The Known Unknowns: Using the spectrum of intelligence in investing and life with Christopher Begg

06/28/23 • 73 min

Blending Imagination with Expertise to Nurture your Investment Acumen

with Christopher Begg

To truly thrive in investing, nurturing the right side of your brain and strengthening your investment acumen is critical. By cultivating and harnessing your creative edge, you can unlock the ability to see the bigger picture and make informed investment decisions. Exploring opportunities in certain uncertainties and volatile landscapes becomes a captivating endeavor driven by the pursuit of gaining an edge in investing. However, as an investor, stepping back and grasping the entire landscape proves invaluable, as it pushes you to delve into the depths of businesses, understand their culture, and meet their customers. This immersive process enables you to build a tangible understanding of the businesses you invest in, enhancing your competitive advantages and opening doors to alternative investment opportunities. By blending imagination, curiosity, and expertise, you pave the way for unrivaled insights and success in the dynamic world of investing.

Christopher is the Chief Executive Officer, Chief Investment Officer, and co-founder of East Coast Asset Management. He also serves as an adjunct associate professor at the Heilbrunn Center of Graham and Dodd Investing at Columbia Business School, where he teaches Security Analysis.

Christopher's investment philosophy and passion for investing are something you can't miss!

Tune in!

What You Will Learn:

[01:53] Christopher's background, how he began investing and ended up as an adjunct professor
[06:44] Some of Christopher's most esteemed and favorite guest speakers over the years
[09:47] Nurturing the right side of your brain to be more creative and see the bigger picture
[15:31] Principles on how to strengthen your investment acumen
[18:45] How Christopher works as a professor to help his students cultivate exploration of the right side of the brain
[23:28] Investing in certain uncertainties and volatile investment environments.
[27:47] What Christopher looks for when investing and his process of making investment decisions
[30:27] Six principles to help you factor in Capital Allocation across geography in your decision-making process
[35:51] Is there an edge in investing that makes it worth pursuing?
[38:25] How understanding business through the eyes of an operator makes you a better investor
[41:43] The power and importance of expressing culture in every detail of your business
[47:41] Christopher's perspective on where valuations are and what is keeping him awake at night
[53:47] How to leverage AI for transformation and enhancing your competitive advantages

Standout Quotes:

“In investing, stepping back and seeing the whole picture is so valuable .”- Christopher Begg [10:10]
“The certain uncertainties are wonderful little models to see the fractal that exists across many systems.”- Christopher Begg [23:53]
“As investors, we think we know everything there is about a business, but we have to go out and meet with these businesses, understand them, meet their customers and build tangible understanding of what the business and culture is”- Christopher Begg [33:19]
“You can't outsource judgement; tohave judgement is to touch the source material.” - Christopher Begg [33:48]

The information presented in this podcast or available on the website is not intended as and shall not be construed as financial advice. This podcast is produced for entertainment value. Investing is inherently risky. And I encourage you to seek financial advice from a professional who is aware of the facts and circumstances of your individual situation.

Blending Imagination with Expertise to Nurture your Investment Acumen

with Christopher Begg

Christopher's investment philosophy and passion for investing are something you can't miss!

Tune in!

What You Will Learn:

[01:53] Christopher's background, how he began investing and ended up as an adjunct professor
[06:44] Some of Christopher's most esteemed and favorite guest speakers over the years
[09:47] Nurturing the right side of your brain to be more creative and see the bigger picture
[15:31] Principles on how to strengthen your investment acumen
[18:45] How Christopher works as a professor to help his students cultivate exploration of the right side of the brain
[23:28] Investing in certain uncertainties and volatile investment environments.
[27:47] What Christopher looks for when investing and his process of making investment decisions
[30:27] Six principles to help you factor in Capital Allocation across geography in your decision-making process
[35:51] Is there an edge in investing that makes it worth pursuing?
[38:25] How understanding business through the eyes of an operator makes you a better investor
[41:43] The power and importance of expressing culture in every detail of your business
[47:41] Christopher's perspective on where valuations are and what is keeping him awake at night
[53:47] How to leverage AI for transformation and enhancing your competitive advantages

Standout Quotes:

“In investing, stepping back and seeing the whole picture is so valuable .”- Christopher Begg [10:10]
“The certain uncertainties are wonderful little models to see the fractal that exists across many systems.”- Christopher Begg [23:53]
“As investors, we think we know everything there is about a business, but we have to go out and meet with these businesses, understand them, meet their customers and build tangible understanding of what the business and culture is”- Christopher Begg [33:19]
“You can't outsource judgement; tohave judgement is to touch the source material.” - Christopher Begg [33:48]

Previous Episode

Timeless Thoughts on Life & Investing with Arnold Van Den Berg

In an environment where the dollar's value is volatile and inflation is on the rise, investors face challenges but should stay vigilant in their search for opportunities. History has shown that equities remain a durable long-term strategy given their ability to grow their earnings and cash flows over time. Investors willing to search more broadly in the equity markets should not be surprised to discover compelling opportunities in these uncertain times, but they must be prepared to consider stocks that are temporarily unpopular. Join our conversation with Arnold Van Den Berg, a long-time investor with a proven, yet hard-earned skill to overcome adversity in both life and in the markets. During our discussion, Arnold shares his gripping life journey and experience as a Holocaust Survivor, as well as his later development as an investor. Along the way, he also shares with us his views on current investment opportunities, and his concerns regarding the market. Arnold began his career in investments in 1968 as the US stock market was experiencing its worst decline since the Great Depression. Arnold spent these difficult years studying Wall Street, the markets, and various investment philosophies and ultimately concluded that the managers who used a value-based investment strategy protected their customers' capital better and provided more consistent investment results than managers using other investment strategies. In September of 1974, Arnold started his own investment advisory business, Century Management, and uses a value investment approach. From humble beginnings, Arnold learned early on what it means to work hard, sacrifice, and help others. It is this spirit of service that has shaped the way he lives his life and runs his business.

[03:37] Arnold's background and his experience as a Holocaust Survivor

[25:06] Lessons from Arnold's father’s story on a death march on focus and thought control

[32:57] How Arnold transitioned to a career in investing and how he applied his skills

[58:16] Investment principles and how they apply to Arnold's strategy as an investor

[01:02:52] How Arnold is investing in natural gas and why it is a lucrative space for investor

[01:08:27] What is concerning Arnold today about the future of the US dollar

[01:15:11] Debt-equity and inflation rate compared to the 70s and Arnold's resource article

[01:17:50] Arnold’s recommendation on how investors can protect themselves from inflation

“When you focus the mind and control it, you can do many things that you never believed that you could, the mind creates its own energy by focusing.”- Arnold [27:43]

“The most important thing is not what you eat. It is not what you think. It is not what you do. It is what you believe; and what you believe focuses the subconscious mind and creates it.”- Arnold [30:04]

“If your principles are more important than your life, you sacrifice your life for your principles; if your life is more important than your principles, you sacrifice your principles. You have to develop a philosophy that you can live with that creates character and integrity so that no matter what you are faced with you are not going to sacrifice your principles.”- Arnold [45:31]

“The real inflation doesn't come from just printing money, it comes when the dollar collapses and you have to pay more for everything.” - Arnold [75:33]

“When the dollar is going down and you’ve got inflation, the way you invest is you buy assets, you don't buy equities.” - Arnold [78:09]

Next Episode

The Power of Shareholder Letters: Insights into Corporate Governance with Lawrence Cunningham

The shrinking cohort of quality shareholders and rising number of transient shareholders lacking an understanding of corporate governance has led to a rise in cookie-cutter corporate governance practices. When transient shareholders view stocks as mere pieces of paper for trading, long-term factors of value creation and corporate governance are more likely to suffer. In many cases, the entire business model can become aligned with tactics seeking immediate profits at the expense of strategic visions seeking sustainable growth. Creating lasting value for stockholders entails nurturing and protecting customers, employees, and the surrounding community. Corporate focus on creating long-term and durable value for these parties will naturally lead to better societal outcomes. Therefore, as a manager, corporate director, or shareholder, interpreting the alignment of corporate focus, governance, and resulting shareholder cohorts can provide important signals surrounding prospective long-term returns in this evolving landscape. Transient shareholders may coincide with transient returns while quality shareholders may signal lasting returns over a longer period of time.

In this episode, we are joined by Lawrence Cunningham to talk about corporate governance, investing, different types of shareholders, the role of shareholder letters, trust, succession, and director’s compensation. Lawrence is a leading authority on the relationships between corporate governance, finance, and investing. He is an exceptional scholar, author, and professor who has left an enduring mark in the world of business and academia. Lawrence has garnered widespread acclaim for his invaluable contribution to the field of corporate governance. As a professor Emeritus at George Washington University Law School and other esteemed institutions, he has had a profound impact on shaping the minds of future business leaders.

Lawrence has authored numerous critically acclaimed books, including the Essays of Warren Buffett, Lessons for Corporate America, Dear Shareholder, Berkshire Beyond Buffett, Margin of Trust, which he co-authored with his wife, and Quality Investing: Owning the Best Companies for the Long-Term. His writing has become essential reading for anyone seeking to gain a deep understanding of these intricate subjects. The wisdom and insights Lawrence has garnered throughout his illustrious career are truly priceless. This is an episode you can’t miss!

What You Will Learn:

[00:01] Episode intro and a quick bio of the guest, Lawrence Cunningham
[03:27] Lawrence's background and how he got into corporate governance and investing.
[06:15] CEOs that Lawrence finds accomplished and skilled in writing investor letters.
[11:51] Lawrence’s four categories of shareholders including quality shareholders
[20:28] The shrinking quality shareholders cohort and its impact on corporate governance
[30:15] The concerns on proxy voting firms' consolidation of power and recommendation
[32:59] The correlation between the erosion of quality shareholders and monetary policy
[35:50] The blowback on the role of ETF providers and proxy vetting through ESG
[42:57] How shareholders' letters can help enhance diversity and inclusiveness.
[48:10] Why trust is essential to an organization and the consolidation of trust-based businesses.
[56:57] The best way for investors to measure trust within an organization.
[59:45] The role of trust in succession and the principles in Lawrence's book,