The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network RWH067: Prudent Investing In Perilous Times w/ Matthew McLennan
Matthew McLennan, head of Global Value at First Eagle and manager of large-value strategies, focuses on resilient, long-term wealth built around scarce and positional assets. He discusses preparing for geopolitical turmoil, using cash and gold as ballast, constructing a non-uniform portfolio of durable businesses, favoring patience over short-term trends, and thinking like a gardener to survive uncertainty.
01:37:29
Variegation Beats Naive Diversification
- Variegation means intentional non-uniformity across industries, countries and asset types, unlike naive diversification tied to market concentration.
- They hold diffuse exposures, limits on country/sector risk and a defensive ballast like gold.
Prioritize Survival With Ballast Scarcity And Margin
- Prioritize survival: carry ballast (cash and gold) and buy scarce-position businesses at valuation margins of safety.
- Scarcity (real assets or market share) creates pricing power and optionality to consolidate or repurchase in downturns.
How First Eagle Came To Hold Gold As Ballast
- McLennan credits Jean-Marie Ebyard for First Eagle's early gold stance and calls gold a defensive positional asset because of its fixed supply and inertness.
- They hold bullion and miners mid-teens combined but will trim if gold becomes overpriced vs equities.
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Intro
00:00 • 42sec
Why prepare for geopolitical turmoil
00:42 • 2min
Energy, chokepoints, and market consequences
02:48 • 5min
Processing fast-moving crises
07:34 • 5min
Parallels with the 1970s and stagflation risk
12:11 • 4min
Positioning vs predicting macro risks
16:29 • 3min
Variegation vs naive diversification
19:08 • 3min
Survival as the path to wealth
22:10 • 7min
Ad break
28:44 • 4min
The team, specialization and portfolio breadth
32:50 • 3min
Fixed principal vs positional assets
35:53 • 6min
Why First Eagle holds gold as ballast
41:44 • 6min
Examples of resilient businesses we own
48:08 • 4min
Eclectic royalties and niche dominance
52:28 • 5min
Patience as an investment edge
56:59 • 5min
Ad break
01:01:41 • 3min
Staying true during long droughts
01:05:00 • 7min
The Snow Leopard: purpose and process
01:11:43 • 3min
The right brain, complexity, and markets
01:14:55 • 9min
Humility, uncertainty, and margin of safety
01:24:05 • 7min
Practical playbook for resilient wealth
01:31:16 • 4min
Life beyond markets aids investing
01:35:31 • 6min
Outro
01:41:18 • 56sec
#93161
Old Masters and Young Geniuses
David W. Galenson
string
#3516
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Snow Leopard
How Legendary Writers Create A Category Of One
Category Pirates
Snow Leopard is the first writing advice book written through a Category Design lens.
It guides writers on how to frame their ideas, stories, and insights to resonate with the most people possible.
The book, written by the Category Pirates (Christopher Lochhead, Eddie Yoon, and Nicolas Cole), focuses on creating a category of one, mastering Obvious and Non-Obvious content, and monetizing writing in new ways.
It includes frameworks such as the 5 levels of content creation (Consumption, Curation, Obvious Connection, Non-Obvious Connection, and Category Creation) and how to apply these to achieve independence, creative freedom, and exponential financial upside.
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Fiscal Theory of the Price Level
John H. Cochrane
#5527
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The Spirit of Law
1748
Montesquieu
Montesquieu's 'The Spirit of Law' is a foundational work in political theory, advocating for the separation of powers.
Published in 1748, the book analyzes different forms of government, emphasizing the importance of checks and balances.
Montesquieu argues that dividing governmental authority among separate branches prevents tyranny and protects individual liberties.
The Spirit of Law was influential in the development of constitutional governments, particularly in Great Britain and the American colonies.
The Founding Fathers of the United States drew upon Montesquieu's ideas when drafting the U.S.
Constitution, incorporating the principle of separation of powers into the framework of American governance.
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The Matter with Things
Our Brains, Our Delusions, and the Unmaking of the World
Iain Mcgilchrist
In 'The Matter with Things', Iain McGilchrist delves into the neuroscience, epistemology, and metaphysics of the brain's hemispheres and their impact on human perception and understanding.
The book is divided into two volumes: 'The Ways to Truth' and 'What Then is True?
'.
McGilchrist argues that the left hemisphere's dominance has led to a skewed perception of the world, neglecting the vital role of the right hemisphere in integrating science, reason, intuition, and imagination.
He explores topics such as attention, perception, judgement, and the nature of reality, including concepts like time, space, consciousness, and the sacred.
The book is a call to re-enchant the world and ourselves by recognizing the deeper, more holistic understanding provided by the right hemisphere.
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A New Kind Of Science
Stephen Wolfram
In 'A New Kind of Science,' Stephen Wolfram presents a comprehensive study of computational systems, particularly cellular automata, and argues that the study of simple programs can revolutionize various fields of science.
The book, which took over a decade to complete, introduces the Principle of Computational Equivalence and the concept of computational irreducibility.
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My Early Life
Winston Churchill
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Richer, Wiser, Happier
How the World's Greatest Investors Win in Markets and Life
William Green
In Richer, Wiser, Happier, William Green draws on interviews conducted over twenty-five years with many of the world’s greatest investors.
The book highlights that the most successful investors are mavericks and iconoclasts who question conventional wisdom and think rationally, rigorously, and objectively.
They maximize their odds of long-term success in markets and life by drawing insights from diverse fields such as neuroscience, economic history, psychology, philosophy, and more.
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History of the Peloponnesian War
Thucydides
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Daniel Yergin
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The book spans from the drilling of the first well in Pennsylvania through two great world wars, the Iraqi invasion of Kuwait, Operation Desert Storm, and the Iraq War, to current climate change.
It is a definitive work on the subject of oil, addressing its role in shaping major world events, global power dynamics, and the ongoing energy crisis.
Yergin's narrative includes the rise of John D. Rockefeller's Standard Oil, the discovery of oil in various regions, and the geopolitical clashes over oil resources, making it crucial for understanding world politics and the global economy.
In this episode, William Green talks with Matthew McLennan, who oversees about $130 billion at First Eagle Investments. Matt is head of the firm’s Global Value team & a portfolio manager of its Global Value, Global Equity, International Value, International Equity & US Value strategies. Here, he explores how to build resilient wealth by patiently holding a “non-uniform” portfolio of scarce assets that should endure & prosper even in difficult conditions. This episode provides a time-tested survival strategy for investors looking to navigate this period of extreme uncertainty.
IN THIS EPISODE YOU’LL LEARN:
00:00:00 - Intro
00:02:14 - Why Matthew McLennan thinks investors should prepare for turmoil.
00:17:43 - How to construct a resilient portfolio by thinking like a gardener.
00:19:38 - Why Matt loves businesses with scarce assets in mundane industries.
00:23:02 - Why survival is the key to investment success.
00:23:33 - How cash & gold provide a ballast in the event of unexpected storms.
00:26:28 - Why he’s wary of a highly concentrated investment strategy.
00:51:07 - How patience has become a powerful edge in a hyperactive world.
00:57:17 - How to build long-term success by focusing on process, not rewards.
01:05:28 - How to think better by harnessing our right-brain capabilities.
01:23:05 - Why “what’s hot today” is likely to produce terrible investment returns.
01:25:10 - How studying wine & playing backgammon help him as an investor.
01:29:04 - Why he favors a team-based approach, instead of being a lone wolf.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join the exclusive TIP Mastermind Community.
- Learn how to join us in Omaha for the Berkshire meeting here.
- Inquire about William Green’s Richer, Wiser, Happier Masterclass.
- Thucydides’ book, History of the Peloponnesian War.
- Daniel Yergin’s book, The Prize.
- John Cochrane’s book, The Fiscal Theory of the Price Level.
- Peter Matthiessen’s book, The Snow Leopard.
- Iain McGilchrist’s book, The Matter with Things.
- David Galenson’s book, Old Masters and Young Geniuses.
- Charles de Montesquieu’s book, The Spirit of the Laws.
- Stephen Wolfram’s book, A New Kind of Science.
- Winston Churchill’s book, My Early Life.
- William Green’s book, Richer, Wiser, Happier.
- Follow William Green on X.
- Related books mentioned in the podcast.
- Ad-free episodes on our Premium Feed.
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