Tuesday, October 6, 2015


I answered a few questions for the great team over at ValueWalk (Part 1)

Outsiders in chemicals, the story of Rockwood Holdings (LINK)

Buybacks and Debt (LINK)

The share buyback mirage (LINK)

Under the Radar: Bank Executives Not Aware of Key Fintech Startups (LINK)

Now on Audible: The Money Game

TED Talk - Siddhartha Mukherjee: Soon we'll cure diseases with a cell, not a pill (LINK)
Related books:  
The Laws of Medicine: Field Notes from an Uncertain Science 
The Emperor of All Maladies: A Biography of Cancer [PBS also did a documentary based on this book, HERE.]

Monday, October 5, 2015


For those interested, this course from The Great Courses has been recommended to me by a wise man, and it seems like a good Charlie Munger/worldly wisdom type of course (the video download version is currently on sale for $109.95): The Origin and Evolution of Earth: From the Big Bang to the Future of Human Existence -- Professor Robert M. Hazen

Another interview with Tren Griffin about his book on Charlie Munger [H/T Linc] (LINK)

Ben Bernanke was on CNBC talking about his book, which was released today: The Courage to Act: A Memoir of a Crisis and Its Aftermath

Operant Conditioning, Market Trends, and Small Bets: A 2012 vs. 2008 Case Study (LINK)

While Hussman has been saying similar things for a couple of years, all three of John Hussman, John Mauldin, and Richard Duncan have issued similar recession warnings over the last few days, and think we're basically heading into a downturn in both the economy and a further decline in the market. It's hard to predict anything like this, but all three were fairly accurate about things leading up to 2008, so I thought it was worth a mention, and maybe a reminder to think about how one's investments would fare in another very tough environment, whether or not it actually comes to pass. 

Peter Lynch quote

From One Up On Wall Street:
"If I had to choose a great single fallacy of investing, it's believing that when a stock's price goes up, then you've made a good investment."

Sunday, October 4, 2015


A Dozen Things Learned from Charlie Munger about Capital Allocation (LINK)

Related book: Superforecasting: The Art and Science of Prediction
John Burbank at UC Berkeley from April of this year (video) [H/T ValueWalk] (LINK)

Barry Ritholtz talks to Gary Shilling on this week's Masters in Business interview (LINK)

a16z Podcast: Money, Risk, and Software (LINK)
Financial services are overdue for an overhaul. With a16z’s newest general partner, Alex Rampell (who just officially started), this segment of the podcast explores the world of fintech… How software backed up by data is being brought to bear on lending, insurance, and the science (oftentimes art) of underwriting risk.
The 5 Things Tim Ferriss Did To Become a Better Investor (podcast) (LINK)

Friday, October 2, 2015


Munger residents praise unique living environment [H/T Linc] (LINK)

Are Buybacks an Oasis or a Mirage? (LINK)
Key Points 
1. In 2014, the S&P 500 Index’s dividend (1.9%) + buyback (2.9%) yield = 4.8%, but this yield was not realized by investors. 
2. As in most years, in 2014 issuance of new shares—for management compensation, new investments, and funding mergers and acquisitions—exceeded buybacks. 
3. The dilution rate for the U.S. equity market in 2014 was 1.8% compared to the historical dilution rate of 1.7% over the 80-year period from 1935 to 2014.  
4. U.S. equity investors in aggregate—contrary to appearances—have not realized a benefit from the recent spate of stock repurchases.
Related link to the above: Warren Buffett on Share Repurchases

Mutual Fund Observer, October 2015 (LINK)

Value Investing Podcast: Christopher Pavese on His Value Investment Philosophy (LINK)

Deutsche Bank Mistaken for Bundesbank Saved on Funding Costs [H/T Phil] (LINK)

How Steve Jobs Fleeced Carly Fiorina [H/T The Big Picture] (LINK)

Richard Dawkins discusses his book Brief Candle in the Dark with the WSJ (video) [H/T Will] (LINK)

Behold, the Mess That Is Pluto's Moon Charon (LINK)

Phil Fisher quote

From Common Stocks and Uncommon Profits:
All types of common stock investors might well keep one basic thought in mind; otherwise the financial community's constant worry about and preoccupation with the danger of downswings in the business cycle will paralyze much worthwhile investment action. This thought is that here in the mid-twentieth century the current phase of the business cycle is but one of at least five powerful forces. All of these forces, either by influencing mass psychology or by direct economic operation, can have an extremely powerful influence on the general level of stock prices.  
The other four influences are the trend of interest rates, the over-all governmental attitude toward investment and private enterprise, the long-range trend to more and more inflation, and—possibly most powerful of all—new inventions and techniques as they affect old industries. These forces are seldom all pulling stock prices in the same direction at the same time. Nor is any one of them necessarily going to be of vastly greater importance than any other for long periods of time. So complex and diverse are these influences that the safest course to follow will be the one that at first glance appears to be the most risky. This is to take investment action when matters you know about a specific company appear to warrant such action. Be undeterred by fears or hopes based on conjectures, or conclusions based on surmises.

Thursday, October 1, 2015


I had posted a link to the videos before, but here's the full show of... Ray Dalio on Fed Policy, Hedge Funds, China (Full Show from 09/16/2015) [H/T Exploring Markets] (LINK)
Ray Dalio, Bridgewater Associates' chairman and founder, talks to Bloomberg's Tom Keene and Mike McKee on the eve of a critical U.S. Fed policy decision in "Bloomberg Surveillance Primetime" special. What does the head of the world's biggest hedge fund firm have to say about the domestic economy, the future of China and the volatile market? 
The Absolute Return Letter, October 2015: The Real Burden of Low Interest Rates (LINK)
Almost the entire world is concerned about the high levels of debt, should interest rates begin to rise again, but we are not. Don't get us wrong; a meaningful increase in debt service burdens could do substantial damage to a global economy so loaded with debt. We just don't think it is going to happen. 
Economic growth and inflation are likely to stay comparatively low for many years to come, and so are interest rates, but that raises another question. What damage can very low interest rates for an extended period of time actually be expected to do?
Sohn Canada Investment Conference Notes 2015: Capitalize For Kids (LINK)

McKinsey warns banks face wipeout in some financial services (LINK)
The digital revolution sweeping through the banking sector is set to wipe out almost two-thirds of earnings on some financial products as new technology companies drive down prices and erode lenders’ profit margins. 
This is one of the main predictions by the consultancy McKinsey in its global banking annual review to be published on Wednesday, portraying banks as facing “a high-stakes struggle” to defend their business model against digital disruption. 
McKinsey said technological competition would reduce profits from non-mortgage retail lending, such as credit cards and car loans, by 60 per cent and revenues by 40 per cent over the next decade. 
It predicted a smaller, but still significant, chunk of profits and revenues would be lost from payments processing, small and medium-sized enterprise lending, wealth management and mortgages. These would decline between 35 and 10 per cent, McKinsey said. 
Philipp Härle, co-author of the report, said: “The most significant impact we see in price erosion, as technology companies allow delivery of financial services at a fraction of the cost, and this will mostly be transferred to the customer in lower prices.”
Investing in Commodities - by Paul Lountzis (LINK)
Given the recent declines in a broad range of commodities, we are often asked about our views on investing in that space. We have always felt that one of the most challenging areas to invest in are companies in the commodity sector, which includes many diverse areas, such as energy (oil, gas), agriculture (corn, soybeans, wheat), and hard assets (iron ore, copper, lead). According to Kessler Companies, commodities are at new 13 year lows and are off 25% over the past year, and lower than their 2008 trough by 6.2%. If you had invested in the Bloomberg Commodity index in January 1991, you would not have made any money for 24.5 years
Trade Secrets From Two Investing Legends - by Chris Mayer (LINK)

Einhorn Has Brutual Q3, Down 16.9 Percent Year To Date (LINK)

Fred Wilson: A Different Approach To VC (LINK)

The future of cryptocurrencies: Bitcoin and beyond (LINK)

Why Aren’t America’s Shipping Ports Automated? (LINK)
Related book: The Box
Book of the day: The Making of a Blockbuster: How Wayne Huizenga Built a Sports and Entertainment Empire from Trash, Grit, and Videotape

Wednesday, September 30, 2015


For those curious to see the legend we named Boyles Asset Management after, see THIS video (it starts at the 6:05 mark).

Latticework of Mental Models: Framing Effect (LINK)

Henry David Thoreau on Success (LINK)

Buffett's Unconventional Investments (LINK)

Beer before Steel: Ranking 30 Industries by Fundamental Equity Performance, 1933 to 2015 (LINK)

The Man Who Built Silicon Valley: A Tribute to Andy Grove (LINK)
Related book: Only the Paranoid Survive
The Investors Podcast discusses a trip to Mohnish Pabrai's annual meeting (at the beginning of the show) (LINK)

John Hempton with some comments on Valeant Pharmaceuticals (LINK)

History’s First Quadruple-Wizard - by Scott Adams (LINK)

George Mumford talks about his book, The Mindful Athlete, at Google (video) (LINK)

Book of the day [H/T David]: Building Art: The Life and Work of Frank Gehry

Tuesday, September 29, 2015


Catching back up after a few days in Miami...

PBS Program: E.O. Wilson – Of Ants and Men, premieres Wednesday, September 30, 2015 (LINK)
Related book: Journey to the Ants: A Story of Scientific Exploration
A Dozen Things Learned from Charlie Munger About The Berkshire System (LINK)
Related book: Charlie Munger: The Complete Investor
The latest from Michael Mauboussin: Sharpening Your Forecasting Skills (LINK)

Elizabeth Holmes on CNBC (video) (LINK)

Sequoia Fund Managers Suffer $1.2 Billion Loss as Valeant Falls (LINK)
Related link: Ruane, Cunniff & Goldfarb Investor Day Transcript (May 2015)
Carl Icahn's 'Danger Ahead' video (LINK)

With Glencore, Commodity Rout Beginning to Look Like a Crisis (article and video) (LINK)

Aswath Damodaran: No Mas, No Mas! The Vale Chronicles (Continued)! (LINK)

a16z Podcast: Advertising vs. Micropayments in the Age of Ad Blockers (LINK)

The Pulse podcast on disruptive innovation in higher education (LINK)
Related book: Hire Education: Mastery, Modularization, and the Workforce Revolution
Hussman Weekly Market Comment: Valuations Not Only Mean-Revert; They Mean-Invert (LINK)
For decades now, I’ve regularly detailed the historical evidence linking equity valuations to actual subsequent long-term returns in stocks. An important feature of historically reliable measures of valuation is that they mute the impact of cyclical fluctuations in profit margins. Current earnings – or analyst estimates of expected “forward” earnings – should not be taken at face value, because profit margins are not permanent. The most reliable measures of broad market valuation are actually driven by revenues, not earnings. For a review, including the arithmetic linking valuations to actual subsequent market returns, see Ockham’s Razor and the Market Cycle and Margins, Multiples, and The Iron Law of Valuation. 
It’s sometimes argued that the long-term expected return on stocks is simply the expected long-term growth rate of earnings, dividends and the like, plus the prevailing dividend yield. While this would be true if valuations were held constant for all of eternity, the fact is that elevated and depressed valuations tend to normalize over time, which investors know as “mean reversion.” As a result, higher valuations are systematically related to lower subsequent long-term market returns, and lower valuations are systematically related to higher subsequent long-term market returns.
Some advice from Jeff Bezos [H/T @derekhernquist] (LINK)
He said people who were right a lot of the time were people who often changed their minds. He doesn’t think consistency of thought is a particularly positive trait. It’s perfectly healthy — encouraged, even — to have an idea tomorrow that contradicted your idea today. 
What trait signified someone who was wrong a lot of the time? Someone obsessed with details that only support one point of view. If someone can’t climb out of the details, and see the bigger picture from multiple angles, they’re often wrong most of the time.
Notes on the book Diaminds: Decoding the Mental Habits of Successful Thinkers (Part 1, Part 2, Part 3, Part 4, Part 5)

‘Find your passion’ is terrible career advice [H/T @cfchabris] (LINK)
Related book: So Good They Can't Ignore You: Why Skills Trump Passion in the Quest for Work You Love
'Snakeskin' Pluto revealed in planetary close-up (LINK)

Monday, September 28, 2015

Pay attention to mistakes of omission, but don't suffer over them.

From a learning perspective, paying attention to mistakes of omission is useful, but it's also important to keep the right attitude and not let "missing out" affect they way you do things going forward. I've recently re-read some excerpts from both Peter Lynch and Charlie Munger that say it about as well as it can be said... 

From Charlie Munger (via Tren Griffin):
"The most extreme mistakes in Berkshire’s history have been mistakes of omission. We saw it, but didn’t act on it. They’re huge mistakes — we’ve lost billions. And we keep doing it. We’re getting better at it. We never get over it. There are two types of mistakes [of omission]: 1) doing nothing; what Warren calls “sucking my thumb” and 2) buying with an eyedropper things we should be buying a lot of." 
"It’s important to review your past stupidities so you are less likely to repeat them, but I’m not gnashing my teeth over it or suffering or enduring it. I regard it as perfectly normal to fail and make bad decisions."
And one of Peter Lynch's "The Twelve Silliest (and Most Dangerous) Things People Say About Stock Prices" in One Up On Wall Street:
We’d all be much richer today if we’d put all our money into Crown, Cork, and Seal at 50 cents a share (split-adjusted)! But now that you know this, open your wallet and check your latest bank statement. You’ll notice the money’s still there. In fact, you aren’t a cent poorer than you were a second ago, when you found out about the great fortune you missed in Crown, Cork, and Seal.  
This may sound like a ridiculous thing to mention, but I know that some of my fellow investors torture themselves every day by perusing the “ten biggest winners on the New York Stock Exchange” and imagining how much money they’ve lost by not having owned them. The same thing happens with baseball cards, jewelry, furniture, and houses. 
Regarding somebody else’s gains as your own personal losses is not a productive attitude for investing in the stock market. In fact, it can only lead to total madness. The more stocks you learn about, the more winners you realize that you’ve missed, and soon enough you’re blaming yourself for losses in the billions and trillions. If you get out of stocks entirely and the market goes up 100 points in a day, you’ll be waking up and muttering: “I’ve just suffered a $110 billion setback.” 
The worst part about this kind of thinking is that it leads people to try to play catch up by buying stocks they shouldn’t buy, if only to protect themselves from losing more than they’ve already “lost.” This usually results in real losses.