Ever wondered how a Harvard graduate ended up at a notorious firm like D.H. Blair and later transformed his life with the wisdom of Warren Buffett? How did a failed investment lead to a lifelong friendship with investor Mohnish Pabrai? What crucial lessons did a lunch with Warren Buffett teach about success and authenticity? Discover how investing isn't just about financial acumen but about building meaningful relationships, managing irrational minds, and becoming the best version of oneself.

The Education of a Value Investor

Have you ever found yourself in a job that felt utterly soul-crushing? Guy Spier certainly had. Unlike Hamlet, Spier wasn't suicidal, but he sure did loathe himself and his job. Fresh out of Harvard Business School, with an Oxford degree in hand, he thought he was destined for greatness until he made one reckless career move.

In 1993, Spier joined D. H. Blair Investment Banking Corp, seduced by its chairman, J. Morton Davis. Morty, a charismatic salesman, painted a picture of limitless opportunities. Ignoring warnings from friends, Spier bought into his vision and joined the firm with high hopes. But the reality was a nightmare. The firm, notorious for shady practices, left Spier disillusioned and miserable.

He quickly realized that his role wasn’t to analyze but to sell dubious deals. The firm’s specialty was venture capital, often backing ventures with sketchy odds. Spier felt like he was drowning in a sea of bad deals. One memorable moment was when Spier questioned a cold fusion venture’s science, only to be met with scorn. He was supposed to sell the dream, not question it.

After months of struggling, Spier found a promising deal: Telechips, a company with a solid product and credible management. However, the deal was nitpicked and undervalued, leaving Spier and the company’s management disheartened. This experience was a moral wake-up call. Spier realized he was on the brink of losing his ethical compass.

The firm’s downfall was inevitable. By 2000, D. H. Blair was embroiled in scandal, with several executives indicted for stock fraud. Though the investment bank remained unscathed, Spier's reputation felt tarnished. It was a painful lesson in how easily one can be sucked into a toxic environment.

Desperate for an escape, Spier found solace in Warren Buffett’s value-investing philosophy. Reading Ben Graham’s "The Intelligent Investor" and Roger Lowenstein’s biography of Buffett was like discovering a lifeline. Buffett’s ethos was the antithesis of his experience at D. H. Blair. He treated stocks as shares in real businesses, not just pieces of paper to trade.

This realization was transformative. It taught Spier the importance of reputation and moral integrity in business. Inspired by Buffett, Spier embarked on a journey to rebuild his career and align it with ethical principles. His time at D. H. Blair became a pivotal learning experience, reminding him that we must choose our environments carefully and strive to work with people who elevate us.

In the end, this dark chapter didn’t break Spier. Instead, it strengthened his resolve to pursue a path of integrity and value. As Hemingway said, “The world breaks everyone and afterward some are strong at the broken places.” This journey from the belly of the beast to the principles of Warren Buffett is a testament to that resilience.

Can a Soul-Crushing Job Under a Shady Investment Bank Lead to a Buffett-Inspired Career Transformation?

Guy Spier found himself in a tangled mess, questioning how he, an Oxford and Harvard graduate, ended up in a morally bankrupt finance job at D.H. Blair. His education had seemed to promise so much more. This crisis led to an inward journey, forcing him to confront whether his elite education had failed him or if he had failed it.

Many of Spier's peers from prestigious institutions also played roles in the 2008–2009 financial crisis. It made him question whether their gilded education had left them ill-prepared for real-world challenges. His own path was a stark reflection of this. He went into finance with utmost confidence, only to realize the field could cause more harm than good.

Interestingly, the person who influenced Spier's investing approach the most was Mohnish Pabrai, an Indian immigrant educated at Clemson University, not an elite school. When they had lunch with Warren Buffett—who himself didn't get into Harvard Business School—it became clear that practical wisdom mattered more than prestigious degrees.

Spier's education journey started at an independent high school focused on getting students into top universities, not on broad-based learning. At Oxford, he initially studied law, but the curriculum felt alien and unengaging. In contrast, his friend Andrew Feldman, now Lord Feldman, had a broad historical knowledge that made the study of law meaningful for him. This mismatch pushed Spier to switch to the PPE (Politics, Philosophy, and Economics) program, guided by the kind and supportive economics professor Peter Sinclair.

Despite enjoying PPE, Spier struggled academically because he was years behind peers like future British Prime Minister David Cameron, who had been groomed at Eton. He focused on excelling in political philosophy, using it as a way to hide his insecurities and gain acceptance. However, this need for external validation, what Warren Buffett calls the "outer scorecard," can be detrimental in investing, where independent thought is crucial.

After Oxford, Spier joined a strategy consulting firm and then Harvard Business School, where the practical case study method was more aligned with real-world business challenges. Yet, his arrogance grew. When Warren Buffett spoke at HBS, Spier dismissed him, blinded by the Efficient Market Hypothesis he'd learned at Oxford, which wrongly suggested that finding undervalued stocks was futile.

It wasn’t until he hit rock bottom at D.H. Blair that Spier became open to new ideas. Through Buffett's teachings, he found a more ethical and successful path in value investing. The adversity Spier faced at D.H. Blair turned out to be a blessing, teaching him lessons no elite university could.

In the end, Spier's journey underscores the importance of matching education to personal needs and being open to learning beyond traditional academic paths. Sometimes, the most valuable lessons come from the most unexpected places.

From Ivy Leagues to Wall Street: A Journey of Self-discovery and the Real Value of Education

After leaving D. H. Blair, Spier struggled to find a job due to the firm's tarnished reputation. Despite interviews with prestigious firms like Goldman Sachs and Credit Suisse, he was seen either as naïve or ethically questionable.

Feeling like a failure, Spier stumbled upon Tony Robbins, a self-help guru recommended by highly educated friends. Initially skeptical, Spier attended his "Unleash the Power Within" seminar in San Francisco. Robbins’ authenticity and motivational techniques, including a literal fire walk, transformed his mindset. His message—to take action despite fear—resonated deeply with Spier.

Inspired, Spier devoured self-help classics like Dale Carnegie's "How to Win Friends and Influence People" and Napoleon Hill's "Think and Grow Rich," applying practical strategies to his life. He also joined the New York Society of Securities Analysts, igniting his passion for value investing. His first investment was in Burlington Coat Factory, which he researched meticulously.

Spier dreamt of working at value-investing firms like Tweedy, Browne and Ruane Cunniff. Although he faced rejections, he found inspiration in their ethical approach. By buying shares in the Sequoia Fund, Spier connected with like-minded investors, including Warren Buffett’s circle.

His big break came when his father entrusted him with managing his money, leading to the creation of the Aquamarine Fund. Despite initial challenges, Spier adhered to Buffett's principles, focusing on a single fund where his interests aligned with his investors. However, he made some missteps, like adopting a typical hedge fund fee structure and allowing frequent redemptions.

Operating from modest offices, his fund thrived, outperforming the market. Spier avoided the tech bubble, thanks to the wisdom of seasoned investors. Yet, the allure of Wall Street and comparisons to peers like Bill Ackman fueled his envy and led to costly mistakes, including unnecessary extravagances and shorting stocks like Farmer Mac.

A pivotal moment came when Bill Ackman revealed the risks of Farmer Mac, leading Spier to reevaluate his strategy. Despite profitable shorts, the stress and moral dilemmas taught him to focus on positive, long-term investing.

Ultimately, Spier realized the importance of surrounding himself with a supportive network. The "Posse," a group of value investors, became his sounding board, enhancing his investment acumen. Through this journey, Spier learned that success in investing—and life—requires self-awareness, ethical integrity, and the right environment.

Can Tony Robbins' Teachings Turn a Struggling Investor into a Wall Street Success Story?

In his early years as an investor, Spier desperately wanted to be recognized for his brilliance. Despite being a lousy salesman, he realized he needed to learn how to market and sell himself effectively. His journey took an unexpected turn when he attended the annual meetings of the Sequoia Fund and befriended American businessman John Lichter. 

John shared with Spier a CD of Charlie Munger’s talk on the 24 standard causes of human misjudgment, which became his constant companion. Munger’s insights, especially about how "extra-vivid evidence" skews our thinking, profoundly changed Spier's perspective on marketing and investing.

Munger's speech also introduced Spier to Robert Cialdini’s book, "Influence: The Psychology of Persuasion," which highlighted the power of simple gestures, like the Chevrolet salesman Joe Girard’s holiday cards saying “I like you.” Inspired by this, Spier began writing thank-you letters, which eventually transformed his outlook on life and business. It wasn't just about marketing anymore; it became a genuine practice of goodwill, leading to deeper connections and unexpected opportunities.

One such connection was with Mohnish Pabrai, an investor Spier met through a Wharton student. Mohnish, who had achieved phenomenal returns, held annual meetings that were refreshingly different from the typical investment gatherings. His authenticity and commitment to learning rather than self-promotion resonated with Spier deeply. Spier wrote him a thank-you note after attending his meeting, which led to a dinner invitation and a life-changing friendship.

Their bond grew, and Mohnish proposed they jointly bid for a charity lunch with Warren Buffett. They won the auction, and the lunch with Warren left an indelible mark on Spier. Buffett’s advice to live by an "inner scorecard" rather than seeking external validation struck a chord. His example of integrity and authenticity inspired Spier to realign his business practices, including revamping his fund’s fee structure to be fairer to his shareholders.

Additionally, Spier visited the GLIDE Foundation, the charity benefiting from their auction bid, to understand why Buffett supported it. Meeting Reverend Cecil Williams and witnessing GLIDE’s work reinforced Spier's commitment to using his resources for good.

The lunch itself was a masterclass in humility, wisdom, and authenticity. Buffett’s openness, sense of humor, and profound insights on life and investing were transformative. His emphasis on patience, integrity, and creating a peaceful environment to think clearly resonated deeply. It led Spier to move to Zurich, away from the distractions of New York, to think more clearly and live more authentically.

Ultimately, Spier's journey with Munger, Cialdini, Pabrai, and Buffett taught him that true success lies in authenticity and genuine goodwill. It’s not about competing with others but becoming the best version of oneself. This shift in mindset has enriched Spier's life and business in ways he could never have imagined.

From Salesman to Philanthropist: A Journey Guided by Munger, Cialdini, Pabrai, and Buffett

Value investors take pride in staying calm and rational during market crises, but nothing could have prepared Spier for the 2008-2009 financial meltdown. As Warren Buffett once said, if you weren’t terrified, you weren’t paying attention. Spier was definitely scared. 

In March 2008, the Financial Times announced Bear Stearns was on the brink of collapse. Bear Stearns held all of Spier's fund’s assets, and he feared they could vanish overnight. That weekend, Spier frantically sought experts to understand what Bear Stearns' bankruptcy would mean for his fund. Despite Spier's cautious approach—keeping all assets in cash accounts and avoiding leverage—the unpredictability was nerve-wracking. 

Then, on a quiet Sunday afternoon, Spier's Bloomberg monitor lit up: JPMorgan Chase had decided to acquire Bear Stearns. Hearing Jamie Dimon assure that JPMorgan would guarantee Bear Stearns' counter-party risk brought overwhelming relief. Spier has been sending Jamie a Christmas card every year since.

However, the ordeal was far from over. In September 2008, Spier's father called, worried about his investments in Lehman Brothers bonds. Shocked and frustrated, Spier advised him to sell immediately, but there was no liquidity. A few days later, Lehman filed for bankruptcy. This personal blow undermined Spier's confidence and added pressure just as he needed to stay calm and analytical.

One of Spier's analysts even confessed he’d sold all his stocks, going entirely to cash. This wasn’t the rational behavior Spier expected from someone he hired to help seize market opportunities. Spier realized that even the most level-headed could succumb to panic.

Spier had carefully avoided the housing market and invested in companies with strong fundamentals like MasterCard and gas pipeline companies. Yet, as the crisis deepened, it seemed there was no safe haven. Spier's fund, which had quadrupled investors’ money in its first decade, plummeted by 46.7% in 2008.

Despite the chaos, Spier stayed the course. He refused to sell major holdings like American Express, which eventually soared. He bought severely undervalued stocks like London Mining and Brookfield Office Properties, which later skyrocketed.

The experience taught Spier the importance of creating a conducive environment for making rational decisions. Inspired by Buffett and his friend Mohnish Pabrai, Spier decided to hit the reset button. In 2009, Spier left New York for Zurich, aiming to build an environment that would help him remain calm, rational, and successful in future crises.

Did the 2008 Financial Crisis Expose the True Danger of Market Unpredictability?

One of the biggest challenges for any investor is the irrational nature of our minds, a fact brutally highlighted by the financial crisis. Even professionals like Spier are susceptible to market pressures, often making poor decisions when emotions take over. Daniel Kahneman's work on "thinking fast and slow" reveals the complexities of our decision-making processes. 

Spier once saw himself as a rational fighter pilot in the investment world, constantly making optimal decisions. However, the reality is that our brains are not just rational machines; they are influenced by subrational instincts. Research by experts like Kahneman, Dan Ariely, and others show that our decision-making often occurs subconsciously. For instance, Benjamin Libet's neurological studies indicate that decisions form in our brains before we are even aware of them.

Understanding our evolutionary background helps explain why our brains are poorly suited for modern investing. For over 200,000 years, our brains evolved for survival in the wilderness, not for the stock market's complexities. 

Isaac Newton, a brilliant mind, lost his savings in the South Sea Bubble, famously remarking, "I can calculate the movement of stars, but not the madness of men." The economy, like an ant colony, is a complex adaptive system, as described in books like "Journey to the Ants" by Bert Hölldobler and Edward O. Wilson and research from the Santa Fe Institute.

Spier's move to Zurich was a deliberate attempt to create an environment conducive to rational investing. Zurich's balance, egalitarianism, and trust-based society help mitigate the irrational forces that financial centers like New York exacerbate. His office setup, free from distractions like the Bloomberg terminal, and designed to encourage deep thinking, exemplifies this approach. Influences from figures like Warren Buffett and Charlie Munger further shape his environment, reminding him of their disciplined, rational methods.

Investing, Spier realized, is not just about technical skills but managing our irrational minds. He embraced a more playful attitude toward life, inspired by Buffett's love for bridge and his joyful approach to work. This included travels and engaging in activities that broaden his perspective and bring joy. For instance, a trip to India with Mohnish Pabrai and experiences like starting the TEDxZurich conference enriched his life and indirectly benefited his investing.

Games like bridge and chess, which involve probabilistic thinking and pattern recognition, sharpen Spier's investment skills. Bridge, in particular, teaches valuable lessons about making inferences based on incomplete information, a crucial skill in investing. His decision to invest in companies like BYD Auto and American money-center banks during uncertain times reflects this probabilistic approach, influenced by observing the moves of seasoned investors like Buffett.

Ultimately, creating a balanced, thoughtful environment and adopting a playful approach to life and investing have made Spier a better investor. This mindset shift, focusing on joy and authenticity rather than relentless ambition, has not only improved his investment returns but also brought a sense of peace and fulfillment to his life.

Mastering the Investor's Mind: A Journey from Irrational Decisions to Rational Investing

Imagine the world of investing as a bustling ant colony. Ants use a handful of simple rules to navigate complex environments. So, could we, as investors, craft a set of rules that improve our decisions and minimize the chaos of our irrational minds?

Consider this: the human brain operates on roughly 12 watts—far less than the power needed to light a 60-watt bulb. Yet, we expect it to make extraordinarily complex investment decisions. What if we simplified our approach, using structured rules and routines?

In the wake of the financial crisis, Spier devised a structured investment approach, akin to how pilots follow strict protocols. This method brought clarity and reduced decision-making complexity. Here are eight rules that transformed Spier's investing:

1. Stop Checking Stock Prices: Early in Zurich, Spier decided to keep his Bloomberg terminal off for weeks. Constantly checking stock prices is like watching a pot boil—it’s unnecessary and stressful. Our brains react more strongly to losses than gains, so why subject ourselves to this emotional rollercoaster? By checking prices less frequently, Spier created a calm, rational investment environment.

2. Don’t Buy What’s Being Sold: During Spier's New York days, sales calls from brokers and reps became a measure of his success. Yet, he realized buying under pressure often led to poor decisions. He adopted a rule: if someone tries to sell him something, he doesn’t buy it. It’s about avoiding adverse selection—like Warren Buffett refusing to participate in open outcry auctions.

3. Avoid Talking to Management: CEOs are skilled salespeople. They might unintentionally skew information to present their company in the best light. Observing Mohnish Pabrai, who avoids management meetings, Spier realized this approach cuts out noise and potential bias.

4. Gather Research in the Right Order: The first idea that enters our minds sticks. So, Spier starts with objective sources like company filings before moving to more biased materials. This sequence allows him to form a grounded, unbiased understanding of potential investments.

5. Discuss Ideas with Unbiased Peers: Conversations with trusted peers like Nick Sleep or Bill Ackman are invaluable. These discussions are confidential, judgment-free, and devoid of any business relationship. They help clarify ideas without any hidden agendas.

6. Never Trade During Market Hours: Inspired by Mohnish, Spier avoids trading when the market is open. This detachment from real-time market actions prevents emotional decisions. He prefers trading at the average price of the upcoming day, reducing the influence of market volatility.

7. Hold for Two Years if a Stock Drops: If a stock Spier buys falls, he commits to holding it for at least two years. This rule forces careful consideration before buying and reduces rash selling driven by short-term losses. Warren Buffett’s advice on making limited, thoughtful investments echoes this sentiment.

8. Don’t Discuss Current Investments Publicly: Speaking publicly about investments can trap us in our own opinions. The “commitment and consistency principle” makes it hard to backtrack. Spier learned this the hard way with EVCI stock. Now, he avoids discussing current holdings to maintain flexibility in decision-making.

These rules are not exhaustive but provide a flavor of a structured, rational approach to investing. By simplifying processes and minimizing emotional interference, Spier has found a way to navigate the investing world with greater clarity and success.

Can We Simplify Investing to an Ant Colony's Rules for Success?

Even with the best investment rules, we inevitably make mistakes. The brain struggles with the complexity of financial decisions, often leading to costly errors. However, one tool has proven invaluable for Spier: the checklist. Inspired by surgeon Atul Gawande's insights on managing extreme complexity in medicine, Mohnish Pabrai realized the importance of a checklist in investing. 

Gawande's work, particularly his article "The Checklist" and book "The Checklist Manifesto," emphasized how simple checklists can prevent fatal errors even among experts. This concept resonated with Mohnish, who saw its potential to minimize investment blunders.

Mohnish and his colleagues, including Spier, began compiling their past investment mistakes, analyzing why they happened, and creating checklist items to prevent similar errors. They also examined the errors of investment giants like Warren Buffett and Charlie Munger. For example, they scrutinized Berkshire Hathaway's ill-timed investment in CORT Furniture and its vulnerability to the bursting tech bubble. These reflections led to specific checklist items to avoid repeating such missteps.

One key story involves the Spier’s investment in EVCI Career Holdings, a for-profit education company. Despite initial success, the investment soured due to management's self-serving decisions, exacerbated by personal turmoil like a contentious divorce. This led to checklist questions regarding the personal circumstances of key executives and their past decisions’ impact on shareholders.

Another enlightening case was the Spier's investment in Tupperware. Enthralled by the company’s psychological sales tactics, he overlooked critical aspects like product value and market competition. This experience underscored the importance of analyzing the company’s entire ecosystem and ensuring it provides a win-win for all stakeholders.

In another instance, Spier invested in CarMax, a used car retailer heavily reliant on credit markets. The 2008 financial crisis exposed CarMax’s vulnerability, teaching Spier to scrutinize a company’s dependence on external factors beyond its control.

Lastly, the Spier's investment in Smart Balance demonstrated the perils of overpaying based on future potential rather than present value. The financial crisis and market competition further eroded returns, reinforcing the necessity of paying a reasonable price upfront and avoiding overly complex analyses that fuel intellectual vanity.

These stories illustrate the critical role of a personalized checklist in investment decisions. By learning from past mistakes, investors can develop tailored checklists that address their unique weaknesses and prevent costly errors, ultimately mastering the art of managing complexity in investing.

Mastering Investment Complexity: The Power of the Checklist Inspired by Atul Gawande and Mohnish Pabrai

On his shelf in Zurich, Spier has a book called "The 48 Laws of Power" by Robert Greene. One of its dark principles, "Pose as a Friend, Work as a Spy," recommends deceitful tactics to get ahead. Early in Spier's career, he was seduced by such strategies, envisioning himself as a cunning Gordon Gekko. But his experience at D.H. Blair and subsequent observations of Warren Buffett and Mohnish Pabrai steered him toward a more enlightened path, which he calls "The Buffett-Pabrai Way."

Reading Buffett's biography while at D.H. Blair was a turning point for Spier. It introduced him to the importance of surrounding oneself with the right people. As Buffett advised at a charity lunch, “Hang out with people better than you, and you cannot help but improve.” This approach transformed Spier's life and investment strategy.

Nicholas Christakis' research at Harvard highlighted how our social networks influence us profoundly. For example, having fit friends makes one more likely to be fit. This understanding led Spier to seek out and build relationships with better people, not just for professional gain but for genuine personal enrichment.

A decade ago, Spier met Mohnish Pabrai at the Delamar Greenwich Harbor Hotel, sparking a deep friendship. Recently, Mohnish emailed Spier about a promising stock, trusting him to provide a second opinion. This act of sharing exemplifies the power of sincere relationships and mutual support, which are far more valuable than any financial gain.

Warren Buffett's life teaches that success isn't just about financial acumen but about building meaningful, generous relationships. His kindness and generosity, evident in small acts like sending a note or giving a tour of his office, have had a profound impact on Spier. These gestures underscore that the more one gives, the more one receives.

By observing Buffett and Pabrai, Spier has learned to focus on what he can do for others. For instance, Mohnish always looks for ways to help people, creating a network of goodwill. This giving mindset leads to greater rewards than a self-serving approach ever could.

Buffett and Pabrai have taught Spier the importance of being genuine and straightforward. They avoid dealing with opaque individuals and focus on those who are transparent and honest. This principle has influenced Spier's hiring and networking practices, ensuring that he surrounds himself with trustworthy people.

Their influence has also helped Spier understand the significance of the inner journey. For example, his family's history of financial loss has shaped his conservative investment approach. Understanding these inner narratives is crucial for making rational decisions in the stock market.

Participating in mastermind groups and engaging in various forms of therapy have been invaluable tools for Spier's personal growth. These experiences have helped him confront his vulnerabilities and improve not just as an investor but as a person.

Ultimately, the journey isn't just about financial success but about becoming the best version of oneself. As Warren Buffett wisely said, “Hang out with people better than you, and you cannot help but improve.” This principle, above all, has been the guiding light in Spier's life and career.

Can the Buffett-Pabrai Way Transform Your Life and Investment Strategy?

Spier's journey made him question the effectiveness of prestigious education in preparing for real-world challenges. His eventual mentor, Mohnish Pabrai, wasn't from an elite school, which led him to realise that practical wisdom and ethics outweigh prestigious degrees. 

After leaving D. H. Blair, he struggled to find a job but was inspired by self-help books, which helped him develop practical strategies to rebuild his career. He managed to successfully establish his own fund, the Aquamarine Fund, learning along the way that creating a supportive network and maintaining ethical integrity are vital for success in investing.

Spier's approach to investing transformed after a life-changing lunch with Warren Buffet. He learned the importance of living by an "inner scorecard" and focusing on personal growth rather than external validation. He also realized the significance of creating a peaceful environment to think clearly, which led him to move to Zurich.

Spier faced a significant challenge during the 2008-2009 financial meltdown. Despite the stress, he managed to maintain rationality and learned the importance of creating a conducive environment for making rational decisions. 

Spier's investment approach is structured, simple, and minimizes emotional interference. He developed a set of rules, such as avoiding checking stock prices constantly, not buying what's being sold, and not discussing current investments publicly, among others. 

Spier also found a checklist to be an invaluable tool in investment decisions. By learning from past mistakes, he was able to develop a personalized checklist that prevents costly errors. Furthermore, he learned that managing our irrational minds is as important as technical skills in investing.

Finally, Spier's journey taught him the value of building meaningful, generous relationships. Following the principles of Warren Buffet and Mohnish Pabrai, he learned to focus on helping others and being genuine. This approach of giving, along with understanding his inner narratives, has brought him not just financial success but also personal growth and fulfillment.

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The Education of a Value Investor

Guy Spier

Ever wondered how a Harvard graduate ended up at a notorious firm like D.H. Blair and later transformed his life with the wisdom of Warren Buffett?

How did a failed investment lead to a lifelong friendship with investor Mohnish Pabrai?

What crucial lessons did a lunch with Warren Buffett teach about success and authenticity?

Discover how investing isn't just about financial acumen but about building meaningful relationships, managing irrational minds, and becoming the best version of oneself.

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