period, which would require unprecedented fiscal and monetary discipline that may not be politically achievable.
“the only way we can repay uh uh uh the de that we have incurred is going to be by you know devaluing the currency so we can pay back and you could do that gradually over a long period of time with 3 four% inflation and let that roll through and that chips away at it and you can do that provided there's enough discipline to stop growing it I don't think either one of those things are particularly sure bets”
Davis keeps a journal of every alcoholic drink he consumes weekly because he loves alcohol but knows it can destroy lives if it gets out of control, and the gradual nature of addiction means the bonds 'are too light to be felt until they're too strong to be broken.'
“I keep a journal of every alcoholic drink I have a week uh because I love alcohol you should be clear I mean I just think it's such a wonderful gift... and I'm a Believer in what Charlie said about the bonds are too light to be felt until they're too strong to be broken uh I'm a Believer it can absolutely take you by surprise and uh so you know for me just keeping track of the drinks I have over the course of a week is a way of it you know ensuring it never gets out of hand”
Working for his grandfather in Maine during summers at age 15-16 as a cook and chauffeur fundamentally shifted his perception of his grandfather from a distant, aloof patriarch to a curious, deeply knowledgeable person, creating a lasting relationship that lasted until his grandfather's death.
“I want to start with your grandfather and if I understand correctly when you were 14 and or no 15 and 16 you were working for him up in Maine as a cook and a chauffeur and that really cemented your relationship with him”
Charlie Munger gave up practicing law because his most profitable clients were people he didn't respect—those operating on the edge of legality constantly needing lawyers—whereas his best clients (those not in trouble) paid little.
“it's one of the reasons he gave up being a lawyer because you know being a lawyer he said it's tough because your best your most profitable clients are going to be people that you don't respect very much because they're always operating right on the line they always need a lawyer they're always trying to get around it but you know your your best clients won't will be your worst customers”
Costco's membership model creates a barrier that keeps out the cohort least likely to pay and most likely to shoplift, and this cohort is shrinking as a percentage of GDP relative to responsible consumers, making the barrier increasingly valuable over time.
“that cohort will have 100% of your shoplifters mhm and 100% of your thieves and now it'll also have most of your small tickets and that cohort relative to the US population will probably be shrinking as a percentage of GDP relative to the people that are able to do the math that are responsible enough”
Davis loves his colleagues and it is a privilege to work with people he's genuinely curious about; his research team is diverse (people in 20s through 60s) with average tenure of 14 years, which he sees as one of his greatest sources of happiness.
“I love the people I work with I can't tell you what a privilege it is to really love your colleagues like just to be curious about you know what they're up to in their lives we have you know a small team they're eight of us on the research side but they're in every decade have one colleague in the 60s couple of us in our 50s some in their 40s some in their 30s and some in their 20s and it's like the Island of Misfit Toys I like have no idea how we could have found each other otherwise you know I think our average tenure together is something like 14 years”
An English nanny named Ellen Wigglesworth, born in 1898, lost her fiancé in WWI and came to the US; she told young Davis stories about going over the top in the trenches with machine guns that terrified him and made him pray 'please don't test me like this'—this taught him to appreciate safety and stability.
“I had believe it or not I had an English Nanny growing up uh I had a very strange upbringing in some ways but uh so this is you know my dad had us out trying to gather kindling and you know and my mom's had this English Nanny named Ellen Wigglesworth and Ellen Wigglesworth was born in 1898 and uh and she lost her fiance in World War I and that's what when she came to the states and she ended up being my mom's nanny in the 30s”
His six kids all worked through the same rule (three weeks without a job allowed during school, three months without a job during summers), and now looking at them he's proud of how they all turned out with good values and work ethic.
“you know my parents were very straightforward about that and and so you know and I look at my kids and I'm I'm so proud of them and they all they all worked through you know we did have the same rule like three weeks without a job as long as you're in school and then 3 months without a job uh uh uh you know how long you can live at home”
In contrast to the financial crisis, Davis felt much better positioned during COVID because he and his team had conviction that the economic impact would be transitory, and he observed that investors didn't panic (no large redemptions or flight to cash), allowing his firm to stay steady rather than de-risking at the wrong time.
“when covid came around that was the crisis for which I think we were the best prepared... we had a lot of conviction that we owned companies that would get to the other side we weren't worried... that was one where I felt we stayed very steady and and I think of of all of the crises I've been through that that was the one where I felt the greatest resolve that we were on the right course”
Warren Buffett gave his grandfather credit for building and holding a diversified portfolio despite significant volatility, and in 1975 held 30% cash when the market went up 30%, causing the fund to lag despite being 'beaten down' and 'wrong day after day' (illustrating how conviction in positioning matters more than being right short-term).
“my father was 30% cash in 1975 and uh uh and so the fund dramatically lagged in one of the best Market years of of the Decades uh 75 and Market went up 30% or something like that and uh you know the fund probably went up 20 because it was a third in cash as he said he was just beaten down he'd just been wrong day after day after day my grandfather had been living overseas he was Ambassador from 68 to 75 in Switz land and he comes home and he's like this looks great now his net worth was down 80%”
A good day at the office beats a bad day at sea (contradicting the nautical saying), because a good day at the office is exciting, meaningful, and watching things come together; meanwhile a bad day at sea is really scary and dangerous.
“there was a an expression in sailing that a uh uh a a bad day at Sea beats a good day at the office that's not true one a bad day at Sea is really scary and and two a good day at the office kicks ass I mean it's just fabulous it it's exciting and you're watching things come together”
Davis underperformed relative to the S&P 500 from 2008-2009 through the 2010s because he derisked the portfolio during the financial crisis by moving from financials into more defensive businesses like Nestlé, accepting lower returns to ensure portfolio survival if the crisis worsened.
“we drisk the portfolio now I had studied my dad enough to know that going to 30% cash was not the right thing to do but it may have been you know selling some wells and buying Nestle that ensures that if the crisis gets worse we're going to own businesses that'll get to the other side and if the thing stabilizes well Nestle's going to go up a lot too it'll just go up a lot less so in essence we planted the seeds of a long stretch of underperformance relatively from that we built wealth and we felt like that was job one we had to get to the other side uh but that was a uh uh but that you know we're only just now beginning to sort of claw away out of you know a long stretch of relative underperformance and it started with that”
Wine is particularly dangerous because portion sizes and alcohol content have grown; cocktails in the 1950s were served in much smaller glasses than today, and Davis now uses small glasses to manage this risk.
“Wine's the most dangerous of all because the portion sizes grow and the alcohol content has grown so you know you end up with wine now that is being drunk out of much bigger glasses and the wine itself is 20 or 30% more potent uh than it was I try that's a good example of something where you can do the opposite which is smaller portions you know smaller glasses uh you know I love Cocktails so you know I will craft some beautiful spectacular work of art but I serve them in very small glasses which in the 50s was often how things like martinis were served uh was in these very much much smaller glasses”
Charlie Munger was 'powerful' about handling suffering and had a stoic philosophy: 'opportunity to behave well is what suffering is', but Davis says 'please don't test me' because he hasn't been severely tested and doesn't know if he could handle it like that.
“I'd like to think you know Charlie was so powerful about handling suffering and his stoicism you know this opportunity to behave well that's what suffering is an opportunity to behave well and I always feel like I hear you Charlie but please don't test me like I just I just don't want to be tested and and uh but of course life doesn't give you that option sooner or later we're all going to be tested it's it's it's a matter of whether it's sooner or later”
After meeting Charlie Munger that day, Davis 'just started ginning up an excuse to go there all the time' and called on him repeatedly in Los Angeles, which was the beginning of his relationship with Munger and was profoundly important.
“at the end he said you know young man anytime you you want to I'll make time to see you anytime you you come to Los Angeles and I enjoyed our conversation and so I just started jinning up an excuse to go there all the time and uh would call on him and and I just I I I can't I can't even put into to words how much I just admired his incredible depth and breadth”
Real estate at 8-9% cap rates in today's environment does not compensate for risk when you can buy Capital One at 14% after-tax earnings yield; the risk-adjusted return on real estate is too low.
“they were seeing some unbelievable opportunities to buy uh uh buildings with you know 8% 9% cap rates well what's so good about that yeah I mean yeah the risk adjusted return on that is pretty small I can buy Capital One at a 14% after tax earnings yield I mean what's so great I don't understand this this real estate mindset that still thinks that a singled digigit cap rate you know compensates them for the risk that they're taking”
Davis bought 17 million shares of Costco on the day it gapped from 45 to 27, representing 'one of the great trades' of his career, but later sold it over time, a decision he considers a major mistake not because the valuation went up but because the business's potential reach expanded far beyond what he had modeled.
“one day in I forget what year it was probably 15 or more years ago now uh maybe 20 years ago uh Costco closed at 41 had come down from 45 it was a momentum growth stock darling they reported a bad quarter that stock opened at 27 uh and we amazingly bought 17 million shares that day it was one of the great trades of my whole career and uh you could talk about how much I screwed it up that we still don't own those shares which we don't... it would have been easy if theoretically for uh some sort of private Equity Firm to jump in”
By putting his money in the funds rather than a personal account, Davis lost the ability to hold concentrated positions (like 40% Costco, 40% Amazon, 20% Berkshire) which would have made him dramatically wealthier, but the tax inefficiency of fund management was the 'right thing to do' for clients, and he feels intellectually at peace with this choice despite the personal cost.
“if I had simply bought each stock that I ever bought for the funds in a personal account uh and held it then I simply never would have sold simply because something was getting too big right whereas in the funds I do that all the time and it's been a terrible mistake so if I had never done that you know Costco would be you know whatever 40% of my worth Amazon would be 40% you know Google would probably be you know 20% and the you know Burkshire would be 20% you know it would be pretty much everything in there you know those four or five positions um but in I felt it was the right thing to put the money in the funds and so the result is I have this enormous tax inefficiency”
The Washington Post's sale was managed with extraordinary character: it took 6-7 months, never leaked, and involved the Graham family voluntarily selling their flagship newspaper rather than forcing it to remain as a family asset.
“I mean it was one of the great great examples in all of corporate history of fidu leadership and servant leadership of the Graham Family to make the decision to sell the newspaper that it needed to be in safer and better hands...imagine the gossip of the Washington Post is going to be sold the grams are going to be soell imagine that taking six or seven months and imagine it never leaking I mean just that unbelievable character the people involved in that”
His grandfather's brokerage firm had large Berkshire positions and could lend them to short sellers, which made extra 1-2% annually; short sellers were willing to pay this because they believed Berkshire was a closed-end fund selling at premium, even though they were continuously wrong.
“my grandfather having a brokerage firm having a big position in Berkshire and all of these people that wanted to short Berkshire well there was a big thing in the 80s particularly that this argument oh birkshire is just a closed end fund selling at a premium so there was a obvious trade that all these really smart people would talk about which was basically short Berkshire buy some coke some cap cities some Freddy Mack you know buy the public companies and you pick up a nice risk-free Arbitrage well of course the shorts got killed for decades but of course they still wanted to keep doing it you know short sellers are often convinced that they're right even you know you think of the test short sellers over the years you know just they just didn't want to look at the facts and so my grandfather loved this cuz he could make an extra one or two% a year by lending out birkshire to these crazy short Sellers and it sort of delighted him because he thought that they were completely wrong”
Money has a fundamental cost that goes back to basic economic logic: when someone borrows a productive asset (like goats), they must compensate the owner for the foregone productivity (milk, offspring), so interest rates exist because lending a productive asset for free makes no economic sense.
“money has a cost for reasons that are totally obvious when you just think of the structure of what it is you know it going all the way back to Babylon which is I think some of the first recorded interest rates had to do with you know somebody has a herd of goats and you want a borrow a couple of goats for a while right you you then you had to return to them the Lost productivity that that what they gave up the milk or they gave up the kids or whatever it was from those goats so in order to use their goats you had to pay them something otherwise why would they give them to you”
New York City in the 1970s was filthy, scary, dysfunctional, with garbage strikes, blackouts, riots, and general post-apocalyptic chaos, which made the idea of rural/pastoral life intensely appealing to a young Davis.
“New York in the 70s uh people try to imagine some romance about it it was just it was dirty and scary and dysfunctional you know there was a garbage strike you know the power uh blackout in 1977 it was like there were riots I mean it just you know I carried mug money uh going to school in the morning because the the crazy theory of Upper East Side parents was that if you got mugged it might be good to have a little money to give them”
Davis' parents were divorced, which created a dual household experience where he could 'fish the seam' between two different parenting styles and gather benefits from both, similar to how fish gather in the seam between two bodies of water moving at different rates.
“I don't I don't know if you ever fish but you know in in in fishing there's this thing about fishing the seam you know where you find two bodies of water moving at different rates and in that seam between those two bodies of water there's often a lot of uh of marine life and uh and so I think Children of Divorce are very good at fishing the seam”
Davis' grandfather started with a $100,000 loan, grew it to $800 million during his lifetime, and intended 100% for charity; similarly Davis' father has given away a 'scale of fortune every year' that is 'mind-blowing,' representing the Carnegie-Buffett model of giving away most of one's wealth.
“my grandfather built this Fortune I mean it was amazing he started borrowed $100,000 when he died it was 800 million it was held in a trust as long as my grandmother his wife was alive and when she died it was two billion but 100% of that money 100% was was marked for charity”
The third generation decline ('shirt sleeves to shirt sleeves in three generations') is common in family businesses, but Davis is an exception in that his grandfather, father, and he each built independent success rather than inheriting and managing existing wealth.
“talk to me about the third generation of a family business usually the expression is like shirt sleeves Shir s in three generations and yet you're an exception to that”
Ben Franklin deliberately loaded his wheelbarrow with printing blocks and walked through the streets of Philadelphia to signal his industriousness to creditors, illustrating the importance of managing perception and reputation.
“Ben Franklin did the same with a wheelbarrow in the Streets of Philadelphia in his autobiography which is you know 80 Pages there's a section about uh borrowing money and he says you know and you borrow money uh they're it's very important that you do certain things and one is that you need to reassure your creditors that you're trustworthy and so he always advised to paying them interest a day early uh but another thing he he said is he would load up these you know big printing blocks and typed things and he'd have a wheelbarrow and he he would be seen pushing this wheelbarrow”
Heisenberg paced around an island in the North Sea while developing quantum mechanics, nearly losing his sanity because the mathematical implications seemed impossible—illustrating how scientists are heroes grappling with fundamental challenges rather than merely technicians following procedures.
“what it was like for you know Heisenberg you know pacing around this island in the North Sea trying to you know coming to terms with the math of quantum mechanics and losing his sanity because it couldn't be right it couldn't be right it it was such a disturbing implication”
Newspapers' larger page size created a better information environment because readers' eyes wandered and discovered unexpected stories; small screens force curated, linear information consumption, and the eventual replacement (VR/AR) may recreate the large-format advantage.
“I wasn't always sure where my eye was going to go what I was going to focus on and it was often the case that something might have caught my eye in a way that it doesn't when I'm on this tiny little screen... when you think about VR and AR of course there'll be much more satisfying ways to take in information uh and that will be the functional equivalent of what that big newspaper page was”
Charlie Munger told Davis that 'it's very hard to be blamed for someone else's unhappiness' during a difficult personal divorce, offering grace and permission to recognize that at some point, trying to make someone else happy becomes impossible.
“I went through an un unexpected divorce and I was having dinner with Charlie... just in this moment where you know I could feel you know Charlie was... he never held back telling me when he thought I was you know foolish or stupid but I felt so deeply supportive too... Charlie said well you know it's it's it's very hard to be blamed for someone else's unhappiness... that just those words... in this moment that was for me you know quite a uh a t a low point in in my life... just the grace of that phrasee”
As a child in 1970s New York, Davis was given 'mugging money' to carry to school on the theory that if mugged, he could give it to attackers to prevent violence—a strategy Davis now views as a terrible idea that likely encouraged mugging.
“I carried mug money uh going to school in the morning because the the crazy theory of Upper East Side parents was that if you got mugged it might be good to have a little money to give them so that they didn't get mad well you know I'm no expert on Pavlo but I think it's it's a really stupid idea to give little skinny kids a bunch of money to carry around with instructions just give it to anybody when you get mugged”
The 1970s bear market (down 45-50% from 1973-1974) felt like the defining economic crisis of Davis' childhood, not because of objective magnitude but because he experienced it through his father's lens and it coincided with societal chaos (oil embargo, inflation, hostage crisis, urban decay), creating a lasting psychological imprint of crisis.
“the bare Market of the 70s to me felt like the big crisis... so to me what happened in the 70s felt like it was the big crisis... it was probably through this childhood lens... it felt like uh uh it was a time where everything was sort of hanging in the balance”
Davis' father had an exceptional ability to narrate businesses as stories, explaining their dynamics and strategy through narrative rather than financial metrics, which created engagement and learning.
“my dad's a great sort of Storyteller he his breadth of information like what he knows about and his ability to describe businesses as stories you know it's it's funny we I don't know if we'll get to this but but I I was just with um... how humans think in stories and it makes sense if you think over the course of evolution how wired we are to learn by storytelling uh story listening”
Davis' father was very anti-television and considered it a 'waste of time,' but made an exception for 'Wall Street Week' with Louis Rukeyser on Friday evenings, which became a fixture in the household dining room during Davis' youth.
“my father is very anti- television and and not even in a a sort of fanatical way he's just not interested he just finds it an amazing waste of time and and uh it is one of the things that I really admire about him and um and but Wall Street week was an exception we I mean I felt like LS Riser must be a relative or something because he was in the dining room you know the little TV uh uh watching uh LS Riser speak”
Davis' father attended to a visit from Steve Jobs (in sandals) at Fiduciary Trust Company trying to raise capital for an IPO and was struck by how casual/disrespectful Jobs' appearance was (hippie, long hair), illustrating the tension between appearance/signaling and competence.
“my father telling the story about these hippies in his office at fiduciary Trust Company you know in in downtown New York respectable Trust Bank and he said this guy shows up in sandals in sandals he couldn't believe it he said how how can a guy show up trying to raise capital for a business and show up in sandals he's like I'm not going to invest with any damn hippie but of course he was trying to teach us a story about you know about respect and knowing you know who you're meeting with but also this sort of the craziness of the idea that these young hippies were raising money for some crazy computer company”
Davis' parents had a rule that children had to find work after age 13 (three weeks without a job while in school, three months without one during the summer), though his parents were supportive of internships and unpaid educational work.
“there was a rule from about the time we were 13 which was you know you were allowed in the house you know three weeks without a job so that sort of got you through you know Christmas break or spring break but the the the the Assumption was you were going to work in the summer and and that was sort of the Assumption all the way through but to their credit uh they felt like you know if it was an internship at the Bronx Zoo or whatever or working at Humane Society that was fine you know and they would pay you for that”
Davis' grandfather sold his firm (Davis Palmer and Biggs) in the 1970s, near the bottom of the market, which is when Davis learned about opportunity in crises and why there was no sense of a 'family business' to inherit.
“my father had a partner he had had a firm called Davis Palmer and bigs but that's he sold it in the '70s uh really pretty near the bottom uh that was another opportunity for me to learn you know differently like we're we want to we want to get through we want to build something and stand for something”
Charlie Munger was fundamentally a tough critic and truth-teller in a way that created an environment where Davis felt supported, similar to having the 'hardest teacher you've ever had' who is rooting for you, which is rare and valuable.
“Charlie was a tough critic and there was he never held back telling me when he thought I was you know foolish or stupid but I felt so deeply supportive too that you know that he he was it was coming from the it was like the hardest teacher you've ever had you know the hardest teacher youve ever had as a tough critic um but you feel they're rooting for you like that's part of what makes them your favorite”
Working at the Bronx Zoo as an intern meant commuting to Tremont Avenue for early morning feedings and cleaning cages throughout the zoo (camel barn, elephant house, reptile house, Wild Asia), providing practical exposure to animal care that informed whether he truly wanted to be a veterinarian.
“I worked at the Bronx Zoo as a uh intern uh which was a crazy job to take the subway out to Treemont Avenue uh you know in time for early morning feeding and and uh you know mostly I cleaned cages is what I did but I clean cages all over the zoo so I worked at the camel barn and the Elephant house but I also worked in uh uh the world of Darkness with other nocturnal animals I worked in the reptile house even in Wild Asia”
Davis' father went on Wall Street Week and later Davis went on, and Charlie Munger mentioned that he had all three generations of Davis' family on the show (grandfather independently, father, and Davis), which Davis found significant.
“when I was uh near the end of Lewis's life uh I went on the show and he he made this comment that he had had all three generations my family on on his show and uh which my grandfather had been on independently of my dad and and then I had been on and so that was sort of a a nice thing”
Interest rates were very high in the late 1970s and early 1980s (likely 15%+ based on context), so Davis and his brother invested Christmas/birthday money in a local savings bank and watched it compound significantly—turning $15 into $52 with change, illustrating the power of compound interest.
“and of course interest rates were very high then and so you know I remember my brother and I both being struck that we had put for a few years money we had gotten at Christmas or our birthdays into the local uh Savings Bank uh and you know the idea that all of a sudden I mean I remember going to get the money out and being given a $50 bill plus a $2 bill and then some change because what seemed like I had put in only1 or $15 and all of a sudden there was $52 in change”
Davis met Charlie Munger at age 26 when pitching a stock-lending business for his grandfather's firm; Munger rejected the business in 4 minutes (noting there were 'seven guys named Vinnie' running it) but spent 4 hours engaging Davis on his background, family, and thinking.
“I show up at 8 o00 at the Millennium Hotel downtown in New York and I I pitch this stock loan business like I I throw it right out there you know I just I have no idea and Charlie stops me after like four minutes and he goes I have no desire to own own a business run by seven guys named Vinnie and of course it was the perfect we literally had seven guys named Vinnie... but I'm very curious about how you picked Berkshire and how you got where you are and what are you doing and and we got talking about the insurance letter and this my grandfather and we stayed at that table until lunchtime which is it was almost 4 hours”
His father had been very close to the founding of Intel and was interested in the semiconductor space, but was skeptical of Steve Jobs and Apple despite their eventual success, illustrating the difficulty of prediction.
“he had been very close at the founding of Intel so it was an area that he was interested in but he just thought these guys you know Steve Jobs these guys seem crazy”
Davis' grandfather held his jacket and shuffled when walking, signaling humility and hard work, in contrast to Davis' father who doesn't care what others think and maintains a much lower profile.
“my grandfather had had that he felt you know interestingly Charlie always talked about dressing conventionally you know wearing he said he's so Ecentric in other ways that by wearing a suit and tie people assume that he's more conventional than he is and that serves him so but yeah was my grandfather would hold his jacket and Shuffle and and whereas my father is he there ways that he doesn't care what anybody else thinks”
During NYC's pooper scooper law transition, some people let dogs defecate on building roofs where enforcement was impossible, leading to dogs jumping off rooftops and dying—illustrating the chaotic and sometimes tragic consequences of rapid regulatory change.
“people were so appalled at the idea of cleaning up after their dog that they would go to the roof of their building where of course it couldn't be policed and they'd let their dogs crap up there and so there was a period of a few months where dogs were jumping off of buildings and you know it was when I say New York was chaotic in the 70s just that's a sense of the cows are dogs coming out of the air there's dog everywhere”
Davis started a dog-walking service in second or third grade to earn money and have pets without his parents' permission to cross streets with dogs (he could go around the block multiple times); when the NYC 'pooper scooper law' was passed, demand exploded and he could charge $5-10 per walk instead of 50 cents.
“I started a dog walking service when I was probably in third grade uh or second grade and my parents rule was I couldn't cross streets with dogs but I could go around the block many times... people would pay you anything to clean up after their dog and there were all sorts of strange inventions... by then I had worked in the Humane societ... I wasn't at all squeamish about... people would pay you anything... I could charge $5 $10 people would pay me to come twice a day”