Rick

finance | ml | quant

[Rick @dwerty_qq]

In September 1939, twenty-six-year-old broker at a small Wall Street firm borrowed $10,000 from his boss the week Hitler invaded Poland and the New York Stock Exchange collapsed.

He bought 100 shares of every single stock on the exchange trading below $1. He ended up with 104 companies. Thirty-four of them were already in bankruptcy.

Four years later he had quadrupled his money.

Fifty-three years later he sold the fund he built on top of that trade for $913 million to Franklin Resources.

His name was John Templeton. Queen Elizabeth II knighted him in 1987. He renounced his US citizenship, moved to a small island in the Bahamas called Lyford Cay, and never came back.

In 1985 a PBS crew flew down to interview him for a show called Adam Smith's Money World. Templeton walked them through his garden, sat down in front of a single camera, and gave the only nine minutes of tape that fully explain how he did it.

The Bahamas were not a tax play. He tells the interviewer directly: "In the 22 years we have lived here, the performance of our mutual fund is better than in the 25 years we managed it from Radio City in New York."

Distance from Wall Street was the alpha. Everyone else was reading the same wires, hearing the same rumors, panicking on the same days.

He gives four rules on camera and never adds a fifth.

Search the entire world for the cheapest company relative to what you believe it is worth. Ignore whether the market is going up or down — nobody knows and it does not matter. Buy at the point of maximum pessimism, when the newspapers are worst. The four most dangerous words in investing are "this time it's different."

Then he delivers the line that has never been printed on a Templeton fund brochure: "To buy when others are despondently selling and to sell when others are avidly buying requires the greatest fortitude and pays the greatest ultimate rewards."

He died on July 8, 2008 in Nassau, Bahamas. He was 95.

The full interview is nine minutes and fourteen seconds. It was uploaded to YouTube in November 2020 and has 2,270 views. That is roughly the number of people who work on a single hedge fund floor in Manhattan on any given morning.

Bookmark and watch today ↓

[Superior @andreysuperior]

https://t.co/rUN1cPDY65

[Rick @dwerty_qq]

@0xFractaI the 99 percent accurate test example always gets me because the gut just skips the base rate every time

[Rick @dwerty_qq]

@chopeaceus yeah those talks just make long term thinking feel so obvious

[Rick @dwerty_qq]

Coca-Cola went public in 1919 at $40 a share. Twelve months later it was trading at $19 — cut in half in a single year. Everyone who bought at the IPO was down 50%.

The family that had owned the entire business before that had already sold it. In the 1880s. For two thousand dollars.

Coca-Cola today is worth roughly $270 billion.

This is Warren Buffett at 68 walking a room of Florida MBAs through the single stock he is most identified with, and the point he is making is not that Coke was cheap in 1919 — it is that four generations of owners walked away too early because they were watching the wrong number.

He never opens a spreadsheet. He does not talk about P/E once in ninety minutes.

He watches four things. Unit volumes. Pricing power. How wide the moat is. Where the growth is coming from ten years out. Everything else is noise.

Halfway through he drops the line Berkshire has never printed anywhere: "We never buy a stock with a price target in mind. We never buy something at thirty and say if it goes to forty we will sell it. That is just not the right way to look at a business."

No slides. No notes. No prepared remarks. No lawyer in the room.

The lecture exists on tape because in 1970 a University of Florida student named Mason Hawkins graduated, built Longleaf Partners into a multi-billion-dollar fund, and in 1997 wrote his old school a one-million-dollar check so they could invite one speaker a year. Buffett was the first.

Ninety minutes. Free on YouTube. Filmed on a single camcorder in the back of a classroom.

The stock the family sold for $2,000 has since compounded 135 million times over.

Bookmark and watch today ↓

[Neuro @0xNeuroBlue]

https://t.co/6bJ460527Y

[Rick @dwerty_qq]

@anton_bt yeah most people just panic when the price dips and miss the long run

[Rick @dwerty_qq]

On December 9, 2010, one year after retiring from the hedge fund that made him a billionaire, a mathematician walked into Pappalardo Room 4-349 at MIT and stood in front of an undergraduate colloquium for one hour and three minutes.

He almost never gave interviews. He had never explained on public record how his fund actually worked.

His name was Jim Simons. He founded Renaissance Technologies. From 1988 to 2018 his flagship Medallion Fund returned roughly 66% a year, gross of fees. Thirty years, no losing decade. Buffett averaged 20%. Nobody in the history of markets has come close.

Twenty-eight minutes into the lecture he stops talking about topology and pivots. He says he became an investor at thirty-eight because he was bored of proving theorems and wanted a different problem.

At the thirty-eight-minute mark he does the only thing in public that ever resembled an explanation of Medallion.

He gives four ingredients. Hire first-rate scientists, no MBAs. Give them infrastructure most academics only dream of. Force every new idea into the open the day it is discovered. Pay everyone on total firm performance, not personal PnL.

That is the entire recipe. He never gave the signal, but he gave the shape of the organism that finds it.

At forty-four minutes he says the four rules he tells every young person who asks him for advice. Work with the best people you can find. Be guided by beauty. Do not give up. Hope for some good luck.

He died on May 10, 2024, in New York City. He was 86.

The lecture is one hour and three minutes. It has been sitting on YouTube since May 2013. It has 1.3 million views.

This is the closest thing to a Renaissance Technologies operating manual that will ever exist in public.

[Superior @andreysuperior]

https://t.co/rUN1cPDY65

[Rick @dwerty_qq]

@imperiumNash bookmark, ty for post