Tom Gayner: Lessons That Every Investor Needs to Learn (Audio)

Thapar owned Citigroup at $50 per share yielding 5% at 7x earnings, but sold the entire position at $26 during the 2008 crisis despite the emotional pain of the loss, because he didn't understand the dimensions of the crisis and preferred to preserve balance sheet strength rather than hope for recovery.

“we were not large shareholders of city courp but we did own some and maybe our cost in it was 50 bucks and it was seven times earnings and yielding 5% or something like that... as The Crisis began to develop I think at 26 I sold the entire position and and I can just remember feeling horrible about that but I also remember the feeling of We're In This Storm and I just don't know the dimensions of this storm”

Thapar's father taught him never to make a good deal with a bad person; this principle has been tested and confirmed through experience, though some failures are too painful to discuss publicly.

“one lesson you learned from your dad was you can never make a good deal with a bad person I'm wondering if there's any times where that's really hit home for you when I've made a deal with a bad person can you give me an example of that well I mean some of these are a little too painful to to talk about”

America has benefited more than other countries because it encourages the 'wild west' mentality of innovation and risk-taking, whereas other parts of the world regulate it more tightly and thus have less innovation.

“if you think about America RIT large versus many other places in the world you know we we let that we encourage it as part of our DNA part of the culture where that happens it doesn't happen so much in other parts of the world and we have been the net beneficiaries as a society from The Innovation that comes about from the fact that we operate with a pretty wild west me mentality of of that sort of stuff”

Mistakes of omission in COVID-19 policy—educational gaps, social development delays, mental health costs—have not been honestly acknowledged, and this failure to admit mistakes erodes trust in institutions and makes future compliance less likely.

“I also think in the sense of opportunity cost and mistakes of omission we have not admitted to ourselves what mistakes we made through the the period of Co and educational gaps Social Development people's mental health U that that suffered because of isolation so all that stuff was going on”

Base rates (Mark Leonard's principle) are the underlying statistical frequency of outcomes; explaining why your situation will be different from the base rate is a critical discipline that prevents false confidence and unrealistic expectations.

“Mark lard who's a great business leader he talks about the concept of Base rights all the time what's what's the base rate here so to always go back to what the underlying base rate of something is and explaining or reconciling why it is you think this thing is going to be different than what the base rate that is a very important discipline”

Risk is defined as 'more things can happen than do happen' (Peter Bernstein); in a car accident scenario with an aggressive driver, Suehlmann prioritized avoiding the uncertain risk (unknown weapons, unstable person) over the certain cost (rental car repair).

“how do you think about risk I think Peter Bernstein defined risk is more things can happen than do happen and I think that's a great definition of risk so the thing is you should think about that all the time”

Grant's autobiography, written because he was bankrupt after his daughter married a swindler and he needed income for his family, was completed with the help of Mark Twain and provided the income to sustain his family after his death from cancer.

“unfortunately his daughter did not marry well she married one of the great swindlers of that that era um and he was bankrupt I mean he had no money and he he knew he got sick and the cancer was developing and you can almost read that book and feel the Race Against Time that he was personally involved with basically because that book with the help of Mark Twain who was a friend of his and a contemporary provided the income that sustained his wife and family after his death”

Munger's principle 'any number no matter how big multiplied by zero is zero' explains the temptation to optimize and make things bigger while missing the risk of catastrophic failure that turns everything to zero.

“as Munger said any number no matter how big multiplied by zero is zero but it is so tempting to be at the moment where you're you're making bigger and bigger numbers and you're minimizing the risk of zeroing out because that's not what's happening right now what is happening right now is is you're making that number super big”

Munger's discipline of 'inverting, always inverting, working with the end in mind' is the fundamental component of how Thapar is wired—thinking backwards about what you want to avoid.

“and again munger's discipline of thinking backwards inverting always inverting always working with the end in mind that's that's just the fundamental component of the way I'm wired”

Most individual investors know the formula for wealth: save money every month, invest in index fund, wait a long time—this formula is nearly guaranteed to create financial independence, yet very few people follow it because they want to speed up the process.

“I know what works but what we want to do is we we know how to achieve the outcome we want but what we try to do is achieve it faster like we know for most individual investors if you save money every month and you put it into an index fund and you wait a really really really long time you will be financially independent and incredibly wealthy in life we that's as close to a formula as you're going to get for guaranteed investment success and yet the number of people that follow that formula is incredibly low in part because they know it works but they they want to speed up the natural outcome”

A Quaker principle that all people are equal before God translates directly into business practice: you should serve customers with fair prices and win-win transactions rather than extracting maximum value from each transaction.

“the central tenant of being a Quaker is that all people are equal before God and everything flows from that so for instance if you wanted to tie that to a specific investment decision... CarMax was selling used cars at fixed prices”

It's hard to 'do more of what's working' because smart, gifted, high-energy people naturally want to be in active control; they want to make things happen rather than letting good things compound passively.

“one of the things that's hard about it is that an in as an individual you have to let go of your own ego to be willing to accept what the universe has handed to you you can't make that happen you have to let that happen and people who are gifted and smart and intelligent and high energy and want to do things it is it is not their natural inclination to be able to embrace and accept things that are done on your behalf rather than by your active work”

Steve Markel's response to Thapar's underperformance during 1998-1999 was crucial leadership: every month he'd say 'I understand what you are doing and why you're doing it, and I understand what you are not doing and why you are not doing it'—providing psychological safety while Thapar worked through the internet bubble.

“in that period where I was so grossly underperforming in addition to talking about the top Holdings that we owned I would talk about the top things that were in the news that were going up the most that we didn't own and we would talk about the same sorts of aspects the business... well in that period where I was so grossly underperforming... every month at the end of that meeting Steve would conclude by saying I understand what you are doing and why you're doing it and I understand what you are not doing and why you are not doing it”

Thapar took a Northwestern business school class where a professor used Gap as an example in a discounted cash flow model with 15-20% growth rates for years; Thapar disagreed that these assumptions were realistic, walked out, and met John Fox—a fellow skeptic—who became a 25+ year friend and long-term Markel shareholder through that random encounter.

“there was this two-e class that I signed up to take at at northwester to just try to think things through... they had a variety of their professors come through and one of the professors got up and he did a discounted cash flow model and he used the Gap as the example... he had laid all this stuff out and he used the Gap as an example and he had these growth rates of 50 and 20% going for years and I thought to myself... those assumptions they're they're they're insane... I walked out of the class and I there was a little Lounge there... and there was a Cubs game going on... about five or 10 minutes later another guy stumbles out of the class and he looks at me... he'd come to the same conclusion... as it turns out that guy's named John Fox he's with fenmore Asset Management he's been a friend of mine now for 25 years”

Shelby Davis taught Thapar that if you buy a business with little or no leverage (100% equity financed), you greatly reduce the conditions under which a crooked person would steal from that business because a crook wants to steal from others' money, not their own; high leverage creates the conditions where dishonesty can flourish.

“Shelby Davis was a wonderful and is a wonderful teacher and mentor and helped me in many ways along the way and I can remember in the early days having a conversation with about about the marel venters business with him and he he very quickly and succinctly put his finger right on it he says you know if you want to make sure you're not buying a business run by a crook buy one that doesn't use leverage... if you're if you're 100% Equity financed you are not going to steal money from that business because it's your own money Crooks don't want to steal their own money they want to steal somebody else's money”

Markel operates with autonomy, where 20+ business units run independently, and small teams (two-pizza rule size) make decisions with accountability; this creates feedback and reduces catastrophic failure risk from centralization.

“we have 20 different businesses in addition to the insurance business all the businesses within the marel group uh operate autonomously and their it systems are are autonomous and by not unifying them or not linking them you've created some level of safety some level of risk mitigation by virtue of the fact that you've you've you've uh had these things uh operate autonomously ly”

A long, successful life requires durability—the ability to persist through difficult episodes and remain in the game; many failed to recognize Charlie Munger's insights when he was younger because it wasn't obvious at age 37, 52, or 60 that he was right, but time proved him correct.

“there were a lot of people who encountered Charlie Munger at age 37 or 52 or 29 or 60 who didn't just write up a check for all the money they had why because at that moment in time it was not as obvious as it is today that the stuff he was saying was right so being able to last through difficult episodes and still be in the game is epically important”

The ability to look like an idiot in the short term to be successful in the long term requires three things: financial ability to withstand it, psychological ability to handle others pointing and laughing, and environmental stability so you're not jeopardized.

“I think one of the hardest aspects of that is in order to do that you almost have to look like an idiot in the short term to be successful in the long term and that becomes hard and three aspects immediately come to mind financially you have to be willing or able to withstand that emot Al psychologically you have to be willing to withand doing something that not everybody else is doing and have them maybe Point At You and laugh at you and environmentally you have to be in a situation where you have stability”

High leverage creates addiction through adrenaline rushes and dopamine reinforcement from outsized returns relative to equity capital deployed; 'deal junkies' become hooked on this feeling and keep seeking the next deal, which can become destructive if not balanced.

“there's an adrenaline rush I mean addictions happen because there's a moment of positive reinforcement I mean you won the bet your horse won you won your football team won um you hit the slot what whatever um so there's a a dopamine reinforcement and hit that you get from winning and it's uh a disproportionate size it's an outsize return relative to the equity Capital that that you that you laid out there so yeah that sounds like a fundamentally important component of addictive type substances and I think people get hooked on um the adrenaline of that I mean the phrase deal junkies and I can think of companies that are run by CEOs that just always seem to be doing the next deal”

Win-win business architecture requires short cycle times because if customers repeatedly interact with you frequently, you have strong incentive to treat them fairly; conversely, long cycle times allow companies to exploit customers since repeat interactions are rare.

“if you're a grosser there uh is a very short cycle time many people go to the grocery store every week so your incentive to treat people fairly... is very high because they're going to be making lifetime decisions... getting back to the CarMax example one of the things that people were not completely believing that this thing would work is that the cycle time to buy a car is way way longer than what it is to buy a gallon of milk so you're only going to buy a car once every five six seven eight years”

Peter Kaufman noted that the universe will do most of the work for you if you align yourself with its general principles; with 8 billion people on Earth, if you can get 7.999 billion to at least not hate you, that is a recipe for profound success.

“Peter Kaufman for instance who was a great friend of mongers and was the editor of poor Charlie's Almanac you know he he talks about the idea that the universe will do most of the work for you if you align yourself with its general principles so I think you know there's eight billion people on planet Earth I'm only one if I can get the other 79999 billion to uh maybe not like me at least not hate me that's a recipe for profound success”

Always doing favors for others, being helpful, and adding value creates a compounding effect where 'the world is kind of rooting for you' because people remember that you made them glad they interacted with you.

“my dad used to tell me anytime anytime you can do a favor for somebody do it just do it uh because life is long and you never know how those things come back over time so I think the idea of just always trying to be helpful always trying to add value always trying to do favors for people always just trying to make them glad they interacted with you somehow or another that's a pretty good Central organizing principle”

Being part of a team of skilled people in their respective positions, where Thapar serves as coach, watching them recognize opportunities and having the institutional foundation to seize them, is deeply joyful.

“you know as I sit in business meetings and talk with the people who are running these businesses and I see the opportunities that are flowing in front of them and I and I see the way in which the architecture of marel has provided them with this base of both Financial intellectual social emotional Foundation such that they're able to make the most of the circumstances they have and I don't mean that narrowly financially I mean that they're able to help other people and it's just fun”

Thapar considers his job at Markel to be his calling and what he was put on Earth to do; he references Eric Liddell from 'Chariots of Fire' who said he felt God's joy when he ran, and Thapar feels similar joy in his investment work.

“I feel like this is what I was put on Earth to do it's fun I enjoy it... Eric little the runner... 'God made me fast and I feel his Joy within me when I run' so I have some Glimpse and essence of that and that I think this is what I was put on Earth to do”

Mark Leonard of Constellation Software differentiates from other deal-heavy CEOs because he laid out a decades-long plan and executed it consistently, earning the market's confidence; he's also classic enough and independent enough that he doesn't seem driven by approval from others, making him less subject to deal addiction.

“Mark Leonard is a great example someone is is incredibly thoughtful who who laid out a plan and you have Decades of evidence that he's executed upon it so that is a guy who has earned the confidence that the the marketplace places in him um and also he's um and a kind of clastic enough gentleman that you get the Sensation that he's really not driven by the approval of others quite so much he is a self-motivated independent autonomous thinker”

During the internet bubble, Thapar avoided companies with heavy option compensation because he didn't want to calculate through the accounting complexity; this cost him some errors of omission (companies he wished he'd bought), but his rule of imposing moral judgment on accounting practices is worth the occasional miss.

“I I I would just put my pencil down and say I just I just don't like that so I'm it's in the to hard pile and I'm not going to try to calculate that to the fourth decimal point I just don't want to any part of it that caused some errors of omission there are some companies that I wish I had bought even though they went beyond my personal preferences”

20,000 people at Markel × their households = hundreds of thousands or millions of people who benefit from the organization's existence, because the business is fundamentally about doing something for customers and having them want to do more of it.

“that's 20,000 people multiply that by the households that are involved because of the organization we have a place where 20,000 people can find sustenance for their daily needs... when you really connect the dots of what we have been able to build and construct and how all of that exists because we're doing something for somebody else and they're happy we're doing it and want to do more of it with us”

Success for Thapar is to continue doing what he does, maintaining his 42-year marriage, seeing his three adult children independent, and being an architect of Markel's growth from 300 people to 20,000+ people who can sustain themselves and families.

“continue to be able to do the things that I do uh been happily married for 42 years three kids who are adults and standing on their own couple of grandkids now so the idea that this life and being part of an organization like for for marel when I started at Marquel we had 300 and some people we now have over 20,000 and that's 20,000 people multiply that by the households that are involved because of the organization we have a place where 20,000 people can find sustenance for their daily needs”

Disney's 100-year debt issued at 5.58% was likely refinancing previous 100-year debt at 5.78% with a five-year call; Thapar immediately recognized this opportunity and suggested Markel try the same, but was rebuffed by bankers who said only well-known consumer names like Disney could issue such debt.

“there was this article in the Wall Street Journal about uh the Walt Disney Company that had just issued 100-year debt and I think it was at 5 and 58 and I saw that and I said oh man I'll bet that they're refinancing something that was a 100-year debt at 5 and 78 that had a five-year call and I just instantaneously had that thought and as I I dug into it that was almost exactly what they were doing doing so if you're Walt Disney and you can issue hundred-year debt at those kinds of rates use all the debt that they will give you”

On February 14, 1990—the day Drexel Burnham went bankrupt—Thapar and his partner Mike Beal identified RJR junk bonds trading at 30 cents on the dollar as potentially worth 70 cents; Thapar realized Steve Markel had a tax loss carryforward that made him uniquely positioned to buy these bonds profitably.

“February 14th of 1990 that year that was when Drexel Burnham went bankrupt that day and I can remember um my my partner at Davenport Mike Beal we we said you know if we were ever going to buy a junk bond this is the day we should do it... we rough penciled some things out and we thought um if the there was this RJR issue that were pay in kind zero coupon bonds... they were trading for about 30 cents on the dollar at that point now we penciled some stuff out and we swagged an estimate that worse comes to worse we thought they were worth 70 cents”

Consistently successful people maintain optionality by positioning themselves so they're never forced into bad decisions by circumstances; they design their lives to have good options available.

“one of the differences between people who consistently get better results than other people is that they're almost never in a position where circumstances are thinking for them and they're able to master their circumstances they're always in a position where they have good options they're always in a position where almost any choice they make is a net positive”

Business is like dating—you interact with people through meetings, movies, restaurants, ball games—not for the activity itself but to discern if you can work together for decades with aligned values and circumstances.

“so much of what we do is in effect a dating process you're doing business with somebody you're interacting with them you you go to the movies you go to a restaurant you go to a ball game all those kind of things it's not so much because you wanted that meal at the restaurant or you wanted to see that movie or you wanted to see that ball game it's so that you could discern whether this was a person who you really could work together with in all kinds of circumstances over a long Peri periods of time”

Thapar's father modeled kindness—treating people with dignity and respect regardless of their circumstances or position; this was visible through his work as a CPA doing tax returns and owning a liquor store where he encountered all walks of life.

“my father was a a fundamentally kind man he he was just nice he he was nice to people he always treated people with dignity and respect no matter what their circumstances or or position in life was we we lived in a small town um he was a CPA he did people's tax returns he owned a liquor store so would would see the people you would see in a liquor store on a on a day-to-day basis um so he he did encounter all walks of life and I observed him treat anybody he dealt with basically the same way”

Organizations should focus on being on the field and not getting zeroed out; any number multiplied by zero is zero, so the priority is survival and durability, not peak performance in any single year

“because again as Munger said any number no matter how big multiplied by zero is zero but it is so tempting to be at the moment where you're you're making bigger and bigger numbers and you're minimizing the risk of zeroing out because that's not what's happening right now what is happening right now is is you're making that number super big and that's super fun who wouldn't want to do that well [1:05:40] the person who wouldn't want to do that is that person who's at the party and instead of completely falling into the joy of the party is looking at their watch and thinking you know we want might want to make a different decision right right now”

The approach to opportunity cost is always asking 'if we do that, what are we not going to do?' and discussing it with thoughtful reasonable people to understand tradeoffs, applicable to 4-year-olds through 90-year-olds.

“the the first example that comes to m is just the the role of being a parent and how I try to teach my children about that and again very simple Concepts and just at the dinner table when ideas were proposed or plans were being drawn up or requests were being issued is the the question is if we do that what are we not doing... I don't care whether you're talking to a four-year-old or 40y old or a 90y old that that's a relevant question so I think the real learning comes from asking that base level question and participating fully in the conversation with thoughtful reasonable people about what the answers are”

Thapar's principle 'avoiding stupidity is easier than seeking Brilliance' captures the idea that preventing obvious failures is more reliable than trying to achieve excellence.

“I uh I sort of came up with this phrase to encapsulate it for me which is avoiding stupidity is easier than seeking Brilliance exactly right”

Zero percent interest rates are fundamentally weird with no justification, creating conditions where there's no 'curfew' on bad ideas—everything gets funded because there's no cost to capital and thus no appreciation for opportunity cost; this created massive misallocation.

“I think the environment we've just live through of essentially 0% rates that's just weird there there's there's no fundamental justification for that... the idea of um 0% interest rates or low interest rates that meant there was no such thing as a bad idea any possible idea that you had had no push back on it from needing to service the debt so the capital allocation decisions that we have made as a society in the last five years I think we're made in the context of no gravity no no curfew no no counter example no no sense of opportunity cost what are you giving up nothing do it go”

Thapar's daughter, working as a public defender, encountered a poor client who paid with Monopoly money at a Waffle House—not out of stupidity but out of hunger and desperation, with no concern for future consequences; this taught Thapar about the reality of living in immediate necessity rather than long-term optimization.

“she told me and she said well this guy went into the waffle house and he ordered a meal and he had the meal and um when it came time to pay for it he paid with Monopoly money... my clients are Zen masters of the right now there is no past there is no future he was hungry”

One CEO Thapar encountered referred to his company as a 'not yet' company—when asked if they did X, he'd say 'not yet' rather than 'no'—which is a powerful mindset for optionality.

“there was one CEO who I encountered one time and he referred to his company as a not yet company so they did all these things but when somebody would say do you do such and such he would not say no he would say well not yet tell me about it should I and I love that mindset so in many ways I've copied that learn that”

Rather than thinking 'X or Y' for opportunity cost, the correct framing is 'X or not X'—meaning X or all of {Y, Z, M, 73, etc.}—and people should develop multiple 'Plans' not just 'Plan B'.

“if you're thinking about opportunity cost and I know you think about this much deeper so I'd love to get into the weeds here but if you're thinking about opportunity cost as like X or Y well that that's one sort of lens into opportunity cost another is like well there might be a new letter that comes up in a year... the framing of that X or Y is too limited it's really X or not X so that's y z m 73 it's like a comedian says why are all plans lettered everybody says they have a plan B how about how plan two Plan Three plan four”

During COVID (March 2020), a senior government official shook Thapar's hand on March 9, which turned out to be the last handshake for two years; this showed that 'nobody knows anything' at the highest levels of information access.

“March 9th I get a call and it was from someone who I would label appropriately as a senior government official... walks into a restaurant and and shakes my hand so March 9th... that was the last hand I shook for probably two years and a number of things one if that guy on March 9th was willing to shake my hands that means that nobody knows anything the the amount of stuff that no one really can be capable of of knowing is is immense”

Value investors 'always get the last laugh but they miss a lot of laughs in the interim'—the optimal time to leave a party is one second before the police show up, but knowing when that is requires leaving while it still seems fun.

“value investors always get the last laugh but they miss a lot of laughs in the interim so when when the part's rocking and rolling and you're sort of looking at your watch and saying you know we better get out of here before the consequences start to show up you're leaving the party at a suboptimal time because the optimal time to do it would be you know 1 second before the police show up”

Gayner discovered Berkshire Hathaway's business model in 1984 while still working as an analyst, recognized it immediately as analogous to what Markel could become, and pursued the founder Steve Markel aggressively for six years until Markel agreed to hire him in 1990

“It was 1984 when Carol Luma wrote that article about Buffett in fortune and I read that I was relatively fresh out of school and I got graduated from UVA 1983 so 1984 it wasn't out uh very long”

Don Graham invited Gayner to Washington Post board in 2007 because Buffett and Chris Davis vouched for him, and because Gayner had written real-time memos during 1998-2003 showing disciplined thinking during crises; this 10-year reverberation illustrates how integrity compounds

“it was 07 so I was I was invited and asked to consider going to the board of the Washington Post company at that time and Don Graham the chairman and CEO of the of the post reached out to me and we chatted and he had understood through my friend Chris Davis who was on on the board and perhaps Buffett as well who who knew of Mark ell and new of us that we had navigated that period in in [1:38:32] financial history relatively well”

There is one CEO (Thapar) with individual accountability, but every decision is made with resources of friends, peers, colleagues, and data; trying to make decisions without these resources is stupid.

“I I do use the phrase now that I'm the sole CEO it's it's good to have one throat to choke so yes people make decisions and there is an individual that will be accountable and identified with the decision but any individual who would make the decision without using the resources that's available to them of their friends their peers their colleagues the data that's stupid so let's try not to be stupid”

One useful framework is the Venn diagram with bubbles for 'all things insurance' and 'non-insurance things'—Thapar challenges people to name something that exists in the world that doesn't fit in one of those two bubbles.

“I joke I mean I love Vin diagrams as a way of illustrating things and articulating things and if you think about marel marel group r large well there's one Vin diagram that would include all things insurance so we have an insurance business and insurance related businesses that would fit in that bubble of a VIN diagram and then we would have a a bubble that would say non-insurance and I challenge people tell me something that exists in the world that is not in one of those two bubbles”

The pricing of Disney admission (which has compounded faster than oil prices since 1974) is a better inflation hedge than owning an oil company because Disney's accounting is transparent, costs are understood, and consumers will pay the prices needed to maintain the business.

“I have a price chart of a barrel of oil compared to the single day admission at Disney World since it opened in 1974 and you know what the price of a single day admission at Disney world has compounded at a faster rate than that of a barrel of oil and I think the accounting is better I mean there are fixed costs of the hotels and the monals and all that kind of stuff they continuously need to be refreshed for Disney World to remain irrelevant property but that accounting is is pretty good it's reasonable and I can get my head around it and it seems to me if I'm looking to protect myself from inflation I would rather own shares of Disney than than an oil company”

When buying businesses, Thapar doesn't teach sellers to think differently about EBITDA; instead, he understands what the economic reality actually is and makes rational decisions based on true economics, operating like Alexi Dobrynin translating between two cultures.

“sellers have been conditioned to use that phrase so if you come in and try to academically explain the limitations or what adjustments you need to make they're to sell that business to somebody else... your job is not to teach them how to think differently about their thing your job is to understand what economic reality is and make a rational decision”

Patience was shaped in Thapar by childhood—not being the fastest, strongest, or picked first for teams, so he got used to being steady and appreciating that things work out in fullness of time.

“I guess it it's part of that childhood background of not being the fastest or the strongest or the swiftest or pick first for the teams and stuff so I just I just got used to just being steady and and subtle and appreciating that in the fullness of time it would work out”

At Markel, by every single daily decision Thapar tries to avoid putting himself in a position of limited options; this means low leverage, not being forced into difficult decisions, and maintaining the ability to choose.

“by every single daily decision I'm always trying to avoid exactly what you spoke of where you're in such a limited set of options that the circumstances make the decision for you I I hate that and trying to do every single thing I can to avoid that so what that means is low leverage and what that means is not being at a point where you're faced with a very difficult decision”

When making decisions, there's a quantitative and qualitative aspect; one mistake Thapar tends to make is favoring people who are modest, frugal, and humble, which can make him vulnerable to charming people who appear the same but aren't.

“I think Buffett told a story once upon a time but the the person who's going to really fool him and be able to Swindle him out of some money is going to be a guy you know driving a car wearing khaki pants being uh very modest and humble in his bearing and ways but at the same time just be um stealing his wallet... somebody trying to fool me would engage in the kind of behaviors that that I feel more comfortable with and maybe my guard would be down because you know these markers tell me that that fine when in point of fact it's not”

Buying biographies for $25 gives you three man-years of a person's accumulated wisdom and experience; this is one of the best investments you can make

“Munger talked about [1:32:38] you know buying a biography for 25 bucks is the best investment you can make because for 25 bucks you're getting about three man years of a person's life that went into writing that book”

The 'do more of what works' strategy doesn't feel like it works every day—there are periods where it looks like you're making a mistake, which makes it boring and frustrating for most people, but for Thapar this is actually satisfying.

“it doesn't it doesn't look like it works every day there will be periods where you know people will be you're the batter and again Buffy uses the example Ted Williams The Hitter you know he's only going to swing at those pitches that are in the precise part of the STK Zone that he has determined are favorable places for him to swing that bat and the ability to just sit there with the bat on your hand and have a have a strike call on you from time to time and as bu says in the investment World there are no called strikes you get to look at pitch after pitch after pitch without having to to swing um that is is um boring for people”

Thapar references the Tom Hanks movie 'Sully' about landing the plane in the Hudson as an example of making exceptional decisions in real time with no possibility of turning back; he relates this to his COVID decisions.

“if you want to see a movie that would sort of illustrate and I'm not claiming this amount of Glory or or or involvement but that uh Tom Hanks movie Sully where the pilot lands the plane in the LaGuardia and he was second guest in the hearings is why didn't you go to teer bro well the decisions he had to make in real time with no possibility of turning back they were outstanding”

Markel operates on the Lego-block principle: build one small block at a time, ensuring each block has integrity, and scale up—rather than trying to build everything simultaneously and adjusting.

“it's like Lego blocks where you look at this great Lego structure well that huge Lego structure that you see was built one little tiny block at a time and those blocks have integrity so that that's the same sort of model that I that I dream for for Mark ell and by and large has has worked pretty well for a long period of time”

Suehlemann sold 20% of Markel's equity portfolio in Q1 2020 after the 118 loss to fortify the balance sheet and preserve optionality; in retrospect, the timing was suboptimal, but given the uncertainty at the time, the process was correct.

“as a consequence of that 118 that we put up I did um take about 20% of our Equity portfolio chips off the table and and sold some positions just because again my number one job is to make sure we are always there to answer the bell for the next round of the fight so I reduced some of our Equity exposure as a consequence of what I saw taking place on our insurance bu at that particular time in retrospect that was not optimally timed um and there were some things that I wish I hadn't sold”

Nebraska volleyball demonstrates the beauty of team sport—positioning, constant communication while the ball is in air, liberos diving to the floor to set up teammates—all working in coordinated function rather than individual excellence.

“I'm currently infatuated with Nebraska volleyball and I went to a Nebraska volleyball game a couple of weeks ago and when you see a game like that unfold and you see the team aspect of the play the positioning the constant communication while the ball is in the air the labero who is 5 foot2 among all these six-footers because her job is to dive to the floor to get that ball up to her team is to just see a team on display like that fascinates me”

When choosing between holding a concentrated position with a gain versus selling and redeploying into a new idea, the new idea must be compelling enough to overcome the tax drag of selling; if selling at a 30% gain means reinvesting only 70 cents on the dollar, the new opportunity must be substantially superior

“so there's tax efficiency in that for us in that assume that we have something that we bought and generally speaking it is kind of worked out you you have a gain there which is unrealized and unrealized means untaxed so we have the tax liability accounted for on our balance sheet but in essence that creates a loan from the government for the tax portion of that unrealized gain so if you sell something that has a big gain to it you are not [1:59:13] reinvesting 100 cents on the dollar you're reinvesting 80 or 70 or 60 and so the next idea relative to what you already have a gain in must be super compelling in order to reinvest $60 Cent from hundred cent dollars of staying with the position you already have that that's one of them”

Thapar respects physical books and owns Kindle for travel, and if he likes a book he'll buy both Kindle and physical copies to tip the author for their work; a biography for $25 is worth more than it appears given the accumulated work that went into it.

“Munger talked about you know buying a biography for 25 bucks is the best investment you can make because for 25 bucks you're getting about three man years of a person's life that went into writing that book so was a as a tip to the authors who did that normally if I like a book I'll buy the Kindle and the physical copy to tip them a few bucks for the work that they did”