This is episode 15 of The Investors Podcast and this is our second part interview with Guy Spear.

Broadcasting from Bel Air, Maryland. This is The Investors Podcast.

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All right. I think Hari, I think you're up with and we'll get some investing hardcore accounting investing questions going here. So Hari, go ahead and kick this one off.

Sure. So Guy, the chapter 11 about checklist in the book was very helpful and thank you so much for generously sharing your checklist, especially it helps for somebody like me who is a good person.

Just starting out because it's really I think checklist comes out of experience and somebody like me who has less experience doesn't have anything to go on or to start with.

One of the lines that caught my attention and I kind of noted down in your book was that you mentioned that we can't use the brain to override the brain and that was profound to me.

And the reason being I read this book think passed and slow where the author Daniel Kahneman, I hope I'm pronouncing his name right talks about the system one and system two and how system one works against us because of the heuristics that it forms and short cuts it takes.

And when I looked at some of the checklist items that you have like you know don't read during the market hours or don't sell us talk for at least two years after you buy it if it goes down in value, you're basically applying your principle of like you know, countering the system one and that was very helpful.

My question about the checklist was how do you assess the quality of management in terms of integrity and competence are there checklist items that you would share with us or insights that you would share with us by reading safe the 10 case or 10 kills how would one go about figuring out the competence of the management.

You know what just before we get into it what's so interesting for me is that I mean I didn't first of all the checklist was developed by Marnesh he's and I'm not trying to be falsely modest he's waste smarter than I am and he's an incredibly useful and extraordinary mind in that you know if you look at that, you know those rules of don't sell a stock.

At least two years after you've purchased it or don't create during market hours I I was sitting with with Marnesh in I don't remember the hotel it was a hotel in Delhi and I was asking him how he dealt with you know these kinds of difficulties and he gave me he said he gave me these two rules and you know my jaw dropped to the floor I was like that is so obviously right.

And immediately after that the next thing I thought was why the hell didn't you think of that guy I mean that is not such a difficult thought to have and that's what's extraordinary is that his mind sort of finds these things which the minute he sell it's like oh my god that is just so obvious so.

So and I would tell you that it's the same with the development of the checklist and I think what I get what I find interesting and this is not that we'll get to the direct question in a second but.

You know in the tell mode this is a so that book of Jewish law.

It is very a lot of emphasis is placed on crediting ideas to the person who you have done and I I had I didn't want to use up any ones ideas is my own and what I find fascinating is that I think I take sufficient pains in the book to show the reader that you know these ideas are not my ideas that primarily coming from Marnesh Pabri and some other people much smarter than me.

But isn't it amazing how I find it amazing that when you truly attribute and you get credit to where the idea came from you know you guys are interviewing me and you treat some is if they're my ideas even actually I love them from somebody else so and so that that's just an interesting interesting observation to me in terms of assessing the quality of management I think that I don't have any any.

Simple obvious answers although then I do think that over time the more time we spend with materials produced by public companies the more I think that sometimes is obvious and sometimes just a feeling that we get and I think that I think the time when I saw Warren Buffett used to speak to a group of investors collected together by Morgan Stanley when.

At his road was now at Morgan Stanley he would appear on either the first day of the Friday night and I'm secure made a long Stanley dinner and he was talking about Freddie Matt and he talked about how he sold Freddie Matt and he talked about how he was looking out some of their securitizations and you notice some things that didn't make me feel comfortable he felt like it was time to sell I think that that's an example of a mind that's extraordinary well.

Attuned to sort of these minor things they just make you know well why would they do that and if they're doing that what else are they doing and I don't think there's any substitute or just time spent reading any reports but it's time to spend reading any reports intelligently so one is you know I imagine I don't know and that story really stuck with me all that event really stuck with me I think it's quite likely that somebody would have said to Warren Buffett or you.

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