The Davis Dynasty - John Rothchild

[sjh]

As I didn't find anything about it via the search function and also it is not the most commonly know book, here is my book recommendation: https://www.amazon.com/Davis-Dynasty-Successful-Investing-Street/

 

It spans a lot of stock market history and contains some great anecdotes. For example a conversation between Chris Davis and his grandfather Shelby Davis:

 

"I asked my grandfather for a dollar to buy a hotdog. He said 'Do you realize if you invest that dollar wisely it will double every five years? By the time you reach my age, in 50 years, your dollar wil be worth 1024$. Are you so hungry you need to eat a 1000$ hotdog?' I guessed not. In one swoop he taught me three lessons: the value of a dollar, the value of compound interest and the importance of always carrying my own money."

[racemize]

I just finished this book as well.  I thought it was pretty good and gave a nice history of the stock market for the past century.

[winjitsu]

Just finished reading this and loved the book. The elder Davis definitely did not shy away from leverage (50% levered yet somehow never faced a liquidation event) with an insane run in the 50s and 60s. 

 

Also, as the author points out, there is immense irony in the elder Davis using his wife's trust fund to start his investing, but being a complete ass to his children seeking to take away their trust funds. 

 

Also, the list of insurance companies that have dominated the last century simply does not change. Chubb, Aetna, AIG, Tokio Marine and Fire etc. 

[schin]

1 hour ago, winjitsu said:

Just finished reading this and loved the book. The elder Davis definitely did not shy away from leverage (50% levered yet somehow never faced a liquidation event) with an insane run in the 50s and 60s. 

 

Also, as the author points out, there is immense irony in the elder Davis using his wife's trust fund to start his investing, but being a complete ass to his children seeking to take away their trust funds. 

 

Also, the list of insurance companies that have dominated the last century simply does not change. Chubb, Aetna, AIG, Tokio Marine and Fire etc. 

 

It's amazing that 3 generations were all successful investors.... It's really hard to excite the next generation and the one after that into the "family business".  

[winjitsu]

21 minutes ago, schin said:

 

It's amazing that 3 generations were all successful investors.... It's really hard to excite the next generation and the one after that into the "family business".  

Not quite sure about the 3rd generation. I took a quick look at Morningstar for the Davis Funds and they seem to be mostly keeping up with the index but nothing special over the past 10 years https://www.morningstar.com/asset-management-companies/davis-BN000008K4/funds

 

 

[schin]

9 hours ago, winjitsu said:

Not quite sure about the 3rd generation. I took a quick look at Morningstar for the Davis Funds and they seem to be mostly keeping up with the index but nothing special over the past 10 years https://www.morningstar.com/asset-management-companies/davis-BN000008K4/funds

 

 

Yes, I concur Chris Davis might be more of an asset gatherer.. But, having 3 generations in the same field is interesting to me. Like there is no legacy for Warren Buffett or Charlie Munger.

 

Carl Icahn has a son that worked for him... But, I don't think both are relevant... so, it's a blessing if you can have several generations of a family in the same industry and some what like it... versus it being forced on them like Japanese businesses.... Generally, there is a drop off. Like Tom Brady and Michael Jordan doesn't have kids that were that same calibre.  The Mannings and Currys are exceptions not the rule... You can make an argument on the Mahomes in different sports.. but, having 2-3 generations capable to perform in the top 10% of the field is unique.

 

Again, this book ignited the flame in me on investments in BAC, DB, Commerzbank, AIG, etc.

[oscarazocar]

54 minutes ago, schin said:

Yes, I concur Chris Davis might be more of an asset gatherer.. But, having 3 generations in the same field is interesting to me. Like there is no legacy for Warren Buffett or Charlie Munger.

 

Carl Icahn has a son that worked for him... But, I don't think both are relevant... so, it's a blessing if you can have several generations of a family in the same industry and some what like it... versus it being forced on them like Japanese businesses.... Generally, there is a drop off. Like Tom Brady and Michael Jordan doesn't have kids that were that same calibre.  The Mannings and Currys are exceptions not the rule... You can make an argument on the Mahomes in different sports.. but, having 2-3 generations capable to perform in the top 10% of the field is unique.

 

Again, this book ignited the flame in me on investments in BAC, DB, Commerzbank, AIG, etc.

 

I think you'd be hard pressed to find any metric by which Chris Davis could be considered in the top 10% of the field as an investor.  Davis NY Venture Fund (flagship) has underperformed S&P 500 by 340 bps in last 10 years (15.3% vs 11.9%, 250 bps over 20 years (11.0% vs 8.5%), and 60 bps (9.2% vs 8.6%) assuming he took over in late 1998, it's unclear when dad handed over the CIO reins.

 

It's amusing, in his 2007 interview in Value Investor Insight they quoted the 10 year record vs S&P but in the 2015 interview they switched to quoting the 46 year record of the fund of outperforming because the 10 year at that point lagged by 160 bps.

[winjitsu]

Didn't realize Chris is on the board of Berkshire and Coke. 

Aum down from $90bn to $17bn since the 2000s when they tried doubled down on AIG during the 2007 crash

[schin]

6 hours ago, oscarazocar said:

 

I think you'd be hard pressed to find any metric by which Chris Davis could be considered in the top 10% of the field as an investor.  Davis NY Venture Fund (flagship) has underperformed S&P 500 by 340 bps in last 10 years (15.3% vs 11.9%, 250 bps over 20 years (11.0% vs 8.5%), and 60 bps (9.2% vs 8.6%) assuming he took over in late 1998, it's unclear when dad handed over the CIO reins.

 

It's amusing, in his 2007 interview in Value Investor Insight they quoted the 10 year record vs S&P but in the 2015 interview they switched to quoting the 46 year record of the fund of outperforming because the 10 year at that point lagged by 160 bps.

 

@oscarazocar - I'm not going to make this a hate-fest to fund managers like Chris, Mohnish, etc.  I said he seems more like an asset gatherer, but he impressed enough to get on certain boards. Two, he might be Bronny to LeBron... and maybe, he got a leg up from his name...

 

But, do you have 3 generations of your family in the same profession? Generally future generations want to plow their own field and not have a huge shadow from their famous parents. Look at Bill Gates Sr. (lawyer) and Bill Gates Jr. ... even Bill's daughter is focused on being a doctor and not following in their shadows. 

[oscarazocar]

2 hours ago, schin said:

 

@oscarazocar - I'm not going to make this a hate-fest to fund managers like Chris, Mohnish, etc.  I said he seems more like an asset gatherer, but he impressed enough to get on certain boards. Two, he might be Bronny to LeBron... and maybe, he got a leg up from his name...

 

But, do you have 3 generations of your family in the same profession? Generally future generations want to plow their own field and not have a huge shadow from their famous parents. Look at Bill Gates Sr. (lawyer) and Bill Gates Jr. ... even Bill's daughter is focused on being a doctor and not following in their shadows. 

 

I don't think it's a hate fest to point out that someone is nowhere close to being in the top 10% of his field.  It's important in investing and life to be reasonably accurate about relatively objective assessments like that.  Baker Mayfield is a good quarterback but he's nowhere close to being in the top 10% of his field, I'm a a fan, it's not an insult.

 

I think it's fairly common to have 3 generations of a family in the same profession.  My dad was 5th generation in a small family business.  My best friend and his dad & grandfather are lawyers.  I think you don't see it too much in investing nowadays because the business was very small before, really, the 1980's so there just hasn't been that much time.  Run ahead 30 years and there will be a zillion funds/investment firms that grandpa started in the 1980s, son joined in 2010, and granddaughter joins in 2040.

[schin]

20 minutes ago, oscarazocar said:

 

I don't think it's a hate fest to point out that someone is nowhere close to being in the top 10% of his field.  It's important in investing and life to be reasonably accurate about relatively objective assessments like that.  Baker Mayfield is a good quarterback but he's nowhere close to being in the top 10% of his field, I'm a a fan, it's not an insult.

 

I think it's fairly common to have 3 generations of a family in the same profession.  My dad was 5th generation in a small family business.  My best friend and his dad & grandfather are lawyers.  I think you don't see it too much in investing nowadays because the business was very small before, really, the 1980's so there just hasn't been that much time.  Run ahead 30 years and there will be a zillion funds/investment firms that grandpa started in the 1980s, son joined in 2010, and granddaughter joins in 2040.

 

Baker Mayfield is not Tom Brady; but being in the NFL period... is .0001% event. Not a lot of people get to that elite stage.

 

As for family businesses, you can have small businesses that are handed down... but, they are not Walmart or something that has been rebooted. Like In-N-Out, it's a family business, but don't tell me the second and third generation is doing anything then, managing the business and not trying to screw up. There was no second coming of Sam Walton in that took WalMart to the next level. Howard Buffett is not running Berkshire after Warren.

 

Small family businesses, yes.. but, large publicly traded companies with CEOs that are just transformation as the first CEO... no.... In politics, you can saw the Bushes and Kennedys... but, not necessarily in sports or other hyper competitive venues. David Beckham's kids are not playing soccer at the highest level. They're good, but not Premier League good. They can run their non-profit and trademark brands...but only from an operational, keep the lights on PoV.