Gary Carmell is the President of CWS Capital Partners, a real estate investment and management company with more than $3 billion under management. He’s also the author of The Philosophical Investor: Transforming Wisdom into Wealth. In this episode of Strategic Investor Radio, host Charlie Wright interviews Mr. Carmell about his business, his book, and his admiration for a pair of seemingly disparate philosophers: Arthur Schopenhauer and Charlie Munger.
CWS was able to expand in the aftermath of the Great Recession by responding to “tectonic shifts” in the real estate market that other investors didn’t see coming. Most notably, CWS loaded up on variable-rate loans, which many experts thought were a bad bet since interest rates in the U.S. “couldn’t” stay low for as long as they have. With the benchmark fed funds rate still pegged below 0.5% years later, CWS’s strategy has paid off in a big way.
How did Carmell have the insight to anticipate Ben Bernanke’s moves? He credits a background in philosophy, economics, and politics as giving him a different set of tools to view the world and interpret trends. Carmell cites philosopher Arthur Schopenhauer as his inspiration for identifying the consensus, determining what was wrong with it, and acting accordingly. He credits Charlie Munger for teaching him to be patient, avoid manias, and wait for the bottom – these times are the “Munger moments” that can make a huge impact on the outcome of a person’s financial life.
By having a curious mind and paying attention, an investor can spot “tectonic shifts” in advance, since they usually build up over time and don’t just appear out of the blue. Following the subprime crisis, Carmell reasoned that homeownership would likely be dead for a time. Americans had bruised bank accounts, credit scores, and psyches, plus rentals would provide the flexibility for workers to move where they were needed. This intuition turned out to be very lucrative.
The theses of Carmell’s book, The Philosophical Investor, are that there’s a “dynamic intersection” between intelligent investing and intelligent living, and that true wealth goes beyond the financial realm. He describes the book’s audience as “deep pockets and deep thinkers” looking for more than just surface-level answers.