Danielle Town - Invested: How Warren Buffett and Charlie Munger Taught Me to Master My Mind, My Emotions, and My Money (with a Little Help from My Dad)

WITHOUT THE QUESTIONS AND COMMENTS FROM OUR INTREPID PODCAST listeners, we would never have had the idea to write about this Investing Practice. We are continually grateful to each of you for engaging with us and sharing your own investing practices. Equally, there would be no book without the tradition of investing masters from whom we draw the wisdom of value investing. Benjamin Graham, Warren Buffett, and Charlie Munger lead that tradition, and we thank them for developing this practice and speaking and writing about what they do, so we can attempt to emulate their work.

Thank you to our extraordinary literary agents, Christy Fletcher and Sylvie Greenberg, who have guided us with deft and kind hands through every step of this process, and took us to the wonderful team at William Morrow/HarperCollins. There, we were fortunate to work with our editor, Matt Harper, and associate editor, Alieza Schvimer, whose hard work and insightful advice made this book better and turned it into the heartfelt story that it became; our acquiring editor, Amy Bendell, whose early enthusiasm was key; and the whole team led by the indomitable Lisa Sharkey, including Tavia Kowalchuk, Shelby Meizlik, Lauren Janiec, and Amelia Wood.

Were incredibly thankful to our friends and family who read drafts for their time and thoughtful comments: Kamala Nair, David Kienzler, Jessi Trujillo, Brian Hubbard, Katie Caves Gahr, Sarah Barthelow, Samantha Carney, Chris Collins, Chris Hazlitt, Alaina Town Bennett, Adam Bennett, and Nuno das Neves Cordeiro; to our family and friends who listened and gave advice along the way, especially Steve Town, Jeff Town, Lianne Childress, Alexis Lawrence, Ilana Miller, Devin Licata, Lauren Ivison, Megan Rushall, Afra Moenter, and Astrid Utrata; and to Danielles former colleagues for being supportive at work and when she left Boulder, particularly Chris Hazlitt, Mark Weakley, Laurel Durham, Jason Haislmaier, Adam Sher, Sean Odendahl, Jason Werner, Lorraine Torres, Joan Sherman, John Gaddis, Carlos Cruz-Abrams, David Kendall, Jennifer Rosenthal, Matt McKinney, Kyle White, and Brad Bernthal.

Guy Spier generously loaned some space in his library under a framed photograph of Charlie Munger whenever it was needed, and were very thankful for his and Lory Spiers encouragement throughout the writing process. Thank you to Katharine Sephton for helping out with a constant smile.

Our deepest gratitude goes to our family for putting up with us during the occasionally arduous and often emotional writing and editing process, and somehow being endlessly encouraging through all of it: Melissa, Nuno, Mary, Alaina, Adam, Daniel, and Hunter. This book is for you.

I WAS WATCHING THE LIVE STREAM OF WARREN BUFFETTS ANNUAL meeting in Omaha during the time Danielle and I were working on this book. He and Charlie Munger were taking questions from the audience, and one question was what theyd like their legacy to be. Buffett answered hed like to be thought of as a good teacher.

Warren Buffett is, of course, one of the wealthiest men in the world, a self-made man who started his investing career with $100, and a man who has given away more money to charity than anyone in the worldand yet here he was, telling us that none of that success matters to him as much as teaching us how to properly invest and be better people.

I think he chose his legacy well.

In my view, he and Charlie are among the most influential teachers in the last hundred years and, if judged by the financial impact of their teaching, perhaps the most important teachers of the modern era. Their long-term and consistently successful investing results have been one of the major anomalies for the Efficient Market Hypothesis paradigm and a spur to the efforts of the current generation of economists to dethrone EMH. They are responsible for creating not just wealth but, more important, knowledge about how to create wealth that can be passed down through family generations. This knowledge about investing to create generational wealth that Ive tried to teach Danielle is not only about pure financial wealth, but also requires that your values be in charge of your money. And the coolest thing for me is that it was the deep connection between values and money that made this strategy of building wealth meaningful for Danielle.

This was a big deal for me; Ive been trying her whole life to get her interested in investing. When she was a baby, sometimes shed get a tummy ache in the middle of the night and Id walk around with her in the dark and sing Ragtime Cowboy Joe to her. It was a song my dad told me had magic powers for lulling babies off to sleep; apparently, it had worked on me. Ive gotta say, I was skeptical, but every time Id sing it to her, shed quiet down, and sometimes, when she was settled down and comfortable in my arms, Id walk around with her and tell her about the companies I was investing in. That would put her dead out.

She and I were close from the very beginning of her life, but when she was young her mom and I split up, and Danielle felt I left her too, and that broke the trust shed had in me. I never figured out how to earn it back. This book and the podcast we do together have given me another chance to be there for her, an opportunity I never expected to have. Her decision to trust in Warren and Charlie was also a decision to trust in me. I hope Ive made the best of it.

The opportunity to pass down to the next generation a set of ideas that hold the potential to create generational wealth is a game changer. Mohnish Pabrai, in his fine book The Dhando Investor, writes about the Patel family as an example of a family with generational wealth that is more valuable than their actual wealth because, no matter what happens, the knowledge about how to create wealth cant be taken away. They knew how to own and run hotels, and when they immigrated to the United States in the 1960s with only a few thousand dollars and that knowledge, they bought a run-down motel and started over. Today, only fifty years later, the greater Patel family owns 40 percent of the hotels and motels in America. That is the power of a generational wealth strategy.

I know this much: Ive done the best I know how to teach Danielle well so that she can have her own resources to live the life she wants. I think she really does own this Rule #1 strategy, maybe in a way better than I do. When I learned it, it all just seemed like what Charlie saidIts all so easy and obvious; what would they have to do the rest of the semester? But Danielle has had to dig deep to learn this, and I think that her efforts to understand have created a deep well of learning for all of us. It certainly has for me. There is an old saying that if you want to master something, teach it. Id add that if you really, really, really want to master it, try to teach it to your really smart kid.

What Warren and Charlie have done is revolutionary; theyve created a strategy that, if carefully followed, can make anyone wealthy. Just as the Patel familys generational wealth makes it possible for the family members who use it to become rich in the hospitality business, the Rule #1 investing strategy can make it possible for your family members to become rich from stock investing. Those of us who have followed that strategy owe a generational debt of gratitude to the grandfathers, Warren and Charlie, who gave us this wisdom. And I owe them a debt I cant pay for giving me my daughter back.

I love you, Danielle.

PHIL TOWN

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