WEBVTT - Beating the S&P For Generations with Davis Funds Chairman Chris Davis 0:00:02.520 --> 0:00:11.840 Bloomberg Audio Studios, Podcasts, radio news. This is Masters in 0:00:11.920 --> 0:00:15.440 Business with Barry Ritholts on Bloomberg Radio. 0:00:17.320 --> 0:00:21.200 This week on the podcast strap Yourself In for Another Banger, 0:00:21.680 --> 0:00:25.520 Chris Davis choose up the scenery. He is the portfolio 0:00:25.560 --> 0:00:29.880 manager of Davis Advisors. They've been kicking the smps but 0:00:30.120 --> 0:00:32.800 for the past I don't know, since nineteen sixty nine, 0:00:33.080 --> 0:00:39.760 twenty billion dollars in client assets. Fascinating conversation. Charlie Munger 0:00:39.960 --> 0:00:42.840 was his mentor. He sits on the board of Coke 0:00:43.040 --> 0:00:46.960 and On Berkshire Hathaway. I thought this conversation was spectacular. 0:00:47.479 --> 0:00:50.440 I think you will also with no further ado, my 0:00:50.640 --> 0:00:52.440 sit down with Chris Davis. 0:00:53.720 --> 0:00:56.200 It's so always good to be with you. Thank you 0:00:56.240 --> 0:00:56.800 so much. 0:00:56.880 --> 0:01:03.000 So before we get into your career, master's degree with 0:01:03.160 --> 0:01:07.280 honors from the University of Saint Andrews in Scotland, Like, 0:01:07.440 --> 0:01:08.679 how did that come about? 0:01:08.959 --> 0:01:11.720 Well, and one of the things that confuses people is 0:01:11.840 --> 0:01:14.800 I actually don't have an undergraduate degree. I only have 0:01:14.920 --> 0:01:17.680 the master's degree. Wait, I sort of skipped that. 0:01:18.440 --> 0:01:21.319 Did you did you go to an undergraduate college? 0:01:21.520 --> 0:01:24.160 Well, what happened is I went to Saint Andrews. I 0:01:24.200 --> 0:01:26.840 had originally only intended to go for a year. I 0:01:27.360 --> 0:01:30.480 wanted to be a veterinarian's that's a longside story. And 0:01:30.520 --> 0:01:33.520 I had worked at the Bronx Zoo. I wait, wait, wait, 0:01:33.640 --> 0:01:34.800 Humane Society. 0:01:34.959 --> 0:01:39.759 So the original plan wasn't Dad's a fund manager, grand 0:01:39.840 --> 0:01:41.920 fought pause a grant fund manager. I guess I'm going 0:01:42.000 --> 0:01:44.200 to be a going to the family business. That was 0:01:44.280 --> 0:01:44.880 not the plan. 0:01:45.040 --> 0:01:48.720 Definitely not. But I give both of them credit. They 0:01:48.960 --> 0:01:52.559 you know, they felt that all of their kids should 0:01:52.560 --> 0:01:57.560 be financially literate. And so every kid worked for my 0:01:57.720 --> 0:02:00.600 father or for my grandfather at some point point and 0:02:00.760 --> 0:02:04.240 learned because they just felt like, look, you'll have money 0:02:04.360 --> 0:02:07.640 over time. It's not taught in schools, just the basic 0:02:07.960 --> 0:02:11.280 fundamentals of investing. And if you got help, you turn 0:02:11.320 --> 0:02:14.840 on the TV, you're going to get a totally distorted view. 0:02:14.680 --> 0:02:17.800 Of what invstipos of nonsense exactly. 0:02:17.960 --> 0:02:20.680 And so we all had this grounding. But you know, 0:02:20.760 --> 0:02:25.440 for example, my my smartest sibling without question, as my sister, 0:02:25.560 --> 0:02:29.440 my younger sister. But she's a small town doctor, but 0:02:30.000 --> 0:02:34.679 boy does she understands investing. She's very thoughtful in how 0:02:34.720 --> 0:02:37.520 she's managed her financial affairs. So we owed that route, 0:02:37.520 --> 0:02:39.919 but we all thought we were going different paths. She 0:02:40.080 --> 0:02:43.240 was interested in medicine. I was interested in veterinary medicine, 0:02:43.639 --> 0:02:46.080 and so I was going to go to Cornell. And 0:02:46.600 --> 0:02:49.880 I was very young for my high school class, and 0:02:50.040 --> 0:02:53.480 I was very late hitting puberty. I mean I was 0:02:53.639 --> 0:02:56.359 five feet tall my senior year in high school. That's 0:02:56.400 --> 0:02:59.800 when I broke five feet so you know that you 0:02:59.840 --> 0:03:03.840 can imagine what this looked like. But but my scores 0:03:03.840 --> 0:03:06.919 and grades were okay. And so Cornell took me into 0:03:07.000 --> 0:03:11.520 their prevet program. But the woman that ran it said, look, 0:03:11.560 --> 0:03:14.840 this is a seven year program. It's intense. Why don't 0:03:14.840 --> 0:03:18.280 you take a year off, like a gap year. So 0:03:18.400 --> 0:03:20.640 I propose that to my father. He said, we don't 0:03:20.639 --> 0:03:23.320 do that in our family. Like you could go study, 0:03:23.639 --> 0:03:26.680 but there's no like year off like to go ski year. 0:03:26.720 --> 0:03:27.200 Find this. 0:03:27.919 --> 0:03:29.440 Did you skip a grade or you? 0:03:29.520 --> 0:03:29.760 Like me? 0:03:29.880 --> 0:03:32.840 The back of like October November December, So you're young 0:03:32.880 --> 0:03:33.840 relative to no. 0:03:34.040 --> 0:03:37.840 I had skipped a grade sort of early because I bazarrely. 0:03:38.000 --> 0:03:40.840 I didn't nobody in my family believes this now, but 0:03:40.880 --> 0:03:44.360 I didn't talk until quite late. So they had sort 0:03:44.400 --> 0:03:44.880 of and. 0:03:44.840 --> 0:03:48.280 Then when I started talking, they jumped to me out 0:03:48.960 --> 0:03:51.920 and it never stopped since then. 0:03:52.400 --> 0:03:55.680 But anyway, so I had this year period and it 0:03:55.800 --> 0:03:58.640 was the first year that the University of Saint Andrews 0:03:59.200 --> 0:04:04.720 wast in taking direct applications from students that where they 0:04:04.800 --> 0:04:07.600 dropped the requirement to have A levels or O levels 0:04:07.640 --> 0:04:11.440 to sort of British entry exams, mostly because they wanted 0:04:11.440 --> 0:04:14.080 the Yankee dollar. You've got to remember Thatcher had just 0:04:14.160 --> 0:04:19.680 become Prime Minister. She was slashing the public support of 0:04:19.839 --> 0:04:24.120 the Scottish universities. So I applied. There were I think 0:04:24.200 --> 0:04:28.600 eight of US Americans that came in that first year, 0:04:29.000 --> 0:04:32.000 and they had a program where after two years you 0:04:32.040 --> 0:04:36.000 could apply into the honors program, which would allow you 0:04:36.080 --> 0:04:39.000 to concentrate on just one subject, and I ended up 0:04:39.040 --> 0:04:45.560 picking two, but needless, it was philosophy and theology and interesting, 0:04:45.720 --> 0:04:49.000 you know. I picked them my freshman year, thinking well, 0:04:49.040 --> 0:04:50.840 when I go back to Cornell, I'm going to be 0:04:50.920 --> 0:04:54.760 filled up with organic chemistry and biology and anatomy and 0:04:54.839 --> 0:04:56.520 so on, so I may as well pick things that 0:04:56.560 --> 0:04:59.120 I would never I'll never get to study again. So 0:04:59.240 --> 0:05:03.440 I picked things like medieval history, philosophy, theology. 0:05:03.640 --> 0:05:06.839 I love that. That's something I always, in hindsight wish 0:05:06.920 --> 0:05:10.400 I did. And I started out physics and math and 0:05:10.440 --> 0:05:13.400 switched the political science and philosophy. So I got to 0:05:13.440 --> 0:05:18.880 study some stuff that was fun. But like medieval history, 0:05:19.000 --> 0:05:21.919 sounds like that would be a delightful semester. 0:05:22.040 --> 0:05:26.640 You use the perfect word fun. I mean I became 0:05:26.680 --> 0:05:29.040 a good student in high school. I wasn't a good student. 0:05:29.080 --> 0:05:32.640 In fact, recently I found my elementary school my eighth 0:05:32.680 --> 0:05:35.880 grade final report card. I went to a school here 0:05:35.920 --> 0:05:37.919 in New York and it was a pretty strict, you 0:05:37.960 --> 0:05:42.880 know where, a uniform sort of boys' school, and the 0:05:42.920 --> 0:05:45.760 headmaster would review each report card before it went to 0:05:45.800 --> 0:05:48.400 the parents and then make a comment on the bottom. 0:05:48.920 --> 0:05:52.680 And the headmaster's comment on my final elementary school report 0:05:52.720 --> 0:05:57.360 card was yet another semester of squandered potential. 0:05:57.920 --> 0:06:02.039 Not living up to his potential. God, my children classic. 0:06:01.720 --> 0:06:04.440 My children found that my mother David to my children, 0:06:04.440 --> 0:06:06.600 which was a big problem you could imagine. 0:06:06.760 --> 0:06:09.320 But anyway, so I thought I'll just be in Scotland 0:06:09.360 --> 0:06:12.479 for a year. I picked subjects I would never study again. 0:06:12.920 --> 0:06:14.159 They were so fun. 0:06:14.360 --> 0:06:17.120 It was just it was especially in Scotland. 0:06:17.880 --> 0:06:21.920 Medieval in a medieval university and where Hume had been 0:06:22.160 --> 0:06:25.200 a professor. I mean, you know, it was just amazing, 0:06:25.200 --> 0:06:27.960 And of course it was. It's also a Presbyterian seminary, 0:06:28.320 --> 0:06:31.840 so so Saint Mary's, which is one of the colleges there. 0:06:32.200 --> 0:06:34.520 So I thought, well, you know, and I'm not. It 0:06:34.560 --> 0:06:37.960 wasn't that I was a deeply faithful sort of person. 0:06:38.160 --> 0:06:40.640 I more thought of theology from the point of view 0:06:40.640 --> 0:06:44.640 of you know, people organize their lives around religion, people 0:06:44.839 --> 0:06:47.560 die for it, people, you know, I should study this. 0:06:47.720 --> 0:06:51.960 And but I also there was a secondary reason that 0:06:52.000 --> 0:06:55.320 I was interested, which is, if you look at communities 0:06:55.320 --> 0:06:59.920 that have a religious institution at their center, whether they're rural, 0:07:00.040 --> 0:07:04.320 whether the urban suburban, almost all outcomes are better, you know, 0:07:04.600 --> 0:07:09.400 intact families, crime rates, graduation rates, you know, all of 0:07:09.440 --> 0:07:12.920 these sorts of statistics tend to go better. So to me, 0:07:13.080 --> 0:07:16.200 there's I was lucky that I didn't. I was never 0:07:16.320 --> 0:07:18.440 you know, didn't have one of those childhoods where it 0:07:18.480 --> 0:07:20.640 was beaten into me or something. So it was more 0:07:20.720 --> 0:07:23.960 this curiosity about how it seemed to serve communities to 0:07:24.000 --> 0:07:27.120 have a shared value system. Anyway, I picked those subjects 0:07:27.320 --> 0:07:29.520 I applied into this honors program, so I was able 0:07:29.600 --> 0:07:32.520 to get the Masters at the end, but there was 0:07:32.560 --> 0:07:34.800 no undergraduate degree along the way. 0:07:34.920 --> 0:07:36.880 And there was no going back to Cornell to become 0:07:36.920 --> 0:07:40.480 a vet now, although the order for that faded. 0:07:40.640 --> 0:07:44.559 Although because I deferred my admission freshman year, I still 0:07:44.560 --> 0:07:49.280 get mailings from their alumni department because I matriculated but 0:07:49.360 --> 0:07:53.480 then deferred, And I'd like to think the Development department 0:07:53.480 --> 0:07:56.880 has nothing to do with them sending me these mailings. 0:07:56.880 --> 0:08:00.120 But I lived on a sheep farm in Scotland, and 0:08:00.160 --> 0:08:02.640 of course that was when I realized I was confusing 0:08:02.680 --> 0:08:05.440 loving animals with wanting to be a vet, and those 0:08:05.440 --> 0:08:06.640 are very different things. 0:08:06.800 --> 0:08:07.800 Yeah, very much. 0:08:07.880 --> 0:08:07.960 So. 0:08:08.440 --> 0:08:13.240 I'm always as we used to foster dogs and get 0:08:13.240 --> 0:08:16.960 them adopted, and anytime I meet someone who was like, oh, 0:08:17.000 --> 0:08:18.640 I really don't care for dogs, it's like. 0:08:19.440 --> 0:08:21.720 Oh, that's a big ex don We weren't allowed to 0:08:21.720 --> 0:08:24.440 have dogs when I was a kid, But I grew 0:08:24.520 --> 0:08:26.760 up right in the city of East eighty fourth Street. 0:08:27.800 --> 0:08:30.400 But my parents from the time I was in maybe 0:08:30.960 --> 0:08:33.840 third grade or so, so what would that be, probably 0:08:34.400 --> 0:08:36.720 nine years old or eight years old something like that, 0:08:38.360 --> 0:08:40.720 they said I could walk dog, I could be a 0:08:40.720 --> 0:08:44.160 dog walker, provided I didn't cross any street, so you know, 0:08:44.200 --> 0:08:46.400 i'd put up a notice in the elevator and their 0:08:46.440 --> 0:08:49.120 building if anybody needed their dog walk, and then I 0:08:49.160 --> 0:08:51.760 would just walk the dogs around the block before school 0:08:51.760 --> 0:08:54.480 and after school. I can still remember the name of 0:08:54.559 --> 0:08:58.000 every dog I walked, which is amazing. And I loved it. 0:08:58.120 --> 0:09:02.960 And of course it actually became seed capital, which is unexpected. 0:09:03.040 --> 0:09:05.679 But the reason was, you know, I could probably charge 0:09:05.679 --> 0:09:08.040 fifty cents a walk back then, so it was nothing, 0:09:08.320 --> 0:09:11.079 but I got to be with dogs and I enjoyed it. 0:09:11.080 --> 0:09:11.600 It was like a. 0:09:11.559 --> 0:09:14.160 Paper running a small business. I had a paper route 0:09:14.240 --> 0:09:16.719 and it was just so formative so far. 0:09:16.840 --> 0:09:18.960 And this was like a paper route for city kids 0:09:18.960 --> 0:09:21.000 because you didn't couldn't have a paper route New York. 0:09:21.840 --> 0:09:26.120 But then an amazing thing happened New York City around 0:09:26.200 --> 0:09:29.320 nineteen I'd have to be around nineteen seventy seven or 0:09:29.679 --> 0:09:33.520 seventy eight passed the Pooper Scooper line, I remember, and 0:09:34.320 --> 0:09:39.880 everything changed because people had these dogs with nobody even 0:09:39.960 --> 0:09:43.920 knew what to do they nobody had ever imagined cleaning 0:09:44.000 --> 0:09:46.800 up after a dog. There are all sorts of inventions, 0:09:46.840 --> 0:09:50.240 you know, talls, but people didn't you know people were 0:09:50.280 --> 0:09:52.400 so gross they had to carry shovels with them. 0:09:52.320 --> 0:09:56.880 Change the diaper on the baby. How it's just processed food. 0:09:57.360 --> 0:09:58.400 There's no big deal. 0:09:58.679 --> 0:10:01.640 Well for me that my rates could go from fifty 0:10:01.640 --> 0:10:04.839 cents to five dollars and people were glad to pay it. 0:10:04.920 --> 0:10:07.080 And instead of one or two dogs, I had four 0:10:07.200 --> 0:10:10.880 or five. And it was real money because what it 0:10:10.960 --> 0:10:13.800 meant was I was suddenly making you know, fifty dollars 0:10:13.840 --> 0:10:14.200 a week. 0:10:14.880 --> 0:10:15.800 In nine sixty. 0:10:15.600 --> 0:10:16.240 Dollars a week. 0:10:16.960 --> 0:10:17.640 Yeah, that's good. 0:10:17.800 --> 0:10:21.160 Yeah, And so you start, you know, thinking about holy cow, 0:10:21.280 --> 0:10:23.800 you know, I'm making two hundred and fifty dollars a month. 0:10:24.679 --> 0:10:28.000 You know, I'm making thousands of dollars a year. And 0:10:28.360 --> 0:10:32.520 it was just fantastic. So I've I've loved dogs ever since. 0:10:32.920 --> 0:10:35.959 So let's talk a little bit about the early days 0:10:35.960 --> 0:10:39.120 of the career. You start as an accountant at State 0:10:39.160 --> 0:10:44.000 Street Bank and ultimately end up as a unglamorous research 0:10:44.080 --> 0:10:49.079 analyst at Tanaka Capital Management. These are, you know, very 0:10:49.240 --> 0:10:52.800 much bottom rung on the Oh Street ladders. What you 0:10:52.880 --> 0:10:54.080 learn in those well, it. 0:10:54.040 --> 0:10:58.439 Wasn't really my first job. My first job was I 0:10:58.480 --> 0:11:02.559 became a pastoral ass at the American Cathedral in Paris, 0:11:02.960 --> 0:11:06.079 so I lived. I moved from rural Scotland to Paris. Well, 0:11:06.120 --> 0:11:08.880 that was like landing in oz you know, you get 0:11:09.080 --> 0:11:13.240 honest to God, you my eyes lit up, but again 0:11:13.440 --> 0:11:15.679 in the same way that living on the sheep farm 0:11:15.760 --> 0:11:18.960 convinced me I was confusing loving animals with wanting to 0:11:19.000 --> 0:11:22.400 be a vet, you know. Working for the American Cathedral 0:11:22.400 --> 0:11:25.520 convinced me I was confusing loving people with wanting to 0:11:25.840 --> 0:11:29.000 you know, be a priest or something. So I moved 0:11:29.000 --> 0:11:34.040 from there to Boston, and I thought about teaching. I 0:11:34.320 --> 0:11:37.440 actually even applied to the CIA because I was very 0:11:37.480 --> 0:11:42.679 interested in research and international affairs. I'd lived abroad then 0:11:42.800 --> 0:11:45.559 five years, and I thought it would be an amazing 0:11:45.640 --> 0:11:50.200 thing to be the greatest expert on let's say Czechoslovakia's 0:11:50.360 --> 0:11:54.120 learned the language, the history, the people, the economics, the business, 0:11:54.200 --> 0:11:58.120 the military, the topography. And so I didn't want to 0:11:58.120 --> 0:11:59.920 be a spy, but I wanted to be an analyst. 0:12:00.559 --> 0:12:05.640 And CIA wisely turned me down, having briefly had a 0:12:05.679 --> 0:12:08.400 stint in you know, sort of the Worker's Revolutionary Party, 0:12:08.440 --> 0:12:08.880 you know, and. 0:12:09.240 --> 0:12:12.440 Oh so they looked at your history and said, this guy's. 0:12:12.440 --> 0:12:15.560 Yeah, they're like, this needs to ripe it a little more. 0:12:15.760 --> 0:12:19.600 We don't know have ethical malleability that we're looking for. 0:12:19.920 --> 0:12:24.960 But I and so, you know, I started thinking about 0:12:25.040 --> 0:12:27.720 the summers that I had spent working with my dad 0:12:27.720 --> 0:12:31.800 and my grandfather, both of whom loved their jobs. They 0:12:32.040 --> 0:12:35.320 loved investing, they loved their career, and of course that 0:12:35.480 --> 0:12:38.720 was infectious even as kids. I thought the idea of 0:12:38.760 --> 0:12:43.199 investing was so interesting because they didn't highlight the math 0:12:43.360 --> 0:12:48.880 to begin with. They highlighted the stories, the people, the ideas. 0:12:48.920 --> 0:12:51.199 And but I realized that even though I've had this 0:12:51.880 --> 0:12:55.280 study of sort of the idea of businesses being made 0:12:55.360 --> 0:12:59.080 up of people and ideas and this sort of interest 0:12:59.240 --> 0:13:03.719 in that, I had no grounding in the rigor of it. 0:13:04.280 --> 0:13:06.960 And so what I like to say is, you know, 0:13:07.120 --> 0:13:10.800 my father and grandfather, you know, let us live in 0:13:10.840 --> 0:13:14.000 a foreign country, like live in France for some time 0:13:14.440 --> 0:13:18.280 and hear French spoken and see this new culture. But 0:13:19.880 --> 0:13:22.320 we did that before. We had to learn the grammar 0:13:22.559 --> 0:13:24.600 and read the textbooks and so on. So they got 0:13:24.600 --> 0:13:28.280 the order right for setting the hook of curiosity. But 0:13:28.559 --> 0:13:31.080 I knew enough to know that I couldn't go into 0:13:31.160 --> 0:13:34.520 investing without a real grounding, and of course a bank 0:13:34.640 --> 0:13:37.800 is perfect. And I got I mean I interviewed a 0:13:37.800 --> 0:13:41.440 lot of places. George Putnam himself turned me down for 0:13:41.480 --> 0:13:43.080 a job at Putnam. So I had a lot of 0:13:43.120 --> 0:13:47.240 rejects before. And State Street Bank had an program for 0:13:47.400 --> 0:13:50.920 entry level accountants, and you know, they had a wonderful 0:13:51.280 --> 0:13:57.160 training program. And so I had an operations center in Quincy, Massachusetts, 0:13:57.200 --> 0:14:00.400 and I would take the red line down there and 0:14:00.400 --> 0:14:03.440 and I could do my day job. But they would 0:14:03.440 --> 0:14:06.720 also pay for all of any schooling you wanted. They 0:14:06.760 --> 0:14:11.040 had something called the State Street Institute, and you could 0:14:11.080 --> 0:14:15.920 take courses and anything to do with economics, accounting, business, 0:14:15.960 --> 0:14:19.000 and so I took advantage of that, although I will 0:14:19.040 --> 0:14:21.960 say I was fooled by one course. They had a 0:14:22.040 --> 0:14:25.440 course in their catalog that was called the Rules of 0:14:25.600 --> 0:14:26.640 Rhythmic Touch. 0:14:27.560 --> 0:14:29.840 Now I thought that sounds like massage. 0:14:29.920 --> 0:14:32.560 That sounds pretty good, right, I figure I circled that 0:14:32.600 --> 0:14:33.920 one in a little course catalog. 0:14:34.000 --> 0:14:39.000 It was only a two night's course, and I showed 0:14:39.080 --> 0:14:42.880 up and it was how to use a ten punch 0:14:43.120 --> 0:14:46.680 tape calculator, you know, without looking at your hands, so 0:14:46.880 --> 0:14:50.600 you know when you're summing up the column is the 0:14:50.680 --> 0:14:53.040 rules of rhythmic touch. And I would say, if you 0:14:53.080 --> 0:14:55.720 put what on this table now, I would be calf 0:14:55.840 --> 0:14:57.600 I would bet you a large sum of money. I 0:14:57.600 --> 0:14:59.800 could run a column of numbers faster than you. 0:15:00.040 --> 0:15:03.480 I'm going to that one. 0:15:03.520 --> 0:15:06.520 But so that's so I got the grounding there. Graham 0:15:06.560 --> 0:15:10.080 Tanaka was somebody I had met during my summer jobs. 0:15:10.880 --> 0:15:15.800 He was a very talented analyst at Fiduciary Trust. He'd 0:15:15.800 --> 0:15:19.760 been at JP Morgan before, and uh, we'd sort of 0:15:19.760 --> 0:15:23.040 stayed in touch, and I learned that he was hanging 0:15:23.040 --> 0:15:26.360 out his own shingle and starting his own firm. And 0:15:27.000 --> 0:15:31.840 he's a Japanese American really a very you know, driven, 0:15:32.320 --> 0:15:36.479 talented guy. And uh he said he wanted an apprentice, 0:15:37.160 --> 0:15:40.200 and uh, and you know it would be everything. I 0:15:40.240 --> 0:15:43.200 would be his first hire and we would go from there. 0:15:43.640 --> 0:15:46.800 And that was a terrific hell did I stayed there 0:15:46.920 --> 0:15:51.760 about two years. Uh, And we stayed because what happened 0:15:51.800 --> 0:15:55.600 after the first stretch is my grandfather, who I was 0:15:55.640 --> 0:15:58.200 close with when I went to work for Tanaka. My 0:15:58.280 --> 0:16:02.000 grandfather opened up an account at Tanaka because he thought 0:16:02.040 --> 0:16:06.560 this was you know, he had big investments in Japanese firms. 0:16:06.560 --> 0:16:10.640 He had a lot of admiration for Japanese culture values, and. 0:16:11.960 --> 0:16:14.960 He admired late seventies, early eighties. 0:16:15.120 --> 0:16:18.280 This was late eighties now, so we're probably in eighty nine, 0:16:18.400 --> 0:16:22.280 something like eighty eight eighty. Yeah. Well, but Graham was 0:16:23.160 --> 0:16:27.000 a growth investor primarily in the US, and so he 0:16:27.160 --> 0:16:30.600 just happened to have Japanese heritage. But so my grandfather 0:16:30.640 --> 0:16:35.040 opened account and as the time there progressed, my grandfather 0:16:35.640 --> 0:16:39.800 was worried about his health failing. He loved the business 0:16:39.880 --> 0:16:42.400 and he wanted to die at his desk, and so 0:16:42.480 --> 0:16:44.960 he started asking if I would come in on the 0:16:45.000 --> 0:16:48.720 weekends and go through his you know, his accounts with him. 0:16:48.800 --> 0:16:54.040 And Graham, of course, was so respectful of that, and 0:16:54.160 --> 0:16:57.160 so it was sort of a very gradual transition out. 0:16:57.200 --> 0:17:00.600 There wasn't an end date of my time with Graham 0:17:00.680 --> 0:17:02.760 so much as there was a start date of my 0:17:02.880 --> 0:17:04.600 time working with my dad and father. 0:17:04.760 --> 0:17:08.879 So your father launched Davis Advisors in nineteen sixty nine, yea, 0:17:09.560 --> 0:17:17.159 and your grandfather was still running his Davis investing shop. Yeah, parallel. 0:17:17.320 --> 0:17:21.800 Did they ever end up murging what happens when they 0:17:21.960 --> 0:17:25.000 decided all right, it's you know, it's time. 0:17:25.359 --> 0:17:30.720 Well, my father was my grandfather's only son, and as 0:17:30.880 --> 0:17:36.840 often happens, they had a very complicated relationship, and so 0:17:36.920 --> 0:17:42.720 they never worked together. My father grew up with his 0:17:42.920 --> 0:17:46.560 famous name because your numbers were right. In the beginning. 0:17:46.600 --> 0:17:48.840 It was one hundred thousand dollars that he borrowed from 0:17:48.880 --> 0:17:52.439 his wife's family. It was eight hundred million when he died, 0:17:52.600 --> 0:17:56.080 and it was two point two billion when his wife died, 0:17:57.280 --> 0:18:00.240 and she was sort of the successor trustee, and then 0:18:00.280 --> 0:18:03.119 it all went to charity after that. He didn't believe 0:18:03.119 --> 0:18:05.639 in inheritance, but it was in trust for her and 0:18:06.040 --> 0:18:07.840 she lived to be one hundred and six. 0:18:08.080 --> 0:18:08.480 Wow. 0:18:08.680 --> 0:18:11.320 Although I will tell you I managed her account, and 0:18:12.280 --> 0:18:15.520 you know, in two thousand and eight, of course I 0:18:15.560 --> 0:18:17.000 had to go see her and we had a lot 0:18:17.040 --> 0:18:20.520 of financial stocks and we had a really bad mark 0:18:20.560 --> 0:18:23.919 at the bottom, probably down forty or fifty percent. And 0:18:24.000 --> 0:18:25.880 I went to see her in Florida and I said, 0:18:25.920 --> 0:18:29.199 you know, grand I just I want you to know 0:18:29.280 --> 0:18:32.840 the businesses are sound. You know, we took some body blows, 0:18:32.880 --> 0:18:35.000 but you know, in the long run, it's going to 0:18:35.040 --> 0:18:38.600 be fine. She said, you idiot, I'm ninety eight years old. 0:18:40.080 --> 0:18:43.080 She said, I don't buy green bananas, and you're you're 0:18:43.200 --> 0:18:47.160 telling me I'm down fifty percent and you go. 0:18:47.080 --> 0:18:50.679 Get back to work. So she teached me because of 0:18:50.720 --> 0:18:53.040 course she lived long enough to see it all come back. 0:18:53.920 --> 0:18:56.159 But we would always she would always tease me about 0:18:56.440 --> 0:18:59.480 not buying green bananas, and my telling her she just 0:18:59.520 --> 0:19:01.719 had to have a little bit of a longer term perspective. 0:19:02.960 --> 0:19:06.440 But anyway, so my my my grandfather built his firm 0:19:06.480 --> 0:19:09.320 which was called Shelby Colin Davis and Company. My father 0:19:09.400 --> 0:19:11.800 built his which in the beginning was called Davis, Palmer 0:19:11.840 --> 0:19:15.080 and Biggs and Uh. And then the New York Venture 0:19:15.119 --> 0:19:18.720 Fund was a client or a fund managed by Davis, 0:19:18.760 --> 0:19:23.760 Palmer and Biggs. And And when I was working at Tanaka, 0:19:24.240 --> 0:19:26.760 I went to a meeting. It was Chub Insurance, you know, 0:19:26.840 --> 0:19:29.840 analyst day sort of thing. And there weren't that many 0:19:29.880 --> 0:19:32.000 analysts then, so it was held around a big sort 0:19:32.000 --> 0:19:35.800 of boardroom table, and the CEO is Dino Hare, and 0:19:35.840 --> 0:19:39.280 he'd sit there and say, we Chubb you know this 0:19:39.480 --> 0:19:43.119 he was it was and uh, And I looked around 0:19:43.119 --> 0:19:45.439 the table and both my father and grandfather were at 0:19:45.440 --> 0:19:48.880 the same meeting by chance, and uh and I thought 0:19:48.960 --> 0:19:53.000 this seems a little nuts and uh uh. And so 0:19:54.040 --> 0:19:56.800 you know, I spoke to them both because I was 0:19:56.920 --> 0:20:00.080 very close with them both. And you know, one of 0:20:00.080 --> 0:20:02.320 of the things my father was very clear on is 0:20:02.359 --> 0:20:05.240 he wanted out at age sixty. He said, I'm not 0:20:05.560 --> 0:20:09.560 yep our age. Yeah, hard stop. And here was my 0:20:09.680 --> 0:20:12.720 grandfather at the time, and he was probably in his 0:20:13.240 --> 0:20:18.200 late eighties and early eighties probably then, and he said, 0:20:18.320 --> 0:20:20.600 you know, I want to die at my desk. I mean, 0:20:20.640 --> 0:20:23.480 he was the one that called investing the best game 0:20:23.520 --> 0:20:25.800 in town. He would say, this is the best game 0:20:25.840 --> 0:20:30.359 in town. He loved his firm. He loved now his firm, 0:20:30.359 --> 0:20:33.960 well most of it was his own capital, and so 0:20:34.119 --> 0:20:36.000 in a way he was just managing his own but 0:20:36.080 --> 0:20:39.639 he loved being in the flow. He loved in a way, 0:20:39.400 --> 0:20:42.600 my grandfather loved being a great man. You know. He 0:20:42.640 --> 0:20:46.040 had served as an ambassador, He was a co founder 0:20:46.119 --> 0:20:49.440 of the Heritage Foundation chairman for a long time. He 0:20:49.440 --> 0:20:54.119 had very conservative political views, although that was slightly different 0:20:54.200 --> 0:20:58.439 organization twenty five years ago than it is now. But 0:20:58.560 --> 0:21:01.240 he was a passionate Reagan Republican and sort of a 0:21:01.280 --> 0:21:07.600 Hoover Institute sort of Republican, and his namesake, Shelby Cullum, was, 0:21:08.359 --> 0:21:12.080 you know, a Republican senator and governor under Lincoln. So 0:21:12.240 --> 0:21:14.800 I mean, you know, it was it was in him deep. 0:21:15.200 --> 0:21:19.439 And so he loved the game, and it wouldn't have 0:21:19.520 --> 0:21:23.760 occurred to him to stop working. My father loved investing, 0:21:23.800 --> 0:21:27.400 but he did not like the responsibility of the business. 0:21:27.520 --> 0:21:31.760 He didn't like boards and clients and you know, employees. 0:21:31.840 --> 0:21:36.879 That was not his thing. Is much more a wonderful 0:21:37.400 --> 0:21:40.560 human being, but very different than my grandfather. So he 0:21:40.640 --> 0:21:44.679 wanted out before he turned sixty. My grandfather wanted to 0:21:44.720 --> 0:21:46.560 die at his desk. And I thought, well, here I am. 0:21:46.600 --> 0:21:48.880 I don't know what I am at the time, twenty 0:21:48.920 --> 0:21:52.480 six or something. I was like, well, here's a great idea. 0:21:52.480 --> 0:21:56.640 Why don't we merge the companies and then I'll come 0:21:56.680 --> 0:21:59.320 in and you know, I'll learn from both of you. 0:22:00.119 --> 0:22:03.080 And I was an SNL and a banking analyst then, 0:22:03.119 --> 0:22:05.720 and of course this was going right into the teeth 0:22:05.760 --> 0:22:08.600 of the SNL crisis, so it was an exciting time 0:22:08.640 --> 0:22:13.199 to invest. And then you know, we'll figure out a 0:22:13.200 --> 0:22:14.720 way for the three of us to do. 0:22:14.680 --> 0:22:17.000 It, and how long did it take for that to 0:22:17.080 --> 0:22:17.920 all come together? 0:22:18.119 --> 0:22:23.520 I think my grandfather my father turned sixty in nineteen 0:22:23.640 --> 0:22:28.359 ninety seven, nineteen ninety eight, somewhere like that. And my 0:22:28.480 --> 0:22:30.720 grandfather died six. 0:22:32.080 --> 0:22:33.680 Eighty six something like that, you. 0:22:33.640 --> 0:22:40.840 Know, don't quiz me. And then my grandfather died in 0:22:41.400 --> 0:22:45.280 let's see, nineteen ninety four, so I have to say 0:22:45.320 --> 0:22:48.439 he was eighty six or eighty seven when he died, 0:22:48.640 --> 0:22:52.520 and so in a way, the timing all sort of 0:22:52.640 --> 0:22:56.560