Planting Seeds & Life-Changing Reads: Berkshire Hathaway's Chris Davis on the Next Generation of Investors
Davis's "one simple trick" to present impressionable young minds with loads of timeless wisdom and life-changing lessons — while putting a little money in their pockets, too...
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Since joining Berkshire Hathaway’s board of directors a little over two years ago, Chris Davis has proven to be an unflinching defender of the company’s unique culture. A bulwark against those would-be change agents who demand conformity and acquiescence to the Wall Street hive mind.
Every time I hear Davis speak — whether it be on William Green’s excellent Richer, Wiser, Happier podcast or his recent guest spot on Excess Returns — I’m more and more impressed with his clear-eyed determination to protect and preserve what Warren Buffett and Charlie Munger so assiduously built at Berkshire.
To carry the flame of the Berkshire way long after both of those great men are gone.
This long-term, multi-generational outlook comes quite naturally to Davis. He is the scion of the famous “Davis Dynasty” — grandson of the late Shelby Cullom Davis and son of Shelby Davis — an illustrious family tree of money managers with a value bent.
Although his route into the money game (or stewardship, as he prefers to call it) was a circuitous one — including time spent in the seminary — Davis keenly understands the importance of passing on the many lessons and teachings that shaped him to the next generation of thinkers coming up the path behind him.
Today, I’d like to take a closer look at one ingenious way that Chris Davis plants the seeds of financial literacy and multi-disciplinary thinking in this group.
One easily replicable with the young people in our own lives…
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Reading for Profit 📚💰
A few years ago, Chris Davis joined The Meb Faber Show and shared his “one simple trick” to present impressionable young minds with loads of timeless wisdom and life-changing lessons — while putting a little money in their pockets, too.
A really great way to get your kids that sort of information [about being an intelligent investor] is if you come up with a list of books and pay them $100 for each book that they read and then write a summary of that book. If the books are really valuable, that will be the best money you ever spend.
And Davis isn’t exactly spitballing here.
He goes on to say that his investment firm often runs this very play when approached by high school students in search of a summer job.
We don’t tell them that it’s make-work, but we say, “Well, we have all these books we recommend to clients and it would be really useful to have a summary of these books [on our internal website]. So your summer job is to write those summaries for us for these ten books.”
Of course, we don’t need the summaries — but it’s a great gift to those kids.
Reading the right book — at the right time — can change a person’s life. Opening his or her mind to a new way of thinking and laying out a better path for the future.
But, in this brave new world of TikTok and social media, it’s a big enough challenge just to convince someone to put the phone down and pick a book up.
That’s where the $100 comes in.
(And if $100 sounds a little steep, feel free to substitute in whatever number works best for you.)
Could any parent, mentor, or employer ever hope to compound an investment faster or better than spending a modest amount to have a young adult read and internalize The Intelligent Investor or Where Are The Customers’ Yachts?
I doubt it.
For anyone interested: Davis specifically recommends a book like Moneyball to start. What seems on the surface like a breezy book about baseball actually masks a deep (but accessible) exploration of arbitrage and resource allocation. About how to think outside the box and make the most out of whatever hand you are dealt in life.
What else can we add to the list?
Davis also mentions Ship of Gold (a treasure-hunting deep dive “all about people that brought a rigorous, disciplined, analytical framework to an industry that was characterized by speculation, old wives’ tales, [and] hokum”), Fortune’s Formula (a similar look at games of “chance”), and Titan (Ron Chernow’s celebrated biography of John D. Rockefeller).
Pretty much any well-written history book. “There is no better teacher than history in determining the future,” Charlie Munger once said. “There are answers worth billions of dollars in a $30 history book.”
Might I recommend expanding the concept of a “book” to include a collection of Warren Buffett’s annual letters to Berkshire Hathaway shareholders? It’s almost impossible to believe that anyone could read through page after page of Buffett-isms and not come out the other side a more well-rounded person.
And, of course, The Davis Dynasty by John Rothchild.
Or his three-part series written alongside the legendary Peter Lynch.
The ultimate goal: To ensure that the right lessons are passed on to the next generation. So think long and hard while whittling through the choices and compiling your own personal curriculum of “must-reads”. Focus on quality over quantity.
And, lest anyone forget, this mission takes on heightened importance in the arena of personal finance where an early start can mean the difference between success and failure. Between an early retirement and a life behind the financial eight ball.
If you manage to open even one person’s eyes to the wonders of compounding — convince one child to start rolling his or her investment snowball at a young age — then $100 per book seems a very small price to pay.