Bogumil Baranowski on Freedom, Mindfulness, Patience, and the Art of Investing | S07 E39
Summary
Investment Philosophy: The guest frames himself as a value buyer and growth holder, preferring to buy at a discount and hold quality businesses for very long periods without rigid price targets.
US Equities: Strong preference for US-listed companies due to superior liquidity, disclosure, and shareholder friendliness, while still gaining global exposure as many have over half of profits overseas.
Quality Compounders: Emphasis on owning higher-quality businesses that can be “forgotten” for long stretches, minimizing monitoring costs and behavioral errors while compounding over years.
Magnificent Seven: Used as examples of winners that experienced long flat periods and sharp drawdowns; the key is patience and the ability to hold through euphoria, stagnation, and volatility.
Buy and Hold: Selling is rare and usually only when displaced by a better idea; he highlights tax impacts and the difficulty of re-entering as reasons to maintain positions.
Macro and Policy: Skeptical of central planning and rate-setting by central banks, highlighting currency debasement risks and advocating ownership of businesses with pricing power as a resilient hedge.
International Risk: Cautions on geopolitical and policy risks abroad (e.g., write-offs in Venezuela) and prefers US governance structures while still benefiting from companies’ international revenue bases.
Market Dynamics: Notes that returns often accrue after-hours around earnings and that market overreactions create contrarian opportunities for disciplined, long-term investors.
Transcript
I think we're live. I always stare blankly at the camera for the first few minutes just to let you know that there's nothing going on behind the behind the eyes. I'm reading off I'm reading off a prompter and I'll read anything. I'm Tobias Carlile. This is Value After Hours joined as always by my co-host Jake Taylor. Our special guest today is Bogamill Baronowski of Blue Infinitus Capital, host of the podcast with perhaps the greatest name ever, Talking Billions. How are you, Bogamill? Welcome. >> I'm very well, very excited to be here. >> Just tell us a little bit about your investment philosophy and your journey to setting up Blue Infinitus. Wow, a simple easy question to start with. >> We'll see you at the end. [laughter] >> Where do I start? I manage money for families, long-term patient capital, and I've been doing it for 20 years. I discovered investing when I was an exchange student in Brussels. I was born in Poland, went to schools around Europe. I was in Brussels at some point and I picked up a book by Peter Lynch one up on Wall Street and I studied business, economics, political science at the time. But that book really opened my eyes to a whole new world and I found investing just a fascinating intellectual puzzle, something that I could figure out. And it's not that I thought I'm going to beat the market, outperform, and become the richest person in the world. I thought this is worth paying attention to. This is something that I want to spend time understanding. I came to New York. I joined a firm and I was very fortunate that that firm was focused on a certain subgroup of of clientele that had money for many generations. And I realized that if you want to be a long-term patient investor, you have to have clients that are on the same time horizon. I call it the infinite time horizon. And I grew to appreciate the people behind the portfolios. Two two decades later, I was trying to figure out what's the best vehicle for me to continue to do it for the rest of my life. I'm I feel very young, but I am 45 and I'm thinking about the folks in their 80s tell me that I'm just getting started. So, it depends on the [laughter] perspective, but I was thinking about the second half of my career, the the two/3s ahead of me. And I set up Blue Infinitas to serve a few families and open it up to new business for other families that are on the same page and continue to do what I love, which is investing and spending time with clients. So, here we are. H how would you describe your investment philosophy? Are you a Are you a value guy? Are you a How would you describe it? >> I love the labels, as you can imagine. I call myself a [laughter] if you really corner me, I'm going to say I'm a value buyer but a growth holder. I want a deal when I go in. Mostly because of course it improves the returns if you're right. But if I'm wrong and I paid half of what I think something is worth, there's a lot of room for me to to get out without too much damage. That's how I look at it. And I I always go in thinking, what if I'm wrong? Can I can I afford it? And I think a lot of people get into investing because they they have this urge to be right. I think it's a dangerous place to be. So I want to get a deal up front. And even if you look at the the largest and most successful companies out there, if you look at the last decade or two, there's so many windows where these stocks were down, you know, 40 50%. And we forget it. But I was in rooms with people that were convinced that among the top Magnificent 7, all of them, they had really convincing reasons why these companies will never grow again. You know, whe there was a switch to to mobile at some for at some point and you know, new competition, all of those things. And people were convinced that these things are done. And they're, you know, multi-trillion dollar companies today. I was in rooms when really smart people were very close to convincing me that these companies are done. So, I own some of them and many others over the years, but I go through this uh realization that I met enough people that told me they bought the right thing at the right time, even at the right price, but they were not in a position to hold these holdings long enough. And I think that's where you really create value. That's why I call myself, you know, a growth holder because once I bought it, right, it really takes me a lot to sell. So, that's that's the philosophy in a nutshell. What sort of begs the question a little bit, what does it take to sell? [laughter] >> It has to be pushed out by a better idea. I I'm very I used to be much more sensitive on the valuation side and I would and I dropped and and dropped the idea of a price target. I worked with a lot of people at different points in time that were set on a price target. I think a price target gives you a false sense of precision that you know that this is a $50 stock. And you have a huge dilemma when you reach the $50 because what are you going to do next? Like this could be a $100 stock, right? And it could be $150 stock. And I think psychologically it's very hard. So I have no price targets. If something makes sense, I'll keep on holding it. I am I I'm writing a piece now. I'm exploring this situation when I've owned something for, you know, 10 12 years and at some point it becomes part of some short-lived euphoria and it clearly gets inflated by the market and I have a huge dilemma here because I could sell it. I mean, I have all the reasons to sell it because I feel like this valuation will not hold or this stock will take a lot of time to grow into this valuation. But what do I do next? You know, there are tax consequences for a lot of clients. That's one thing that makes me slow down. And second, going back to an idea. I think it's this untold, you know, secret or truth in investing. It's very hard for a lot of people, including me, to go back to an idea. So, I I'd rather just wait it out and see a dead money period or even a draw down in [clears throat] a holding. It's tough. It's hard. But you know I Chris Mayer on the show many times and Chris talks about those hundred beggars and we're all fascinated with the idea right but what he really talks about is that there are so many periods when it's so hard to hold on to those stocks because they go absolutely nowhere even among the magnificent seven a lot of them went nowhere for two years and I was in rooms when people would ask me why are you still holding it I mean it hasn't moved the whole market is up but one of these you know incredible companies they're not moving what do you do? You know, and if you sell, when do you go back? When it sells off 10%, 20%, 30%, it might never sell off again like that. So, I'd rather on the side of sitting on my hands and doing nothing. >> Does the uh does the period of two years waiting around follow on from the period of being very overvalued? >> Well, I Yes. Yes. For answer is yes. So, I see it as you know, company growing into its valuations and we've all seen it, right? I think the tricky part with the market is that there are hardly ever any periods uh especially for individual stocks where the market in a calm way absorbs all the news, good news and bad news. It doesn't just happen. And that's how I look at it. If it's a little bit of a bad news, the stock is down 20%. If it's a bit of good news, it's up 10%. Why isn't it up a [clears throat] percent or two and then 3 months later at percent or two? It doesn't work that way. Actually, there was this incredible study that I quoted in one of my Substack essays. How if you take out all the after hours market movement, have you seen this study? I have to look it up again. The majority of the returns for the overall stock market as such happens after hours where the announcements are made. So, throughout I think there's so many lessons out of this study, but one of them is you're going to miss out a lot of movement if you just participate during the day. It gives me a lot more peace of mind that I don't have to watch my stocks during the day because that's not where the biggest value is created. [laughter] You know, they move up and down, up and down, but then they report and they're up, you know, 15%. Even large names are these, they're up 10, 15%. Anyways, so the market overreacts and in both directions all the time. I wouldn't cry about it if you're a disciplined long-term investor. I think it creates an incredible opportunity. You know, if everybody's focusing on the guidance being lowered by a percent and the stock is down 20%. And it's a large company, you know, with that everybody knows, why not be a contrarian here and buy a few shares and wait it out? >> Uh, you've been doing this for two decades. What has changed over two decades? How have you evolved? How has the market changed? I used to be much more frugal and much more focused on cheap [laughter] the cheap end of the spectrum. And I'll tell you a story. I won't mention the name of the company, but 10 years ago or so, we were researching as a team and I was leading it a certain stock that looks super cheap and we spent a lot of time researching it. It had a little bit too much leverage for me. But we spent a lot of time, a lot of resources, a lot of research and uh people were falling out of love with this company which we us know something I usually like. It got to the point that nobody wanted to talk to the management. The management came to visit us in New York and yeah we were not the people wouldn't see us as much but they came to see us and I thought nobody wants to see you guys. So we want to see you. Anyways, after one of those meetings, one of the managers, portfolio managers at the firm where I was, he walked up to me and he said, you know, they have a competitor. And I said, I know, but the competitor is trading at a higher multiple. And he says, yes, but they have less leverage and they seem to get things right. You know, the new product launch, the new market, they just seem to just get it sorry, get it right. They seem to get it right. And the other guys always get it wrong. The cheap stock was getting it wrong. So he said, "I I don't know enough about the competitor, but I'm just going to buy the competitor." And obviously, we had this, you know, tremendous, very painful holding period, and this never worked out. We sold it with a small loss. And here he was holding a stock that was so much easier to hold because it was the the business was doing all the right things for the right reasons. And I watched this manager over the years and I realized you know sometimes we might think that you might get something cheaper but it might cost you in a non-monetary way monetarily too but you know with with the lost sleep and the time invested and and so on. So I think there's a lesson at least for me that sometimes it's I'm willing to pay up you know I'm just willing to accept the price. Is that kind of a return on brain damage calculation you're doing? >> And and pain, you know, sometimes it's almost physical pain. [clears throat] >> I like that idea. But let me let me give you a let me give you the counter example, which would be >> there are many [laughter] >> that Graham called it double counting when you went and had a look at the quality of management. So you find a business that's doing really well and you kind of impute all of these great qualities to the management of that business that's doing very well. And then you find a business that's struggling and you think, well, these guys are these guys are bozos. Like they're just not doing the obvious thing here. And sometimes it's just it's a little bit of the turn of the market. It's the cycle that you look smart when you've got a great history and you look dumb when you've got a great future. >> Yeah. I think you're what I'm looking for is a certain gap between reality and perception, right? And I think you can find that gap across a very wide spectrum. And I think you can find it in the very cheap bucket and you can find it at the very well expensive end of the spectrum. I think we all have to find a place where we're comfortable. You know, I'm not saying I've talked to enough people to know that there's probably a thousand ways to make money owning stocks. I have no doubt. And at the at the end of the day, you know, the best portfolio is the one that you can hold or your clients can actually hold. And if they feel comfortable holding certain things that move up and down a lot or that are, you know, cheaper or more expensive or have better margins or lower margins, whatever it is, you found a sweet spot that resonates with your audience. So I I evolved in the sense that I would rather hold slightly better quality businesses or better quality businesses that I could almost forget about. Like I take this idea to its limits. And somebody asked me, I think it was Jim Shanis. He asked me, "What kind of money you want to manage?" And I told him, "Forgotten money." And he left. [clears throat and laughter] And I said, "No, I I really mean it. I want to manage forgotten money." And he said, "What do you mean? You know, the clients that I work with, it's the money that they don't immediately need, but it's the money they can't afford to lose." And I think it's a it's a beautiful framework and setup for it for what I'm trying to do. If you have money on the side that you need for the house, the car, the call it for the kids, it's not the money that you can really invest. I think we're not as open and honest about it. That's not really investable capital in the sense that I see investable capital. The capital that I managed, it gives people huge peace of mind that it's there, but it's not part of the daily equation that that's the money they have to dip into to to make this payment or that payment. But within that forgotten money framework, I'd like to have forgotten stocks. I'd like to have stocks that I could just forget about. If I forget about them and not check on them for 6 months or a year or maybe five, will they be more or less okay? You know, like that's how I look at it. And it's a it's a huge test. And I've owned stocks that I had to watch like really really watch quarter to quarter. How much worse is this getting? [laughter] and I'm not going to get that, you know, time, effort, attention back. And I don't think I was compensated proportionately in terms of the investment return for for what I was trying to do. >> Yeah, that's certainly been true for cyclicals for a very extended period of time. That sort of buy and sell. >> Yeah. >> Necessary for cyclicals. It's definitely a buy and hold, never sell type market for the things that have won, which is the mag 7 and so on. Um you you talk about compounding wisdom as much as compounding capital. What do you mean by that and how do you how do you go about doing it? >> It's the idea of of always learning. I think I stayed in investing because of the people that I get to work with. That's for sure. But also because it's a neverending learning opportunity. I even even ho hosting the podcast, you know, sitting down with people and talking to them for an hour about something they dedicated decades of their life to and they're so passionate about it and they know everything about that aspect of money, wealth, investing, whatever it is. I take away from it. People ask me, "What's your return on investment with the podcast?" And I said, I mean, there's no number, you know? I It's an inspiration. It's a lesson. It's a It's an eye-opening experience. It's the ability to learn from other people's mistakes. You know, it's all those things. So, the more you learn, the more questions you have, the better your questions become. It's an open-ended pursuit just as investing is to me. And I know that I, you know, open the laptop the next day. There's something new to think about. I mean, a lot of the things that are we, you know, that's on people's minds today, like AI, this wasn't part of the conversation even 3, four, 5 years ago really to that extent, right? So there always new things to look at, question. I remember a senior partner at one of the firms where I was years ago. And he told me that he likes investing because he feels that he's always plugged in to the world. That, you know, I I'm I might look at a pharmaceutical, but I'm not a pharmacist and I'm not a doctor, but I can understand how this helps, how it's sold, how it's paid for, right? like I can I have this head on on my head that allows me to analyze all kinds of businesses in industries that I'm I'm no expert. I have no idea how to produce this medication, but I can understand how this medication can help and work in the world. So, it's this ability to have uh a lens and uh an eye on some of the most fascinating things that are happening around us and have an opinion about it. And if you want to act on that opinion, do that and own a few shares of companies that maybe will benefit from it. >> Yeah, it's nice to have that kind of a monetary spur for your curiosity. >> Yeah. But it's, you know, I thought about it a lot that I know investors that are very financially comfortable like they're not doing it for the money. And I think it's a bigger picture idea that what I find fascinating is when you have a founder of a business that's worth, you know, tens of billions of dollars, I think we all know that they're not doing it for the money. They really don't need the extra 10 billion, but they're on a mission. They're doing something. They're building something. And they're staying and working harder than they probably need to or should for, you know, decades to come. And when you have an investor that's just showing up every day and I met people in their 90s who were investing still and opening up the newspaper and reading things and and you know asking things and what what you know they were asking about Facebook back in the day. They had no idea what Facebook was and and I had to explain what and they would call it bookface by the way. They would [laughter] say tell me about that book face. So I, you know, and I thought it's it's so endearing and fascinating that at 90 they still they felt they don't know it all. They won't understand. So is this like a newspaper? Is it like a radio? What is that book face? And I, you know, I would sit down with them and as much as I could explain, I I tried to explain. >> What are the most common mental traps you see investors falling into? I think we over complicate what investing is about. I think we're trying to make it way way too too complicated. To me, the idea is is very simple. I'm not saying it's easy to to do, but some of us are in a position to [clears throat] be investors. We have some capital that became available to us. Either we and it's one of the traps I think for value investors that we are frugal. So there is some capital that's saved on the side and that capital has to be deployed at some point. We realize that a money market account or a certificate of deposits just not enough. So it has to be invested in some way and obviously you know with the families I work with there's a family inheritance or a business that was sold. So that money is needs to be deployed and it's you know serious challenge and an opportunity and now a question is how do you do it? And I have an overly simplistic answer, but you have to own businesses. And if you are not going to start those businesses on your own, which I think is really hard to do, to start a business on your own, then you have a choice with the stock market, an opportunity to own small pieces of businesses. That's what Peter Lynch told me in his book, you know, 25 years ago. And I I thought it was fascinating, fascinating. I don't have to be a billionaire. I don't have to, you know, my age, my gender, my education, my experience, nothing matters. I can own a few shares of some of the most incredible businesses out there and be treated the same way as the founder. I know there are different classes of shares. You can challenge this statement, but the principle is the same, right? like I I get to own the same a slice of a business with the same rights more or less as the founder without >> How did How did uh growing up in Poland kind of influenced that appreciation for that ability to own business? Yeah, >> hugely. [laughter] >> Maybe you could kind of share some of the background of that. That's always interesting. >> It's a terrific question. I think I you know we all grow up in certain circumstances like even the three of us grew up in different places and we assume that everybody else has the same experience and there are books about inherited wealth how people with inherited wealth they assume that everybody grew up with inherited wealth and they realize no it's actually an exception to the rule that somebody grew up with inherited wealth anyways I grew up in cold war Poland so I got to see the last decade of a failed economic political system and I saw, you know, empty stores. I had to line up with my parents and grandparents in front of empty stores. So, you would get a paycheck, but even with the paycheck, you had to go to the government owned, state-owned store that was empty, huge shortages, you know, poorly managed economy and a large healthy, you know, gray market on the side where you could buy things. But anyways, the principle was that private property is not allowed. priv private property is not something that's that's a good idea in that system because it means that you accumulate wealth. You're greedy and all those things that you know you you know about socialism, communism, well then the same thing at the end of the day. So anyways, owning things was not an option and owning a business was not an option and even sometimes owning an apartment was not really possible because it was just a lease from the government. So coming to you know discovering Poland changed in a huge way when I was a teenager and the stock market reopened supermarkets came in it was a massive massive change you know hyperinflation as well but anyways you know discovering Peter Lynch who tells me listen there's a stock market and it's not necessarily a casino it could be if you want it to be but it's also a place where you can go and buy shares of companies it just blew my mind. What do you mean? I have $100 and I can have, you know, two shares of this, one share of that and become a shareholder. How come? It just blew my mind. >> I can own Coke or Nike or >> Poland has become one of the world's great success stories over the last uh well, since since it opened up and it's often used to contrast with other countries that have gone the other way. Have you have you what's that experience like knowing some of the people presumably who've lived through it and what is that what is that like? Well, I I left Poland 20 some years ago, but I go visit and I saw a massive change in the first decade. So, the '9s when the country opened up. It was such a big shock. I think that we're trying to label things and Poland was, you know, labeled an emerging market for a period of time. I think the idea is that the country was absolutely frozen. It's not that it was not capable of growing or delivering value. It was just stuck because if you don't allow people to start businesses, if you have only the government as the only buyer of your skills and talents, if you have the government as the only seller of everything that you need in your life, you can imagine what a huge inefficiency it creates, right? If you if you want to work the extra hour, it doesn't really matter if you want to work a little bit better. And you know, compound wisdom that we talked about, nobody cares. [laughter] Right? So, the system levels everybody. And there are some people that say, "Well, I didn't feel like working anyway." But there are quite a few people that think that I could make a better loaf of bread. I could make better shoes or I could make whatever better. I could teach kids better at school and and on and on. If you take that away, you know, it's it's a huge deprivation. Anyways, this was released in the '90s. in Poland. I saw statistics and I hope it's correct that that the purchasing power of the the average citizen is catching up with Japan which is unbelievable to me because you know Japan when in the in the 80s was supposed to take over the world and I be you know Japanese businesses were buying US assets. I remember this moment and you're telling me that Poland is catching up at least on purchasing power level to Japan in my lifetime. I it's hard to process, you know, it's it's it's a huge leap, but to me it's a proof that if you let people operate in a free market economy and sell their skills and services to the highest bidder, the outcomes can be really impressive. >> What about lessons as an investor? Does it teach you something about patience or about incentives or what what is the what do you take from your childhood which was in a totally different system to to the one that you're in now? >> I think there's so many layers to it that I still uncover them as I go and it was one you know one revelation. I have a very calm and collected attitude to money as such as a phenomenon because in the first decade of my life even if you had a paycheck you couldn't really spend it you know so so to me you know shopping is not really a fun activity you know I I grew to accepted and I spend money that might just be because you're a man [laughter] >> there you go >> but money you know was not really it was very abstract act as a concept. You know, I knew that my parents are getting paid and I got that. But then we had the the cash and we couldn't buy things anyway because the stores were empty and you had to line up and wait for things to show up even the basic goods like flour and sugar which is you and even meat. Poland ran out of pork and Poland was invaded by European powers for for hundreds of years because of pork and grain and we ran out of pork and flour [clears throat] grain which is because it was all shipped to >> you really got to screw up to do that huh >> and whatever was produced was shipped to the Soviet Union but anyways that's [laughter] so I remain to have a very you know common collected attitude to money comes and goes I saw hyperinflation which is a very confusing phenomenon to adults, but it's equally confusing to a kid that goes to a store and a bottle of Coke, I remember it was 10,000, then it was 20,000, then it was 30,000 and then it was 40,000 and then we took four zeros away. So, it became four. I mean, and it happened in within, you know, four years or three years when you're growing up. So, what what is money? Is it the 10,000 or is it the four? And then the more fun thing was that my grandparents continued to speak in the old money. So they would talk about hundreds of thousands and millions and we no longer had those zeros. So as a kid I had to translate in my head between the old money and the new money. Dollar was gold. So that was something that was ingrained in my head that dollar is not something that you go spend like the same way you would treat a gold bar today. You don't really run around with a gold bar and you know pay for food. So to me go sorry dollar was something that you store it you respect it. It doesn't lose value. I know that people have different thoughts about the dollar these days but that's how I grew up. >> So you you were living Gresham's law then at that point. Huh. So these are the things that I think allowed me to look at the money and wealth phenomenon from outside and I think I I continue to see it as something very helpful that the numbers are just numbers and you know they have a meaning in a certain context. I also grew to appreciate the the impact that money has on people and I don't think there's any amount in the world that exists in a vacuum. It's all, you know, it has a charge. You I work with people that inherit wealth and the way that the money was given to them and the money the way they receive that money has a huge importance and it doesn't really matter how much it is. It doesn't have to have a lot of zeros. But the the emotional charge around it, I think in the investment profession, we're granted this huge responsibility for a very intimate experience. And I don't think we're fully equipped to take on the role we have to take. you know, we focus on the numbers, focus on the returns, but you're taking on the responsibility for somebody's livelihood, and I think we we forget that sometimes. >> I think it's a great point. Um, but we've come to the top of the hour, so JT, we need to do some uh veggies and then we're going to come back and talk about uh a few other things. >> Sure. So, you know, as as you can tell, Bo's got a a very calm energy and patience to him. So, you know, I always try to match segments up with uh with the guests. So, today we're going to start with a paradox, which is every organism wants to live forever. Every company does too. Every founder dreams of building something that outlives them, you know, 100 plus year companies. But in biology, the only cells that live forever are cancer. Uh and so what is the secret to endurance in life, business, leadership? It's is it learning when to occasionally go a little slower? Okay. So in the 1960s, there was a scientist named Leonard Haylick. H A Y F L I C K. And he was studying human cells in a petri dish. And he expected them to keep dividing indefinitely, right? Like after all, that's what life does. Multiply, expand, reproduce. But after about 50 or 60 50 to 60 divisions depending on the cell something strange happened. The cells just stopped dividing. They didn't die. They didn't fail. They just stopped. And that in they entered a state that's called scinsessence. And it's kind of a permanent rest. And and this is not a random glitch in biology. It's a design choice. It was written into the genetic code of life itself. Each time a cell divides the ends of it uh of the chromosomes which are called telomeirs uh they get a little bit shorter and you know the famous analogy is that the telomeirs are like the plastic tips that are on the end of the shoelace right which are called aglets by the way in case you want to win at Jeopardy at some point. >> Yeah. So these telomeirs protect the chromosome from fraying basically and but after enough divisions the the tips of it wear down and the cell then senses that danger and that another replication might potentially damage the DNA. So it decides okay that's enough like stop and stops dividing to protect the integrity of the whole organism. So, so Hay Flick discovered this this biological truth and that life really has speed boundaries to it and for a good reason and that's now called the Haylick limit. So cells that ignore that you know they find a way to override it. They become immortal but in the worst way possible they become cancerous. So um now let's take that lesson out of the petri dish and into the boardroom. Um you know organizations are living systems too. They replicate uh through new hires, new products, new new offices. They divide just like cells, you know, they clone their processes and values. They imprint on each other. And and just like in biology, that replication can introduce risk. So the faster a company grows, the more that it's copying itself, the more likely it might be to introduce mutation. And in this context, mutation means like cultural drift, you know, ethical drift, strategic drift. And that slow erosion of what made the company coherent in the first place can then start to take place. So when companies scale too fast without repairing themselves, without repairing their DNA, uh their culture, values, judgments, it can start to degrade. Uh so in other words, like they're basically kind of overclocking their Hey Flick limit. And every company has a genome, this set of organizing principles and how decisions are made, trade-offs are judged, how information is shared and sorted and dissipated throughout the system. Um, and in healthy organisms that DNA replication comes with a proofreading enzyme that catches mistakes before they become mutations. And in healthy companies that proof reading comes in the form of values that are codified and enforced and and lived on a day-to-day basis. So [clears throat] um I'm g skip this part because it's already running along. So what's uh what's the hey flick limit in business? Um you know it's it's probably varies depending upon the industry or the age of the business. Uh but if we look at Mobison's white paper work on base rates, he documents the historical distributions of revenue growth um profit margins and returns on capital across a bunch of industries at different sizes. And the data show that mids singledigit to maybe low double digit growth is the norm for established firms, but it growth that gets above 20% and per year and you're starting to sit on the outer edges of this distribution curve and it's it's rare and it's usually temporary. So my guess is that it's that haylick limit is probably somewhere around 20% before you really start risking like introducing cultural cancer into your firm. uh and the healthiest systems, whether they're in nature or business, you know, they grow, they pause, repair, renew, and they respect that limit. Um and and nature shows us that we have to pause by design or or by disaster. Those are like your two choices. So either way, you're going to end up pausing. Um and you know, I was just to make this a little more personal, I was fortunate enough uh my family uh got to spend time a month with Bogey and his wife Megan in the Dominican Republic during COVID. and um you know that that he really had an incredible amount of patience and like um ease with the whole like COVID situation and and really everything in life in general. Um and so I thought it might be fun for you to share like think about that analogy a little bit about you moving from New York City to the Dominican Republic and kind of what that meant for your own personal pausing and repairing. >> Wow. I mean I love the story. got me thinking about many different things. You know, I was thinking about an individual, a business, and and family fortune. Somehow I was thinking about it and obviously I asked people about immortality. It's funny that you brought it up because I I have this book in mind, which maybe will happen at some point. I want to compare, you know, time to money because people say money is time, time is money. And we can imagine having enough wealth that's almost impossible to spend in a lifetime, but we can't imagine having enough time that exceeds a lifetime because it's it's just not possible and being, you know, able to enjoy this time. Anyways, I think it's it's fascinating to consider immortality. And I think we're all longing for it in some way. I think through through art and and writing and also running a portfolio when you think about it we imagine that this will outlast us and somebody will take it over and continue to grow it right so I think it's a human thing of what can I do to touch immortality I think that's that's been with us for a long time but uh changing the setting has had a huge impact on me during during co and at different points in time you might remember that we left New New York for a small cabin in the woods 2 hours away from New York at first and we were probably one of the the last people to do so among our friends because a lot of our friends bounced right away and we thought we'll just wait it out [laughter] and New York was not fun and you know there were moments we were walking along the river and there was a police car that drove over the curb and told us to disperse and and we said like it's just two of us disperse. was like in what way dispers like there's nowhere to go. [laughter] So we went home and I just New York was not a fun place to be and it was just really tough. So we thought we'll leave for a week or two and became a much longer experience. We went to the woods and I felt that I could hear my thoughts again. You know New York is an incredible city, don't get me wrong and I came to America for New York. That's the obvious to me and but it's also in that city it's very hard to hear your own thoughts. You can be pulled in to so many events. I'm very very grateful. I've been to lunches and meetings with incredible people over many years in New York. But there's a moment when you sit down and you realize which thoughts and ideas are my ideas and which ones I just overheard and are not really mine. But I heard them so many times from very convincing people that they may as well be mine, but they don't really feel mine. Going to the woods and hearing absolute silence, like deafening silence. Something happens to you and there books about it, right? About going to the forest and I think it was a hugely eye opening experience. I'm thinking about family wealth and I'll bring up a couple of things we talked about throughout this conversation. Poland that I grew up in left limited chances for anybody to preserve wealth over generations in the century before I was born and into my lifetime. So whether it was World War I, World War II, Poland didn't have independence before World War I, divided among three empires that are long gone and then you know half a century of communism like game over. Like we won't let you keep anything. if it wasn't stolen or burned down or damaged, it's it was confiscated. So coming to New York and working with a firm where I was introduced to families that some of them had the initial, you know, seedling of their wealth planted 200 years ago when Beethoven was writing his symphonies. It really opened my eyes and I thought there is a setting, there is a place and there's a framework that would allow multiple generations of a family to build on what was built already. Just compound and not compound over a lifetime, which is already very impressive, but compound over generation after generation after generation. A lot of a lot of challenges on the way. Don't get me wrong, it wasn't a straight line for any of those families, but there was a certain framework that allowed them to continue. And it was as much you know financial in terms of investing and participating in the success of the businesses as it was family communication knowing peace cooperating collaborating and being a family unit which is as hard as investing itself but it opened my eyes. In terms of immortality, I think when people think about their legacy, I think it's an attempt to touch that kind of immortal experience. Can what I created in this lifetime be that shadow under the tree for the generations to come? Let me get let me go around the horn and then uh I have uh some more questions on durability for you. Uh, Tumble, Texas, Tampa, Winter Park, Florida. Luzan, Switzerland, Tallahassee, Boisey, what's up? Thanks for spelling it out. Hamburg, Germany, Mumbai, Toronto, Belleview, Oregon City, Jupiter, Florida, Yvan, La Rapita, Catalonia, Portugal, Sydney, Dubai, Jackson Hole, Oam, Sweden. Thanks team. That's a good spread. Uh listening to the story about Poland and just made me it's unusual to I don't know many people who've sort of lived through a revolution and then gone from a communist socialist world to a capitalist world. It must be sort of a I can't imagine what it does to your mind or the way that or the way that you think, but it's sort of an interesting question to what does it teach you about durability and patience and h what what what is your sort of view on these things if you know that prior to Poland sort of being liberated? It was part of other empires and then a communist country and now you're thinking about generations. How how do you what's the thought process? What's the Yeah, I'm kind of intrigued by >> how do you avoid confiscation? [laughter] >> You know, there's there's I'll give away a secret that might not be a secret, but the choice of location is the most important part of it all. And I'll explain why. You know, the US has, and I wrote a book, Money, Life Family, where I dedicated a third of it to explaining why the US has worked and I hope continues to do so. And it's never that obvious because I think we're earning our future as we go. It's not given. And it doesn't apply just to the US, but a setting where you had a country where it was okay to own things. It was okay to be successful. It was even praised and accepted that you could get richer than your neighbor. You could definitely get rich as rich as the king, which is still not the case in some countries on earth. I I visited some places where you can't speak up about the king in a certain way. You know, it's still very real. It it's happening as we speak. But it's a country when we haven't had a king and we are allowed to get rich and we can keep it. Of course, you know, there are taxes and consequences and, you know, all kinds of frameworks, but nobody's out there to take it away from you outright and not having a conflict within the borders, you know, obviously except for the civil war, which is, you know, tough time and a lot of lost life and I'm sure wealth as well, but nothing like what Europe endured and many other places. So having a so this is like the protection of the downside, right? But then the upside, it's a country that has a a huge economy, lots of talent, people that are willing to work hard. I've lived in many places. Americans work hard and even, you know, us immigrants coming and working hard, it pushes the country forward. And having a stock market where the best businesses choose to be listed and allow you to participate. So you have layers and layers that allow this place to be a great setup and give you a chance, not a guarantee, but a chance to to grow wealth. You know, people use the word perpetuate. I think it's it's it's an aspiration to perpetuate wealth over many generations. To me, it's um heartbreaking to see that every generation has to start from zero. You know, we talked about wisdom. Can you imagine all of us burning all the books with every generation and every kid has to start with nothing again? We don't do that. But so many people start with absolute zero financially speaking and some students these days start with a negative net worth. It's a very uncomfortable place to be making any life decisions. Right? So to think of the next generations being able to start with something I think it's the beginning of the aspiration that we're building here. What can we do so that the next generation has an easier head start? I think that's something we could aspire to have. >> I certainly >> What are you thinking about the uh New York City mayoral race, >> right? Right. [laughter] You know, people ask me, I actually spoke with somebody yesterday who's from Hungary and might be listening to this, and he's about my age, and he said, you know, it's interesting that you talk about your experience in Poland because he lived for something similar in Hungary. And he says, it's interesting you just you choose to talk about it. And I told him, you know, I think I almost feel obligated to talk about it because we forget as a civilization. We just forget the lessons of the past again and again. And I find it very disturbing that some of the ideas that we already tried and they failed. We tried to apply them again across a wide spectrum of ideas. Not picking on anybody, you know, in particular, but we've tried it. We've tried it already. And I think it would be very useful to if you don't want to read the book, have somebody in the room that has lived through an experience that you tried to invite again and tell them what it's really like. And if you still want to do that, then then sure. But just sharing the story and the idea and the experience, I think, gives us a chance not to make the same mistakes again. Communism as the one that was practiced in Poland came at a huge expense to a nation and to a whole to a whole block of nations within Europe and a lot of people died with songs that were never heard. You know, they had talents and gifts. I don't think we would like to live through it again anywhere else, including New York City. the uh I I saw a good program the other day that talked about the geographic advantages that the US has relative to the rest of the world. I mean there are many like just having two oceans so not not having competitors nearby all the rivers on the inside the the amount of arable land that the states has like oil and gas and minerals and so on. And so it just goes on and on which suggests that the US is set up pretty well for probably better than any other country in the world for at least the next century or so beyond that which is a huge positive for the states. But the problem for the states seems to me to be that that huge wealth inequality where you have students who are coming out of school who've got giant giant student debts that really you got to swallow that before you then go and try and buy a house and move on with your life beyond that. And I it frustrates me a little bit because I think that a lot a lot of the problem is that interest rates were set too low for too long and that's a Federal Reserve problem which I think is one of the problems with um you know central planning and it frustrates me that our solution to central planning is more central planning in New York. So that's the end of end of my end of my editorializing but that's the way I feel about it. >> Yeah. Can I chime in? >> Yeah, please. I was going to throw it to you. [laughter] >> So Jake knows very well how I feel about central planning. I I remember the office building in Warsaw, you know, a gray communist Soviet style building where people >> beautiful, right? >> Beautiful where people would go in and decide, and you're going to laugh at it, but I'll say it because people forgot it. Set the prices of everything from a nail to a shoe to a car to a television set. They would go in there and look at it and say, you know, there are that many Jake in the world. There are there many Tobies. I think the TV should be 500. But nobody asked how much does it cost to make a TV. Well, who cares? And and [laughter] there was only like one or two models available on a on a license. One was, you know, the Soviet style TV. Anyways, very limited options. So, don't imagine a a Costco style aisle of TVs or anything like that. And I remember and I'll bring it up. I don't know how much time we have, but I was in Brussels in that bookstore where I found Peter Lynch's book. And there was a book about uh the chairman of the Fed, Alan Greenspan. And I picked up that book and on the floor on the carpet. I started reading it and he said how he is counting the the train cars and trying to guess what the interest should be, interest rate should be. And I'm reading this book [laughter] and I'm thinking, >> "Wow, this sounds really familiar." Because I remember a building in Warso where guys go in and decide how many shoes Jake of the world need and how many TVs Tobies of the world will buy and then we'll set the price. How different is that than some group of people gets together and decide that the cost of money is this or that? How come they know if you and I I think we can agree. I have no idea how much a pair of Nikes should sell for. I have no idea. We're trying to figure it out how much people will pay, how much it costs. There might be tariffs or no tariffs. It's a moving target. There's no official that can say a Nike shoe should cost this much. How come we think that we have some [clears throat] god-given power to set the interest rates? I know it's very hard to give up. It's an immense framework and you know power over the the markets and it can be used allegedly it's not a political force in most of the countries that have a central bank. People can read about the history of central banks and people can be reminded there were times when we had no central banks and the economies worked somehow and I don't think central banks belong in the future. I actually wrote a chapter in money life family the elephant in the room about what you just brought up Toby about low interest rates. I personally don't think that we will have central banks the way we have today in in a couple of decades. I think the model is just not it doesn't belong. Do you think we rat around it with crypto or do you think it just we sort of wake up to the problem? Because I don't I don't think the second thing's going to happen. I think it's just too it's too abstract for the average person. The average person has no idea what the Federal Reserve is or what it does. >> No. And I think most of us don't really know. And I'm I'm still trying to understand how how this it's a much more complicated system than than we all think. The the Federal Reserve and how money is created and fractional reserve banking a lot of things I'm throwing throwing out here that are each and everyone should be a lecture of hours and hours of explaining how the system actually works. It's it's too there's too much going on. The point is you can turn it up and turn it down depending on how you think the economy should be operating. That's basically in a simple if you feel like the economy is slowing down you cut the rates. If the economy is overheating you cut them in very very basic terms. I think at the end of the day we will be making things and providing services and goods. I don't know in which currency we will exchange those things. I've seen you Poland where I grew up switch between currencies and I've seen multiple currencies functioning at the same time. Right? So you would buy tomatoes and cucumbers with the local currency, but you would buy a car with dollars. And there are countries in the world today where some things are priced in dollars. You can buy a lot of goods, everyday goods with local currency, but if you want to sell an apartment, it's going to be in euros or dollars, right? So it's it exists still today. And I don't know if the currencies we have today are the final ones. I I doubt it. As a as a civilization, we got we ruined so many currencies in the last few thousand years, right? >> Only everyone we've ever created so far. >> Record so far. >> You know, I was I was visiting a house. >> But we have dot plots now. Bo, you're forgetting about dot plots. So that's got a >> committee. The committee is making a decision. [clears throat] >> I I visited a museum in Madrid and it's a house. I think it was a publisher and he has a room full of uh currencies and it's a it's a beautiful wall and all the money he was collecting was some sort of metal. All the paper money is gone and it was silver and gold coins from around the world that he was collecting and I think that room reminded me yet again that we say paper money but that paper money means something different these days because most of it is it's an electronic letter. We don't Yeah. It's digital. But the paper money that's not backed by anything. It's built in a way that allows us to inflate our way out of a problem again and again. And we've the Greeks have done it, the Romans have done it, and everybody in between. The Chinese have done it, you know, centuries ago, many times. And we're doing it again. The moment that we end up on the other side of it is very disruptive. And it's it's like an unfair disruption because it's not going to be it's going to be really random. The same way hyperinflation in Poland, the outcome was very random. It's not like you had people that were so prepared for it, nobody was really prepared for it. You might end up on the right or the wrong side of it. Again, going back to what I talked about, what can I do to be the least wrong? And my conviction is that if I own a collection of businesses that are doing something that people want, they can price it a at a level that allows them to make money and they continue to to grow and improve and it's not a set in stone portfolio of companies. They will change. That's the best place that I can imagine for a family fortune to survive any of you know systemic shocks of that kind. >> Well, well, does that mean international as well outside the US? >> Well, yes and no. I think it's it's a whole separate topic because in the US we have an incredible, you know, large liquid market with incredible protections, incredible disclosure. I haven't seen other markets except for very small that match what the US offers. And the the other side to it is a lot of the companies I have in mind, they they have a lot of the business outside of the US. They have more than half of the profits outside of the US. Right? So even if I limit myself, so to speak, just to wellestablished US companies, just to make it super simple, half of your profits are not from the US. Anyway, I actually was going to write a piece that I put aside, what is an American company? What would you call an American company? Because I think we're all a little bit lost with the terminology these days. >> I would say the head head office is doiciled here. That's about all. But then then you have you have companies that were started outside of the US and they're as American as any American company because they moved their headquarters to the US. They got listed in the US and they have most of their customers in the US, right? And they then you say no, it's actually a European or it's actually an Asian company, whatever. I think it's not that if you are operating under the the protection and the level of disclosure and the level of liquidity that the US market offers, I think it's a good place to be. I spent half of my life in Europe. I looked at a lot of European companies and I I visit visited many countries visiting companies too and it's very very hard. The hurdle for me is very very high if I want to invest globally. So that's yeah a separate topic but I wish to be honest with you I wish I could say that it's very easy to build a portfolio of international stocks that match the US level of shareholder friendliness and on and on and on. It's it's not as easy at least to me but I'd be happy if somebody wants to prove me wrong. Uh I I I want my my concern with someone like Maani winning the New York mayoral election is not so much that I I think he probably wins and I think that nothing ever changes really. The US has had build a blazy on New York's had build a blazy on other guys who are like equivalent kind of maybe the rhetoric isn't as obvious or as striden but they're sort of comparable kind of plans to govern and likely nothing happens really. there's like small changes but it'll continue on as it's always continued on but it does sort of make it a little bit more acceptable for it to roll out across the rest of the US which is one of the concerns that I have at some point it's conceivable that you don't want to have all of your allocation in the states but then the question becomes where do you then allocate I mean China's looking very it's markets are looking pretty capitalistic these days I think there's some real bare knuckle capitalism going on in their stock market I don't know about the political situation But you you're not just out of an abundance of caution considering sort of distributing the the doiciles or I I that's a good question. So what allows me to sleep well at night is that the stocks that I own, half of the profits are overseas, but they're from the US perspective, the US shareholder friendly mindset. If I look outside, I I have a hard time getting comfortable with the the location. I think I would rather have and I've seen it happen even with my stocks, a company have a write off because they picked the wrong location for a part of their business. I remember and let's call out a name, Colgate. I remember a billion dollar write-off for their Venezuelan operations and it's public. Everybody knows about it. You can look it up. No recommendation of any kind. But I I remember it and and it was eye openening. I was well if you have a minute I'll tell you. But I was traveling around South America before that happened and I was in Brazil and Brazilian companies were buying up assets in Venezuela and they were telling me how they understand the continent and they're not as you know exposed to whatever happens in Venezuela because they're also you know they understand Venezuelans. Well, I guess they were wrong because Venezuela went really far with what they wanted to do. I know a lot of Venezuelans that left Venezuela since and are in in Florida and Dominican Republic and many other places. I'm sure they're in California, too. And they're smart, bright people, and they realize this is not the place. Anyways, long story short, if if you can find other places on earth where you feel like you will get to keep what you own and it can flourish also, right? So, the downside and the upside, then more power to you. I >> What if it's Poland after all these [laughter] >> politically? It's really full circle. >> Yeah. Sensitive sensitive topic. Um, well, we're sitting here in uh late 2025 and uh there is an ongoing multi-year conflict right across the border. >> I'll add to you and I'll add here for your benefit. >> Some of the drones that fell in Poland, they fell in villages where I I know those villages. They're not far from some members of my family that that live there. So it Poland has always been we talked about location you talked about the US having this huge advantage Poland has a terrible location you know there no nothing that can really change that it's a terrible location there are no there are mountains in the south but the neighbors in the south are very friendly but there are no mountains and no big rivers on both sides it's very easy to roll the tanks and it's been done if not the horses than the tanks anyways I hope the conflict dissipates, goes away, and and we're all at peace. But there's always the fear that the location is still not great. Blonde had an incredible run, and I certainly hope that we're done redoing the past. But you bring up New York. I feel like somehow humanity is just bound to make the same mistakes. >> Yeah. I I really hope that Poland is done taking the the beating here in the region because it's been an incredible run and probably the longest peaceful growth period for Poland in recorded history. You know, there were different 20 or 30 year periods that I remember from history books, but this is a remarkable and I'm not saying it to, you know, to test the luck or anything. It's just something to admire and I I hope that a permanent solution is found for peace in the region because it's we're not done yet. >> Well, I guess you can always change your leaders, but it's hard to change your demographics or your geography. >> Yes. Yes. >> Um, we're coming up on time. If folks want to follow along with what you're doing or get in contact with you, what's the best way of doing that? >> Find me on Substack. just my first name, last name, Bogamill Daronoski, and everything I post, it's there these days. So, find me there and uh write to me. I answer all emails. I have fun reading people's emails. People share incredible stories with me and I'm I'm always moved by what's on people's mind after reading or listening to whatever they come across. So, thank you for writing and please keep keep writing. The podcast is talking billions. The firm is Blue Infinitist. Bogen Boronowski, thanks very much. JT, any final words? No, it's just fun to see my my buddy Bogey and uh I'm not sure why we took so long to have him on the show, but we won't let that much time go by again before you come back. >> Yeah, we'll do that. Thanks, Bo. Was was awesome. Thanks everybody. We'll be back next week. B times same.
Bogumil Baranowski on Freedom, Mindfulness, Patience, and the Art of Investing | S07 E39
Summary
Transcript
I think we're live. I always stare blankly at the camera for the first few minutes just to let you know that there's nothing going on behind the behind the eyes. I'm reading off I'm reading off a prompter and I'll read anything. I'm Tobias Carlile. This is Value After Hours joined as always by my co-host Jake Taylor. Our special guest today is Bogamill Baronowski of Blue Infinitus Capital, host of the podcast with perhaps the greatest name ever, Talking Billions. How are you, Bogamill? Welcome. >> I'm very well, very excited to be here. >> Just tell us a little bit about your investment philosophy and your journey to setting up Blue Infinitus. Wow, a simple easy question to start with. >> We'll see you at the end. [laughter] >> Where do I start? I manage money for families, long-term patient capital, and I've been doing it for 20 years. I discovered investing when I was an exchange student in Brussels. I was born in Poland, went to schools around Europe. I was in Brussels at some point and I picked up a book by Peter Lynch one up on Wall Street and I studied business, economics, political science at the time. But that book really opened my eyes to a whole new world and I found investing just a fascinating intellectual puzzle, something that I could figure out. And it's not that I thought I'm going to beat the market, outperform, and become the richest person in the world. I thought this is worth paying attention to. This is something that I want to spend time understanding. I came to New York. I joined a firm and I was very fortunate that that firm was focused on a certain subgroup of of clientele that had money for many generations. And I realized that if you want to be a long-term patient investor, you have to have clients that are on the same time horizon. I call it the infinite time horizon. And I grew to appreciate the people behind the portfolios. Two two decades later, I was trying to figure out what's the best vehicle for me to continue to do it for the rest of my life. I'm I feel very young, but I am 45 and I'm thinking about the folks in their 80s tell me that I'm just getting started. So, it depends on the [laughter] perspective, but I was thinking about the second half of my career, the the two/3s ahead of me. And I set up Blue Infinitas to serve a few families and open it up to new business for other families that are on the same page and continue to do what I love, which is investing and spending time with clients. So, here we are. H how would you describe your investment philosophy? Are you a Are you a value guy? Are you a How would you describe it? >> I love the labels, as you can imagine. I call myself a [laughter] if you really corner me, I'm going to say I'm a value buyer but a growth holder. I want a deal when I go in. Mostly because of course it improves the returns if you're right. But if I'm wrong and I paid half of what I think something is worth, there's a lot of room for me to to get out without too much damage. That's how I look at it. And I I always go in thinking, what if I'm wrong? Can I can I afford it? And I think a lot of people get into investing because they they have this urge to be right. I think it's a dangerous place to be. So I want to get a deal up front. And even if you look at the the largest and most successful companies out there, if you look at the last decade or two, there's so many windows where these stocks were down, you know, 40 50%. And we forget it. But I was in rooms with people that were convinced that among the top Magnificent 7, all of them, they had really convincing reasons why these companies will never grow again. You know, whe there was a switch to to mobile at some for at some point and you know, new competition, all of those things. And people were convinced that these things are done. And they're, you know, multi-trillion dollar companies today. I was in rooms when really smart people were very close to convincing me that these companies are done. So, I own some of them and many others over the years, but I go through this uh realization that I met enough people that told me they bought the right thing at the right time, even at the right price, but they were not in a position to hold these holdings long enough. And I think that's where you really create value. That's why I call myself, you know, a growth holder because once I bought it, right, it really takes me a lot to sell. So, that's that's the philosophy in a nutshell. What sort of begs the question a little bit, what does it take to sell? [laughter] >> It has to be pushed out by a better idea. I I'm very I used to be much more sensitive on the valuation side and I would and I dropped and and dropped the idea of a price target. I worked with a lot of people at different points in time that were set on a price target. I think a price target gives you a false sense of precision that you know that this is a $50 stock. And you have a huge dilemma when you reach the $50 because what are you going to do next? Like this could be a $100 stock, right? And it could be $150 stock. And I think psychologically it's very hard. So I have no price targets. If something makes sense, I'll keep on holding it. I am I I'm writing a piece now. I'm exploring this situation when I've owned something for, you know, 10 12 years and at some point it becomes part of some short-lived euphoria and it clearly gets inflated by the market and I have a huge dilemma here because I could sell it. I mean, I have all the reasons to sell it because I feel like this valuation will not hold or this stock will take a lot of time to grow into this valuation. But what do I do next? You know, there are tax consequences for a lot of clients. That's one thing that makes me slow down. And second, going back to an idea. I think it's this untold, you know, secret or truth in investing. It's very hard for a lot of people, including me, to go back to an idea. So, I I'd rather just wait it out and see a dead money period or even a draw down in [clears throat] a holding. It's tough. It's hard. But you know I Chris Mayer on the show many times and Chris talks about those hundred beggars and we're all fascinated with the idea right but what he really talks about is that there are so many periods when it's so hard to hold on to those stocks because they go absolutely nowhere even among the magnificent seven a lot of them went nowhere for two years and I was in rooms when people would ask me why are you still holding it I mean it hasn't moved the whole market is up but one of these you know incredible companies they're not moving what do you do? You know, and if you sell, when do you go back? When it sells off 10%, 20%, 30%, it might never sell off again like that. So, I'd rather on the side of sitting on my hands and doing nothing. >> Does the uh does the period of two years waiting around follow on from the period of being very overvalued? >> Well, I Yes. Yes. For answer is yes. So, I see it as you know, company growing into its valuations and we've all seen it, right? I think the tricky part with the market is that there are hardly ever any periods uh especially for individual stocks where the market in a calm way absorbs all the news, good news and bad news. It doesn't just happen. And that's how I look at it. If it's a little bit of a bad news, the stock is down 20%. If it's a bit of good news, it's up 10%. Why isn't it up a [clears throat] percent or two and then 3 months later at percent or two? It doesn't work that way. Actually, there was this incredible study that I quoted in one of my Substack essays. How if you take out all the after hours market movement, have you seen this study? I have to look it up again. The majority of the returns for the overall stock market as such happens after hours where the announcements are made. So, throughout I think there's so many lessons out of this study, but one of them is you're going to miss out a lot of movement if you just participate during the day. It gives me a lot more peace of mind that I don't have to watch my stocks during the day because that's not where the biggest value is created. [laughter] You know, they move up and down, up and down, but then they report and they're up, you know, 15%. Even large names are these, they're up 10, 15%. Anyways, so the market overreacts and in both directions all the time. I wouldn't cry about it if you're a disciplined long-term investor. I think it creates an incredible opportunity. You know, if everybody's focusing on the guidance being lowered by a percent and the stock is down 20%. And it's a large company, you know, with that everybody knows, why not be a contrarian here and buy a few shares and wait it out? >> Uh, you've been doing this for two decades. What has changed over two decades? How have you evolved? How has the market changed? I used to be much more frugal and much more focused on cheap [laughter] the cheap end of the spectrum. And I'll tell you a story. I won't mention the name of the company, but 10 years ago or so, we were researching as a team and I was leading it a certain stock that looks super cheap and we spent a lot of time researching it. It had a little bit too much leverage for me. But we spent a lot of time, a lot of resources, a lot of research and uh people were falling out of love with this company which we us know something I usually like. It got to the point that nobody wanted to talk to the management. The management came to visit us in New York and yeah we were not the people wouldn't see us as much but they came to see us and I thought nobody wants to see you guys. So we want to see you. Anyways, after one of those meetings, one of the managers, portfolio managers at the firm where I was, he walked up to me and he said, you know, they have a competitor. And I said, I know, but the competitor is trading at a higher multiple. And he says, yes, but they have less leverage and they seem to get things right. You know, the new product launch, the new market, they just seem to just get it sorry, get it right. They seem to get it right. And the other guys always get it wrong. The cheap stock was getting it wrong. So he said, "I I don't know enough about the competitor, but I'm just going to buy the competitor." And obviously, we had this, you know, tremendous, very painful holding period, and this never worked out. We sold it with a small loss. And here he was holding a stock that was so much easier to hold because it was the the business was doing all the right things for the right reasons. And I watched this manager over the years and I realized you know sometimes we might think that you might get something cheaper but it might cost you in a non-monetary way monetarily too but you know with with the lost sleep and the time invested and and so on. So I think there's a lesson at least for me that sometimes it's I'm willing to pay up you know I'm just willing to accept the price. Is that kind of a return on brain damage calculation you're doing? >> And and pain, you know, sometimes it's almost physical pain. [clears throat] >> I like that idea. But let me let me give you a let me give you the counter example, which would be >> there are many [laughter] >> that Graham called it double counting when you went and had a look at the quality of management. So you find a business that's doing really well and you kind of impute all of these great qualities to the management of that business that's doing very well. And then you find a business that's struggling and you think, well, these guys are these guys are bozos. Like they're just not doing the obvious thing here. And sometimes it's just it's a little bit of the turn of the market. It's the cycle that you look smart when you've got a great history and you look dumb when you've got a great future. >> Yeah. I think you're what I'm looking for is a certain gap between reality and perception, right? And I think you can find that gap across a very wide spectrum. And I think you can find it in the very cheap bucket and you can find it at the very well expensive end of the spectrum. I think we all have to find a place where we're comfortable. You know, I'm not saying I've talked to enough people to know that there's probably a thousand ways to make money owning stocks. I have no doubt. And at the at the end of the day, you know, the best portfolio is the one that you can hold or your clients can actually hold. And if they feel comfortable holding certain things that move up and down a lot or that are, you know, cheaper or more expensive or have better margins or lower margins, whatever it is, you found a sweet spot that resonates with your audience. So I I evolved in the sense that I would rather hold slightly better quality businesses or better quality businesses that I could almost forget about. Like I take this idea to its limits. And somebody asked me, I think it was Jim Shanis. He asked me, "What kind of money you want to manage?" And I told him, "Forgotten money." And he left. [clears throat and laughter] And I said, "No, I I really mean it. I want to manage forgotten money." And he said, "What do you mean? You know, the clients that I work with, it's the money that they don't immediately need, but it's the money they can't afford to lose." And I think it's a it's a beautiful framework and setup for it for what I'm trying to do. If you have money on the side that you need for the house, the car, the call it for the kids, it's not the money that you can really invest. I think we're not as open and honest about it. That's not really investable capital in the sense that I see investable capital. The capital that I managed, it gives people huge peace of mind that it's there, but it's not part of the daily equation that that's the money they have to dip into to to make this payment or that payment. But within that forgotten money framework, I'd like to have forgotten stocks. I'd like to have stocks that I could just forget about. If I forget about them and not check on them for 6 months or a year or maybe five, will they be more or less okay? You know, like that's how I look at it. And it's a it's a huge test. And I've owned stocks that I had to watch like really really watch quarter to quarter. How much worse is this getting? [laughter] and I'm not going to get that, you know, time, effort, attention back. And I don't think I was compensated proportionately in terms of the investment return for for what I was trying to do. >> Yeah, that's certainly been true for cyclicals for a very extended period of time. That sort of buy and sell. >> Yeah. >> Necessary for cyclicals. It's definitely a buy and hold, never sell type market for the things that have won, which is the mag 7 and so on. Um you you talk about compounding wisdom as much as compounding capital. What do you mean by that and how do you how do you go about doing it? >> It's the idea of of always learning. I think I stayed in investing because of the people that I get to work with. That's for sure. But also because it's a neverending learning opportunity. I even even ho hosting the podcast, you know, sitting down with people and talking to them for an hour about something they dedicated decades of their life to and they're so passionate about it and they know everything about that aspect of money, wealth, investing, whatever it is. I take away from it. People ask me, "What's your return on investment with the podcast?" And I said, I mean, there's no number, you know? I It's an inspiration. It's a lesson. It's a It's an eye-opening experience. It's the ability to learn from other people's mistakes. You know, it's all those things. So, the more you learn, the more questions you have, the better your questions become. It's an open-ended pursuit just as investing is to me. And I know that I, you know, open the laptop the next day. There's something new to think about. I mean, a lot of the things that are we, you know, that's on people's minds today, like AI, this wasn't part of the conversation even 3, four, 5 years ago really to that extent, right? So there always new things to look at, question. I remember a senior partner at one of the firms where I was years ago. And he told me that he likes investing because he feels that he's always plugged in to the world. That, you know, I I'm I might look at a pharmaceutical, but I'm not a pharmacist and I'm not a doctor, but I can understand how this helps, how it's sold, how it's paid for, right? like I can I have this head on on my head that allows me to analyze all kinds of businesses in industries that I'm I'm no expert. I have no idea how to produce this medication, but I can understand how this medication can help and work in the world. So, it's this ability to have uh a lens and uh an eye on some of the most fascinating things that are happening around us and have an opinion about it. And if you want to act on that opinion, do that and own a few shares of companies that maybe will benefit from it. >> Yeah, it's nice to have that kind of a monetary spur for your curiosity. >> Yeah. But it's, you know, I thought about it a lot that I know investors that are very financially comfortable like they're not doing it for the money. And I think it's a bigger picture idea that what I find fascinating is when you have a founder of a business that's worth, you know, tens of billions of dollars, I think we all know that they're not doing it for the money. They really don't need the extra 10 billion, but they're on a mission. They're doing something. They're building something. And they're staying and working harder than they probably need to or should for, you know, decades to come. And when you have an investor that's just showing up every day and I met people in their 90s who were investing still and opening up the newspaper and reading things and and you know asking things and what what you know they were asking about Facebook back in the day. They had no idea what Facebook was and and I had to explain what and they would call it bookface by the way. They would [laughter] say tell me about that book face. So I, you know, and I thought it's it's so endearing and fascinating that at 90 they still they felt they don't know it all. They won't understand. So is this like a newspaper? Is it like a radio? What is that book face? And I, you know, I would sit down with them and as much as I could explain, I I tried to explain. >> What are the most common mental traps you see investors falling into? I think we over complicate what investing is about. I think we're trying to make it way way too too complicated. To me, the idea is is very simple. I'm not saying it's easy to to do, but some of us are in a position to [clears throat] be investors. We have some capital that became available to us. Either we and it's one of the traps I think for value investors that we are frugal. So there is some capital that's saved on the side and that capital has to be deployed at some point. We realize that a money market account or a certificate of deposits just not enough. So it has to be invested in some way and obviously you know with the families I work with there's a family inheritance or a business that was sold. So that money is needs to be deployed and it's you know serious challenge and an opportunity and now a question is how do you do it? And I have an overly simplistic answer, but you have to own businesses. And if you are not going to start those businesses on your own, which I think is really hard to do, to start a business on your own, then you have a choice with the stock market, an opportunity to own small pieces of businesses. That's what Peter Lynch told me in his book, you know, 25 years ago. And I I thought it was fascinating, fascinating. I don't have to be a billionaire. I don't have to, you know, my age, my gender, my education, my experience, nothing matters. I can own a few shares of some of the most incredible businesses out there and be treated the same way as the founder. I know there are different classes of shares. You can challenge this statement, but the principle is the same, right? like I I get to own the same a slice of a business with the same rights more or less as the founder without >> How did How did uh growing up in Poland kind of influenced that appreciation for that ability to own business? Yeah, >> hugely. [laughter] >> Maybe you could kind of share some of the background of that. That's always interesting. >> It's a terrific question. I think I you know we all grow up in certain circumstances like even the three of us grew up in different places and we assume that everybody else has the same experience and there are books about inherited wealth how people with inherited wealth they assume that everybody grew up with inherited wealth and they realize no it's actually an exception to the rule that somebody grew up with inherited wealth anyways I grew up in cold war Poland so I got to see the last decade of a failed economic political system and I saw, you know, empty stores. I had to line up with my parents and grandparents in front of empty stores. So, you would get a paycheck, but even with the paycheck, you had to go to the government owned, state-owned store that was empty, huge shortages, you know, poorly managed economy and a large healthy, you know, gray market on the side where you could buy things. But anyways, the principle was that private property is not allowed. priv private property is not something that's that's a good idea in that system because it means that you accumulate wealth. You're greedy and all those things that you know you you know about socialism, communism, well then the same thing at the end of the day. So anyways, owning things was not an option and owning a business was not an option and even sometimes owning an apartment was not really possible because it was just a lease from the government. So coming to you know discovering Poland changed in a huge way when I was a teenager and the stock market reopened supermarkets came in it was a massive massive change you know hyperinflation as well but anyways you know discovering Peter Lynch who tells me listen there's a stock market and it's not necessarily a casino it could be if you want it to be but it's also a place where you can go and buy shares of companies it just blew my mind. What do you mean? I have $100 and I can have, you know, two shares of this, one share of that and become a shareholder. How come? It just blew my mind. >> I can own Coke or Nike or >> Poland has become one of the world's great success stories over the last uh well, since since it opened up and it's often used to contrast with other countries that have gone the other way. Have you have you what's that experience like knowing some of the people presumably who've lived through it and what is that what is that like? Well, I I left Poland 20 some years ago, but I go visit and I saw a massive change in the first decade. So, the '9s when the country opened up. It was such a big shock. I think that we're trying to label things and Poland was, you know, labeled an emerging market for a period of time. I think the idea is that the country was absolutely frozen. It's not that it was not capable of growing or delivering value. It was just stuck because if you don't allow people to start businesses, if you have only the government as the only buyer of your skills and talents, if you have the government as the only seller of everything that you need in your life, you can imagine what a huge inefficiency it creates, right? If you if you want to work the extra hour, it doesn't really matter if you want to work a little bit better. And you know, compound wisdom that we talked about, nobody cares. [laughter] Right? So, the system levels everybody. And there are some people that say, "Well, I didn't feel like working anyway." But there are quite a few people that think that I could make a better loaf of bread. I could make better shoes or I could make whatever better. I could teach kids better at school and and on and on. If you take that away, you know, it's it's a huge deprivation. Anyways, this was released in the '90s. in Poland. I saw statistics and I hope it's correct that that the purchasing power of the the average citizen is catching up with Japan which is unbelievable to me because you know Japan when in the in the 80s was supposed to take over the world and I be you know Japanese businesses were buying US assets. I remember this moment and you're telling me that Poland is catching up at least on purchasing power level to Japan in my lifetime. I it's hard to process, you know, it's it's it's a huge leap, but to me it's a proof that if you let people operate in a free market economy and sell their skills and services to the highest bidder, the outcomes can be really impressive. >> What about lessons as an investor? Does it teach you something about patience or about incentives or what what is the what do you take from your childhood which was in a totally different system to to the one that you're in now? >> I think there's so many layers to it that I still uncover them as I go and it was one you know one revelation. I have a very calm and collected attitude to money as such as a phenomenon because in the first decade of my life even if you had a paycheck you couldn't really spend it you know so so to me you know shopping is not really a fun activity you know I I grew to accepted and I spend money that might just be because you're a man [laughter] >> there you go >> but money you know was not really it was very abstract act as a concept. You know, I knew that my parents are getting paid and I got that. But then we had the the cash and we couldn't buy things anyway because the stores were empty and you had to line up and wait for things to show up even the basic goods like flour and sugar which is you and even meat. Poland ran out of pork and Poland was invaded by European powers for for hundreds of years because of pork and grain and we ran out of pork and flour [clears throat] grain which is because it was all shipped to >> you really got to screw up to do that huh >> and whatever was produced was shipped to the Soviet Union but anyways that's [laughter] so I remain to have a very you know common collected attitude to money comes and goes I saw hyperinflation which is a very confusing phenomenon to adults, but it's equally confusing to a kid that goes to a store and a bottle of Coke, I remember it was 10,000, then it was 20,000, then it was 30,000 and then it was 40,000 and then we took four zeros away. So, it became four. I mean, and it happened in within, you know, four years or three years when you're growing up. So, what what is money? Is it the 10,000 or is it the four? And then the more fun thing was that my grandparents continued to speak in the old money. So they would talk about hundreds of thousands and millions and we no longer had those zeros. So as a kid I had to translate in my head between the old money and the new money. Dollar was gold. So that was something that was ingrained in my head that dollar is not something that you go spend like the same way you would treat a gold bar today. You don't really run around with a gold bar and you know pay for food. So to me go sorry dollar was something that you store it you respect it. It doesn't lose value. I know that people have different thoughts about the dollar these days but that's how I grew up. >> So you you were living Gresham's law then at that point. Huh. So these are the things that I think allowed me to look at the money and wealth phenomenon from outside and I think I I continue to see it as something very helpful that the numbers are just numbers and you know they have a meaning in a certain context. I also grew to appreciate the the impact that money has on people and I don't think there's any amount in the world that exists in a vacuum. It's all, you know, it has a charge. You I work with people that inherit wealth and the way that the money was given to them and the money the way they receive that money has a huge importance and it doesn't really matter how much it is. It doesn't have to have a lot of zeros. But the the emotional charge around it, I think in the investment profession, we're granted this huge responsibility for a very intimate experience. And I don't think we're fully equipped to take on the role we have to take. you know, we focus on the numbers, focus on the returns, but you're taking on the responsibility for somebody's livelihood, and I think we we forget that sometimes. >> I think it's a great point. Um, but we've come to the top of the hour, so JT, we need to do some uh veggies and then we're going to come back and talk about uh a few other things. >> Sure. So, you know, as as you can tell, Bo's got a a very calm energy and patience to him. So, you know, I always try to match segments up with uh with the guests. So, today we're going to start with a paradox, which is every organism wants to live forever. Every company does too. Every founder dreams of building something that outlives them, you know, 100 plus year companies. But in biology, the only cells that live forever are cancer. Uh and so what is the secret to endurance in life, business, leadership? It's is it learning when to occasionally go a little slower? Okay. So in the 1960s, there was a scientist named Leonard Haylick. H A Y F L I C K. And he was studying human cells in a petri dish. And he expected them to keep dividing indefinitely, right? Like after all, that's what life does. Multiply, expand, reproduce. But after about 50 or 60 50 to 60 divisions depending on the cell something strange happened. The cells just stopped dividing. They didn't die. They didn't fail. They just stopped. And that in they entered a state that's called scinsessence. And it's kind of a permanent rest. And and this is not a random glitch in biology. It's a design choice. It was written into the genetic code of life itself. Each time a cell divides the ends of it uh of the chromosomes which are called telomeirs uh they get a little bit shorter and you know the famous analogy is that the telomeirs are like the plastic tips that are on the end of the shoelace right which are called aglets by the way in case you want to win at Jeopardy at some point. >> Yeah. So these telomeirs protect the chromosome from fraying basically and but after enough divisions the the tips of it wear down and the cell then senses that danger and that another replication might potentially damage the DNA. So it decides okay that's enough like stop and stops dividing to protect the integrity of the whole organism. So, so Hay Flick discovered this this biological truth and that life really has speed boundaries to it and for a good reason and that's now called the Haylick limit. So cells that ignore that you know they find a way to override it. They become immortal but in the worst way possible they become cancerous. So um now let's take that lesson out of the petri dish and into the boardroom. Um you know organizations are living systems too. They replicate uh through new hires, new products, new new offices. They divide just like cells, you know, they clone their processes and values. They imprint on each other. And and just like in biology, that replication can introduce risk. So the faster a company grows, the more that it's copying itself, the more likely it might be to introduce mutation. And in this context, mutation means like cultural drift, you know, ethical drift, strategic drift. And that slow erosion of what made the company coherent in the first place can then start to take place. So when companies scale too fast without repairing themselves, without repairing their DNA, uh their culture, values, judgments, it can start to degrade. Uh so in other words, like they're basically kind of overclocking their Hey Flick limit. And every company has a genome, this set of organizing principles and how decisions are made, trade-offs are judged, how information is shared and sorted and dissipated throughout the system. Um, and in healthy organisms that DNA replication comes with a proofreading enzyme that catches mistakes before they become mutations. And in healthy companies that proof reading comes in the form of values that are codified and enforced and and lived on a day-to-day basis. So [clears throat] um I'm g skip this part because it's already running along. So what's uh what's the hey flick limit in business? Um you know it's it's probably varies depending upon the industry or the age of the business. Uh but if we look at Mobison's white paper work on base rates, he documents the historical distributions of revenue growth um profit margins and returns on capital across a bunch of industries at different sizes. And the data show that mids singledigit to maybe low double digit growth is the norm for established firms, but it growth that gets above 20% and per year and you're starting to sit on the outer edges of this distribution curve and it's it's rare and it's usually temporary. So my guess is that it's that haylick limit is probably somewhere around 20% before you really start risking like introducing cultural cancer into your firm. uh and the healthiest systems, whether they're in nature or business, you know, they grow, they pause, repair, renew, and they respect that limit. Um and and nature shows us that we have to pause by design or or by disaster. Those are like your two choices. So either way, you're going to end up pausing. Um and you know, I was just to make this a little more personal, I was fortunate enough uh my family uh got to spend time a month with Bogey and his wife Megan in the Dominican Republic during COVID. and um you know that that he really had an incredible amount of patience and like um ease with the whole like COVID situation and and really everything in life in general. Um and so I thought it might be fun for you to share like think about that analogy a little bit about you moving from New York City to the Dominican Republic and kind of what that meant for your own personal pausing and repairing. >> Wow. I mean I love the story. got me thinking about many different things. You know, I was thinking about an individual, a business, and and family fortune. Somehow I was thinking about it and obviously I asked people about immortality. It's funny that you brought it up because I I have this book in mind, which maybe will happen at some point. I want to compare, you know, time to money because people say money is time, time is money. And we can imagine having enough wealth that's almost impossible to spend in a lifetime, but we can't imagine having enough time that exceeds a lifetime because it's it's just not possible and being, you know, able to enjoy this time. Anyways, I think it's it's fascinating to consider immortality. And I think we're all longing for it in some way. I think through through art and and writing and also running a portfolio when you think about it we imagine that this will outlast us and somebody will take it over and continue to grow it right so I think it's a human thing of what can I do to touch immortality I think that's that's been with us for a long time but uh changing the setting has had a huge impact on me during during co and at different points in time you might remember that we left New New York for a small cabin in the woods 2 hours away from New York at first and we were probably one of the the last people to do so among our friends because a lot of our friends bounced right away and we thought we'll just wait it out [laughter] and New York was not fun and you know there were moments we were walking along the river and there was a police car that drove over the curb and told us to disperse and and we said like it's just two of us disperse. was like in what way dispers like there's nowhere to go. [laughter] So we went home and I just New York was not a fun place to be and it was just really tough. So we thought we'll leave for a week or two and became a much longer experience. We went to the woods and I felt that I could hear my thoughts again. You know New York is an incredible city, don't get me wrong and I came to America for New York. That's the obvious to me and but it's also in that city it's very hard to hear your own thoughts. You can be pulled in to so many events. I'm very very grateful. I've been to lunches and meetings with incredible people over many years in New York. But there's a moment when you sit down and you realize which thoughts and ideas are my ideas and which ones I just overheard and are not really mine. But I heard them so many times from very convincing people that they may as well be mine, but they don't really feel mine. Going to the woods and hearing absolute silence, like deafening silence. Something happens to you and there books about it, right? About going to the forest and I think it was a hugely eye opening experience. I'm thinking about family wealth and I'll bring up a couple of things we talked about throughout this conversation. Poland that I grew up in left limited chances for anybody to preserve wealth over generations in the century before I was born and into my lifetime. So whether it was World War I, World War II, Poland didn't have independence before World War I, divided among three empires that are long gone and then you know half a century of communism like game over. Like we won't let you keep anything. if it wasn't stolen or burned down or damaged, it's it was confiscated. So coming to New York and working with a firm where I was introduced to families that some of them had the initial, you know, seedling of their wealth planted 200 years ago when Beethoven was writing his symphonies. It really opened my eyes and I thought there is a setting, there is a place and there's a framework that would allow multiple generations of a family to build on what was built already. Just compound and not compound over a lifetime, which is already very impressive, but compound over generation after generation after generation. A lot of a lot of challenges on the way. Don't get me wrong, it wasn't a straight line for any of those families, but there was a certain framework that allowed them to continue. And it was as much you know financial in terms of investing and participating in the success of the businesses as it was family communication knowing peace cooperating collaborating and being a family unit which is as hard as investing itself but it opened my eyes. In terms of immortality, I think when people think about their legacy, I think it's an attempt to touch that kind of immortal experience. Can what I created in this lifetime be that shadow under the tree for the generations to come? Let me get let me go around the horn and then uh I have uh some more questions on durability for you. Uh, Tumble, Texas, Tampa, Winter Park, Florida. Luzan, Switzerland, Tallahassee, Boisey, what's up? Thanks for spelling it out. Hamburg, Germany, Mumbai, Toronto, Belleview, Oregon City, Jupiter, Florida, Yvan, La Rapita, Catalonia, Portugal, Sydney, Dubai, Jackson Hole, Oam, Sweden. Thanks team. That's a good spread. Uh listening to the story about Poland and just made me it's unusual to I don't know many people who've sort of lived through a revolution and then gone from a communist socialist world to a capitalist world. It must be sort of a I can't imagine what it does to your mind or the way that or the way that you think, but it's sort of an interesting question to what does it teach you about durability and patience and h what what what is your sort of view on these things if you know that prior to Poland sort of being liberated? It was part of other empires and then a communist country and now you're thinking about generations. How how do you what's the thought process? What's the Yeah, I'm kind of intrigued by >> how do you avoid confiscation? [laughter] >> You know, there's there's I'll give away a secret that might not be a secret, but the choice of location is the most important part of it all. And I'll explain why. You know, the US has, and I wrote a book, Money, Life Family, where I dedicated a third of it to explaining why the US has worked and I hope continues to do so. And it's never that obvious because I think we're earning our future as we go. It's not given. And it doesn't apply just to the US, but a setting where you had a country where it was okay to own things. It was okay to be successful. It was even praised and accepted that you could get richer than your neighbor. You could definitely get rich as rich as the king, which is still not the case in some countries on earth. I I visited some places where you can't speak up about the king in a certain way. You know, it's still very real. It it's happening as we speak. But it's a country when we haven't had a king and we are allowed to get rich and we can keep it. Of course, you know, there are taxes and consequences and, you know, all kinds of frameworks, but nobody's out there to take it away from you outright and not having a conflict within the borders, you know, obviously except for the civil war, which is, you know, tough time and a lot of lost life and I'm sure wealth as well, but nothing like what Europe endured and many other places. So having a so this is like the protection of the downside, right? But then the upside, it's a country that has a a huge economy, lots of talent, people that are willing to work hard. I've lived in many places. Americans work hard and even, you know, us immigrants coming and working hard, it pushes the country forward. And having a stock market where the best businesses choose to be listed and allow you to participate. So you have layers and layers that allow this place to be a great setup and give you a chance, not a guarantee, but a chance to to grow wealth. You know, people use the word perpetuate. I think it's it's it's an aspiration to perpetuate wealth over many generations. To me, it's um heartbreaking to see that every generation has to start from zero. You know, we talked about wisdom. Can you imagine all of us burning all the books with every generation and every kid has to start with nothing again? We don't do that. But so many people start with absolute zero financially speaking and some students these days start with a negative net worth. It's a very uncomfortable place to be making any life decisions. Right? So to think of the next generations being able to start with something I think it's the beginning of the aspiration that we're building here. What can we do so that the next generation has an easier head start? I think that's something we could aspire to have. >> I certainly >> What are you thinking about the uh New York City mayoral race, >> right? Right. [laughter] You know, people ask me, I actually spoke with somebody yesterday who's from Hungary and might be listening to this, and he's about my age, and he said, you know, it's interesting that you talk about your experience in Poland because he lived for something similar in Hungary. And he says, it's interesting you just you choose to talk about it. And I told him, you know, I think I almost feel obligated to talk about it because we forget as a civilization. We just forget the lessons of the past again and again. And I find it very disturbing that some of the ideas that we already tried and they failed. We tried to apply them again across a wide spectrum of ideas. Not picking on anybody, you know, in particular, but we've tried it. We've tried it already. And I think it would be very useful to if you don't want to read the book, have somebody in the room that has lived through an experience that you tried to invite again and tell them what it's really like. And if you still want to do that, then then sure. But just sharing the story and the idea and the experience, I think, gives us a chance not to make the same mistakes again. Communism as the one that was practiced in Poland came at a huge expense to a nation and to a whole to a whole block of nations within Europe and a lot of people died with songs that were never heard. You know, they had talents and gifts. I don't think we would like to live through it again anywhere else, including New York City. the uh I I saw a good program the other day that talked about the geographic advantages that the US has relative to the rest of the world. I mean there are many like just having two oceans so not not having competitors nearby all the rivers on the inside the the amount of arable land that the states has like oil and gas and minerals and so on. And so it just goes on and on which suggests that the US is set up pretty well for probably better than any other country in the world for at least the next century or so beyond that which is a huge positive for the states. But the problem for the states seems to me to be that that huge wealth inequality where you have students who are coming out of school who've got giant giant student debts that really you got to swallow that before you then go and try and buy a house and move on with your life beyond that. And I it frustrates me a little bit because I think that a lot a lot of the problem is that interest rates were set too low for too long and that's a Federal Reserve problem which I think is one of the problems with um you know central planning and it frustrates me that our solution to central planning is more central planning in New York. So that's the end of end of my end of my editorializing but that's the way I feel about it. >> Yeah. Can I chime in? >> Yeah, please. I was going to throw it to you. [laughter] >> So Jake knows very well how I feel about central planning. I I remember the office building in Warsaw, you know, a gray communist Soviet style building where people >> beautiful, right? >> Beautiful where people would go in and decide, and you're going to laugh at it, but I'll say it because people forgot it. Set the prices of everything from a nail to a shoe to a car to a television set. They would go in there and look at it and say, you know, there are that many Jake in the world. There are there many Tobies. I think the TV should be 500. But nobody asked how much does it cost to make a TV. Well, who cares? And and [laughter] there was only like one or two models available on a on a license. One was, you know, the Soviet style TV. Anyways, very limited options. So, don't imagine a a Costco style aisle of TVs or anything like that. And I remember and I'll bring it up. I don't know how much time we have, but I was in Brussels in that bookstore where I found Peter Lynch's book. And there was a book about uh the chairman of the Fed, Alan Greenspan. And I picked up that book and on the floor on the carpet. I started reading it and he said how he is counting the the train cars and trying to guess what the interest should be, interest rate should be. And I'm reading this book [laughter] and I'm thinking, >> "Wow, this sounds really familiar." Because I remember a building in Warso where guys go in and decide how many shoes Jake of the world need and how many TVs Tobies of the world will buy and then we'll set the price. How different is that than some group of people gets together and decide that the cost of money is this or that? How come they know if you and I I think we can agree. I have no idea how much a pair of Nikes should sell for. I have no idea. We're trying to figure it out how much people will pay, how much it costs. There might be tariffs or no tariffs. It's a moving target. There's no official that can say a Nike shoe should cost this much. How come we think that we have some [clears throat] god-given power to set the interest rates? I know it's very hard to give up. It's an immense framework and you know power over the the markets and it can be used allegedly it's not a political force in most of the countries that have a central bank. People can read about the history of central banks and people can be reminded there were times when we had no central banks and the economies worked somehow and I don't think central banks belong in the future. I actually wrote a chapter in money life family the elephant in the room about what you just brought up Toby about low interest rates. I personally don't think that we will have central banks the way we have today in in a couple of decades. I think the model is just not it doesn't belong. Do you think we rat around it with crypto or do you think it just we sort of wake up to the problem? Because I don't I don't think the second thing's going to happen. I think it's just too it's too abstract for the average person. The average person has no idea what the Federal Reserve is or what it does. >> No. And I think most of us don't really know. And I'm I'm still trying to understand how how this it's a much more complicated system than than we all think. The the Federal Reserve and how money is created and fractional reserve banking a lot of things I'm throwing throwing out here that are each and everyone should be a lecture of hours and hours of explaining how the system actually works. It's it's too there's too much going on. The point is you can turn it up and turn it down depending on how you think the economy should be operating. That's basically in a simple if you feel like the economy is slowing down you cut the rates. If the economy is overheating you cut them in very very basic terms. I think at the end of the day we will be making things and providing services and goods. I don't know in which currency we will exchange those things. I've seen you Poland where I grew up switch between currencies and I've seen multiple currencies functioning at the same time. Right? So you would buy tomatoes and cucumbers with the local currency, but you would buy a car with dollars. And there are countries in the world today where some things are priced in dollars. You can buy a lot of goods, everyday goods with local currency, but if you want to sell an apartment, it's going to be in euros or dollars, right? So it's it exists still today. And I don't know if the currencies we have today are the final ones. I I doubt it. As a as a civilization, we got we ruined so many currencies in the last few thousand years, right? >> Only everyone we've ever created so far. >> Record so far. >> You know, I was I was visiting a house. >> But we have dot plots now. Bo, you're forgetting about dot plots. So that's got a >> committee. The committee is making a decision. [clears throat] >> I I visited a museum in Madrid and it's a house. I think it was a publisher and he has a room full of uh currencies and it's a it's a beautiful wall and all the money he was collecting was some sort of metal. All the paper money is gone and it was silver and gold coins from around the world that he was collecting and I think that room reminded me yet again that we say paper money but that paper money means something different these days because most of it is it's an electronic letter. We don't Yeah. It's digital. But the paper money that's not backed by anything. It's built in a way that allows us to inflate our way out of a problem again and again. And we've the Greeks have done it, the Romans have done it, and everybody in between. The Chinese have done it, you know, centuries ago, many times. And we're doing it again. The moment that we end up on the other side of it is very disruptive. And it's it's like an unfair disruption because it's not going to be it's going to be really random. The same way hyperinflation in Poland, the outcome was very random. It's not like you had people that were so prepared for it, nobody was really prepared for it. You might end up on the right or the wrong side of it. Again, going back to what I talked about, what can I do to be the least wrong? And my conviction is that if I own a collection of businesses that are doing something that people want, they can price it a at a level that allows them to make money and they continue to to grow and improve and it's not a set in stone portfolio of companies. They will change. That's the best place that I can imagine for a family fortune to survive any of you know systemic shocks of that kind. >> Well, well, does that mean international as well outside the US? >> Well, yes and no. I think it's it's a whole separate topic because in the US we have an incredible, you know, large liquid market with incredible protections, incredible disclosure. I haven't seen other markets except for very small that match what the US offers. And the the other side to it is a lot of the companies I have in mind, they they have a lot of the business outside of the US. They have more than half of the profits outside of the US. Right? So even if I limit myself, so to speak, just to wellestablished US companies, just to make it super simple, half of your profits are not from the US. Anyway, I actually was going to write a piece that I put aside, what is an American company? What would you call an American company? Because I think we're all a little bit lost with the terminology these days. >> I would say the head head office is doiciled here. That's about all. But then then you have you have companies that were started outside of the US and they're as American as any American company because they moved their headquarters to the US. They got listed in the US and they have most of their customers in the US, right? And they then you say no, it's actually a European or it's actually an Asian company, whatever. I think it's not that if you are operating under the the protection and the level of disclosure and the level of liquidity that the US market offers, I think it's a good place to be. I spent half of my life in Europe. I looked at a lot of European companies and I I visit visited many countries visiting companies too and it's very very hard. The hurdle for me is very very high if I want to invest globally. So that's yeah a separate topic but I wish to be honest with you I wish I could say that it's very easy to build a portfolio of international stocks that match the US level of shareholder friendliness and on and on and on. It's it's not as easy at least to me but I'd be happy if somebody wants to prove me wrong. Uh I I I want my my concern with someone like Maani winning the New York mayoral election is not so much that I I think he probably wins and I think that nothing ever changes really. The US has had build a blazy on New York's had build a blazy on other guys who are like equivalent kind of maybe the rhetoric isn't as obvious or as striden but they're sort of comparable kind of plans to govern and likely nothing happens really. there's like small changes but it'll continue on as it's always continued on but it does sort of make it a little bit more acceptable for it to roll out across the rest of the US which is one of the concerns that I have at some point it's conceivable that you don't want to have all of your allocation in the states but then the question becomes where do you then allocate I mean China's looking very it's markets are looking pretty capitalistic these days I think there's some real bare knuckle capitalism going on in their stock market I don't know about the political situation But you you're not just out of an abundance of caution considering sort of distributing the the doiciles or I I that's a good question. So what allows me to sleep well at night is that the stocks that I own, half of the profits are overseas, but they're from the US perspective, the US shareholder friendly mindset. If I look outside, I I have a hard time getting comfortable with the the location. I think I would rather have and I've seen it happen even with my stocks, a company have a write off because they picked the wrong location for a part of their business. I remember and let's call out a name, Colgate. I remember a billion dollar write-off for their Venezuelan operations and it's public. Everybody knows about it. You can look it up. No recommendation of any kind. But I I remember it and and it was eye openening. I was well if you have a minute I'll tell you. But I was traveling around South America before that happened and I was in Brazil and Brazilian companies were buying up assets in Venezuela and they were telling me how they understand the continent and they're not as you know exposed to whatever happens in Venezuela because they're also you know they understand Venezuelans. Well, I guess they were wrong because Venezuela went really far with what they wanted to do. I know a lot of Venezuelans that left Venezuela since and are in in Florida and Dominican Republic and many other places. I'm sure they're in California, too. And they're smart, bright people, and they realize this is not the place. Anyways, long story short, if if you can find other places on earth where you feel like you will get to keep what you own and it can flourish also, right? So, the downside and the upside, then more power to you. I >> What if it's Poland after all these [laughter] >> politically? It's really full circle. >> Yeah. Sensitive sensitive topic. Um, well, we're sitting here in uh late 2025 and uh there is an ongoing multi-year conflict right across the border. >> I'll add to you and I'll add here for your benefit. >> Some of the drones that fell in Poland, they fell in villages where I I know those villages. They're not far from some members of my family that that live there. So it Poland has always been we talked about location you talked about the US having this huge advantage Poland has a terrible location you know there no nothing that can really change that it's a terrible location there are no there are mountains in the south but the neighbors in the south are very friendly but there are no mountains and no big rivers on both sides it's very easy to roll the tanks and it's been done if not the horses than the tanks anyways I hope the conflict dissipates, goes away, and and we're all at peace. But there's always the fear that the location is still not great. Blonde had an incredible run, and I certainly hope that we're done redoing the past. But you bring up New York. I feel like somehow humanity is just bound to make the same mistakes. >> Yeah. I I really hope that Poland is done taking the the beating here in the region because it's been an incredible run and probably the longest peaceful growth period for Poland in recorded history. You know, there were different 20 or 30 year periods that I remember from history books, but this is a remarkable and I'm not saying it to, you know, to test the luck or anything. It's just something to admire and I I hope that a permanent solution is found for peace in the region because it's we're not done yet. >> Well, I guess you can always change your leaders, but it's hard to change your demographics or your geography. >> Yes. Yes. >> Um, we're coming up on time. If folks want to follow along with what you're doing or get in contact with you, what's the best way of doing that? >> Find me on Substack. just my first name, last name, Bogamill Daronoski, and everything I post, it's there these days. So, find me there and uh write to me. I answer all emails. I have fun reading people's emails. People share incredible stories with me and I'm I'm always moved by what's on people's mind after reading or listening to whatever they come across. So, thank you for writing and please keep keep writing. The podcast is talking billions. The firm is Blue Infinitist. Bogen Boronowski, thanks very much. JT, any final words? No, it's just fun to see my my buddy Bogey and uh I'm not sure why we took so long to have him on the show, but we won't let that much time go by again before you come back. >> Yeah, we'll do that. Thanks, Bo. Was was awesome. Thanks everybody. We'll be back next week. B times same.