Saturday, November 28, 2015

The balance between an openness to new ideas and a healthy skepticism...

This is from the book Capital Account and was written in 2001 during the tech bust, but it is probably timely for many technology companies today as well:
The challenge for investors is to distinguish the genuine innovations which create sustainable competitive advantage for companies and value for shareholders from the MacGuffins of this world. This requires a balance between an openness to new ideas and a healthy scepticism. In the last few years, we have seen many new investment concepts turn out to be nothing more than flagrant promotions. Even in the more questioning times that lie ahead, an aptitude for spotting absurdities in the stock market -- the financial equivalent of devices for trapping lions in Scotland -- remains an invaluable component in the fund manager's tool-kit.

Friday, November 27, 2015


Warren Buffett: The Oracle of Nebraska Shares His Wit and Wisdom With Business Students [H/T Linc] (LINK)

Vegas Casinos Can Fire Buffett's Utility -- for $127 Million [H/T Linc] (LINK)

An excerpt from Michael Lewitt's The Credit Strategist (via John Mauldin), "Be Careful Out There" (LINK)
Commodity prices are plunging, the dollar is powering higher, the yield curve is flattening, ObamaCare is collapsing, global trade is plummeting and terrorism is spreading across the globe. The high yield credit markets are sending distress signals and 10-year swap spreads are negative. Energy companies are going out of business faster than you can say “frack” and trillions of dollars of European bonds are again trading at negative interest rates. The world is drowning in more than $200 trillion of debt that can never be repaid while European and Japanese central bankers promise to print more money and the Federal Reserve is being dragged kicking-and-screaming into raising interest rates by a paltry 25 basis points. Accurate pricing signals in the markets are distorted by overregulation, monetary policy overreach and group think. Hedge funds are hemorrhaging and investors, desperate to generate any kind of nominal return on their capital, continue to ignor e the concept of risk-adjusted returns. Some market strategists believe this is a positive environment for risk assets; I am not among them. 
Companies in the United States have taken advantage of low interest rates to issue record levels of debt over the past few years to fund buybacks and M&A. This has driven the total amount of debt on balance sheets to more than double pre-crisis levels. However, cash flows have not kept pace, resulting in leverage metrics that are the highest in 10 years.
I missed these earlier, but Jake Taylor's latest Five Good questions interviews were with Dorie Clark about her book Stand Out, and with Wesley Gray about his book The DIY Financial Advisor. And then released today was his interview with Kabir Sehgal about his book Coined.

For print books at Amazon, you can use the coupon code 'HOLIDAY30' to get an extra 30% of that print book (up to $10 value) if you order over weekend. So while it wouldn't ship until next month, it looks like it'll save you $10 on a more expensive book like Capital Returns. I used my code on a cheaper option from Vaclav Smil: Prime Movers of Globalization: The History and Impact of Diesel Engines and Gas Turbines.

And for the next few days, Audible is having a sale with 300+ books priced at $4.95. After going through the list, here are some that I've either listened to and liked or that look interesting:

Misbehaving: The Making of Behavioral Economics

Bird by Bird: Some Instructions on Writing and Life

Why Zebras Don't Get Ulcers: The Acclaimed Guide to Stress, Stress-Related Diseases, and Coping

Meditations (only $2.99)

Do More Faster: TechStars Lessons to Accelerate Your Startup

Lawrence in Arabia: War, Deceit, Imperial Folly, and the Making of the Modern Middle East

The Fellowship of the Ring: Book One in The Lord of the Rings Trilogy [A classic work of fiction with a highly-rated narration.]

What It Is Like to Go to War

Means of Ascent: The Years of Lyndon Johnson

The Curious Incident of the Dog in the Night-Time

Medical School for Everyone: Grand Rounds Cases

Wednesday, November 25, 2015


While the hardcover still doesn't look like it's available until next month, the Kindle version of Capital Returns is now available, HERE. And if you don't have a Kindle yet but are considering one, it looks like Amazon has them on sale for Black Friday week (Kindle; Kindle Paperwhite).

Latticework of Mental Models: Gambler’s Fallacy (LINK)

Yahoo Finance asks Warren Buffett about what gives him optimism (video) (LINK)

Yahoo Finance asks Warren Buffett about what keeps him up at night (video) [H/T Will] (LINK)

What is a Better Strategy – Invest in Berkshire, or Buffett’s Stock Picks? (LINK)

As China's Workforce Dwindles, the World Scrambles for Alternatives (LINK)

The First Woman Of Women: How Melinda Gates Became The World's Most Powerful Advocate For Women And Girls (LINK)

Trends in oil production [H/T @cullenroche] (LINK)

How Failed JC Penney CEO Ron Johnson Is Redeeming Himself With Enjoy [H/T Phil] (LINK)

Uber and the Sharing Economy’s Biggest Threat (LINK)

This looks like an interesting little book (based on THESE free recordings): Exploring the Practice of Antifragility

Tuesday, November 24, 2015


60 Minutes on The Future of Money (video) (LINK)
A "mobile money" revolution has swept Kenya, where people can send and receive money on their cell phones. It's improved commerce and brought basic necessities to poorer areas
Howard Marks on Bloomberg last Friday (video) [H/T ValueWalk] (LINK)
Howard Marks, co-chairman at Oaktree Capital, discusses high-risk debt markets and the future of hedge funds. 
Bob Gurr, Disney Imagineer | Talks at Google (video) (LINK)
Retired Disney Imagineer Bob Gurr stopped by Google to discuss his career which spans 40 years developing more than 100 designs for attractions ranging from the Disneyland and Walt Disney World Monorails to the design of the mechanical workings of Disney’s first Audio-Animatronics® human figure, Abraham Lincoln, featured in Great Moments with Mr. Lincoln.
Blue Origin completes successful Earth landing of its New Shepard rocket (LINK)
Jeff Bezos just accomplished the near impossible: one-upping Elon Musk. 
Bezos’s private space company, Blue Origin, has just completed a successful Earth landing of its New Shepard rocket, making it the first reusable rocket to land totally intact, something that has eluded Musk’s SpaceX.
Quote of the day, from John Mackey in the Whole Foods conference presentation from last week:
"But one thing about business is that if you're not willing to attack your own business model, you can't expect other people not to attack it.... You have to be willing to disrupt yourself because others are going to disrupt you."
Book of the day: How the World Was One [H/T Chris Dixon in his chat with Shane Parrish. There are also more good books mentioned in the show notes]

Monday, November 23, 2015


Jason Zweig on WealthTrack (video) (LINK)
Related book: The Devil's Financial Dictionary
Even Michael Lewis Was Surprised Hollywood Bet on The Big Short [H/T Linc]  (LINK)
Related book: The Big Short
Why and how do Munger and Buffett “discount the future cash flows” at the 30-year U.S. Treasury Rate? (LINK)

Grant’s bearish view on Valeant from March 2014 (LINK)

Buffett's Grandson Seeks Own Investment Route: Social Change [H/T Will] (LINK)

ValueWalk's three-part interview with Christopher Pavese (LINK) [PDF at bottom of page of all three parts]

Achal Bakeri's talk to Sanjay Bakshi's class at MDI (LINK)

How A “Platform Company” Works: The Shortcomings of DCFs and Why People Miss Lollapaloozas (LINK)

Books of the day:

Essentialism: The Disciplined Pursuit of Less

Luck: The Brilliant Randomness Of Everyday Life

Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change [A book described in Breaking Smart as being "For readers interested in a broad understanding of the economic context of software eating the world, Phelps’ book is probably the single best resource."]

Sunday, November 22, 2015

Montaigne quote

From The Complete Essays of Montaigne:
"Look on each day as if it were your last, And each unlooked-for hour will seem a boon." HORACE

It is uncertain where death awaits us; let us await it everywhere. Premeditation of death is premeditation of freedom. He who has learned how to die has unlearned how to be a slave. Knowing how to die frees us from all subjection and constraint. There is nothing evil in life for the man who has thoroughly grasped the fact that to be deprived of life is not an evil. 

Saturday, November 21, 2015

What kind of learner are you?

When you see a couple of references to the same idea within a 24-hour period, it makes you take notice. As is evident from some of the excerpts I've posted recently, I just finished going back through Josh Waitzkin's book, The Art of Learning. In the book, he talks about different types of learning styles, and compares and contrasts his own way with some other people that were a part of his life at various times. I had made a note to explore this further, and I got a little clarity on some of it while re-listening to his 2008 talk at Google today. The whole discussion is good, but the key minutes about this idea occur in the 31:17-35:36 range. Toward the beginning of those minutes in the video, Josh says:
"The biggest flaw in the educational system is that people are trying to fit all students into the same cookie-cutter mold.... I think people have to become much more observant about their own character; about the way they learn. Are you a kinesthetic learner, a visual learner, an auditory learner? Are you a naturally more aggressive person, or are you a more cautious person?"
That comment made my ears perk up because I had just finished reading an article about the football coach at my alma mater (which also has a couple of good quotes from Warren Buffett). This paragraph from that article is the one that sounds a lot like the above:
While Moglia may not pick apart the offense's play-calling strategy, he remains passionate about teaching. All of his players are required to take a VAK learning test, so the coaches know if they're visual, audio or kinesthetic learners. Coaches should be aware if they should teach a specific player by acting out technique, drawing on a whiteboard or providing verbal instruction. Moglia doesn't want his assistants to tell him they explained something to a player who didn't get the message. It's incumbent on coaches to communicate their points more effectively. "That's our fault if a player doesn't understand something," Moglia says. "So, if he doesn't understand it, why doesn't he understand it? Coaches need to be great teachers."
It looks like there's a good overview HERE, and a short book on it HERE. But if anyone has more familiarity on applying this or some good resources, I'd love to know more. 

Friday, November 20, 2015

The natural voice...

As I go back through Josh Waitzkin's book The Art of Learning, which I had originally read several years ago, I'm paying special attention to things that might be applicable to business and investing; ideas that may lead one to achieve peak performance, and things that may lead one to failure. As I came across the excerpt below, it made me think that there may be some insight into why certain partnerships and groups of people can work incredibly well together, and why some are likely to end in failure. I haven't read Michael Eisner's book yet, Working Together: Why Great Partnerships Succeed, but I know Warren Buffett and Charlie Munger are included in it, so I may need to look into it.

After reading the excerpt below, it made me think that one of the reasons they may have succeeded so well together is that their relationship is structured in a way that allows them to both learn and pursue their interests in their own way; with Buffett spending more time with Berkshire businesses and managers and Munger spending more time pursuing worldly wisdom. Their pursuits and the way they spend their time have plenty of overlap, but the details are more personalized to each of them. And the knowledge they've gained and the progress they've made individually come together in a way that leads to a smarter and more objective way to make decisions over time. In essence, they have structured their environments in a way where they can pursue what they are passionate about, and that allows them to stay interested and keep on tap dancing to work every day. 

From The Art of Learning:
A key component of high-level learning is cultivating a resilient awareness that is the older, conscious embodiment of a child’s playful obliviousness. My chess career ended with me teetering on a string above leaping flames, and in time, through a different medium, I rediscovered a relationship to ambition and art that has allowed me the freedom to create like a child under world championship pressure. This journey, from child back to child again, is at the very core of my understanding of success.  
I believe that one of the most critical factors in the transition to becoming a conscious high performer is the degree to which your relationship to your pursuit stays in harmony with your unique disposition. There will inevitably be times when we need to try new ideas, release our current knowledge to take in new information—but it is critical to integrate this new information in a manner that does not violate who we are. By taking away our natural voice, we leave ourselves without a center of gravity to balance us as we navigate the countless obstacles along our way.

Thursday, November 19, 2015


Getting caught up on a few links after a little time away...

Notes from the Berkshire Hathaway 50th Anniversary Symposium (Market FollyValueWalk)

Prominent film company focuses documentary lens on Buffett [H/T Linc] (LINK)

How does Charlie Munger recommend dealing with adversity? (LINK)

Shane Parrish talks to Chris Dixon on The Knowledge Project (LINK) [Shane is also starting a membership program that is worth considering, HERE.]

John Malone interview on CNBC (video) [H/T Santangel's Review] (LINK
"I'm an investor. When I see opportunity to create value for my shareholders, I tend to want to dabble in that. So that effort to position capital, to anticipate value creation, I think is my job."
How to Become a Better Reader (LINK)
Related book: How to Read a Book
Latticework of Mental Models: Reciprocation Tendency (LINK)
Related book: Influence: The Psychology of Persuasion
Robert Shiller at the LSE discussing Phishing for Phools (LINK)

Robert Shiller's Talk at Google for Phishing for Phools (video) (LINK)

Beyond Banking: under attack on all sides (LINK)

Huge Valeant Stake Exposes Rift at Sequoia Fund [H/T Linc] (LINK)


Managing a creative culture (LINK)
Related book: Creativity, Inc.
The Bill Simmons Podcast - Episode 19: Malcolm Gladwell (LINK)
HBO's Bill Simmons talks to best-selling author Malcolm Gladwell about Grantland's abrupt demise, public funded sports arenas/stadiums, new owner syndrome, Tom Brady's never-ending career, the corrupt NCAA, Obama's next job and how America needs a sports czar more than ever.
The Saudi Wahhabis are the real foe: We must take our fight to the preachers and financiers of terror - By Nassim Nicholas Taleb (LINK)

Some highlights from the book Seneca: A Life (Part 1, Part 2, Part 3, Part 4)

Some interesting books I've seen recommended by others: 

Regaining and clarity of mind after making a mistake...

From Josh Waitzkin in The Art of Learning:
One idea I taught was the importance of regaining presence and clarity of mind after making a serious error. This is a hard lesson for all competitors and performers. The first mistake rarely proves disastrous, but the downward spiral of the second, third, and fourth error creates a devastating chain reaction. Any sports fan has seen professional football, basketball, and baseball games won and lost because of a shift in psychological advantage. People speak about momentum as if it were an entity of its own, an unpredictable player on the field, and from my own competitive experience, I can vouch for it seeming that way. The key is to bring that player onto your team by riding the psychological wave when it is behind you, and snapping back into a fresh presence when your clarity of mind begins to be swept away. 
With young chess players, the downward spiral dominates competitive lives. In game after game, beginners fall to pieces after making the first mistake. With older, more accomplished players the mistakes are subtler, but the pattern of error begetting error remains true and deadly.