저자: TerrySmith · 외국인
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Terry Smith는 투자자는 기업 경영 경험에서 실행과 실무의 중요성을 배운다고 강조한다. 일상 업무는 화려하지 않으며 모델링, 데이터 수집, 실적 콜 청취, 기록이 대부분이라고 설명한다. 준비 부족은 용납할 수 없다는 'Proper preparation prevents poor performance' 원칙을 강조한다. 외부 이단자로서 독립적 사고가 장기 투자에 유리하다고 주장한다. 증권사 리서치와 브로커 소통을 차단하고 시장 뉴스도 끊고 장기 관점을 유지한다고 말한다. 구체적인 개별 종목이나 시장 방향에 대한 예측 발언은 없다.
다듬은 글
I think you're also unusual in that you were not only a very successful stock market player, but also actually a very successful CEO. I mean, you were the CEO of two public brokerage firms , one of which I think you grew to 3,000 employees, and the other you took public, and there were a lot of mergers, spinoffs, etc.
And that was back in the 1990s and 2000s. When I read about your background as a CEO, it reminded me of a famous quote from Buffett: "I'm a better investor because I'm a businessman, and a better businessman because I'm an investor." So I'm wondering if you could talk a little bit about what you learned as a CEO that helped you as an investor.
Yeah, look, one of the things is that change often takes time. Despite the fact that certain decisions can be made quickly. You still need to adapt to them, to change as a person. This often requires money, effort, and much more; I have a close friend who has a steel business in the UK. He said that when he was at a public company, which is no longer the case—he became a private owner— the questions from analysts about how to turn things around reminded him of this .
It's funny, he says: "They think I have two buttons on the wall in my office : a red one and a green one." When I come in the morning, I click the green one that says "make money." And when I'm about to leave, I think: " Oh, I must not forget to press that same red button." And I press, he says: " Everything is a little more complicated." We need to develop products, receive orders, create molds, right ?
And I think until you've done it yourself , it's hard to understand. It's like people who sometimes leave fund management and then try to manage a fund. And I said, " Well, it's like when I was head of research at UBS." People came to me because one of our analysts was a very big guy, a hammer thrower in college, and he had gained a lot of weight.
And when he sat on the toilet seats, he would break them, because, you know, they're on these little mounts , they're raised. If this guy didn't care, and people came up to him and said, "I just cut my ass on the toilet," he would just...you..." I would have to respond, " Maybe you'll sit down a little more carefully?" Because people come to me." You know, I would say this : the day-to-day work of running a business is not glamorous at all.
A big part of everyday work isn't posing like Rodin's "The Thinker" or coming up with grand strategic ideas, right? It really all comes down to execution and implementation. And in many ways, execution and implementation involve addressing issues with toilet seats and things like that. That's all. Just like that.
And things aren't much different with investing, right? Regarding investments, you said that in many ways it is: you have these grand theories, principles that are timeless, but there is also the daily routine: listening to conference calls, building models and so on. To every new employee we hire who achieves some success, I always say the same thing before they start: everyday work is not glamorous .
What we do is not sitting here with big investment ideas. I said that sometimes we don't have any ideas for several years in a row. You know , the number of companies like Microsoft or IDEX that we find is relatively small. And if you have an idea like that , we'd love to hear about it, but when you bring in three in the first week, we start to get a little suspicious.
The reality is modeling, collecting data, listening to calls, writing notes, and keeping records so we can reread them and see what happened before. And that's actually the vast majority of what we do. You told me before the recording about the sign that hung in your office. Can you tell us about it , because it kind of embodies this mentality of persistent, incremental progress and avoiding mistakes.
I hung five letters "P", five capital "P"s in a frame. And these five "Ps" mean: " Proper preparation prevents poor performance." Don't show up anywhere without being prepared in advance. Don't go to a meeting with a company unless you've read the latest results and the notes you wrote earlier, you know?
This happened when I was working as a broker at UBS, and the CEO and sales manager and I went on a business trip to Scotland. The sales manager joined us from another brokerage firm. I looked at our numbers in Scotland—they were terrible, and that manager was assuring us that we were number one or in the top three there.
But we clearly weren't like that . So we decided to fix that by starting to work directly in Scotland. Why not ? We met there with representatives of General Accident. This was in Perth. These were wonderful guys . They were very nice, but with that special Scottish hardness, which is actually good, and while talking about the service they asked, "So, what do we think of your service?" "How much did we pay you in commission as a broker last year?" I looked at the sales manager, and he said, "I don't know." I say, "You don't know." They say, "Well, we paid you 4 million pounds." Then they asked: " How much did we pay you a year earlier?" I don't know either.
5 million. They made it clear that they were not interested in such meetings or filling out surveys . They voted with their wallets, right? When we left the meeting, I said to the CEO, "I would fire this guy." I said that going to meet you in a room without having basic information about the client is just shameful, and there is no excuse for it.
There is no excuse for coming to a company interview when you are being interviewed by an investor. Imagine I come to you and say, "Terry, I want to ask you about my investments," and you say, "Do you know how much you have invested?" "No, I don't really have..." " How much do you have there?" That would be a bad start, wouldn't it?
" When did I invest?" "I don't really know." We have all the data about this. If I didn't bother to find out whether you made money with me or lost it? How much did you earn? Did you deposit money or withdraw it? The very idea of coming without proper preparation is simply absurd. I, I think when I, I look back at your youth, yeah, when you, you know, came from this poor background, and then, you know, you, you're like a working-class guy going to University College in Cardiff, and then you, you know, you get an MBA , but he's not, he's not from Harvard or Wharton, right?
He's from Henley School of Management, you know. I wonder if there's something about being an underdog and having to fight for everything you've done that's really been the key to your success that you... I don't know why something resonates here. I hope, I hope, this doesn't get on the, on the record, but I wonder if there's something really important to your success in that you had to fight, to be persistent, to work harder, and you've always been kind of a super competitive underdog.
Does this resonate with you? Yes, I think that's pretty apt actually. I think that's , that's a big part of it. I was never part of whatever the establishment was. I mean, I suspect we have a new establishment now that has replaced part of the old establishment. Um, I was never a part of that. I never wanted to be a part of this, really.
It never, ever occurred to me that I particularly wanted to join any club or anything like that. Um, literally or metaphorically . And yeah, I always felt like I was a bit of an outsider and had to work for things, and I think it's probably good, um, generally, to be in that situation. I was talking to someone at dinner, and there was someone's son at dinner , and, uh, the parents were leaving, and, uh, he said to me, " If I had a son, I would send him there ." I said, "Would you send it?" He said, "Why?" He said, "This is, you know, the place where everyone who runs the world goes." I said, "I just don't see much of a positive in this.
" I think I would, uh, rather have him go to a very normal school and learn how the world really works. My friend, the steelworker I told you about, he has a family business. He is the descendant of a family that spans several generations, and he refused to go to public school and enrolled in graduate school himself.
Uh, and it's for his benefit, but also for his own good, because I think when you go around a foundry and talk to people, you can understand a little bit better what their problems are and what they're doing if you've actually been around them from time to time . This is such an interesting question.
You know, I went to Eton and Oxford, but I'm a Jewish boy from a family that... fled Russia, Ukraine, and Poland. And so I remember coming to my friend's house and... like an outsider. Yes, that's right. Bruce Greenwald once said to me, "Oh, yes, a Jew from Eton." That is, we weren't there at all . Yes, I'm surprised there were so many.
I think there were those who pretended it wasn't so. I think some hid the fact that they were Jewish. So I think being an outsider, for me, is being somewhere in the middle between an outsider and an insider. So I'm comfortable doing interviews or talking to anyone, because I studied with people like Boris Johnson and David Cameron, so I know they weren't anything special, and you don't feel that fear because...
here's my castle, I'm shocked, just shocked to hear that. They were very...Boris , I remember when I was a little boy, I was 13, and he was the headman, and he was incredibly charismatic and had a bright personality. But the idea that these privileged intellectuals who could write Greek poetry should be making fateful decisions about the future of the country just because they went to Eton and Oxford...
It was quite funny if you knew them, because I knew what a fool I was, even though I was, you know, the best English student in the class. I was as smart as many of those kids, and I know I'm a fool. But the ideal place, if you can achieve it—and I don't think many can— is to be able to get along and communicate with people, regardless of their background, and if you can do that, you've achieved the right outcome.
If you can have lunch at Buckingham Palace, sitting next to Boris—and I've been to lunches there—and at the same time go to a boxing gym with young black guys, then I think you've reached a good level. That's my opinion, and sometimes I feel like I'm lucky in that regard, that I can combine these things and not feel out of place in either .
I'm curious that one of your first clients was Sir John Templeton, and you mentioned earlier how you went to the Bahamas, to KT, to see him and Mark Holesco, his chief investment officer. I write about Sir John in my book because I went and interviewed him in the Bahamas, spent a day with him, about 25 or 26 years ago.
And in a way, you seem to have recreated his lifestyle by going to Mauritius, away from the hustle and bustle of the city, to think for yourself. Can you tell me if I'm right that Templeton somehow influenced you, maybe in the same way that that movie once influenced you, and you thought, "Oh, there's another way to do this"?
And also, how did it become an advantage for you to settle in such an independent, non- partisan way, very far from Wall Street and the City of London? I actually imitate Todd more than you might think, because as you probably know , he had a habit of going to the sea every day . I swim to the reef and back whenever I can, which is at least two or three times a week.
And my colleagues say, "Oh, that's interesting. What are you doing there?" And, oddly enough , when I do something, I often think about him. Strange, is n't it? Just doing the job—it's like what he did in the Bahamas. Yes, it definitely had an impact on me— seeing such a person at work. I always remember how, at the very beginning, he talked about how to react or not react to events.
He said, meaning that we are talking about times before the Internet. He said that the newspapers arrive a day late. I receive the Wall Street Journal the day after it is published. So by the time a problem arises, it's too late to panic. And he made an important point in a somewhat mundane way that the events that we often describe in our daily news...
We write to each other and look back at certain periods of time, sometimes just a few weeks , sometimes a few months and so on, and say, "If someone had gone to sleep that day and woke up today, and in the meantime all these events had happened, you know, terrible things like elections or wars or pandemics and so on, and because the market had stayed the same , if they hadn't seen all these events , I wonder what conclusion they would have come to." All this is happening, so was any of what happened really that important ?
For the most part, the answer is no, it wasn't. And I think he and Buffett—although I've met Buffett and all that —the way he explains it is valuable. And there were other people too. I think they're not the only ones who decided, you know, not to go with the flow. I talk to people I know in this industry who work from London or New York.
I always say a lot of these guys need a GPS to get beyond West One or SW1. I mean, I don't know how you do it. And I ask them: why are you there? And they answer: well, state-owned companies. I say, "Are you an investor in Procter & Gamble?" They say, "Yes." I say, "They're in Cincinnati, right?" And the reality is this: they like to be able to go and talk to other people who are doing the same thing —their brokers or other managers, they like to meet them for lunch, for drinks, to chat and compare their experiences.
And the reality is that they don't really want to stand out from the crowd, which is perfectly normal. I mean, there's an old quote by John Maynard Keynes that the worst thing for a career is to deviate from the norm. Even if you are successful, it still remains something repulsive to people, and they mostly don't want to stray too far from the norm.
Um, and if you're trying to invest for the really long term, being in that kind of environment is detrimental. How do you actually structure your lifestyle and your ecosystem to be able to act in this long-term, patient, independent, and decisive way, and to some extent resist, resist, you know, even the pressure to think about short-term outcomes in a world where everything is becoming increasingly short-term?
We do not communicate with any broker or anyone. We do not take any research from brokers. We don't talk to them, so we have our own. Why? Well, you know, boxers get paid to fight, so they like to fight. Lawyers are paid to argue, so they love arguing. And brokers are paid for transactions. Guess what they like to do?
We were brokers ourselves. Oh, of course. That's right. Chill was a broker. We did this work. We know what this is, right? We don't communicate with any of them . We don't take any research from them. I'm getting a small tsunami of messages offering my services. No. So we don't accept any of this . We are completely cut off from this.
Plus, I'm in a different time zone. I mean, for the first four hours of the day, I have no outside contact, except with a few colleagues who are already awake. So, I have a significant part of the day where I can reflect on what I read and learned the day before, and decide whether I need to do, say, or ask something, without any outside interference.
And that really helps, and as for Wall Street—I'll turn off the news after I'm done talking to you. I'll keep working, but I'll switch off, and unless something really big happens, like Microsoft going bankrupt, then call. And besides that—don't bother. The remoteness of Mauritius is something people talk about in the context of the world, and living in a different part of it can be quite significant.
I live on an island 800 kilometers off the coast of Africa, where the majority of the population is Indian, and you can learn almost everything about Mauritius through the system of public holidays. There are two days a year for Christians, Hindus, Tamils, Muslims, Chinese, as well as Independence Day and the day of the abolition of slavery.
In other words, people talk a lot about diverse societies. This is a truly diverse society. People on the street, if they don't know who you are, will first address you in French if you're white, and in Creole if you're black , right? These are the most common languages here, and there are also quite convenient connecting flights to China from here.
And, um, we're in the same time zone as Dubai, and, um, gradually, different ways of seeing the world start to seep into your consciousness. I think if you live somewhere, do you arrange yourself very, um, very freely and independently? I mean, it was a long way, I mean , literally a long way, you're 10,000 kilometers from London.
But I mean, you, to some extent, the fact that you weren't part of " your" company, that you didn't grow up, you know, going to elite schools and then going to work in Mayfair at a hedge fund or something, allowed you to chart your own course in a very unusual way. Yes. Yes. I think so . Yes. You are absolutely right.
In many ways. We will not rule out other things. Good luck too. But yeah, I also had mentors along the way, you know. I remembered a couple of them, and , uh, I probably had two, three or four mentors. I think when people ask me about careers and what to do, and they all want to build the latest fintech, I always say: get a job at an organization that will provide you with training, take everything they have to offer, and if you can find a mentor, someone who can teach you how it works, it will give you experience that you would n't otherwise get, and sometimes it's quite painful.
What I mean is that mentoring is not always a positive experience. You also have difficult cases. I always remember working in a bank branch, and we had to reconcile the accounts of the branch itself: a balance sheet of its operations, you know , in terms of loans and deposits, the amount, the capital that we're working with, that's being provided, and, um, you had to reconcile that, um, and all the separate accounts, the ledgers that went into it.
And I remember, uh, unbalanced books , and, uh, when I was an intern, the assistant manager took me and said, "Go into the office and come back in an hour," said, "I balanced this, and I didn't go to university." True. Yes. Well, you need people every now and then to tell you that you can do better than this.
The world is not just solid positive reinforcement. Every now and then someone told you that you were wrong.
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