21: Timeless Thoughts on Life & Investing with Arnold Van Den Berg

Resources Mentioned 

1. Right Is Might by Richard Wetherill
2. Think and Grow Rich by Napoleon Hill
3. Timeless Thoughts for Today by Napoleon Hill

Arnold Van Den Berg
Website: https://centman.com/arnold-van-den-berg

LinkedIn: https://www.linkedin.com/company/century-management/

Lauren and Scott
Website: https://www.investingthetempletonway.com/

YouTube: https://www.youtube.com/@LCTempletoninvesting

Twitter: https://twitter.com/TempletonWay

LinkedIn: https://www.linkedin.com/company/investing-the-templeton-way-podcast/

TRANSCRIPT BELOW

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Hi, my name is Lauren Templeton and you are listening to investing the Templeton way.

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This podcast is for anyone interested in learning more about investing.

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In this podcast, I will be interviewing some of the greatest minds from the investment

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community and exploring topics ranging from international markets to behavioral finance.

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To learn more, please visit us at investingthetempletonway.com

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Any information presented in this podcast or available on the website is not intended

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as and shall not be construed as financial advice.

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This podcast is produced for entertainment value.

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Investing is inherently risky and I encourage you to seek financial advice from a professional

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who is aware of the facts and circumstances of your individual situation.

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Thanks for listening.

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Let me start by welcoming everyone to the Investing the Templeton Way podcast where we

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interview the most brilliant thinkers in the field of finance and Scott and I are so happy

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to welcome today's guest.

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I have waited forever to have Arnold Van Den Berg on the show and my intro to Arnold

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is straight off of his website because I found that it was the best intro that I could

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come up with but Arnold began his career in investments in 1968 as the US.market was

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experiencing its worst decline since the Great Depression.

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Arnold spent these difficult years studying Wall Street, the market and various investment

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philosophies and he ultimately concluded that the managers who used a value based investment

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strategy both protected their clients capital better and provided more consistent investment

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results than managers using other investment strategies.

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In September of 1974, Arnold started his own investment advisory business, century management

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and uses a value investing approach.

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From humble beginnings, Arnold Van Den Berg, a Holocaust survivor, learned at an early age

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what it means to work hard, to sacrifice and to help others.

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It is his spirit of helping that has shaped the way he has lived his life and runs his

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business.

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So welcome, Arnold Van Den Berg.

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Thank you, Lauren and it's my pleasure to be here today and so we can get started.

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Yes, I believe I initially met you at, we were just discussing this at a Fairfax meeting.

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We were sitting next to each other.

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It might have been Fairfax Africa if my memory recalls and after meeting you, I was discussing

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with a colleague.

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I just met this really interesting guy at the meeting named Arnold Van Den Berg and my

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colleague said, "Oh, he was in his hotel room this morning doing some yoga and I had the

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chance to meet with him in the lobby later on."

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So I have been really just interested in you since that moment.

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I've read so much about you.

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Please start by telling the audience a little bit about your background, your experience

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of being a Holocaust survivor and then ultimately what led you to a career in investing?

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Okay, well I guess I could start off by saying I was born in Amsterdam, Holland.

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We lived on the same street as Anne Frank.

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Most of you probably heard about the story about Anne Frank.

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She lived at the 267 block in the Prince of Hracht and we lived at a 23 Prince of Hracht.

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So it wasn't too far away.

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When the war started, my mom was born in Poland.

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My dad was born in Germany and they went to escape the Nazis in '33.

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They were very early.

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My dad was a student of history so he saw this coming and he migrated to Holland and he married

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my mom in Germany before they left.

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So they did very well.

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They started a business.

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My mom was a fabulous business woman and they started off on the end of a dirt road street

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and they built it into a pretty good business as the war was going.

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But then as the war got going, things got worse and worse and they knew that it would be

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dangerous to stay in Holland.

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So my dad suggested to my mom that we moved to South Africa which would have been a very

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good move but my mom didn't want to move because she had a family at that time.

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There were 39 members that died during the Holocaust but she had her whole family there.

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They had a successful business and it was just hard to get up and leave and she didn't

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really believe that the things that happened were going to happen.

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They didn't see it.

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But anyway, they went into hiding and this is an interesting story because there was a friend

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of his that hid him in the attic just like Anne Frank's folks were hidden in an attic.

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And the problem was that they had me and my brother and it was kind of hard.

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I was two and a half and my brother was five and a half.

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It was kind of hard to keep me quiet.

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Nothing has changed.

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It's no hard to keep me quiet.

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But anyway, as a small child, they had to do something because if the Germans came in

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and found them, then the people who were hiding them would be sent to Auschwitz as well.

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So what they had to do is they had to find a place for my brother and I so that we wouldn't

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be with the parents if they were caught.

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And so they made an arrangement.

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The Brunt family was the people that hid us and they made an arrangement with the Dutch

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underground and they found a 17-year-old girl that was able to take me on a train and smuggle

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me through the German lines.

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And this girl risked her life for if she had been caught, she'd have been sent right to

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Auschwitz with me.

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And so it was a big undertaking and the biggest problem was they had a fake passport because

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Jews didn't have passport in Holland.

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So the Dutch underground created a fake passport, but it wasn't very good at it and so everybody

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was concerned about it.

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If they really studied it, they would see that it just would not be real.

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And so what they did is they put a person in front of us to keep the guy busy when he was

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checking passports, asking him questions and so forth with the hopes that he wouldn't

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be able to check the passport.

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Well, that was successful.

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The guy kept the guy busy, the whistle blew and the officer had to get off the train.

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So we got to the orphanage and there was supposed to be people to pick us up but was about

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a three mile, two or three mile walk.

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But the only guy that showed up was a person with a bike and so he took the luggage and

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Olga Krumling, who was the girl that smuggled me through the line.

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She carried me on her back.

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And as I got in touch with her after the war, she wrote me a beautiful letter and I said

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to her, she said, you know Arnold, it's amazing how out of all the things that happened,

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the thing I remembered most is you kept slipping off my back and you said, 'Teta' which is

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'aunt', your back is very slippery.

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You know, and how old were you at the time?

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Two and a half.

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Two and a half.

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So they finally got me to the orphanage where I was there and through another route, my

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brother was also put in there and we stayed there.

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And then of course one time my brother had to be moved by the Dutch underground because

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he knew he was Jewish and the Germans would come through and they thought he was a cute

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kid, they give him rides on tank and everybody was worried that he might mention that he

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was Jewish, which would have given away the whole orphanage operation.

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So in the meantime, the big thing with my mom is that the way they were going to do it is

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they didn't have a phone there.

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So somebody down the street, the orphanage was going to call them and tell them we arrived

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safely and then my folks would know.

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And it took about an hour for the train.

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So after two or three hours nobody had called her and she was getting very, very nervous.

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It really upset her to think that something might have gone wrong, you know, because the

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train ride was about an hour.

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So anyway, my dad kept on trying to persuade her, no, we can't go down the street and use

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a phone because the Germans are all over us.

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We don't have a good, we don't have a passport and it's just certain death, you know.

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And so my dad says, look, if we go out in the street and we get caught, the kids will never

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have any parents.

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So my mom says, I got to know whether they made it or not.

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I don't care about anything else.

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Anyway, after about four or five hours, he said he couldn't contain her anymore and she

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said, "Hugo, if you don't go with me, I'm going by myself."

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And so my dad says, "What could I do?"

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I had a very bad feeling.

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It was obvious what was going to happen, but you couldn't stop her.

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And I said, "Pa, how could you let her do this?"

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He says, "If you ever argued with your mother."

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And I said, "I know what you mean."

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She's a very powerful woman.

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But anyway, they went out to a butcher shop that had a phone and the people in the butcher

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shop were Nazi sympathizers, so they called the Gestapo and they arrested my folks.

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And what's really interesting when you study this is here you have the same people, the same

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religion.

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One was willing to risk their life and their family to save people.

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And here's another people that turned Jews into a death camp for food rations and 15

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goldens.

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And so it just shows you the difference how important the philosophy was.

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And that bothered me for many years.

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What was the difference in people?

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But anyway, so my folks got caught and they were sent to Auschwitz.

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They were sent on a train ride for about three hours and sub-zero weather, horrible conditions,

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no food.

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There wasn't even any toilets in there.

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Women would have to go to the bathroom in a bucket.

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Somebody would hold up a coat to hide them.

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And then the things spilled over and it smelled and people died on the train.

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So by the time they got the Auschwitz, they really were in bad shape.

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Anyway, they had a selection both of them passed.

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So then they were in Auschwitz for 15 months.

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And one of the interesting things that influenced my life a lot is there was a woman on the

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train who was a friend of my folks.

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She was a younger girl.

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I think she was only 23.

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My mom and dad were about 36.

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And she had a fight with her mother on the train.

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And so when they got there, her dad says, "Beppie, I have a very big family.

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Very bad feeling about this place.

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I think you should apologize to your mother."

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Well all these years I thought she did, but it turns out I was talking to her son one day

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and he says, "No, the thing that bothered mom all her life was she didn't apologize."

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She was very strong woman.

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And so she said she went into the barracks and there was couldn't sleep and there was

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a woman standing there and she said, "Let me ask you something.

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That big chimney with the black smoke.

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What is that?"

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She said, "I don't know what was going on."

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And she goes, "Before I answer that, let me ask you a couple of questions."

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She said, "Sure."

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She said, "Do you have any children?"

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She said, "No."

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She goes, "Thank God."

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She said, "Did you come with your parents?"

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And she said, "Yes."

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She said, "Well, I'd hate to tell you this, but you're going to find out soon or later."

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You might as well know that chimney is the crematorium and older people they gas the

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first day.

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So your parents are probably already gone.

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She said she went back to the barracks and just laid on the bed.

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She just couldn't believe it.

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And she says, "All her life is she gave talks to young people.

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She taught them the principle how she wished she would have apologized."

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So I made that a cardinal rule in my life that whenever I had a problem with a loved one,

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somebody I cared about, and we got into an argument, the first thing I do is apologize.

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My daughter and my wife used to bet on how long it would take me to apologize by love.

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And it got shorter and shorter.

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And I learned a very valuable lesson is that if there's anger displayed in the argument,

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you should apologize anyway because you're wrong, even if you're wrong, even if you're

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right in the principle, because when you lose control of yourself, you quit seeking for

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the truth and you're looking to defend yourself.

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You get your ego involved.

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So I made a rule, even if I think I'm right, I go in and apologize.

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And that reduces the tension so you can sit there and discuss things.

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And that's made a big impact in my life.

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And I always teach that to any young person because that's a very valuable lesson.

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Yes, I would say so.

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Arnold, how do you ever even repay a 17-year-old girl that risks her life to save your life?

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I asked her, "What made you do that?"

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You realize she says, "Oh, when they came and checked the passport, she says, "I felt like

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my heart was jumping out of my body."

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She says, "I was just so scared of what would happen."

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And I said, "Well, what made you do that?"

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She says, "You know, that's the principle that my folks believed in.

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They were Christians and they believed that it was their duty to save the Jewish people.

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And this man was a missionary and he had this church.

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And the church was full of people who he was hiding in his home.

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He had other kids.

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And when I got older, I kept thinking about it.

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What made these people willing to risk their own life?

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I mean, I can't imagine sending my daughter on a suicide mission.

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Yeah, I mean, that's what it was.

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It was a suicide mission.

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And she said, "You know, we really believed in what we were doing and I felt that no matter

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what happened, I was serving God.

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This was the right thing to do."

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And she says, "I feel very good about it."

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I said, "Well, I didn't know what to say to her.

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I said, "You should."

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You know what I mean?

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It was incredible.

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And so that was the main thing.

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So we came to the United States and we moved into an area near LA.

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And your parents survived, right?

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00:15:39,680 --> 00:15:44,400
Your parents survived Auschwitz and you were later reunited with them?

227
00:15:44,400 --> 00:15:45,400
Yes.

228
00:15:45,400 --> 00:15:47,400
My parents both survived.

229
00:15:47,400 --> 00:15:52,840
But 39 members of our family died during the Holocaust one way or another.

230
00:15:52,840 --> 00:15:53,840
I'm so sorry.

231
00:15:53,840 --> 00:16:00,520
I was the total wipe out, the only people that survived is my folks and my older brother and

232
00:16:00,520 --> 00:16:01,520
I.

233
00:16:01,520 --> 00:16:04,560
And they were the only ones out of the very big family.

234
00:16:04,560 --> 00:16:06,240
My mom had eight kids.

235
00:16:06,240 --> 00:16:08,840
No, there was nine kids in the family.

236
00:16:08,840 --> 00:16:13,840
I think she was the eighth and they all were married and had children.

237
00:16:13,840 --> 00:16:15,480
It was horrible.

238
00:16:15,480 --> 00:16:19,680
And it took my mom at least 20 years to get past it.

239
00:16:19,680 --> 00:16:24,160
You know, I used to come home from high school all the time and she'd be sitting there crying.

240
00:16:24,160 --> 00:16:25,160
So what's the matter, mom?

241
00:16:25,160 --> 00:16:30,800
She'd have a picture of her brother or sister and a candle.

242
00:16:30,800 --> 00:16:33,440
But one day she said, "You know what, Arnold?

243
00:16:33,440 --> 00:16:34,440
They're not going to come back.

244
00:16:34,440 --> 00:16:35,640
There's nothing I can do.

245
00:16:35,640 --> 00:16:38,280
I have to accept it. I'm moving on."

246
00:16:38,280 --> 00:16:42,960
She packed it up into a box, put it in the closet, never looked at it again.

247
00:16:42,960 --> 00:16:47,040
It was an amazing transformation once she did that.

248
00:16:47,040 --> 00:16:49,560
And she lived to be 98 years old.

249
00:16:49,560 --> 00:16:53,320
She was a very positive person, very good business woman.

250
00:16:53,320 --> 00:16:58,560
I could tell you stories about it that you had to believe she did business in Auschwitz.

251
00:16:58,560 --> 00:17:05,520
She bought off guards with diamonds and smuggled things and kept a lot of people alive, including

252
00:17:05,520 --> 00:17:08,320
this lady who was her friend.

253
00:17:08,320 --> 00:17:11,640
It was kind of she was like an intern with her.

254
00:17:11,640 --> 00:17:16,720
You know, she helped her run the business in Auschwitz and she recently died.

255
00:17:16,720 --> 00:17:18,520
She only died a few years ago.

256
00:17:18,520 --> 00:17:19,800
She lived to be 104.

257
00:17:19,800 --> 00:17:27,640
And she said, "Once you meet, she says, if you ever, if somebody ever met your mom, I could

258
00:17:27,640 --> 00:17:32,360
guarantee them that they would never find a person like her in their whole life."

259
00:17:32,360 --> 00:17:34,560
She was just a unique individual.

260
00:17:34,560 --> 00:17:35,960
She was fearless.

261
00:17:35,960 --> 00:17:37,720
She believed in what she was doing.

262
00:17:37,720 --> 00:17:40,040
She was willing to take chances.

263
00:17:40,040 --> 00:17:45,000
And she taught me to take risks, calculate risks.

264
00:17:45,000 --> 00:17:47,000
And I said, "What do you mean?"

265
00:17:47,000 --> 00:17:51,600
She says, "Well, in order to do business in Auschwitz, you have to have connections with the

266
00:17:51,600 --> 00:17:52,600
guard.

267
00:17:52,600 --> 00:17:56,360
But if you buy off the wrong guard, he could send you to the gas chamber."

268
00:17:56,360 --> 00:18:03,720
So I studied all the guards that we were involved in and I decided that I had to pick one that

269
00:18:03,720 --> 00:18:05,360
possibly could be bought.

270
00:18:05,360 --> 00:18:07,560
So I picked a guy who was older.

271
00:18:07,560 --> 00:18:09,280
His shoes weren't shined.

272
00:18:09,280 --> 00:18:14,760
He wasn't interested in the whole Nazi philosophy.

273
00:18:14,760 --> 00:18:19,120
And the other thing I looked for, did he have some human quality?

274
00:18:19,120 --> 00:18:25,520
And so I finally found two candidates and I studied them for three weeks.

275
00:18:25,520 --> 00:18:34,280
And then I made my move and all my friends said, "Manya, you're going to, if you're wrong,

276
00:18:34,280 --> 00:18:36,000
you're going to the chamber."

277
00:18:36,000 --> 00:18:37,560
She said, "Let me tell you something.

278
00:18:37,560 --> 00:18:39,240
I figured this out."

279
00:18:39,240 --> 00:18:43,720
I asked everybody who was skin and bones when I got there, how long have you been there?

280
00:18:43,720 --> 00:18:47,080
I never met anybody that was here more than a year, a year and a half.

281
00:18:47,080 --> 00:18:52,560
So I told all my friends, "If we don't take a risk, you're going to die anyway because you're

282
00:18:52,560 --> 00:18:54,560
going to die from starvation."

283
00:18:54,560 --> 00:18:57,360
Nobody lasts more than a year, a year and a half.

284
00:18:57,360 --> 00:18:59,360
So we have to take the chance.

285
00:18:59,360 --> 00:19:00,760
She says, "Well, what if you get caught?"

286
00:19:00,760 --> 00:19:02,480
She says, "Well, then that's over."

287
00:19:02,480 --> 00:19:06,400
But then it's going to be over anyway, any year and a half and I have to struggle through

288
00:19:06,400 --> 00:19:08,160
all the weaknesses and all that.

289
00:19:08,160 --> 00:19:09,840
I don't need that.

290
00:19:09,840 --> 00:19:13,400
So they finally made the choice.

291
00:19:13,400 --> 00:19:17,600
And then the next thing she had to do was sell the girls when they had these big piles of

292
00:19:17,600 --> 00:19:21,680
precious metals and stones that they took from all the people.

293
00:19:21,680 --> 00:19:25,480
And there's guy, stand there and the sheen gun over your shoulder, you better not steal one

294
00:19:25,480 --> 00:19:28,160
because they shoot you right on the spot.

295
00:19:28,160 --> 00:19:31,800
And she had to talk these girls into smuggling the diamonds out of there.

296
00:19:31,800 --> 00:19:36,200
So one of the girls, they said, "Manya, what are you going to do with diamonds in Auschwitz?"

297
00:19:36,200 --> 00:19:38,080
She says, "That's my job.

298
00:19:38,080 --> 00:19:39,080
Get me the diamonds.

299
00:19:39,080 --> 00:19:40,320
I'll get you anything you want."

300
00:19:40,320 --> 00:19:42,000
Medicine, food, whatever.

301
00:19:42,000 --> 00:19:49,120
Anyway, long story short, she finally found one girl to help her do it.

302
00:19:49,120 --> 00:19:50,800
So she finally had some diamonds.

303
00:19:50,800 --> 00:19:56,200
She picked the guard and she went up to him and she says, "She said to him,"

304
00:19:56,200 --> 00:19:57,760
"Do you have a wife?"

305
00:19:57,760 --> 00:19:58,760
And he says, "Yes."

306
00:19:58,760 --> 00:20:00,920
He says, "Does she like diamonds?"

307
00:20:00,920 --> 00:20:05,600
And the guard smiled and he says, "Have you ever met a woman who doesn't?"

308
00:20:05,600 --> 00:20:09,200
So she gave the diamonds, she didn't ask for anything.

309
00:20:09,200 --> 00:20:12,080
She says, "I'm just trying to make a friend."

310
00:20:12,080 --> 00:20:17,720
And so the guy came back the next day and he said, "Manya, I can't tell you how happy

311
00:20:17,720 --> 00:20:19,840
my wife was with that diamond.

312
00:20:19,840 --> 00:20:21,440
It just changed her life.

313
00:20:21,440 --> 00:20:23,520
I'm just very appreciative."

314
00:20:23,520 --> 00:20:25,920
He says, "I want to do something for you."

315
00:20:25,920 --> 00:20:32,240
She said, "Okay, well, I'd like if you can get us some food and medicine, that would be

316
00:20:32,240 --> 00:20:33,240
very helpful."

317
00:20:33,240 --> 00:20:36,640
He said, "Tomorrow I will see you and I'll have some for you."

318
00:20:36,640 --> 00:20:41,640
Then she started getting referrals from his buddies, said, "Hey, I heard you can get us some

319
00:20:41,640 --> 00:20:42,640
diamonds."

320
00:20:42,640 --> 00:20:43,640
She said, "Yes."

321
00:20:43,640 --> 00:20:50,080
So pretty soon she had a whole network going and the most amazing thing is that she had

322
00:20:50,080 --> 00:20:56,960
a German guard, smuggle food to my dad in a men's camp, which was quite a ways away.

323
00:20:56,960 --> 00:21:01,360
And my dad was sitting there after a hard days' work and he said he was sitting there

324
00:21:01,360 --> 00:21:08,480
with a friend and he saw a guard working towards him and he told his friend, "Don't look now,

325
00:21:08,480 --> 00:21:10,240
but there's a guard heading towards us."

326
00:21:10,240 --> 00:21:11,640
And that was never good news.

327
00:21:11,640 --> 00:21:16,560
You're either going to send the chamber, send them another duty.

328
00:21:16,560 --> 00:21:20,400
So he just kept his head down, the guy goes up to me and says, "Is your name, Hugo?"

329
00:21:20,400 --> 00:21:21,840
He said, "Yes."

330
00:21:21,840 --> 00:21:26,840
He said, "What is your..."

331
00:21:26,840 --> 00:21:30,240
So he said, "I have a present from your wife."

332
00:21:30,240 --> 00:21:34,880
And my dad says he didn't know how to take it whether it was a trick or whether it was somebody

333
00:21:34,880 --> 00:21:36,800
playing games with him.

334
00:21:36,800 --> 00:21:37,800
So he said, "Okay."

335
00:21:37,800 --> 00:21:45,140
So the guy opens up his briefcase, hands him some food and my dad was just stunned and he

336
00:21:45,140 --> 00:21:48,080
said, "I need to know your Hebrew name."

337
00:21:48,080 --> 00:21:51,480
And so my dad told him, "It's Hyun."

338
00:21:51,480 --> 00:21:54,120
Would you mind telling me why you need my Hebrew name?"

339
00:21:54,120 --> 00:21:57,960
He says, "Manya doesn't pay us until we prove of delivery."

340
00:21:57,960 --> 00:22:00,400
Oh my goodness.

341
00:22:00,400 --> 00:22:03,280
So that was her technique to know that it got delivered.

342
00:22:03,280 --> 00:22:09,320
And she was sending food and different things back and forth and she ended up actually making

343
00:22:09,320 --> 00:22:15,080
a market in garlic, which everybody in East Europe appreciates because the Russians even

344
00:22:15,080 --> 00:22:19,280
use garlic as a penicillin.

345
00:22:19,280 --> 00:22:23,440
So anyway, that's how they all got liberated.

346
00:22:23,440 --> 00:22:31,480
My dad by Patton's Third Army and my mom was liberated by the Russians.

347
00:22:31,480 --> 00:22:39,200
And long story short, my dad got out, my mom got out two weeks before my dad.

348
00:22:39,200 --> 00:22:44,800
She went back to Holland, went to the Red Cross and looked to see if somebody, you know,

349
00:22:44,800 --> 00:22:45,800
what happens?

350
00:22:45,800 --> 00:22:46,800
People find each other.

351
00:22:46,800 --> 00:22:50,000
They registered at the Red Cross and you can find your relatives.

352
00:22:50,000 --> 00:22:54,600
So my mom went there figuring, "There's got to be some relatives that survive."

353
00:22:54,600 --> 00:22:58,560
And the bottom line of it was, there was nobody that signed their name.

354
00:22:58,560 --> 00:23:04,560
So my mom concluded that everybody was gone and she figured, "Hugo, her husband was gone,

355
00:23:04,560 --> 00:23:05,560
too."

356
00:23:05,560 --> 00:23:07,360
So she didn't bother putting her name in.

357
00:23:07,360 --> 00:23:11,560
So two weeks later, my dad goes there, "Looks for a name, there's no name there."

358
00:23:11,560 --> 00:23:14,960
So he concluded that everybody was gone.

359
00:23:14,960 --> 00:23:20,840
So he's walking down the street one day and there was a milkman pushing a cart up a hill.

360
00:23:20,840 --> 00:23:22,440
He was an old man.

361
00:23:22,440 --> 00:23:25,120
So my dad thought, "Well, I'll go help him."

362
00:23:25,120 --> 00:23:27,440
So he's pushing the cart up and they look at each other.

363
00:23:27,440 --> 00:23:28,960
That was his former milkman.

364
00:23:28,960 --> 00:23:36,960
"Oh Hugo, you and Manya are so fortunate to have survived this."

365
00:23:36,960 --> 00:23:39,000
And he says, "No, my wife didn't make it.

366
00:23:39,000 --> 00:23:44,600
I looked at the Red Cross and her name wasn't there and nobody else's name was there either."

367
00:23:44,600 --> 00:23:49,360
And the guy says, "Well, she made it and she's alive."

368
00:23:49,360 --> 00:23:51,760
So my dad says, "Well, how do you know?"

369
00:23:51,760 --> 00:23:56,160
He says, "She's living up to, she's living with your friends up the street."

370
00:23:56,160 --> 00:23:58,480
That is incredible.

371
00:23:58,480 --> 00:23:59,880
He was just stunned.

372
00:23:59,880 --> 00:24:03,640
It even chokes me up now to speak about it.

373
00:24:03,640 --> 00:24:08,120
Anyway, he said that the Americans had given him some money so he went and bought some flour,

374
00:24:08,120 --> 00:24:09,120
knocked on the door.

375
00:24:09,120 --> 00:24:11,120
Oh my gosh.

376
00:24:11,120 --> 00:24:15,800
Wow, that is the nicest surprise in the world.

377
00:24:15,800 --> 00:24:21,040
Can you imagine being your mom and opening the door, your husband standing there?

378
00:24:21,040 --> 00:24:23,720
That is such an incredible story.

379
00:24:23,720 --> 00:24:27,360
And I appreciate you sharing it with our guests.

380
00:24:27,360 --> 00:24:34,560
I know in the past we've spoken so much about investing and philosophy and the right mindset

381
00:24:34,560 --> 00:24:39,160
and how Sir John Templeton believed in thought control.

382
00:24:39,160 --> 00:24:46,240
You've shared some really interesting stories about that and one of which just sticks in

383
00:24:46,240 --> 00:24:55,400
my mind is about your father being on a death march and deciding to control his mind by

384
00:24:55,400 --> 00:24:59,200
just putting one foot in front of the other.

385
00:24:59,200 --> 00:25:06,040
Can you expand a little bit on that story and the difference in your father's perspective

386
00:25:06,040 --> 00:25:08,040
at that point?

387
00:25:08,040 --> 00:25:11,360
You know, it just gives me chills on my right arm.

388
00:25:11,360 --> 00:25:16,000
Whenever I hear something profound or truth, I get chills on my right arm and every time

389
00:25:16,000 --> 00:25:20,400
I tell that story here, just like you just did, I just got it.

390
00:25:20,400 --> 00:25:26,320
But basically, we were talking about the Holocaust and he was telling me about the death march

391
00:25:26,320 --> 00:25:34,560
and the way he explained it is, he said he was, "I'm 160 pounds."

392
00:25:34,560 --> 00:25:39,720
And my dad was 85 pounds and he was only one inch shorter than me so he was half my body

393
00:25:39,720 --> 00:25:40,720
weight.

394
00:25:40,720 --> 00:25:41,720
Oh my goodness.

395
00:25:41,720 --> 00:25:43,720
That is hard to imagine.

396
00:25:43,720 --> 00:25:50,600
24 hours, no breaks, a slice of bread that was about twice the thickness of our normal

397
00:25:50,600 --> 00:25:56,760
bread and the water you had to scrape the snow off the guy in front of you and put your

398
00:25:56,760 --> 00:26:01,360
snow in your mouth and melt it and that was your drink.

399
00:26:01,360 --> 00:26:08,160
And if you let your knee hit the snow and the snow was halfway up to your knee, you know,

400
00:26:08,160 --> 00:26:12,000
you weaken or you fall or something like that, they beat you.

401
00:26:12,000 --> 00:26:16,480
And he said the beatings were so bad that most people didn't even want to get up after

402
00:26:16,480 --> 00:26:21,080
the beating because, you know, they just couldn't take it anymore and he says, "And then

403
00:26:21,080 --> 00:26:22,080
they would shoot them."

404
00:26:22,080 --> 00:26:24,200
If they didn't get up, they would shoot you.

405
00:26:24,200 --> 00:26:29,800
And he said the other thing is, if you didn't keep up with the group, they also shot you.

406
00:26:29,800 --> 00:26:36,640
So he said, he asked himself, "What's the most important thing I can do on this march?"

407
00:26:36,640 --> 00:26:42,280
And he said, "The most important thing is to keep his mind only focused on what he had

408
00:26:42,280 --> 00:26:43,280
to do.

409
00:26:43,280 --> 00:26:48,760
He couldn't think about how cold he was, how angry he was, how far he had to march, nothing,

410
00:26:48,760 --> 00:26:55,000
just put your foot down and he said, "You have to make sure that it was planted well because

411
00:26:55,000 --> 00:26:56,000
it was slippery.

412
00:26:56,000 --> 00:26:57,280
It was snowing."

413
00:26:57,280 --> 00:27:01,920
And so he said, "He just locked his knee and he said, "Whenever a thought came in about

414
00:27:01,920 --> 00:27:05,800
anything else, he blocked it out and he said, "Just move your leg."

415
00:27:05,800 --> 00:27:12,380
And he said, "Every time I moved my leg, I didn't think I'd be able to do it, but I was

416
00:27:12,380 --> 00:27:13,620
able to do it."

417
00:27:13,620 --> 00:27:18,120
And this went on for days, you know, they march you all night and then you get on a train

418
00:27:18,120 --> 00:27:21,440
and you go to another place and it just went on and on.

419
00:27:21,440 --> 00:27:23,600
Some people were on it for weeks.

420
00:27:23,600 --> 00:27:28,920
One guy was talking about a situation, he started off with 5,000 people, and they only ended

421
00:27:28,920 --> 00:27:29,920
up with 16.

422
00:27:29,920 --> 00:27:35,560
It was unbelievable, mental pressure.

423
00:27:35,560 --> 00:27:40,000
So I said, "Pa, how did you, how were you able to manage that?"

424
00:27:40,000 --> 00:27:44,520
He said, "You know there's something about the mind that we don't understand, but when

425
00:27:44,520 --> 00:27:51,720
you focus it and you control it, he said, you can do many things that you never believed

426
00:27:51,720 --> 00:27:52,720
you could."

427
00:27:52,720 --> 00:27:59,080
He said, "There's something about the mind that creates its own energy by focusing."

428
00:27:59,080 --> 00:28:04,520
And the way I explained it to people, to young people is to say, "Have you ever had a magnifying

429
00:28:04,520 --> 00:28:10,160
glass, you compare it to the sun, you hand it up to sun, you have a paper, it burns

430
00:28:10,160 --> 00:28:11,160
the paper, right?"

431
00:28:11,160 --> 00:28:12,640
So what are you doing?

432
00:28:12,640 --> 00:28:14,960
You're focusing the sun.

433
00:28:14,960 --> 00:28:17,200
That's what happens when you focus your mind.

434
00:28:17,200 --> 00:28:20,200
It creates energy.

435
00:28:20,200 --> 00:28:21,680
And that stuck in my mind.

436
00:28:21,680 --> 00:28:23,160
I never forgot it.

437
00:28:23,160 --> 00:28:26,160
And I said, "Well, how would you explain it?"

438
00:28:26,160 --> 00:28:30,760
He said, "Arnold, I'm not a psychologist, you know, I don't know it, but I can tell you

439
00:28:30,760 --> 00:28:33,200
it works, it works."

440
00:28:33,200 --> 00:28:38,000
So long story short, I was very weak after the war.

441
00:28:38,000 --> 00:28:39,840
I almost died from malnutrition.

442
00:28:39,840 --> 00:28:44,600
It wasn't that the people were trying to deprive us, there just wasn't any food.

443
00:28:44,600 --> 00:28:47,640
I think even water sometimes.

444
00:28:47,640 --> 00:28:53,400
But we came to America and I wanted to overcome my physical disability.

445
00:28:53,400 --> 00:28:56,680
I was the skinniest and weakest kid in the school.

446
00:28:56,680 --> 00:28:59,240
And so I took up rope climbing.

447
00:28:59,240 --> 00:29:03,200
And I remembered what my dad had said, just focusing on what you're trying to do.

448
00:29:03,200 --> 00:29:08,680
And I climbed for two years and some kid never climbed before off the street and had to

449
00:29:08,680 --> 00:29:09,680
race.

450
00:29:09,680 --> 00:29:13,720
And he would beat me after two years of working hard, two hours a day.

451
00:29:13,720 --> 00:29:18,920
But I had this idea that there was something in the mind I was going to keep on it.

452
00:29:18,920 --> 00:29:23,200
And after that time I thought about quitting and then a thought popped in my mind, why would

453
00:29:23,200 --> 00:29:24,200
you quit?

454
00:29:24,200 --> 00:29:25,200
You're getting stronger.

455
00:29:25,200 --> 00:29:26,440
And I was getting stronger.

456
00:29:26,440 --> 00:29:29,840
Long story short, I ended up being a champion.

457
00:29:29,840 --> 00:29:31,880
I won the league three years in a row.

458
00:29:31,880 --> 00:29:33,160
I set the school record.

459
00:29:33,160 --> 00:29:34,880
I set the league record.

460
00:29:34,880 --> 00:29:43,680
And I placed ninth in the nation among all college seniors in the national AU in 1958.

461
00:29:43,680 --> 00:29:48,240
And so it transformed my life.

462
00:29:48,240 --> 00:29:51,600
I never quite understood it, but it worked.

463
00:29:51,600 --> 00:29:55,880
And I actually got to believing that I was going to be the champion.

464
00:29:55,880 --> 00:29:59,840
And there were people ahead of me and my buddies would say, "How are you going to beat this

465
00:29:59,840 --> 00:30:00,840
guy?"

466
00:30:00,840 --> 00:30:03,400
I said, "I don't know, but I'm going to do it, I believe."

467
00:30:03,400 --> 00:30:08,760
What I learned from the subconscious mind is the most important thing is it's not what

468
00:30:08,760 --> 00:30:09,760
you eat.

469
00:30:09,760 --> 00:30:11,120
It's not what you think.

470
00:30:11,120 --> 00:30:12,680
It's not what you do.

471
00:30:12,680 --> 00:30:14,360
It's what you believe.

472
00:30:14,360 --> 00:30:19,160
And what you believe focuses the subconscious mind and creates it.

473
00:30:19,160 --> 00:30:22,440
And I have some amazing stories to tell.

474
00:30:22,440 --> 00:30:23,720
I studied hypnosis.

475
00:30:23,720 --> 00:30:28,760
I coached my son in becoming a champion in his event.

476
00:30:28,760 --> 00:30:30,520
And we used the mental program.

477
00:30:30,520 --> 00:30:33,520
I hypnotized him every night during track meet.

478
00:30:33,520 --> 00:30:39,080
He says, "I'm the only senior that their dad tucks him in at night.

479
00:30:39,080 --> 00:30:41,800
I have him put in bed and I hypnotized him."

480
00:30:41,800 --> 00:30:44,520
Anyway, some great stories I had.

481
00:30:44,520 --> 00:30:53,280
He had a sprained ankle and there was a championship meet nine days later.

482
00:30:53,280 --> 00:30:58,160
And so I went to the doctor and took him there and he said, "Oh, there's nothing we can do

483
00:30:58,160 --> 00:31:00,160
Arnold if the meet is in nine days.

484
00:31:00,160 --> 00:31:04,160
There's no way I'm going to have to put him into a cast."

485
00:31:04,160 --> 00:31:09,760
And I said, "Well, I can program the subconscious mind to adjust for the cast."

486
00:31:09,760 --> 00:31:11,720
He said, "You don't understand.

487
00:31:11,720 --> 00:31:12,720
It's not the cast.

488
00:31:12,720 --> 00:31:16,600
It's even if he steps on the cast, if you got a sprained ankle, it still hurts."

489
00:31:16,600 --> 00:31:19,560
That's why people have to wear a crutch.

490
00:31:19,560 --> 00:31:20,560
Wear a crutch.

491
00:31:20,560 --> 00:31:26,560
I said, "I believe the subconscious mind can anesthesize his ankle and we're going to be

492
00:31:26,560 --> 00:31:28,120
able to compete."

493
00:31:28,120 --> 00:31:29,600
And he said, "You know what?

494
00:31:29,600 --> 00:31:31,360
I'm not into that stuff."

495
00:31:31,360 --> 00:31:33,760
I put him in a cast.

496
00:31:33,760 --> 00:31:34,760
Put him in a cast.

497
00:31:34,760 --> 00:31:40,280
We went to a hotel nearby, a hypnotized him, and I kept them under hypnosis the whole

498
00:31:40,280 --> 00:31:41,280
meet.

499
00:31:41,280 --> 00:31:46,760
And long story short, he won the meet and he threw six inches off the best he'd ever thrown in

500
00:31:46,760 --> 00:31:47,760
his life.

501
00:31:47,760 --> 00:31:48,760
He was a shot-putter.

502
00:31:48,760 --> 00:31:51,760
And so that was just an amazing test.

503
00:31:51,760 --> 00:31:55,040
So, yeah, that's so incredible.

504
00:31:55,040 --> 00:31:58,000
John Templeton also believed in thought control.

505
00:31:58,000 --> 00:32:03,920
He often said to me, "Lauren, when I encounter a negative thought, I just banish it to the

506
00:32:03,920 --> 00:32:06,560
nothingness that it is."

507
00:32:06,560 --> 00:32:14,720
And that was such an incredible thing to hear one of the world's greatest investors say.

508
00:32:14,720 --> 00:32:18,320
And he grew up in the time of Carnegie.

509
00:32:18,320 --> 00:32:20,800
He studied.

510
00:32:20,800 --> 00:32:26,520
He was very involved in the unity movement, which was all about thought control.

511
00:32:26,520 --> 00:32:32,680
I'm quite sure when you read "Think and Grow Rich" by Napoleon Hill, it definitely reminds

512
00:32:32,680 --> 00:32:36,520
me so much of John Templeton, so much of you.

513
00:32:36,520 --> 00:32:38,520
So, I'm curious.

514
00:32:38,520 --> 00:32:40,400
So, you make it to the United States.

515
00:32:40,400 --> 00:32:43,960
How did you transition to a career in investing?

516
00:32:43,960 --> 00:32:50,040
And how do you take all of these skills that you have developed, that you've learned from

517
00:32:50,040 --> 00:32:55,760
your parents, that you developed out of surviving the Holocaust, controlling your mind?

518
00:32:55,760 --> 00:32:58,800
How do you apply that when it comes to investing?

519
00:32:58,800 --> 00:33:05,480
Well, what happened is I concentrated on my gymnastic career.

520
00:33:05,480 --> 00:33:07,600
But I had an image problem.

521
00:33:07,600 --> 00:33:13,920
And the image problem was when I started Hebrew school at a very young age, I failed the

522
00:33:13,920 --> 00:33:14,920
Hebrew school.

523
00:33:14,920 --> 00:33:16,400
It was like the kindergarten.

524
00:33:16,400 --> 00:33:21,800
So the rabbi and my dad got together and they tried to convince me that the reason I wasn't

525
00:33:21,800 --> 00:33:25,960
going with the other kids is because I was going to another class.

526
00:33:25,960 --> 00:33:28,680
But I knew that they were not telling me the truth.

527
00:33:28,680 --> 00:33:34,040
And so, I started feeling very bad about not being able to do well in school.

528
00:33:34,040 --> 00:33:40,000
And when I got into grammar school and all that, nothing worked well and my mom hired the

529
00:33:40,000 --> 00:33:43,960
best child psychologist you could find.

530
00:33:43,960 --> 00:33:52,000
And he convinced her and that's what happened to me is that he said that because of the malnutrition,

531
00:33:52,000 --> 00:33:57,440
it affected my mind and I may have problems with that the rest of my life.

532
00:33:57,440 --> 00:34:02,200
And so, I didn't realize that I did have the capacity.

533
00:34:02,200 --> 00:34:07,680
But I never bothered too much in the academic area because I never could do it and I never

534
00:34:07,680 --> 00:34:08,680
did well.

535
00:34:08,680 --> 00:34:12,720
So, I was able to get through high school barely.

536
00:34:12,720 --> 00:34:16,640
I was working in a gas station after I got out of high school.

537
00:34:16,640 --> 00:34:24,400
And so, anyway, I was sitting there one day very depressed because I was kind of a hero in high

538
00:34:24,400 --> 00:34:25,400
school.

539
00:34:25,400 --> 00:34:27,720
And now, all of a sudden, I'm working in a gas station.

540
00:34:27,720 --> 00:34:30,560
I'm saying, "What am I going to do with my life?"

541
00:34:30,560 --> 00:34:35,300
So, the thing that depressed me is all the teachers told me, "Arnold, if you don't improve

542
00:34:35,300 --> 00:34:39,980
your grades, you can't go to college and you can't be successful in life without going

543
00:34:39,980 --> 00:34:42,880
to college and you won't be able to make money."

544
00:34:42,880 --> 00:34:48,960
So, my mom saw me sitting there one day and she said, "Arnold, what's the matter?"

545
00:34:48,960 --> 00:34:53,880
And I said, "Mom, I just don't know what I'm going to do with my life."

546
00:34:53,880 --> 00:34:57,040
You know, I'm through rope climbing, you know?

547
00:34:57,040 --> 00:35:00,000
And she said, "What do you want to do?"

548
00:35:00,000 --> 00:35:01,440
I said, "I want to make some money.

549
00:35:01,440 --> 00:35:08,520
I'm making a dollar fifteen per hour, working fourteen hours a day in a gas station and I

550
00:35:08,520 --> 00:35:11,280
don't think there's much of a future in there."

551
00:35:11,280 --> 00:35:17,560
She says, "And I said, "All the teachers told me if I don't go to college, I can't be successful

552
00:35:17,560 --> 00:35:19,800
and I'm not really equipped to go to college.

553
00:35:19,800 --> 00:35:21,560
I never did well."

554
00:35:21,560 --> 00:35:23,520
She says, "What?

555
00:35:23,520 --> 00:35:28,240
The teachers tell you that you can't make money unless you go to college?"

556
00:35:28,240 --> 00:35:33,000
She says, "The first thing you should do is ask the teacher, what do you make?"

557
00:35:33,000 --> 00:35:37,920
And when you find out what they make, you'll see that they don't know what they're doing.

558
00:35:37,920 --> 00:35:42,920
He says, "Now, here's the way it works.

559
00:35:42,920 --> 00:35:46,240
You're either a yaka or a businessman."

560
00:35:46,240 --> 00:35:47,880
I said, "What's a yaka?"

561
00:35:47,880 --> 00:35:50,400
She says, "A yaka is a guy like your dad.

562
00:35:50,400 --> 00:35:57,280
He is smart, he's intelligent, he understands music, mathematics, politics, everything.

563
00:35:57,280 --> 00:35:59,080
Can he make money?

564
00:35:59,080 --> 00:36:00,080
Nothing.

565
00:36:00,080 --> 00:36:01,080
Nothing."

566
00:36:01,080 --> 00:36:07,560
She says, "Now, ask your mother, does she know about psychology, does she know about mathematics,

567
00:36:07,560 --> 00:36:10,360
does she know music, does she know anything, does she care?

568
00:36:10,360 --> 00:36:11,360
No.

569
00:36:11,360 --> 00:36:12,360
Can she make money?

570
00:36:12,360 --> 00:36:13,360
Two thumbs up."

571
00:36:13,360 --> 00:36:22,000
She says, "You need to listen to your mother and she tells you to go out and start a business."

572
00:36:22,000 --> 00:36:26,920
I said, "You know, mom, what kind of business do I have?

573
00:36:26,920 --> 00:36:28,720
What kind of business can I start?"

574
00:36:28,720 --> 00:36:32,080
She says, "What difference does it make?

575
00:36:32,080 --> 00:36:33,080
Business is simple.

576
00:36:33,080 --> 00:36:38,560
You buy something from somebody, you find somebody to sell it to, money is in the middle,

577
00:36:38,560 --> 00:36:40,240
and she makes the profit.

578
00:36:40,240 --> 00:36:41,560
That's business."

579
00:36:41,560 --> 00:36:44,520
And she says, "You can parachute me anywhere in the world.

580
00:36:44,520 --> 00:36:47,760
I don't even care if I know the language I can make money.

581
00:36:47,760 --> 00:36:51,320
When I came to Holland, I couldn't speak Dutch.

582
00:36:51,320 --> 00:36:56,880
We started the business on the dirt road street, and we built it by going out and selling.

583
00:36:56,880 --> 00:36:58,960
That's what you do.

584
00:36:58,960 --> 00:37:02,440
So that stuck in my mind and so...

585
00:37:02,440 --> 00:37:04,840
I don't even know your mother, but I believe her.

586
00:37:04,840 --> 00:37:07,360
I think she could make money anywhere.

587
00:37:07,360 --> 00:37:08,680
I think so too.

588
00:37:08,680 --> 00:37:09,680
She could.

589
00:37:09,680 --> 00:37:14,680
I could tell you stories about her salesmanship that would just make you roar, but she believed

590
00:37:14,680 --> 00:37:20,880
that she had a charisma when you looked into her eyes, and here's another thing that's

591
00:37:20,880 --> 00:37:23,240
interesting about her.

592
00:37:23,240 --> 00:37:29,560
So she was in love with this 15 or 16-years-old in love with this medical student, but her dad

593
00:37:29,560 --> 00:37:37,880
was a very religious person, and so the kid was Jewish, but he wasn't Jewish enough.

594
00:37:37,880 --> 00:37:44,160
So he says, "Manya, as long as you live in this house, you cannot date this man because

595
00:37:44,160 --> 00:37:47,400
he's not religious enough."

596
00:37:47,400 --> 00:37:52,600
So she said, "Okay, Papa, if I can't live in this house, I'm not going to quit dating him,

597
00:37:52,600 --> 00:37:53,600
so I'm going to move out."

598
00:37:53,600 --> 00:37:58,680
Well, what do you do with 15-years-old living in a small Polish ghetto, right?

599
00:37:58,680 --> 00:38:01,360
So she found some relatives in Germany.

600
00:38:01,360 --> 00:38:03,960
She wrote to them and they said, "Sure, come on down.

601
00:38:03,960 --> 00:38:06,040
We have a business you can work there."

602
00:38:06,040 --> 00:38:08,280
So she just took off, left the family.

603
00:38:08,280 --> 00:38:10,400
She said, "We left them very good terms."

604
00:38:10,400 --> 00:38:17,880
She said, "You know, I told my dad, "Papa, I know that you believe this and I respect you,

605
00:38:17,880 --> 00:38:21,440
but I'm not going to quit dating this guy."

606
00:38:21,440 --> 00:38:24,680
So I don't want to upset you, I'll just leave.

607
00:38:24,680 --> 00:38:30,360
So she left, she got on the train, got the Germany, and that's where she met my dad.

608
00:38:30,360 --> 00:38:34,740
So when she was telling me how she met my dad, I said, "Well, Mom, what happened to the

609
00:38:34,740 --> 00:38:36,560
kid you were in love with?"

610
00:38:36,560 --> 00:38:43,960
She says, "Oh, when I got the Germany, I was so beautiful that all the men wanted me

611
00:38:43,960 --> 00:38:45,960
to figure who needs them."

612
00:38:45,960 --> 00:38:49,280
That's a great story.

613
00:38:49,280 --> 00:38:50,800
But you know what's interesting.

614
00:38:50,800 --> 00:38:55,920
While she's telling me this, I'm looking at a picture on the mantle when she was a young

615
00:38:55,920 --> 00:38:59,040
girl like that, I'm not sure I would date that girl.

616
00:38:59,040 --> 00:39:02,560
She doesn't look that great to me.

617
00:39:02,560 --> 00:39:03,560
I love the story.

618
00:39:03,560 --> 00:39:09,240
What's interesting is whenever people with my mom, the first thing they said about her,

619
00:39:09,240 --> 00:39:11,240
your mom is so beautiful.

620
00:39:11,240 --> 00:39:16,640
So even her belief in herself conveyed that to other people.

621
00:39:16,640 --> 00:39:21,120
Anyway, it is just some interesting story.

622
00:39:21,120 --> 00:39:30,320
But anyway, I got to working as an insurance company and then the insurance company, I started

623
00:39:30,320 --> 00:39:33,120
off in a print shop, it became the supervisor.

624
00:39:33,120 --> 00:39:37,400
And then I was looking for more opportunities I saw an ad by an insurance company, being your

625
00:39:37,400 --> 00:39:38,720
own business.

626
00:39:38,720 --> 00:39:43,200
So I figured I'd answer the ad and it was about selling insurance.

627
00:39:43,200 --> 00:39:47,120
I didn't know anything about finance or compound interest or anything.

628
00:39:47,120 --> 00:39:51,560
I thought it was a terrific deal, so I started selling insurance.

629
00:39:51,560 --> 00:39:55,280
And then the insurance company, John Hancock Company, got into mutual funds.

630
00:39:55,280 --> 00:40:01,680
This is at the top of the bull market and all the companies went into mutual funds.

631
00:40:01,680 --> 00:40:07,440
So when I started reading about the returns on the mutual funds at the top of the bull market,

632
00:40:07,440 --> 00:40:08,920
I was so excited.

633
00:40:08,920 --> 00:40:13,120
I thought I finally found the business that I was looking at.

634
00:40:13,120 --> 00:40:17,360
I'm going to get all my friends into the mutual funds and I'm going to make them money

635
00:40:17,360 --> 00:40:20,560
and I was just on fire.

636
00:40:20,560 --> 00:40:25,040
Well, the market lasted about three or four months and then it started the sickening 

637
00:40:25,040 --> 00:40:27,480
decline of six years.

638
00:40:27,480 --> 00:40:31,880
While I was going through it and all these funds were, there was some that literally fell

639
00:40:31,880 --> 00:40:32,880
apart.

640
00:40:32,880 --> 00:40:35,840
I mean, it was just amazing.

641
00:40:35,840 --> 00:40:40,960
But as I was going through and studying it, I was trying to figure out how come some

642
00:40:40,960 --> 00:40:45,000
funds did better than others.

643
00:40:45,000 --> 00:40:50,920
And I noticed when I went to the shareholders meeting, all of these guys seemed

644
00:40:50,920 --> 00:40:51,920
like geniuses.

645
00:40:51,920 --> 00:40:53,520
They were all brilliant.

646
00:40:53,520 --> 00:40:55,800
But some of them, their fund came apart.

647
00:40:55,800 --> 00:40:58,800
I can mention names, but I won't mention it.

648
00:40:58,800 --> 00:41:03,000
But some of them just fell apart and others did very well.

649
00:41:03,000 --> 00:41:10,240
So thank God I was able to dumb luck spread out over 15 to 20 funds and so some of them did

650
00:41:10,240 --> 00:41:12,800
well and some of them didn't do too well.

651
00:41:12,800 --> 00:41:16,040
But overall the results were obviously very poor.

652
00:41:16,040 --> 00:41:18,760
So all this time I'm going through the bear market.

653
00:41:18,760 --> 00:41:24,200
I keep dollar-cost averaging and things just kept going from bad to worse.

654
00:41:24,200 --> 00:41:25,560
And this went on for six years.

655
00:41:25,560 --> 00:41:29,480
I don't even know how I stayed with it.

656
00:41:29,480 --> 00:41:36,400
But I got very excited about a year, a year and a half before the market because I finally

657
00:41:36,400 --> 00:41:43,400
figured out that when I asked these guys who did well during the crash, I asked them, "What

658
00:41:43,400 --> 00:41:44,560
was your philosophy?"

659
00:41:44,560 --> 00:41:47,080
And they all pointed to Benjamin Graham.

660
00:41:47,080 --> 00:41:53,160
I mean no matter who I talked to, all of the guys that did well were Benjamin Graham disciples,

661
00:41:53,160 --> 00:41:57,160
including Warren Buffett, one of them.

662
00:41:57,160 --> 00:42:01,120
So I thought, "I got to study about Benjamin Graham."

663
00:42:01,120 --> 00:42:02,120
So I got all the books.

664
00:42:02,120 --> 00:42:04,320
I got all the articles I read.

665
00:42:04,320 --> 00:42:06,120
Everything I could get my hands on.

666
00:42:06,120 --> 00:42:09,880
And I was totally dedicated just like I was on the rope climb.

667
00:42:09,880 --> 00:42:13,560
There was nothing that I wouldn't do to improve.

668
00:42:13,560 --> 00:42:16,480
And so I read all the books and I read everything.

669
00:42:16,480 --> 00:42:20,800
And I finally got a feeling as the market was coming down.

670
00:42:20,800 --> 00:42:23,040
And just you can appreciate this.

671
00:42:23,040 --> 00:42:29,440
The market, the value line PE was five and a half to six times earning with seven percent

672
00:42:29,440 --> 00:42:31,960
yield with great balance sheets.

673
00:42:31,960 --> 00:42:32,960
Yeah.

674
00:42:32,960 --> 00:42:39,280
I knew by studying Graham that we were in the cheapest stock prices since the depression.

675
00:42:39,280 --> 00:42:48,480
So I told my wife, I said, "You know, I said, "We're either going to make a lot of money

676
00:42:48,480 --> 00:42:53,800
for our clients or the world's going to end because it was very bearish."

677
00:42:53,800 --> 00:42:58,520
I mean I'd go to a social thing and tell people I was in the investment business and they

678
00:42:58,520 --> 00:43:05,760
avoided me like I had bad breath because everybody had been pummeled for six years in the market.

679
00:43:05,760 --> 00:43:11,760
And so about three months before the bottom, I finally realized if I was ever going to do

680
00:43:11,760 --> 00:43:15,080
it in business, this is the time to do it.

681
00:43:15,080 --> 00:43:20,040
So I got whatever people I could get and I invested them in there.

682
00:43:20,040 --> 00:43:24,200
And of course it was a long haul to, you know, I didn't have a background.

683
00:43:24,200 --> 00:43:26,080
I didn't have a track record.

684
00:43:26,080 --> 00:43:28,440
I didn't know any people with money.

685
00:43:28,440 --> 00:43:31,640
All the people I knew were just kids from school.

686
00:43:31,640 --> 00:43:36,320
But I thought, whatever I can, I'm going to start and I'm going to visualize it and I'm

687
00:43:36,320 --> 00:43:37,320
going to believe it.

688
00:43:37,320 --> 00:43:41,000
And by that time I understood the subconscious mind.

689
00:43:41,000 --> 00:43:47,600
And the way I came about that is I was married and then I went through a divorce and the

690
00:43:47,600 --> 00:43:49,480
divorce was so painful for me.

691
00:43:49,480 --> 00:43:55,000
I went into a depression for five years and it was very bad.

692
00:43:55,000 --> 00:43:59,960
And there was a woman at work at the insurance company that said she had gone through a similar

693
00:43:59,960 --> 00:44:03,000
thing that I should go to her psychiatrist.

694
00:44:03,000 --> 00:44:04,760
So I was desperate.

695
00:44:04,760 --> 00:44:08,840
I wasn't getting anywhere and things were very depressing.

696
00:44:08,840 --> 00:44:16,320
And so I went to him and I told him that I had been hypnotizing myself.

697
00:44:16,320 --> 00:44:22,160
I'd learned to hypnotize myself because at the end of the day at 330, I was so tired

698
00:44:22,160 --> 00:44:27,400
that I couldn't work and it would be like it would be 330 in the morning.

699
00:44:27,400 --> 00:44:32,960
And so I read an article about hypnosis and the subconscious mind.

700
00:44:32,960 --> 00:44:37,160
And if you put yourself into a hypno nap after 20 or 30 minutes, the equivalent to three hours

701
00:44:37,160 --> 00:44:38,400
sleep.

702
00:44:38,400 --> 00:44:44,080
After about a week, I was able to do it and I was able to work until 10 30, 11 o'clock

703
00:44:44,080 --> 00:44:46,440
at night and have a lot of energy.

704
00:44:46,440 --> 00:44:49,880
So that really fixed the problem of depression.

705
00:44:49,880 --> 00:44:54,440
But when I went to the psychiatrist, he says, you know, that's a very brilliant thing you

706
00:44:54,440 --> 00:44:55,440
did.

707
00:44:55,440 --> 00:44:59,000
He said, now, how would you like to find out why you're depressed?

708
00:44:59,000 --> 00:45:01,280
I said, oh, yeah, that would be great.

709
00:45:01,280 --> 00:45:04,320
He said, well, we'll start working on it.

710
00:45:04,320 --> 00:45:10,480
So I said, okay, the first thing I'd like to help you help me with is I've been played

711
00:45:10,480 --> 00:45:19,320
with this idea that the 17-year-old girl, the 17-year-old girl saved your life.

712
00:45:19,320 --> 00:45:24,400
He saved my life and I couldn't understand how people could do that.

713
00:45:24,400 --> 00:45:27,240
And I really would like your advice on that.

714
00:45:27,240 --> 00:45:28,880
He says, oh, that's simple.

715
00:45:28,880 --> 00:45:29,880
I said, it's simple.

716
00:45:29,880 --> 00:45:32,440
I've been trying to figure it out for 20 years.

717
00:45:32,440 --> 00:45:34,720
He said, here's the key.

718
00:45:34,720 --> 00:45:41,880
If your principles are more important than your life, you sacrifice your life.

719
00:45:41,880 --> 00:45:47,520
If your life is more important than your principles, you sacrifice your principles.

720
00:45:47,520 --> 00:45:52,600
So he said, the people who saved your life obviously had high principles.

721
00:45:52,600 --> 00:45:57,480
The people who turned your folks in, their life was more important than their principles.

722
00:45:57,480 --> 00:45:59,520
They sacrifice their principles.

723
00:45:59,520 --> 00:46:00,520
There's no difference.

724
00:46:00,520 --> 00:46:02,200
It's just a decision.

725
00:46:02,200 --> 00:46:08,440
You have to develop a philosophy that you can live with that creates character and integrity

726
00:46:08,440 --> 00:46:13,720
so that no matter what you're faced with, you're not going to sacrifice your principles.

727
00:46:13,720 --> 00:46:18,880
He said, now, in the corporate world, people are working and they might have not strong

728
00:46:18,880 --> 00:46:21,000
principles, but they're decent people.

729
00:46:21,000 --> 00:46:24,560
All of a sudden you get a chance to make some easy money.

730
00:46:24,560 --> 00:46:29,800
And if they don't have strong principles, they succumb to it and it ruins their life.

731
00:46:29,800 --> 00:46:36,120
So he said, my advice to you is you've got a good start with your rope climbing career.

732
00:46:36,120 --> 00:46:40,960
Just keep on working on the character so that you have the principle if you were faced

733
00:46:40,960 --> 00:46:44,680
that way that you would make the right decision.

734
00:46:44,680 --> 00:46:49,280
And so that was a very pivotal point in my life.

735
00:46:49,280 --> 00:46:51,480
That changed my life right there.

736
00:46:51,480 --> 00:46:58,520
That example of this girl who fearlessly at 17 years of age and she told me after the

737
00:46:58,520 --> 00:47:01,600
war that this was what they believed.

738
00:47:01,600 --> 00:47:06,680
So I even got involved in studying the Christian religion because I couldn't understand why

739
00:47:06,680 --> 00:47:08,920
people would do that.

740
00:47:08,920 --> 00:47:14,680
And so I spent three years studying the Christian religion and the Jews and the

741
00:47:14,680 --> 00:47:20,560
Christians have been arguing about the Messiah for 2,000 years.

742
00:47:20,560 --> 00:47:26,280
So it became a real study and I got involved with people who were Bible scholars who were

743
00:47:26,280 --> 00:47:28,960
willing to teach me the principles.

744
00:47:28,960 --> 00:47:35,000
And so one day I was sitting there and I thought, geez, all the stories I heard about Jesus,

745
00:47:35,000 --> 00:47:38,520
it didn't coincide with what his life really was.

746
00:47:38,520 --> 00:47:43,120
And I got to thinking, geez, everything he teaches sounds pretty good to me.

747
00:47:43,120 --> 00:47:46,480
Why would it be rejected by the Jewish people?

748
00:47:46,480 --> 00:47:53,360
So I was sitting there agonizing over it because I thought, what am I going to tell my folks

749
00:47:53,360 --> 00:47:57,640
if I have to say that I became a Christian, you know?

750
00:47:57,640 --> 00:48:03,120
And as I was thinking about that, a thought came to me and that influenced everything I've

751
00:48:03,120 --> 00:48:04,120
done.

752
00:48:04,120 --> 00:48:11,280
And I thought about this, if you want to follow the truth, you have to go wherever it leads

753
00:48:11,280 --> 00:48:12,280
you.

754
00:48:12,280 --> 00:48:16,920
And I thought about that for a second and I thought about it and I said, you know, that's

755
00:48:16,920 --> 00:48:17,920
right.

756
00:48:17,920 --> 00:48:22,480
Why am I worried about who's right or wrong just follow the truth?

757
00:48:22,480 --> 00:48:23,960
And so that's what I've been doing.

758
00:48:23,960 --> 00:48:30,120
Even in my stock picking and everything else, the most important thing is to get to the point,

759
00:48:30,120 --> 00:48:31,120
what are the facts?

760
00:48:31,120 --> 00:48:32,120
What are the truth?

761
00:48:32,120 --> 00:48:35,040
Including raising my kids and all of these other things.

762
00:48:35,040 --> 00:48:40,680
So it all came together on the idea that it gets down to character.

763
00:48:40,680 --> 00:48:42,680
Everything gets down to character.

764
00:48:42,680 --> 00:48:46,840
And there's a book called, Right is Might.

765
00:48:46,840 --> 00:48:54,280
And I saw the advertising of it one time and the advertising was so good that I looked

766
00:48:54,280 --> 00:48:59,160
up the author and I thought he wrote five books and so I called up the company.

767
00:48:59,160 --> 00:49:01,160
He had a company going.

768
00:49:01,160 --> 00:49:02,160
And I called up the company.

769
00:49:02,160 --> 00:49:08,680
I talked to his assistant who was assistant for 35 years and I said, you know, that ad was

770
00:49:08,680 --> 00:49:10,800
so powerful.

771
00:49:10,800 --> 00:49:13,600
I ordered all five books.

772
00:49:13,600 --> 00:49:18,280
And so I ordered a book and one time on a plane trip to LA.

773
00:49:18,280 --> 00:49:21,520
I said, I'm not going to do anything else but read this book.

774
00:49:21,520 --> 00:49:26,680
So finally I got to my destination, California and I was so disappointed that

775
00:49:26,680 --> 00:49:32,240
the plane landed because I was so involved in the book.

776
00:49:32,240 --> 00:49:35,920
I grabbed my luggage, drove to the hotel, didn't even hang up my coats or anything.

777
00:49:35,920 --> 00:49:40,120
I just finished reading the book and I finished it that night.

778
00:49:40,120 --> 00:49:43,320
And I was just amazed with what this man taught.

779
00:49:43,320 --> 00:49:49,680
So I called the company and I got his assistant and I said, you know, I just want to know more

780
00:49:49,680 --> 00:49:55,640
about this man because everything he teaches makes so much sense and it confirms everything

781
00:49:55,640 --> 00:49:57,580
I've learned about life.

782
00:49:57,580 --> 00:50:02,680
She said, oh, I worked with him for 35 years but I'm the one that wrote the ad.

783
00:50:02,680 --> 00:50:04,480
I told her, brilliant ad.

784
00:50:04,480 --> 00:50:07,280
She says, there was nothing brilliant about it Arnold.

785
00:50:07,280 --> 00:50:09,600
I just told the truth.

786
00:50:09,600 --> 00:50:14,520
I told the truth about what happens to people with character and people without it.

787
00:50:14,520 --> 00:50:16,480
And that's what his life was all about.

788
00:50:16,480 --> 00:50:18,960
And she says, I've worked for him for 35 years.

789
00:50:18,960 --> 00:50:22,280
I'm 95 years old and I'm the one that's promoting his book.

790
00:50:22,280 --> 00:50:25,200
He's already passed on but that's my mission.

791
00:50:25,200 --> 00:50:28,440
I said, well, I thanked her very much for her time.

792
00:50:28,440 --> 00:50:32,880
I sat down and I thought, I've got to read every one of these books.

793
00:50:32,880 --> 00:50:39,680
And I have right there on the shelf and the book is called Right is Might by Wetherill.

794
00:50:39,680 --> 00:50:45,640
And any young person who reads that would be influenced by that situation.

795
00:50:45,640 --> 00:50:46,640
I love it.

796
00:50:46,640 --> 00:50:52,760
What is, is that the most, is that the book that has influenced you most?

797
00:50:52,760 --> 00:50:56,840
No, there's many books that influence me the most.

798
00:50:56,840 --> 00:51:00,200
I would say Think and Grow Rich would be right at the top.

799
00:51:00,200 --> 00:51:01,200
It's really good.

800
00:51:01,200 --> 00:51:06,760
The first time I read that, it was in about '65, '66.

801
00:51:06,760 --> 00:51:14,240
And I said to myself, this sounds so fantastic that I only believed about 50% of the book.

802
00:51:14,240 --> 00:51:17,640
But today I believe 110%.

803
00:51:17,640 --> 00:51:23,720
Especially when I got to studying the subconscious mind and when the psychiatrist explained to

804
00:51:23,720 --> 00:51:28,480
me when I told them what happened in the rope climb, he said, oh my God, that's amazing.

805
00:51:28,480 --> 00:51:31,120
He said, we teach sports psychology.

806
00:51:31,120 --> 00:51:34,680
Everything that you did is what we teach.

807
00:51:34,680 --> 00:51:36,480
And he said, where did you learn that?

808
00:51:36,480 --> 00:51:41,720
I said, I just learned it by application and principle and trial and error.

809
00:51:41,720 --> 00:51:46,040
I don't, I didn't even know I had a subconscious mind, you know?

810
00:51:46,040 --> 00:51:50,720
But I visualized it and I believed it and it happened.

811
00:51:50,720 --> 00:51:55,880
And so he said, well, if you do the same thing in your business, Arnold, the same thing is

812
00:51:55,880 --> 00:51:57,120
going to happen.

813
00:51:57,120 --> 00:52:02,280
As soon as he said that, my right arm lit up and I knew that he was speaking the truth

814
00:52:02,280 --> 00:52:08,680
and just to give you an example of how fanatical I was, I met this girl who was just fabulous

815
00:52:08,680 --> 00:52:12,280
girl and we got along real great.

816
00:52:12,280 --> 00:52:15,720
And she said to me one day, why don't you come over Wednesday night?

817
00:52:15,720 --> 00:52:18,240
And I'll cook a dinner and we'll hang out.

818
00:52:18,240 --> 00:52:23,520
And I said, oh, I can't, I've got a study, I got a study program.

819
00:52:23,520 --> 00:52:26,680
And she says, I didn't know you were going to school and I said, no, I'm not.

820
00:52:26,680 --> 00:52:27,680
I've got my program.

821
00:52:27,680 --> 00:52:32,920
I've got all of Benjamin Graham's books lined up and my goal is to get through

822
00:52:32,920 --> 00:52:38,600
this one so I can start on this one and I want to finish them all off by a certain date.

823
00:52:38,600 --> 00:52:42,640
And she says, well, what happens if you miss one day?

824
00:52:42,640 --> 00:52:47,120
I said that delays, you know, that delays the day.

825
00:52:47,120 --> 00:52:51,520
And she said, what are you studying to be a monk?

826
00:52:51,520 --> 00:52:53,880
Now reading is so important.

827
00:52:53,880 --> 00:53:03,280
So anyway, but I was on the program and the one thing I learned about my stock, my rope

828
00:53:03,280 --> 00:53:09,360
climbing program is I used to visualize climbing my rope and placing my hand bits.

829
00:53:09,360 --> 00:53:13,000
It's a real art.

830
00:53:13,000 --> 00:53:18,480
And I ended up climbing a 20 foot rope from a sitting position at 3.5 seconds.

831
00:53:18,480 --> 00:53:25,160
So you can imagine a rope hanging down in the gym 20 feet and you start from a sitting position.

832
00:53:25,160 --> 00:53:27,080
You do it in 3.5 seconds.

833
00:53:27,080 --> 00:53:29,240
It's pretty amazing.

834
00:53:29,240 --> 00:53:31,440
But anyway, that's what the mind does.

835
00:53:31,440 --> 00:53:35,480
And so I made it a commitment that I would study the subconscious mind.

836
00:53:35,480 --> 00:53:43,200
I've done it for 50 years. I have 680 pages of notes and articles and things and I have

837
00:53:43,200 --> 00:53:44,200
transcribed that.

838
00:53:44,200 --> 00:53:46,960
I think I sent you my first 55 pages.

839
00:53:46,960 --> 00:53:49,320
I've got it right over here.

840
00:53:49,320 --> 00:53:54,960
So I'll tell you, there is a world of truth in that.

841
00:53:54,960 --> 00:53:57,240
And most of it is not me.

842
00:53:57,240 --> 00:54:00,320
There's only a couple of things that I actually wrote myself.

843
00:54:00,320 --> 00:54:06,800
These are all quoting people who've used it and how they used it and athletes.

844
00:54:06,800 --> 00:54:14,880
I was able to hypnotize my son's buddies on the track team every Thursday night before

845
00:54:14,880 --> 00:54:16,360
the meet.

846
00:54:16,360 --> 00:54:18,600
I had every room in my house.

847
00:54:18,600 --> 00:54:23,360
I had a different track athlete in there and I'd go from one room to the other to hypnotize

848
00:54:23,360 --> 00:54:24,360
them.

849
00:54:24,360 --> 00:54:27,880
And it just is amazing how well it worked.

850
00:54:27,880 --> 00:54:34,000
So the subconscious mind, you have a question in there that you ask, what would you advise

851
00:54:34,000 --> 00:54:36,160
young people for that?

852
00:54:36,160 --> 00:54:37,600
That's the first thing I do.

853
00:54:37,600 --> 00:54:42,200
And let me just tell you about the subconscious mind and just one quick article.

854
00:54:42,200 --> 00:54:43,520
Yes.

855
00:54:43,520 --> 00:54:48,240
They are talking now about creating a quantum computer.

856
00:54:48,240 --> 00:54:54,640
All my life in 50 years I've written and asked people, can you define the subconscious mind?

857
00:54:54,640 --> 00:54:55,640
How powerful is it?

858
00:54:55,640 --> 00:54:59,200
You always hear your mind is great, it can do anything.

859
00:54:59,200 --> 00:55:03,480
So I was in high school one day and one of my teachers caught my interest and she says, you

860
00:55:03,480 --> 00:55:06,280
know, you only use 10% of your mind.

861
00:55:06,280 --> 00:55:10,000
And I thought, maybe that's the reason I'm not doing so good.

862
00:55:10,000 --> 00:55:11,080
How do you use the other?

863
00:55:11,080 --> 00:55:15,800
So I couldn't wait to the end of class and I said, could you tell me how I could use the

864
00:55:15,800 --> 00:55:20,080
other 90% and she kind of pauses?

865
00:55:20,080 --> 00:55:24,880
She said, well, I guess it's by working hard.

866
00:55:24,880 --> 00:55:28,200
Now I just knew that that wasn't the right answer.

867
00:55:28,200 --> 00:55:33,600
And so all this time I was thinking and then the my psychiatrist says it's probably not

868
00:55:33,600 --> 00:55:36,200
even 10% it's probably 2%.

869
00:55:36,200 --> 00:55:41,240
So the closest I ever got to calculating of the subconscious mind is that your conscious

870
00:55:41,240 --> 00:55:48,800
mind is about 50 bits of information per second, but the subconscious is 11 million per second.

871
00:55:48,800 --> 00:55:53,560
So you got a problem, you can see why you wouldn't get on a calculator when you have a main

872
00:55:53,560 --> 00:55:57,000
frame between your brain, between your ears.

873
00:55:57,000 --> 00:56:06,600
But the good news is in the last probably year, I ran across an article about quantum computing

874
00:56:06,600 --> 00:56:12,080
and this quantum computer is going to revolutionize the whole, every industry is going to be affected

875
00:56:12,080 --> 00:56:13,080
by it.

876
00:56:13,080 --> 00:56:20,600
But what was fascinating to me about the quantum computer, it's going to be 158 million

877
00:56:20,600 --> 00:56:25,240
times faster than the fastest computer on the planet.

878
00:56:25,240 --> 00:56:31,480
And I thought, wow, so as I was reading the quantum physics and I don't understand the math,

879
00:56:31,480 --> 00:56:38,080
I don't have the physics background, but I can read what they teach and what they taught.

880
00:56:38,080 --> 00:56:44,000
And I have the article here that the that the quantum computer can do 158 million times

881
00:56:44,000 --> 00:56:51,440
faster. And when they described this quantum computer, I said, everything on the subconscious

882
00:56:51,440 --> 00:56:56,800
mind tells me the same thing that quantum physics teaches.

883
00:56:56,800 --> 00:57:03,920
So I thought, my God, I said, I'll bet you that the subconscious mind is a quantum computer.

884
00:57:03,920 --> 00:57:09,120
So I searched all over Google and I finally found a quantum physicist who's one of the leading

885
00:57:09,120 --> 00:57:16,480
in the, you know, have the article right here. And he said that they believe that the subconscious

886
00:57:16,480 --> 00:57:18,360
is a quantum computer.

887
00:57:18,360 --> 00:57:25,640
So can you imagine you have something between your ears that is as powerful as a computer

888
00:57:25,640 --> 00:57:27,960
that hasn't even been built yet?

889
00:57:27,960 --> 00:57:28,960
Unbelievable.

890
00:57:28,960 --> 00:57:29,960
Yeah.

891
00:57:29,960 --> 00:57:32,000
And that's why you can do all these things.

892
00:57:32,000 --> 00:57:36,280
When you think about people, when you see the Olympics and you see these people skiing

893
00:57:36,280 --> 00:57:41,520
and they're doing flips and doing all these things and all the time, it's calculating everything

894
00:57:41,520 --> 00:57:43,440
and doing all the things in your body.

895
00:57:43,440 --> 00:57:46,520
I mean, you could never think your way through that.

896
00:57:46,520 --> 00:57:50,480
So that's what I learned through hypnosis.

897
00:57:50,480 --> 00:58:00,440
And you know, the secret of that is if you think about it, I have it right here.

899
00:58:02,280 --> 00:58:09,560
Yeah. Hey, Arnold, your life and everything you've shared with us today is so aligned

900
00:58:09,560 --> 00:58:10,560
with firm principles.

901
00:58:10,560 --> 00:58:16,760
I'm wondering if you could maybe share with our audience a little bit about the investment

902
00:58:16,760 --> 00:58:21,920
principles and how those apply to your methods as an investor.

903
00:58:21,920 --> 00:58:22,920
Okay.

904
00:58:22,920 --> 00:58:27,040
Let me get my thing out on investments.

905
00:58:27,040 --> 00:58:34,160
So here's the thing. I started Century Management three months before the bottom and I had this

906
00:58:34,160 --> 00:58:38,680
visualization of creating an investment firm.

907
00:58:38,680 --> 00:58:40,160
But I had no education.

908
00:58:40,160 --> 00:58:44,200
I had no track record and I didn't really have that much knowledge.

909
00:58:44,200 --> 00:58:49,480
But fortunately, we were at the bottom of the market and I followed Benjamin Graham to

910
00:58:49,480 --> 00:58:53,960
the letter and it really worked for the first 10 years.

911
00:58:53,960 --> 00:58:57,480
I had a very good performance even during the inflation.

912
00:58:57,480 --> 00:58:59,280
I learned a lot during the inflation.

913
00:58:59,280 --> 00:59:06,040
I outperformed the market by the first 10 years by 5% and the reason I was able to do that,

914
00:59:06,040 --> 00:59:10,920
I was led to the idea that we were in an inflationary period.

915
00:59:10,920 --> 00:59:15,400
I went to talk to my dad one time and I said, what do you do during inflation?

916
00:59:15,400 --> 00:59:19,800
He says, look, the Americans don't know anything about inflation because they've never experienced

917
00:59:19,800 --> 00:59:20,800
it.

918
00:59:20,800 --> 00:59:24,400
You learn about inflation. You've got to go to Europe and talk to those people.

919
00:59:24,400 --> 00:59:26,760
They've been dealing it for years.

920
00:59:26,760 --> 00:59:29,040
My grandmother dealt with it.

921
00:59:29,040 --> 00:59:30,040
So I did.

922
00:59:30,040 --> 00:59:31,040
I saved up some money.

923
00:59:31,040 --> 00:59:35,680
It took a trip and I talked to as many people as I could.

924
00:59:35,680 --> 00:59:39,840
And I came to the conclusion that gold was one of the answers.

925
00:59:39,840 --> 00:59:45,680
And so my first big hit in the investment field is I was very happy in the gold in the early

926
00:59:45,680 --> 00:59:50,920
'70s and gold was $45 and $50 and went to $800.

927
00:59:50,920 --> 00:59:57,560
We sold out at $350 because I thought that was just, I didn't think it could go any higher.

928
00:59:57,560 --> 01:00:02,560
And that probably wasn't the bad time to sell although it did go to $850 and then it came

929
01:00:02,560 --> 01:00:04,160
crashing down.

930
01:00:04,160 --> 01:00:06,640
But that's what led me into it.

931
01:00:06,640 --> 01:00:12,160
And the thing that is interesting today, one of Lauren's questions is, what do you see about

932
01:00:12,160 --> 01:00:14,040
investments right now?

933
01:00:14,040 --> 01:00:18,200
I see very little opportunity in investments today.

934
01:00:18,200 --> 01:00:22,560
The market is overvalued in every measure you want to pick.

935
01:00:22,560 --> 01:00:28,040
However, like in all markets, there are opportunities.

936
01:00:28,040 --> 01:00:35,120
And today I see investments in natural gas and oil and gas that is the cheapest I've seen

937
01:00:35,120 --> 01:00:36,640
in 50 years.

938
01:00:36,640 --> 01:00:43,000
I have five companies right here that are selling at less than four times earnings, two

939
01:00:43,000 --> 01:00:48,200
times cash flow, paying dividends and have great balance sheets.

940
01:00:48,200 --> 01:00:51,880
Now here's the interesting thing about the natural gas.

941
01:00:51,880 --> 01:00:56,360
There is an energy equivalent between oil and natural gas.

942
01:00:56,360 --> 01:01:00,800
Natural gas is about 6,000 mcf to a barrel of oil.

943
01:01:00,800 --> 01:01:05,840
When you boil that down, you basically take the price of oil, which I did.

944
01:01:05,840 --> 01:01:10,720
It's $77, and divide it by six, which should be the price of natural gas.

945
01:01:10,720 --> 01:01:14,800
And you come to a natural gas price of 10.26.

946
01:01:14,800 --> 01:01:25,040
Now it's 10.26 and usually it trades at about 80% of that BTU equivalent.

947
01:01:25,040 --> 01:01:26,040
Okay?

948
01:01:26,040 --> 01:01:34,360
Today, natural gas at 2.50 is only 24% of the BTU equivalent, which means when I look back

949
01:01:34,360 --> 01:01:42,880
on the history, the cheapest natural gas ever got to oil was 24% where it is today.

950
01:01:42,880 --> 01:01:48,560
And it's only been one time cheaper in 75 years since 1945.

951
01:01:48,560 --> 01:01:53,520
So we have an opportunity to buy natural gas relative to oil.

952
01:01:53,520 --> 01:01:58,080
First of all, oil is cheap and I can give you the reasons why.

953
01:01:58,080 --> 01:02:03,800
We're very heavily invested in oil and gas, but particularly in natural gas because natural

954
01:02:03,800 --> 01:02:09,560
gas is even more cheaper relative to oil and oil is cheap in itself.

955
01:02:09,560 --> 01:02:15,720
So we have one of the greatest investment since the 70s in my opinion.

956
01:02:15,720 --> 01:02:19,240
People disagree with me and I'm used to that.

957
01:02:19,240 --> 01:02:25,040
But the point is that if you look at the BTU equivalent, it usually sells at 80% of the

958
01:02:25,040 --> 01:02:26,040
price.

959
01:02:26,040 --> 01:02:28,920
Today it's selling at 24% of the price.

960
01:02:28,920 --> 01:02:36,840
And if it just goes back to 80% and you're at $10 gas and it's at 2.50.

961
01:02:36,840 --> 01:02:42,600
So when you think about the leverage of a company that owns the natural gas in the acreage

962
01:02:42,600 --> 01:02:52,360
and then that price goes up, once they passed their cost 2.50-3 dollars MCF, it's all profit.

963
01:02:52,360 --> 01:02:54,880
And they're going to make huge amounts of money.

964
01:02:54,880 --> 01:02:56,560
So that's the worst thing.

965
01:02:56,560 --> 01:02:59,680
The second thing is, how are you invested in the natural gas space?

966
01:02:59,680 --> 01:03:00,680
What do you do?

967
01:03:00,680 --> 01:03:02,880
We invested in natural gas companies.

968
01:03:02,880 --> 01:03:07,480
Companies that produce natural gas and I have four or five of them.

969
01:03:07,480 --> 01:03:15,160
Probably the leader of them, which is about $32 a share, is EQT.

970
01:03:15,160 --> 01:03:18,400
Let me give you the numbers.

971
01:03:18,400 --> 01:03:24,280
It's one time book, 4.8 times cash flow, 1.3 total debt to EBITDA.

972
01:03:24,280 --> 01:03:25,960
So they have a good balance sheet.

973
01:03:25,960 --> 01:03:35,840
7.48 times earnings and the price, I'm sorry, the price is 13.8 forward PE.

974
01:03:35,840 --> 01:03:43,880
The stock is $32.75 somewhere in there and it's $70 or $80 once the price of natural gas goes.

975
01:03:43,880 --> 01:03:49,840
I have even smaller companies that sell, I have four or five of them right here.

976
01:03:49,840 --> 01:03:52,160
I don't know whether you want me to mention them or not.

977
01:03:52,160 --> 01:03:53,160
Sure.

978
01:03:53,160 --> 01:03:54,160
Okay.

979
01:03:54,160 --> 01:04:03,540
So what I have, OVINTIV is $9 billion market cap, 1.2 times book, 2.49 times cash flow,

980
01:04:03,540 --> 01:04:18,220
0.88 total debt to EBITDA, 2.69 times trailing earnings, 4.45, 4.55 times PE forward earnings, 37

981
01:04:18,220 --> 01:04:25,420
over closing price and the stock could be easily $60 or $70 just with the burp up.

982
01:04:25,420 --> 01:04:27,220
But there's even better ones than that.

983
01:04:27,220 --> 01:04:30,300
But just to give you an example of how cheap they are.

984
01:04:30,300 --> 01:04:31,300
Yeah.

985
01:04:31,300 --> 01:04:32,300
So, exceptional.

986
01:04:32,300 --> 01:04:33,300
Exactly.

987
01:04:33,300 --> 01:04:34,300
That's interesting.

988
01:04:34,300 --> 01:04:44,180
It's called Vital Energy and the price is VTLE and the stock is selling at about $48

989
01:04:44,180 --> 01:04:47,500
and we believe it's worth close to $100.

990
01:04:47,500 --> 01:04:49,980
Let's call it $80, 90 just to be conservative.

991
01:04:49,980 --> 01:04:51,380
But let me give you the numbers.

992
01:04:51,380 --> 01:04:53,820
Now here's what's interesting about this company.

993
01:04:53,820 --> 01:04:59,380
If somebody wanted to just invest in natural gas, this company is not an operating company.

994
01:04:59,380 --> 01:05:01,340
They buy in thousands of wells.

995
01:05:01,340 --> 01:05:04,140
So they go all over the country and they buy into wells.

996
01:05:04,140 --> 01:05:06,580
Now look what they're selling for.

997
01:05:06,580 --> 01:05:17,460
1.1, 11 times cash flow, total debt, 0.74, forward PE, 2.37, and

998
01:05:17,460 --> 01:05:19,460
it's close to $80, 90.

999
01:05:19,460 --> 01:05:24,060
I mean, this company, you know, I haven't seen these multiples since '74.

1000
01:05:24,060 --> 01:05:26,380
Remember, I told you five times earnings.

1001
01:05:26,380 --> 01:05:30,820
Every one of these companies is less than five times earnings with depressed prices.

1002
01:05:30,820 --> 01:05:36,300
And you see a long-term opportunity here because of underinvestment in the space, correct?

1003
01:05:36,300 --> 01:05:40,100
Due to ESG and government policies and things over the last ten years.

1004
01:05:40,100 --> 01:05:42,300
There's a big problem with the government.

1005
01:05:42,300 --> 01:05:46,540
We could be energy independent.

1006
01:05:46,540 --> 01:05:51,220
We have, you know, 150 years of natural gas.

1007
01:05:51,220 --> 01:05:53,460
We have 90 years of oil.

1008
01:05:53,460 --> 01:05:55,820
The world is short of oil.

1009
01:05:55,820 --> 01:05:59,740
The Saudis have tried to increase their capacity.

1010
01:05:59,740 --> 01:06:01,980
One to 2 million barrels a day.

1011
01:06:01,980 --> 01:06:04,140
They've never been able to maintain it.

1012
01:06:04,140 --> 01:06:06,420
They are almost at the end.

1013
01:06:06,420 --> 01:06:10,820
They would rather lower production and increase the price.

1014
01:06:10,820 --> 01:06:12,540
Their budget is $90.

1015
01:06:12,540 --> 01:06:17,660
So in order for Saudi Arabia to break even, they've got to have $90.

1016
01:06:17,660 --> 01:06:18,660
Oil.

1017
01:06:18,660 --> 01:06:19,660
That's why they cut production.

1018
01:06:19,660 --> 01:06:25,980
They're not making any money unless it's $90 and they don't have any spare capacity.

1019
01:06:25,980 --> 01:06:34,620
And the other part is all over the world, the shortage of capacity to invest in oil.

1020
01:06:34,620 --> 01:06:40,380
And the government, everything they do is against the producing oil.

1021
01:06:40,380 --> 01:06:43,100
So what's going to make a change?

1022
01:06:43,100 --> 01:06:46,380
Well, there's one thing I've learned.

1023
01:06:46,380 --> 01:06:48,500
People change when they have to.

1024
01:06:48,500 --> 01:06:52,460
You can talk to people about eating food and hunger.

1025
01:06:52,460 --> 01:06:55,780
But if you're really hungry, you'll do anything.

1026
01:06:55,780 --> 01:06:57,060
Look at Germany.

1027
01:06:57,060 --> 01:06:59,220
They cut down their nuclear plants.

1028
01:06:59,220 --> 01:07:05,780
They went totally green energy, you know, solar and wind.

1029
01:07:05,780 --> 01:07:09,940
And now they're suffering so much because the short of energy that they're actually

1030
01:07:09,940 --> 01:07:12,380
chopping wood for heat.

1031
01:07:12,380 --> 01:07:17,220
Now, what do you think is going to happen when Germany, the majority of the population

1032
01:07:17,220 --> 01:07:18,460
are short?

1033
01:07:18,460 --> 01:07:22,900
All the government regulations are going to change because they have to.

1034
01:07:22,900 --> 01:07:25,340
Otherwise, they'll have a revolution there.

1035
01:07:25,340 --> 01:07:27,700
And it's the same thing all over the world.

1036
01:07:27,700 --> 01:07:31,820
So the world is totally short of energy.

1037
01:07:31,820 --> 01:07:38,140
The renewable energy is only 10 to 15 percent of all the energy that's produced.

1038
01:07:38,140 --> 01:07:42,860
They spent trillions of dollars over the last 12, 20 years.

1039
01:07:42,860 --> 01:07:47,660
And you know, they've reduced the energy from 86 percent to 82 percent.

1040
01:07:47,660 --> 01:07:52,500
So all these trillions of dollars and 20 years, and they haven't reduced the dependency

1041
01:07:52,500 --> 01:07:53,500
on oil.

1042
01:07:53,500 --> 01:07:57,620
And you're not going to get rid of oil because it's in 6,000 products.

1043
01:07:57,620 --> 01:08:00,300
And that's the reason we have inflation.

1044
01:08:00,300 --> 01:08:05,780
And we're going to have more inflation as time goes on because of all of these insane

1045
01:08:05,780 --> 01:08:07,300
government policies.

1046
01:08:07,300 --> 01:08:12,420
Now eventually, somebody else is going to get in the office, hopefully, will change that.

1047
01:08:12,420 --> 01:08:18,900
But even if they don't, the pressure from people who are not starving but freezing to death,

1048
01:08:18,900 --> 01:08:21,060
it's going to change that.

1049
01:08:21,060 --> 01:08:24,300
>> Sounds like these are some incredible opportunities.

1050
01:08:24,300 --> 01:08:29,780
But we started the podcast saying that you had some concerns when it comes to your

1051
01:08:29,780 --> 01:08:33,180
grandkids, some things you're thinking about.

1052
01:08:33,180 --> 01:08:35,980
What is concerning you today?

1053
01:08:35,980 --> 01:08:41,300
You know, I hate to even say this, but I'm going to.

1054
01:08:41,300 --> 01:08:47,180
Everything that we saw happened in Germany is happening in this country.

1055
01:08:47,180 --> 01:08:51,660
They're going against all the principles that this country was founded on.

1056
01:08:51,660 --> 01:08:57,160
And I said to myself one time when my dad was telling me that, you know, the Jewish people

1057
01:08:57,160 --> 01:09:03,500
in Germany were as highly thought of as professional Jewish people in this country.

1058
01:09:03,500 --> 01:09:08,540
They were the doctors, the lawyers, the engineers, the professors, everything.

1059
01:09:08,540 --> 01:09:11,060
They were right at the top of society.

1060
01:09:11,060 --> 01:09:15,020
And the Jewish people had lived in Germany for 400 years.

1061
01:09:15,020 --> 01:09:21,340
They were more Germans sometimes than Germans because they were so dedicated to the German

1062
01:09:21,340 --> 01:09:24,100
cause because they had such a great life there.

1063
01:09:24,100 --> 01:09:29,060
Matter of fact, my dad was showing me a picture of his father and I was shocked.

1064
01:09:29,060 --> 01:09:32,620
I looked at him and I said, "Pa, this guy looks like a Kraut."

1065
01:09:32,620 --> 01:09:34,540
And my dad says, "He was.

1066
01:09:34,540 --> 01:09:37,140
He even fought for Germany in the First World War."

1067
01:09:37,140 --> 01:09:38,500
And he was proud of it.

1068
01:09:38,500 --> 01:09:43,100
And all of a sudden this propaganda started at and so on and so forth.

1069
01:09:43,100 --> 01:09:45,140
And it changed the whole country.

1070
01:09:45,140 --> 01:09:52,060
So my wife did a story kind of made a video of my life and she would interview my mom and

1071
01:09:52,060 --> 01:09:55,660
dad more than I even interviewed him.

1072
01:09:55,660 --> 01:10:00,460
And she said, "Pa, do you think this could happen in the United States?"

1073
01:10:00,460 --> 01:10:03,180
And he said, "Yes, it can."

1074
01:10:03,180 --> 01:10:09,060
Because propaganda, if you believe in it, it can change your whole society.

1075
01:10:09,060 --> 01:10:14,060
And we have to be careful that these vile, the principles of the Constitution, the reason

1076
01:10:14,060 --> 01:10:20,900
we came as an immigrant here, was my dream to get my family in America because that was

1077
01:10:20,900 --> 01:10:22,980
the golden land, right?

1078
01:10:22,980 --> 01:10:31,260
So as you see these deterioration in the Constitution and the laws and executive orders, they are

1079
01:10:31,260 --> 01:10:33,420
getting around the Constitution.

1080
01:10:33,420 --> 01:10:39,940
And there's a lot of movements in here on the left that many Democrats don't even recognize

1081
01:10:39,940 --> 01:10:40,940
their own party.

1082
01:10:40,940 --> 01:10:45,700
I'm sure my dad was a Democrat, but if he was living today, he wouldn't be a Democrat.

1083
01:10:45,700 --> 01:10:48,100
He'd be in some other country.

1084
01:10:48,100 --> 01:10:50,820
Because there's just some bad signs here.

1085
01:10:50,820 --> 01:10:53,620
Now, hopefully that can be changed.

1086
01:10:53,620 --> 01:11:00,180
But my wife and I watched a movie about the Iranian Revolution.

1087
01:11:00,180 --> 01:11:04,620
And it was about a family who was a Jewish family who was very wealthy and they were diamond

1088
01:11:04,620 --> 01:11:11,060
dealers and they were at the crust of society and showed them with all their mansions and

1089
01:11:11,060 --> 01:11:14,580
the way they lived and all of the things.

1090
01:11:14,580 --> 01:11:17,980
And then all of a sudden the revolution came, all of a sudden they arrested them, they

1091
01:11:17,980 --> 01:11:23,240
threw them in jail and they went through all the tortures and I finally said to my wife,

1092
01:11:23,240 --> 01:11:24,240
you know what?

1093
01:11:24,240 --> 01:11:29,580
I don't want to finish this movie because it just brings back too many memories.

1094
01:11:29,580 --> 01:11:31,620
And it was just horrible.

1095
01:11:31,620 --> 01:11:38,140
But here was an Iranian country that at one time was very prosperous and very Western like

1096
01:11:38,140 --> 01:11:42,420
and then the new government came in and look at them now.

1097
01:11:42,420 --> 01:11:45,940
And so this is the thing that we have a concern.

1098
01:11:45,940 --> 01:11:50,160
Matter of fact, I had a meeting with the client yesterday, very wealthy people, very

1099
01:11:50,160 --> 01:11:51,920
successful.

1100
01:11:51,920 --> 01:11:56,540
And we were talking about this and I said, let me ask you a question.

1101
01:11:56,540 --> 01:12:00,100
If you had to move out of this country, where would you go?

1102
01:12:00,100 --> 01:12:02,420
The room got silent.

1103
01:12:02,420 --> 01:12:05,740
Nobody could come up with a country.

1104
01:12:05,740 --> 01:12:10,820
And so I said, well, if that means what you're telling me is you can't find another country,

1105
01:12:10,820 --> 01:12:13,460
you better take care of this country.

1106
01:12:13,460 --> 01:12:17,140
We have to convince people of the Templeton way.

1107
01:12:17,140 --> 01:12:22,500
I mean, can you imagine if John Templeton was living today, saying about what was going

1108
01:12:22,500 --> 01:12:23,500
on?

1109
01:12:23,500 --> 01:12:29,820
Can you imagine creating laws as disincentives to come up with a mortgage and penalize people

1110
01:12:29,820 --> 01:12:33,860
with good credit to subsidize people with poor credit?

1111
01:12:33,860 --> 01:12:35,820
What are you going to produce?

1112
01:12:35,820 --> 01:12:40,420
You're going to produce people who continue to develop poor credit because they're not going

1113
01:12:40,420 --> 01:12:41,420
to worry about it.

1114
01:12:41,420 --> 01:12:44,740
If you want to buy a home, you get a subsidy.

1115
01:12:44,740 --> 01:12:47,660
Well, that's the wrong thinking.

1116
01:12:47,660 --> 01:12:51,500
And our young people are scary.

1117
01:12:51,500 --> 01:12:55,780
All these years of easy money that has created so much moral hazard in the system.

1118
01:12:55,780 --> 01:12:59,780
And I almost wonder if we're too far down the slope

1119
01:12:59,780 --> 01:13:02,340
to do anything about it.

1120
01:13:02,340 --> 01:13:03,340
You know what?

1121
01:13:03,340 --> 01:13:04,940
That's the good thing about America.

1122
01:13:04,940 --> 01:13:06,660
That's the thing that keeps me to faith.

1123
01:13:06,660 --> 01:13:09,500
We just finished a newsletter recently.

1124
01:13:09,500 --> 01:13:16,100
And we ended it by saying, with all the problems, America has certain things that no other

1125
01:13:16,100 --> 01:13:17,100
country has.

1126
01:13:17,100 --> 01:13:18,820
Now, give you a good example.

1127
01:13:18,820 --> 01:13:25,780
We got caught flat-footed in the war and the Second World War.

1128
01:13:25,780 --> 01:13:27,180
We weren't prepared for war.

1129
01:13:27,180 --> 01:13:31,540
They even had some tanks that were from the First World War.

1130
01:13:31,540 --> 01:13:33,500
That's how bad we were.

1131
01:13:33,500 --> 01:13:39,220
But once America realized they got caught in Pearl Harbor and all the things that

1132
01:13:39,220 --> 01:13:42,620
was happening with Germany, they started the Lend-lease program.

1133
01:13:42,620 --> 01:13:51,380
I gave a whole program on it and I showed that when private companies got together and

1134
01:13:51,380 --> 01:13:56,460
the government and they all had the same goal to produce manufacturing goods and equipment

1135
01:13:56,460 --> 01:14:01,860
for the war, they were able to do marvelous things just to give you an example.

1136
01:14:01,860 --> 01:14:08,780
They figured out how to produce a battleship in 11 days, a complete battleship.

1137
01:14:08,780 --> 01:14:12,020
They were producing tanks one a day.

1138
01:14:12,020 --> 01:14:20,220
And so there is just an enormous manufacturing possibility here that if they harness all the

1139
01:14:20,220 --> 01:14:24,380
ingenuity of America, we can outproduce anybody.

1140
01:14:24,380 --> 01:14:28,220
And I'll tell you, the reason we won the Second World War is not because our soldiers were

1141
01:14:28,220 --> 01:14:32,020
superior, but we threw equipment after equipment after them.

1142
01:14:32,020 --> 01:14:34,620
We just drowned them in that equipment.

1143
01:14:34,620 --> 01:14:40,980
And so Germany could not compete with us even though they had ten-year head start because

1144
01:14:40,980 --> 01:14:43,140
we just outproduced them.

1145
01:14:43,140 --> 01:14:49,420
But what I would like to see is somebody get a hold of this country and say, let's prepare

1146
01:14:49,420 --> 01:14:52,300
for it because you know it's going to happen.

1147
01:14:52,300 --> 01:14:54,020
Look what China is doing.

1148
01:14:54,020 --> 01:15:01,220
They are just drawing circles around us and they sent the spy balloon up over all our

1149
01:15:01,220 --> 01:15:07,340
nuclear facilities and nobody did anything and there was no penalty to China.

1150
01:15:07,340 --> 01:15:16,660
I mean it's just unthinkable, but if America gets pushed, they can do a lot.

1151
01:15:16,660 --> 01:15:21,180
And so that's a capacity we still have.

1152
01:15:21,180 --> 01:15:23,900
But it's as good as it was in the 70s.

1153
01:15:23,900 --> 01:15:28,540
In the 70s our debt to equity was about 35 to 40%.

1154
01:15:28,540 --> 01:15:33,620
Now it's 125%.

1155
01:15:33,620 --> 01:15:37,700
The 70s inflation wasn't due to excess printing.

1156
01:15:37,700 --> 01:15:43,100
It was due to the fact that the dollar collapsed and most people don't realize that the real

1157
01:15:43,100 --> 01:15:46,260
inflation doesn't come from just printing money.

1158
01:15:46,260 --> 01:15:51,020
It comes from the dollar collapses and you have to pay more for everything.

1159
01:15:51,020 --> 01:15:55,100
And the dollar collapsed at a level to such.

1160
01:15:55,100 --> 01:16:02,700
It was got so low that I even wrote an article at the bottom of the 74 period and I have

1161
01:16:02,700 --> 01:16:04,780
the article right here.

1162
01:16:04,780 --> 01:16:09,100
It's called, Don't Sell the Dollar Short.

1163
01:16:09,100 --> 01:16:11,100
Can you hold it up?

1164
01:16:11,100 --> 01:16:12,100
Okay.

1165
01:16:12,100 --> 01:16:14,900
I'll have to check that out.

1166
01:16:14,900 --> 01:16:15,900
Yeah.

1167
01:16:15,900 --> 01:16:22,700
Now let me just show you what happened for the dollar after I wrote that article.

1168
01:16:22,700 --> 01:16:27,860
That was in 79 and that was written right here and look what happened to the dollar.

1169
01:16:27,860 --> 01:16:29,860
A little higher.

1170
01:16:29,860 --> 01:16:34,180
I see.

1171
01:16:34,180 --> 01:16:35,180
It's okay.

1172
01:16:35,180 --> 01:16:37,180
So look.

1173
01:16:37,180 --> 01:16:41,340
Sorry about that.

1174
01:16:41,340 --> 01:16:42,340
That's okay.

1175
01:16:42,340 --> 01:16:43,340
I see.

1176
01:16:43,340 --> 01:16:44,340
Yeah.

1177
01:16:44,340 --> 01:16:48,060
It's amazing.

1178
01:16:48,060 --> 01:16:51,340
So look what happened to the dollar, look how high it went.

1179
01:16:51,340 --> 01:16:57,660
So we are right here and what I did in the article I took six items and I compared them in

1180
01:16:57,660 --> 01:17:02,740
different currencies and it showed how cheap the dollar was.

1181
01:17:02,740 --> 01:17:06,140
That's how I wrote the article just to give you an example.

1182
01:17:06,140 --> 01:17:13,540
The German mark was so high and we invested in the Swiss franc in the 70s.

1183
01:17:13,540 --> 01:17:20,700
But the German mark was so high that you paid $40,000 for a Mercedes but the dollar Cadillac

1184
01:17:20,700 --> 01:17:23,380
only cost $10,000.

1185
01:17:23,380 --> 01:17:29,340
So you can see the relationship between was the Mercedes really four times better or was

1186
01:17:29,340 --> 01:17:33,100
it because of the fact that the currency was changed?

1187
01:17:33,100 --> 01:17:34,100
Sure.

1188
01:17:34,100 --> 01:17:40,420
So that's what I'm concerned about in the future here that not only do we have all the

1189
01:17:40,420 --> 01:17:46,620
earmarks of inflation but we have the debt situation and we have the books and then you

1190
01:17:46,620 --> 01:17:51,940
have the whole world trying to get away from the dollar.

1191
01:17:51,940 --> 01:17:56,620
What do you recommend is the best way for investors to protect themselves in this environment?

1192
01:17:56,620 --> 01:18:02,900
Well, the one thing I learned from the 70s just to give you an example.

1193
01:18:02,900 --> 01:18:11,740
An unweighted index of 21 commodities produced a 20.5% return.

1194
01:18:11,740 --> 01:18:16,540
The S&P during the same time produced a 2.5% return.

1195
01:18:16,540 --> 01:18:21,740
So when the dollar is going down and you've got inflation the way you invest is you buy

1196
01:18:21,740 --> 01:18:25,500
assets, you buy things, you don't buy equities.

1197
01:18:25,500 --> 01:18:30,420
Now we buy equities in oil companies and gas companies.

1198
01:18:30,420 --> 01:18:37,380
We own bullion, gold, 5% of gold, we own copper and almost every commodity that you could

1199
01:18:37,380 --> 01:18:41,620
think of but we don't believe in investing into the futures market.

1200
01:18:41,620 --> 01:18:44,820
We either buy the company or we buy the outright.

1201
01:18:44,820 --> 01:18:49,540
So I believe you're in, I believe nuclear energy is going to come back so we are buying

1202
01:18:49,540 --> 01:18:54,060
uranium and considering even more.

1203
01:18:54,060 --> 01:18:55,180
That's another thing.

1204
01:18:55,180 --> 01:19:01,220
And so basically I'll give you an idea of what the study I made to make it real simple.

1205
01:19:01,220 --> 01:19:10,140
Let's say you divided the S&P by the commodity index, one that's been going back to 50.

1206
01:19:10,140 --> 01:19:17,100
It's at 7.5 times which means if I showed you a chart it's almost right at the top.

1207
01:19:17,100 --> 01:19:22,780
If you divide the commodity, if you divide the S&P by the commodity it shows it's the lowest

1208
01:19:22,780 --> 01:19:24,820
in 20 or 30 years.

1209
01:19:24,820 --> 01:19:28,820
So obviously from a value standpoint were value investors.

1210
01:19:28,820 --> 01:19:32,700
If you want to go where the value is, the value is in the commodities.

1211
01:19:32,700 --> 01:19:39,380
Now what I find by talking to other investment advisors, they say you know, I don't like commodity

1212
01:19:39,380 --> 01:19:41,780
companies because they're the worst investment.

1213
01:19:41,780 --> 01:19:48,380
They're absolutely right but they are at the right time in the right place one of the best

1214
01:19:48,380 --> 01:19:49,540
investment.

1215
01:19:49,540 --> 01:19:57,740
No matter of fact during the 70s like I said the commodities outperformed by 20% per year,

1216
01:19:57,740 --> 01:19:59,460
for eight years.

1217
01:19:59,460 --> 01:20:06,200
So we are in a commodity bull market and it's going to continue to go and the US stock

1218
01:20:06,200 --> 01:20:08,200
market is still overvalued.

1219
01:20:08,200 --> 01:20:14,860
Matter of fact I don't know what your favorite method of evaluating the market is but let's

1220
01:20:14,860 --> 01:20:18,900
just say you use market capitalization to GDP.

1221
01:20:18,900 --> 01:20:27,700
If you took the Wilshire 5000 that's 5000 stocks divided by the GDP, we are as high

1222
01:20:27,700 --> 01:20:32,100
as we were in 2000 when we had a gigantic bubble.

1223
01:20:32,100 --> 01:20:36,980
So the bubble has come down from two to one and a half but if you look at a chart it's

1224
01:20:36,980 --> 01:20:38,460
right where it is.

1225
01:20:38,460 --> 01:20:43,340
So and you look at the commodity markets, they're the cheapest to cost of production and

1226
01:20:43,340 --> 01:20:44,340
everything.

1227
01:20:44,340 --> 01:20:49,180
The reason is the commodities are so cheap is because we didn't invest in the commodity

1228
01:20:49,180 --> 01:20:50,180
market.

1229
01:20:50,180 --> 01:20:55,380
You know the S&P was so good, why would anybody want a commodity company when you can

1230
01:20:55,380 --> 01:20:58,900
have a growth company with no interest rates?

1231
01:20:58,900 --> 01:21:05,460
But now it's changing and now all of these companies, these commodity companies that got

1232
01:21:05,460 --> 01:21:11,700
butchered and a lot of the oil companies went out because the shareholder wanted production

1233
01:21:11,700 --> 01:21:17,500
in oil, production in copper and they leveraged themselves and they kept doing it and then

1234
01:21:17,500 --> 01:21:19,860
it turned and they all got busted down.

1235
01:21:19,860 --> 01:21:27,220
So not only did they not invest but they're at cheap prices and so some of these oil and

1236
01:21:27,220 --> 01:21:31,980
gas companies, the smaller companies, I mean they're trading as cheap as ever.

1237
01:21:31,980 --> 01:21:36,660
Now let's take a company like Pioneer Natural Resources, PXD.

1238
01:21:36,660 --> 01:21:43,780
This thing is the single best big owner of the Permian basin.

1239
01:21:43,780 --> 01:21:52,500
They are paying a 12% dividend and Exxon has, there's rumors that they talked together they

1240
01:21:52,500 --> 01:21:54,580
might think about an acquisition.

1241
01:21:54,580 --> 01:22:00,380
Well the stock is 225 dollars, there's no way this company is going to go out for less than

1242
01:22:00,380 --> 01:22:07,500
300 dollars, maybe 350 and at the same time they've got a great, the best balance sheet in

1243
01:22:07,500 --> 01:22:13,340
the industry, the best acreage, paying a 12% dividend.

1244
01:22:13,340 --> 01:22:17,220
I mean, what do you need to know?

1245
01:22:17,220 --> 01:22:18,220
It's great.

1246
01:22:18,220 --> 01:22:24,660
Well you have described a lot of opportunities for investors as well as some concerns and

1247
01:22:24,660 --> 01:22:29,180
I certainly appreciate all the time you've spent with us today.

1248
01:22:29,180 --> 01:22:34,900
I love, and never get tired of your story Arnold, I think it's such an inspirational story

1249
01:22:34,900 --> 01:22:43,220
for everyone to hear your life's journey, the passion you have for investing and I

1250
01:22:43,220 --> 01:22:44,220
keep this on my desk.

1251
01:22:44,220 --> 01:22:47,100
It's a book that you gave me, Timeless Thoughts.

1252
01:22:47,100 --> 01:22:48,100
Yes, that's.

1253
01:22:48,100 --> 01:22:53,980
And let me tell you something about that that I discovered as the years went by.

1254
01:22:53,980 --> 01:22:59,020
You know how they always tell you to listen to yourself, get quiet and all the great truth

1255
01:22:59,020 --> 01:23:02,940
and knowledge is in within ourself.

1256
01:23:02,940 --> 01:23:08,620
The one I discovered by following quotes is the reason people get attracted to quotes,

1257
01:23:08,620 --> 01:23:10,820
it is the subconscious telling them.

1258
01:23:10,820 --> 01:23:13,460
It's kind of like listening to that voice.

1259
01:23:13,460 --> 01:23:20,180
So I have 5,000 quotes in my computer and what I do is I file it by subject.

1260
01:23:20,180 --> 01:23:26,020
So anytime I'm ready to study a subject, I have quotes by the greatest people who ever

1261
01:23:26,020 --> 01:23:27,180
lived.

1262
01:23:27,180 --> 01:23:32,660
Their opinion of that and I can't even begin to tell you when you read the Stoics and the

1263
01:23:32,660 --> 01:23:39,140
ancient Greek and Roman philosophies, what they said about their society is exactly what's

1264
01:23:39,140 --> 01:23:42,220
happening today.

1265
01:23:42,220 --> 01:23:43,980
You just have to read that.

1266
01:23:43,980 --> 01:23:50,220
But anyway, I have probably about 8,000 quotes now, but I keep on doing it.

1267
01:23:50,220 --> 01:23:51,940
It's one of my hobbies, you know.

1268
01:23:51,940 --> 01:23:53,260
Well, this is amazing.

1269
01:23:53,260 --> 01:23:55,620
Can listeners buy a copy of this?

1270
01:23:55,620 --> 01:23:57,420
How would they find a copy of this?

1271
01:23:57,420 --> 01:23:59,420
I'd be happy to send it to them free.

1272
01:23:59,420 --> 01:24:01,500
It's my gift to everybody.

1273
01:24:01,500 --> 01:24:05,540
And so I don't purposely don't charge because it's not me.

1274
01:24:05,540 --> 01:24:08,100
It's all the great people speaking to them.

1275
01:24:08,100 --> 01:24:10,060
And so I don't want to make money off that.

1276
01:24:10,060 --> 01:24:11,460
I want to give it as a gift.

1277
01:24:11,460 --> 01:24:17,300
So anybody who wants a copy of it, I'm happy to send it to them and it's my pleasure.

1278
01:24:17,300 --> 01:24:18,300
That's very generous.

1279
01:24:18,300 --> 01:24:20,820
There are many in here I'm going to use with my kids.

1280
01:24:20,820 --> 01:24:24,020
The only disability in life is a bad attitude.

1281
01:24:24,020 --> 01:24:25,820
So I like that.

1282
01:24:25,820 --> 01:24:26,820
I know.

1283
01:24:26,820 --> 01:24:27,820
I know.

1284
01:24:27,820 --> 01:24:28,820
I know.

1285
01:24:28,820 --> 01:24:32,260
Arnold, thank you so much for your time today.

1286
01:24:32,260 --> 01:24:33,260
Great.

1287
01:24:33,260 --> 01:24:34,260
Great.

1288
01:24:34,260 --> 01:24:35,260
Great.

1289
01:24:35,260 --> 01:24:36,260
Great.

1290
01:24:36,260 --> 01:24:37,260
Highly valued and thank you again.

1291
01:24:37,260 --> 01:24:39,220
Nice meeting you, Scott and Lauren.

1292
01:24:39,220 --> 01:24:43,060
Good luck to you guys and thank you for the opportunity to speak with you.

1293
01:24:43,060 --> 01:24:44,540
OK, thank you.

1294
01:24:44,540 --> 01:24:48,180
Thank you for listening to "Investing the Templeton Way."

1295
01:24:48,180 --> 01:24:53,500
Please be sure to subscribe on your favorite podcast player.

1296
01:24:53,500 --> 01:25:01,740
To view the show notes and resources mentioned in today's show, head to investingthetempletonway.com.

1297
01:25:01,740 --> 01:25:11,740
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