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The Inner Animal

“If you don’t have integrity, the other two (intelligence and energy) will kill you.” - Warren Buffett

It’s April 23, 1991, and the grand Royal Albert Hall in London is packed with Britain’s elite business leaders. Gerald Ratner, confident and sharply dressed, takes the stage at the Institute of Directors Annual Convention to talk about his business. Eight minutes into his speech, leaning into the microphone, he delivers the now-infamous joke:

“We even sell a pair of earrings for under a pound. Gold earrings as well. And some people say that’s cheaper than a prawn sandwich from Marks and Spencer’s, but I’d say the sandwich will probably last longer than the earrings.”

The room erupts in laughter.

At the time, Ratner was at the helm of the UK’s largest jewelry empire, The Ratners Group, generating over £1.6 billion in revenue and £120 million in profits. He enjoyed the spoils of success—luxury living, and private jets on the company’s dime, along with a substantial salary. But outside that room, his joke fell flat. Britain was in a recession, and the public—many struggling financially—saw his comment as elitist and out of touch. The media pounced, casting him as disconnected from his customers.

In a matter of weeks, The Ratners Group’s stock plummeted from £4.20 to 2p, wiping out £500 million in market value. Customers fled, and Ratner’s empire crumbled. Reflecting on his downfall, Ratner described the experience as “like daggers going into my stomach.” What began as a careless joke destroyed his career, a stark reminder of how unchecked ego and poor judgment can unravel even the most successful leaders.

Ratner’s story is a cautionary tale in business and investing. I’ve noticed that after a big investment win, my Inner Animal similarly starts to surface. Overconfidence creeps in, clouding my judgment, leading to hasty decisions, skipped due diligence, or clinging and to failing positions. Greed, FOMO, and loss aversion are primal instincts that, if left unchecked, sabotage long-term success.

The choice is clear: do we succumb to these impulses, or do we take the long-term approach that prioritizes integrity and collective well-being? Lasting success isn’t built on chasing quick wins and saiting every animal urge. It requires mastering the Inner Animal and recognizing that by serving the greater good, we achieve sustainable, high-return outcomes with the lowest risk.

This is where the analogy of myopia comes into play. As someone with literal myopia—unable to see clearly more than a foot ahead without glasses—I know how short-sightedness distorts our view. In finance, focusing only on immediate gains obscures the bigger picture. To succeed, we need metaphorical glasses of integrity and morality, seeing beyond ourselves and focusing on what benefits everyone around us. In today’s world, what’s good for the whole is greater than the sum of its parts.

Tolstoy’s line from Anna Karenina—“All happy families are alike; each unhappy family is unhappy in its own way”—rings true here. There are countless ways to fail by succumbing to our Inner Animal, as Ratner did. But those who achieve the highest returns, longest duration, and lowest risk in business and investing follow the same principles: integrity, discipline, and long-term thinking focused on the collective good. They Take the High Road, not as an act of altruism, but because it’s simply smart business.

Warren Buffett and Charlie Munger exemplified this. They’ve emphasized that integrity and restraint are far more important for long-term success than intellect alone. As Buffett once said, “If you don’t have integrity, the other two (intelligence and energy) will kill you.” Ratner, in contrast, had intelligence and energy but lacked integrity and humility, leading to his downfall. 

In contrast, Buffett and Munger have built Berkshire Hathaway by prioritizing the long-term interests of shareholders, employees, and the companies they acquire. Their annual shareholder letters, filled with wisdom and insights, freely share knowledge with their investors, empowering them to think long-term. During times of market distress, such as the Global Financial Crisis, Berkshire Hathaway provided liquidity when others couldn't, stepping in as a stable, reliable player in turbulent times.

Their reputation as the "acquirer of choice" is rooted in their win-win philosophy: they allow operating companies to maintain their autonomy while benefiting from the resources and stability Berkshire provides. This additive, long-term mindset ensures that each company under the Berkshire umbrella thrives, creating a collective success that far exceeds the sum of individual parts.

By consistently wearing the glasses of integrity and focusing on the well-being of others, Buffett and Munger achieved extraordinary success—high returns, long duration, and low risk—by mastering their Inner Animal and cultivating an ecosystem where everyone wins.

Similarly, Bono and U2’s manager, Paul McGuinness, embraced long-term collaboration and ethical principles. Bono’s moral compass—reflected in his “10 Commandments”—and McGuinness’s philosophy, embodied by his company Principle Management, ensured U2 retained creative control of their music and a fair share of their earnings. They avoided the traps that ensnared other artists, like Prince, who famously fought his record label for control. While Prince’s rebellion was marked by the word “Slave” written on his face, Bono and McGuinness chose a different path—guided by integrity and additive sum relationships with partners. Over the last 45 years, they’ve become one of the most successful bands in history, amassing hundreds of millions for each band member and relatively few internal squabbles or mistakes.

What Buffett, Munger, and Bono have mastered isn’t just controlling their Inner Animal but applying the lessons of civilization’s moral, intellectual, and cultural progress. The difference between early humans and us today isn’t in our instincts—they remain largely the same—but in the moral and intellectual heritage we’ve inherited. Left unchecked, human nature is raw and often at odds with today’s world. Discipline and guidance—whether from wise mentors or lessons from history—are essential for refining us.

Becoming civilized isn’t about table manners or appearances or becoming a prick—it’s about giving freely, whether it’s knowledge, a laugh, a story, or a helping hand, without expecting anything in return. It’s about adding value to the collective. It’s about treating others as you’d want to be treated and learning from the past to better yourself and those around you.

At MicroCapClub, we live by this philosophy. While the stock market can sometimes feel like a zero-sum game—where one person wins while another loses—that's only true in the short term. Long-term investing isn’t about gambling on quick gains; it's about cultivating a disciplined approach that creates lasting value. At MicroCapClub, we foster a mindset of collective growth, where shared knowledge and collaboration raise everyone up. Our community is greater than the sum of its parts, and together, we help each other navigate the challenges of investing while minimizing the cognitive biases of our Inner Animal.

In the end, both business and investing are about mastering our instincts and focusing on the bigger picture. What once helped us survive now often leads to short-sighted decisions that can sabotage lasting success. But by embracing a disciplined, moral approach that benefits not only ourselves but the collective, we unlock the potential for sustainable, long-term success. At MicroCapClub, we believe that only by working together can we achieve the highest returns with the lowest risk over the longest time. Join us, and let’s rise together.

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MicroCapClub is an exclusive forum for experienced microcap investors focused on microcap companies (sub $500m market cap) trading on United States, Canadian, European, and Australian markets. MicroCapClub was created to be a platform for experienced microcap investors to share and discuss stock ideas. Since 2011, our members have profiled 1200+ microcap companies. Investors can join our community by applying to become a member or subscribing to gain instant view only access. MicroCapClub’s mission is to foster the highest quality microcap investor Community, produce Educational content for investors, and promote better Leadership in the microcap arena. For more information, visit https://microcapclub.com/ and https://microcapclub.com/summit/

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