DeepSummary
In this episode, Chris Davis, a board member of Berkshire Hathaway and Coca-Cola, shares insights from his multi-generational experience in building wealth. He discusses life and investment lessons learned from his father and grandfather, emphasizing the importance of writing for personal clarity, reading physical newspapers, and wearing ties to cultivate a professional mindset. Davis delves into his value-investing philosophy, his interactions with Charlie Munger, and advice for raising grounded children amidst privilege.
Davis reveals strategies he employs to maintain perspective and avoid entitlement, such as tracking alcohol consumption, avoiding envy-inducing situations, and adhering to Warren Buffett's letter on why investment managers underperform. He also provides a behind-the-scenes look at effective board meetings and the dynamics that foster productive discussions.
Throughout the conversation, Davis reflects on the resilience required to navigate financial crises, the value of cultivating long-term thinking, and the significance of modeling happiness for one's children. He shares poignant anecdotes and practical wisdom gleaned from his multi-generational experience in building and preserving wealth.
Key Episodes Takeaways
- Cultivate a long-term perspective and prepare for resilience in the face of uncertainty and adversity, rather than seeking illusory safe havens.
- Avoid excessive privilege and entitlement when raising children, as it can distort values and undermine ambition.
- Writing, even if unread, is a valuable exercise for personal clarity and self-reflection.
- Maintain perspective and avoid lifestyle creep by surrounding yourself with grounded influences and avoiding envy-inducing situations.
- Effective board meetings foster candor, trust, and strategic discussions through informal interactions and a focus on long-term governance.
- Adopt an investment philosophy that emphasizes steady progress, avoids catastrophic losses, and recognizes the role of luck in optimal outcomes.
- Model happiness and contentment for children, as it is a key determinant of their well-being and values.
- Prioritize relationships and find meaning in personal and professional endeavors, especially in the face of mortality.
Top Episodes Quotes
- “Well, the absolutely optimal outcome will be achieved based on luck, right? In other words, somebody will buy that lottery ticket and will get a nearly infinite return, a billion to one payout or whatever. And so I do think there will remain people. And you're right. In the very long term, it should be the case that if you avoid the blow ups, you make progress when the sun is out, but you don't sink that over time, it will just be a war of attrition.“ by Chris Davis
- “I just think you have to think about how do you position? You have no idea. If you're going to be sailing through a storm. Be prepared for that and have redundancy. Shane, resiliency. But imagining there's some tropical island where you can go and drop the anchor and just wait it out, that's not an option. There is no safe harbor.“ by Chris Davis
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Episode Information
The Knowledge Project with Shane Parrish
Farnam Street
3/5/24
Most families who obtain immense wealth squander it by the third generation. But Chris Davis comes from a family whose grandfather and father all became independently wealthy of each other, and Davis has done the same. How does that keep happening? In this conversation, we find out.
Shane and Chris discuss life and investment lessons he learned from his father and grandfather, why writing is more important to clarify one's thinking no matter who's reading it, and the surprising benefit of reading physical newspapers and wearing ties to work. Davis also shares his value-investing philosophy, what he learned from working with and meeting Charlie Munger, and what parents can do to raise kids who aren't entitled. Davis talks about his alcohol drink tracker and why it's important to him, why he never puts himself in situations where envy can grow, and Warren Buffett's letter about why investment managers underperform.
Chris Davis has been a Director of The Coca-Cola Company since April 2018. Davis is Chairman of Davis Selected Advisers-NY, Inc., an independent investment management firm founded in 1969. Davis joined Davis Selected Advisers-NY, Inc. in 1989 as a financial analyst and in 1995, he became a portfolio manager of the firm’s flagship funds. Prior to joining Davis Selected Advisers-NY, Inc., he served as a research analyst at Tanaka Capital Management and as an accountant at State Street Bank and Trust Co.
Watch the episode on YouTube: https://www.youtube.com/c/theknowledgeproject/videos
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(00:00) Intro
(03:20) Life lessons Davis learned from his grandfather and father
(26:24) The importance of writing things no one reads
(36:55) Davis' experiences through financial crises
(52:31) Why Davis loves managing a mutual fund
(55:49) Why Berkshire Hathaway operates with margin
(01:01:05) What is risk?
(01:04:02) On low interest rates and their future impact
(01:14:46) The mismatched timelines between CEOs, companies, investors, and policy
(01:22:19) How Davis and Munger met
(01:30:20) Lessons learned from Munger
(01:41:29) Why avoiding weaknesses is the ultimate recipe for success
(01:55:46) How to raise non-entitled kids and avoid lifestyle creep
(01:16:10) On happiness
(02:27:00) Good vs. bad board meetings
(02:31:34) Three generations of wealth
(02:37:15) On success