The 100 Year Thinkers: Long-Term Compounding in a Short-Term World

Chris Davis and Robert Hagstrom explore the tension between holding great businesses and keeping a winning stock from becoming too much portfolio risk. Why do two investors who believe in letting winners compound also use 10% position limits?
On this episode of 100 Year Thinkers, Chris Davis of Davis Funds and Robert Hagstrom of EquityCompass join Matt Zeigler and Bogumil Baranowski to discuss position sizing, selling mistakes, index concentration and the cost of growth. From Chris Davis’s experience selling Costco to the debate over who will capture AI’s economic benefits, they examine what it takes to hold a business through uncertainty without ignoring risk. Stay for Matt and Bogumil’s closing discussion of the lessons for investors.
Topics covered:
Why selling a genuinely great business can be an investor’s most expensive mistake
How client behavior and fund constraints influence 10% position limits
Chris Davis’s concerns about index concentration, momentum and future IPO incentives
Robert Hagstrom on trimming positions as the margin of safety shrinks
The bull-case pre-mortem: asking what could make selling today a mistake
What Chris Davis missed about Costco’s growth and ability to adapt
Why identical earnings growth can produce different shareholder returns
Whether AI spending builds durable pricing power or delivers more value to users
How customer trust and restraint on margins can strengthen competitive advantages
Balance sheets, circular financing and the humility required to size a position
Chris Davis / Davis Funds
Robert Hagstrom / EquityCompass
Chapters:
00:00 Holding great businesses and the case for position limits
06:47 Robert Hagstrom on concentration and client risk
12:40 Index concentration, momentum and IPO incentives
19:03 Trimming winners, margin of safety and the Costco lesson
30:09 Valuation, return on capital and the cost of growth
36:01 Is AI’s capital spending cycle temporary?
40:10 AI pricing power: builders versus users
45:35 Competitive advantage, margins and customer trust
51:45 Balance sheets and circular AI financing
55:53 Evaluating the AI investment cycle
01:00:23 Matt and Bogumil’s takeaways: position sizing and AI
01:10:25 Being an AI user versus an AI investor
Learn more about the Excess Returns podcast network.
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Chris Mayer and Robert Hagstrom join Matt Zeigler on 100 Year Thinkers to explore how investors can identify great businesses, hold them through volatility, and let compounding work over decades.
Drawing on Mayer's book The Investor's Odyssey, they discuss Warren Buffett's investing philosophy, durable competitive advantages, investor psychology, and the portfolio management decisions that help long-term investors stay the course.
Buy the Investor's Odyssey
https://amzn.to/4gCVMMp
Chris Mayer on Twitter
https://x.com/chriswmayer
Robert Hagstrom on Twitter
https://x.com/RobertGHagstrom
Topics covered:
The original Buffett partnership investor who held Berkshire Hathaway for decades

Why individual investors can have an advantage over professional money managers

The coffee can portfolio and resisting the pressure to trade

How loss aversion and constant price updates undermine long-term investing

High returns on capital, reinvestment, and the power of compounding

Assessing whether competitive advantages can survive AI and new competitors

Distinguishing temporary stock declines from deteriorating businesses

Why great investment track records include periods of underperformance

Invisible moats, employee incentives, and lessons from companies that survived 100 years

Position sizing, letting winners run, and combining stock picking with index funds

Timestamps:
00:00 Chris Mayer's The Investor's Odyssey and the Berkshire buy-and-hold story
04:20 Why more investors don't hold great businesses for decades
09:44 Resisting financial media and the pressure to act
15:59 Loss aversion and protecting yourself from market noise
21:12 Compounding returns and how long a competitive advantage lasts
26:25 Separating AI disruption fears from business fundamentals
30:38 Why outperforming investors still lag the market frequently
36:45 Evaluating the business before the management team
41:26 Invisible moats in trucking and insurance brokerage
48:03 Building a business culture that outlasts its leaders
53:05 Position sizing and why stock picking is only half the job
58:06 Combining index funds with a patient stock portfolio
Learn more about the Excess Returns podcast network:
https://excessreturns.co
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Robert Hagstrom joins Matt Zeigler and Bogumil Baranowski to revisit the 25th anniversary edition of The Warren Buffett Portfolio and explain why volatility is not the same as investment risk.
They discuss concentrated portfolios, active share, business valuation, behavioral finance, complex adaptive systems, and Warren Buffett's warning that the market's casino can overwhelm its cathedral.
The Warren Buffett Portfolio - 25th Anniversary Edition
https://amzn.to/3TVXoru
Robert Hagstrom on X
https://x.com/RobertGHagstrom
Equity Compass
https://www.equitycompass.com/
Topics covered
Why Markowitz's definition of risk as variance shaped modern portfolio theory

Why Buffett views permanent capital loss, not volatility, as the real investing risk

What Hagstrom's study of 3,000 portfolios revealed about concentration and market outperformance

The difference between know-something investors and investors better served by indexing

How benchmark awareness creates closet indexers and weakens active management

What loss aversion and prospect theory explain about investor behavior

Why Darwin, William James, and complex adaptive systems offer better models for markets

Buffett's cathedral and casino metaphor for business ownership versus speculation

The El Farol problem, Jim Simons, and why successful market models stop working

Why options trading, leveraged ETFs, and record single-stock dispersion may be strengthening the casino

How to evaluate portfolios using cash flow, return on invested capital, and look-through earnings

Why permanent capital and System 2 thinking are essential for focused investing

Timestamps
00:00 Intro
04:00 Why Markowitz defined risk as variance
11:47 What 3,000 portfolios revealed about concentration
17:17 Know-something versus know-nothing investors
22:23 Kahneman, loss aversion, and modern portfolio theory
26:58 Darwin, pragmatism, and adaptive markets
32:28 Buffett's cathedral and casino metaphor
37:37 The El Farol problem and why markets resist prediction
42:08 Why investors crave market forecasts
46:16 Why investing is most intelligent when businesslike
51:38 Record stock dispersion, options, and leveraged ETFs
56:00 Measuring portfolio progress through business economics
01:00:43 Why permanent capital enables focused investing
01:04:43 How markets survive widespread investor mistakes
Learn more about the Excess Returns podcast network:
https://excessreturns.co
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms, or their clients.

On this episode of the 100 Year Thinkers, Chris Mayer and Matt Zeigler discuss long-term investing, 100-baggers, AI stocks, SpaceX valuation, founder-led companies, and why the best investments often come with brutal drawdowns. We also cover his new book The Investor's Odyssey, the danger of letting labels like AI do too much work, how to think about TAM and capital allocation, and why patience may be the biggest edge for investors trying to own great businesses for decades.
The Investor's Odyssey: Resisting the Sirens and Playing the Long Game
https://amzn.to/44BMXeJMain topics covered
Why SpaceX, AI and trillion-dollar IPOs are testing investor discipline

How Chris Mayer thinks about valuation after watching Google become a huge winner

Why great businesses can still be terrible investments at the wrong price

The danger of letting labels like AI, quality and TAM replace real analysis

Why many AI features may not create real customer value

What the dot-com bubble can teach investors about AI adoption and shakeouts

Why investors do not need to be early if a company is truly exceptional

How to separate AI anecdotes from real financial impact

Why capital allocation and return on invested capital matter more as companies scale

How to evaluate founder control, governance, incentives and trust

Why the best long-term stocks can still fall 50 percent or more along the way

What rational exuberance might look like for long-term investors

Timestamps
00:00 Intro: Chris Mayer on AI, SpaceX and long-term investing
04:00 SpaceX valuation vs Google and the risk of paying too much
08:01 Why labels like AI and quality can do too much work
12:05 The AI pause, the dot-com analogy and where real value may emerge
16:06 Why investors do not need to be early when a business is real
21:00 Becoming a great company versus already being mature
25:10 Thinking about TAM, market share and realistic growth expectations
29:43 Corporate governance, free float and shareholder rights
34:27 How to judge founder trust, incentives and compensation
38:57 Employee ownership, culture and building enduring companies
43:02 Investor frustration in a lopsided AI-driven market
47:02 Why even a perfect stock picker would face brutal drawdowns
52:17 The rise of trillion-dollar IPOs and the question of rational exuberance
56:29 The Investor's Odyssey and playing the long game

In this episode of The 100-Year Thinkers, Robert Hagstrom explains why modern portfolio theory pulled investors away from business analysis and toward portfolio math. In this episode, Hagstrom, Matt Zeigler and Bogumil Baranowski discuss Markowitz, beta, efficient markets, Warren Buffett, Charlie Munger, business-driven investing, owner earnings, benchmarks, and why thinking like a business owner changes how investors understand risk.
The Warren Buffett Portfolio, 25th Anniversary Editionhttps://amzn.to/4uz8sZ3
Topics covered:
Why Hagstrom thinks modern portfolio theory changed investing’s objective

The difference between volatility, variance and real investment risk

How Benjamin Graham and John Burr Williams framed risk around intrinsic value

Why beta became the dominant shorthand for risk

How the 1973-74 bear market helped institutionalize modern portfolio theory

Why Berkshire preserved the business owner’s lens

The “cathedral and casino” distinction between owning businesses and trading stocks

Owner earnings, return on invested capital and cost of capital

Why business owners often make better long-term equity investors

Look-through earnings and building a “mini Berkshire”

The difference between making money and beating a benchmark

How benchmarks can distort investor behavior

Why knowing yourself and your clients matters in portfolio construction

Timestamps:
00:00 Robert Hagstrom on why risk is not volatility
00:40 Business-driven investing vs portfolio math
02:42 How modern portfolio theory defined risk as variance
06:38 Graham’s margin of safety vs Markowitz’s definition of risk
09:44 Sharpe, beta and simplifying portfolio risk
12:51 Why the 1973-74 bear market helped MPT take over
16:20 Why MPT became institutionalized without proving it could beat the market
18:53 Buffett, Keynes and concentrated investors violating MPT
22:53 Stocks as businesses and Buffett’s cathedral vs casino
30:01 Business analysis, owner earnings and return above cost of capital
36:41 Look-through earnings and running a mini Berkshire
41:34 Making money vs outperforming a benchmark
47:30 Why Berkshire’s public and private businesses shaped Buffett
50:05 How investors can start applying the Buffett way
54:05 Bogumil on how investing theory becomes accepted truth
58:09 Why direct ownership creates responsibility and conviction
01:00:15 Investor know thyself and the limits of outsourcing caring
01:03:35 Finding the right clients for a business-owner investing approach