By Jack Forehand, CFA, CFP® (@practicalquant) —
We were very fortunate to be able to interview Guy Spier on our Excess Returns podcast last week. If you haven’t watched the interview yet, I recommend you check it out before you read this because my writing won’t do justice to Guy’s insights in the same way listening to them directly from him will, but I wanted to summarize some of the biggest lessons I learned from our discussion.
For those who aren’t familiar with Guy, he is the manager of the Aquamarine Fund and a long-time follower and student of Warren Buffett. His book, the Education of a Value Investor is a best seller and provides a very honest look at his investing journey from starting out on the darker side of Wall Street to the value investor he is today.
What I really enjoyed about our interview with Guy is that we were able to cover many topics that go well beyond investing. We went in thinking we would have a conversation about value investing, but the biggest lessons I took from it were much more wide ranging than that.
Here are my biggest lessons from our conversation with Guy.
 Have the Courage to Suck
I am a pretty quiet guy. I don’t really like hearing the sound of my own voice. I hate watching myself on video. So when we started our podcast, it was a challenge for me. But I have also found that overcoming those things and doing it anyway has been really beneficial.
Guy talked in our interview about his similar initial reservations about sharing things in public. In this quote from the interview, he discussed how David Perell inspired him to share more in public
And that’s what happened with David Perell. I was like, this guy, half my age, he’s doing stuff that I haven’t done. And then I think there’s enormous value to that. Cause you start unpicking it and saying, well actually maybe you need to try out your own podcast.
If he can do a podcast, why can’t you? Maybe you need to try out writing your own essays. And that happened to me, by the way, with the book as well. I’m traveling in, probably in India, with Monish Pabrai, a new friend who we’ve jointly bid on this lunch with, with Warren Buffett. And I’m kind of like, this guy’s written a book. Why the hell have you not written a book Guy? And, and so I was like, well those things came together and I took action.
Often the hardest things to do in life is to overcome that initial fear and take action. I am still definitely a work in progress on this front, but this lesson from Guy is a reminder that I need to keep doing it more.
 Buy Stupidity Insurance
I have always been a fan of running focused portfolios. But there is a flipside to conviction. If a portfolio only holds a few positions, the risk to that portfolio if any one of them blows up is very high. Although all of us think our high conviction positions will go up, that has to be balanced with the reality that despite our conviction, we might be wrong.
In the podcast, Guy talked about how he holds 20 positions to manage that risk that he could be wrong. I think all of us can learn from that. If people who are smarter than me recognize they could be wrong and take steps to protect themselves from that, I probably should too.
 Value is a Relative Term
As a quant, I tend to think of value investing as buying statistically cheap companies. But over time, I have come to realize it is really buying something for less than it is worth. We discussed this idea in the interview with respect to stocks, but where it really hit home for me was when we talked about the lunch with Warren Buffett Guy co-bought with Mohnish Pabrai.
They paid $650,000 for that lunch, which by any standard is a very expensive lunch. But when Guy was talking about not just the benefits he received personally from the lunch, but also the benefits of the money going to charity, it struck me that the lunch was really a value investment, even at that high of a price.
Obviously, most of us can’t pay $650,000 for lunch, but I think there is a bigger message in that. Many of us focus on the cost of something so much that we miss the benefits that come with that cost. That can be true in stocks, where sometimes great businesses end up being undervalued even if they aren’t cheap statistically. That can also be true in life, when being willing to pay a premium price for something can sometimes give us benefits that justify it. Understanding that is something I could do a better job of in my life.
 Don’t Put Someone Under an Obligation
When we were discussing Mohnish Pabrai in the interview, we mentioned to Guy that it would be great if he could introduce us to Mohnish so he could potentially come on the podcast. But he pointed out to us that we went about it the wrong way. By asking that of Guy, we were putting him under an obligation to ask Mohnish, and if he went through with our request, he would be making Mohnish feel obligated to meet his request.
There is a better way we could have gone about asking the question that would have eliminated that sense of obligation and would have made both Mohnish and Guy free to make their own choices. Then if Mohnish did eventually come on, he would be doing it because he wants to.
All of us have things we want other people to do for us. It is part of life. But how we go about asking for those things can make a huge difference. This interview was a good reminder of that.
If you would like to watch the full interview, I have included it below. I hope you will learn as much from it as I did.
Jack Forehand is Co-Founder and President at Validea Capital. He is also a partner at Validea.com and co-authored “The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies”. Jack holds the Chartered Financial Analyst designation from the CFA Institute. Follow him on Twitter at @practicalquant.