Thursday, January 18, 2018


" growth, per se, tells us little about value.  It's true that growth often has a positive impact on value, sometimes one of spectacular proportions.  But such an effect is far from certain.... Growth benefits investors only when the business in point can invest at incremental returns that are enticing - in other words, only when each dollar used to finance the growth creates over a dollar of long-term market value.  In the case of a low-return business requiring incremental funds, growth hurts the investor." - Warren Buffett [expanded quote HERE]

The Art of Asking Good Questions (LINK)

Brent Beshore's 2017 Annual Letter (LINK)

The Pro-business Argument for Single-payer Healthcare [H/T Linc] (LINK)
In spring 2017, billionaire businessman Warren Buffett called the American healthcare system “the tapeworm of American economic competitiveness.” In other developed countries, healthcare is not an impediment to the business model—businesses don’t have to pay for it for their employees. In the United States, the opposite is true. Employers often pay big money to provide healthcare to their employees, decreasing the amount of capital the company has available to grow their business. Single-payer healthcare, a system in which universal healthcare coverage is provided to all citizens by the government, seems like the obvious answer for businesses to save money by avoiding healthcare costs. But Warren Buffett is one of the only large-scale businessmen to support single-payer healthcare.
Freakonomics Radio (podcast): What Does a C.E.O. Actually Do? (Part 1) (LINK)

John Medina: "Brain Rules for Aging Well" | Talks at Google (LINK)
Related video: Arthur De Vany - Renewing Cycles
A Popular Algorithm Is No Better at Predicting Crimes Than Random People - by Ed Yong (LINK)

Why Did Two-Thirds of These Weird Antelope Suddenly Drop Dead? - by Ed Yong (LINK)

Wednesday, January 17, 2018


“Nothing any good isn’t hard.” - F. Scott Fitzgerald

Beyond the Bitcoin Bubble - by Steven Johnson (LINK)

Changing Your Mind - by Ian Cassel (LINK)

Facebook's Motivations - by Ben Thompson (LINK)

Bob Dylan as Economic Prophet - by Mark Spitznagel (LINK)

The Last Place on Earth Where Everyone Still Loves Kmart [H/T Matt] (LINK)
The Kmart store in Guam is located 6,000 miles west of California in the Pacific Ocean, well past the easy reach of Target , Wal-Mart or Amazon Prime. 
The store, open 24 hours a day, also seems beyond the reach of time itself. Inside, it feels more like 1980, when Kmart ruled the big-box retail market. 
...The company doesn’t disclose sales for individual stores, but a former executive said the two-decade-old Guam Kmart produces slightly more than $100 million in annual sales—about three times the revenue of the next-highest grossing store. The average Kmart store had sales of $9 million, according to retail consultancy eMarketer, down 20% since 2012.
a16z Podcast: Reinventing Food (LINK)

Rory Sutherland in conversation with Richard Shotton on the O Behave Podcast (LINK)
Related book: The Choice Factory: 25 behavioural biases that influence what we buy
A review of Niall Ferguson's book, The Square and the Tower (LINK)
Related video: Niall Ferguson on History’s Hidden Networks (also available in podcast format)
Speaking of Niall Ferguson, I think we can safely say 'Buffett 1, Ferguson 0' on Ferguson's November 2009 comment about Berkshire's purchase of Burlington Northern: Niall Ferguson on Charlie Rose

And a week or so after Ferguson was on Charlie Rose, Warren Buffett and Bill Gates did a CNBC Town Hall event together, and Buffett said the following, which is worth reviewing:
"So it's a terrible mistake to look at what's going on in the economy today and then decide whether to buy or sell stocks based on it. You should decide whether to buy or sell stocks based on how much you're getting for your money, long-term value you're getting for your money at any given time. And next week doesn't make any difference because next week, next week is going to be a week further away. And the important thing is to have the right long-term outlook, evaluate the businesses you are buying. And then a terrible market or a terrible economy is your friend. I don't care, in making a purchase of the Burlington Northern, I don't care whether next week, or next month or even next year there is a big revival in car loadings or any of that sort of thing. A period like this gives me a chance to do things. It's silly to wait. I wrote an article. If you wait until you see the robin, spring will be over."

Tuesday, January 16, 2018


"Charlie Munger says that he wants to shoot fish in a barrel, but only after all the water has been let out.... When I look at the people that I would normally think of as very good investors, basically, those folks are really good investors but they aren't fishing where the fish are. And it doesn't matter how good of a fisherman you are if you're not fishing where the fish are." - Mohnish Pabrai (Source)

Poker, Speeding Tickets, and Expected Value: Making Decisions in an Uncertain World (LINK)

Greenlight Capital's Q4 Letter (LINK)

TV, retail, advertising and cascading collapses - by Benedict Evans (LINK)

Want Your Group to Learn Faster? Press Pause - by Daniel Coyle (LINK)
Related book: The Culture Code: The Secrets of Highly Successful Groups
Collective hallucinations and inefficient markets: The British Railway Mania of the 1840s [H/T Linc] (LINK)
Abstract.  The British Railway Mania of the 1840s was by many measures the greatest technology mania in history, and its collapse was one of the greatest financial crashes. It has attracted surprisingly little scholarly interest. In particular, it has not been noted that it provides a convincing demonstration of market inefficiency. There were trustworthy quantitative measures to show investors (who included Charles Darwin, John Stuart Mill, and the Bront¨e sisters) that there would not be enough demand for railway transport to provide the expected revenues and profits. But the power of the revolutionary new technology, assisted by artful manipulation of public perception by interested parties, induced a collective hallucination that made investors ignore such considerations. They persisted in ignoring them for several years, until the lines were placed in service and the inevitable disaster struck.
Invest Like the Best Podcast: Crypto-pocalypse, with Preston Byrne (LINK)

A New Clue to the Mystery Disease That Once Killed Most of Mexico (LINK)

Blue Planet II Is the Greatest Nature Series Of All Time - by Ed Yong (LINK)
Across seven episodes of Blue Planet II, viewers are treated to a number of wondrous images. Orcas stun schools of herring by slapping them with their tails. Cuttlefish mesmerize shrimp by splaying out their arms and sending moving clouds of pigment across their skin, like a living gif. Mobula rays cavort in the deep, stirring glow plankton as they move, creating an ethereal scene that looks like a clip from Moana. Cutthroat eels slink into a lake of super-salty water at the bottom of the ocean, and some tie themselves into knots in the throes of toxic shock. Pods of bottlenose dolphins and false killer whales meet in the open ocean, greeting each other as if reuniting with old friends. 
The series first aired in the United Kingdom last year and finally premieres in the United States this Saturday. It is the latest program from the BBC’s indefatigable Natural History Unit—arguably the greatest producers of such documentaries in the world.
Mine Your Acre of Diamonds (LINK)

Monday, January 15, 2018


Fiat Chrysler’s Marchionne: The Future of Cars Will Be Electric and Commoditized (LINK)

Adapt or Die Is Marchionne’s Stark Farewell Message to Carmakers [H/T Matt] (LINK)

Alibaba's AI Outguns Humans in Reading Test [H/T Linc] (LINK)

Is Amazon Going to Rule the World? (video) [H/T The Big Picture] (LINK)

Everyone Is Getting Hilariously Rich and You’re Not (LINK)

Harvard Study Shows Why Big Telecom Is Terrified of Community-Run Broadband [H/T Techmeme] (LINK)

I Kid you not, this Mifid rule relies on a bent coin - by John Kay (LINK)

How I Built This Podcast -- LinkedIn: Reid Hoffman (LINK)

Bill James on EconTalk (podcast) (LINK)

Chemists go green to make better blue jeans (LINK)

Saturday, January 13, 2018


 "It may seem a comparatively easy matter to determine that one enterprise is more promising than another. But it is by no means so easy to establish that one common stock at a given price is clearly preferable to another stock at its current price." - Benjamin Graham and David Dodd (Security Analysis: Sixth Edition)

Advisers at Leading Discount Brokers Win Bonuses to Push Higher-Priced Products - by  Jason Zweig and Anne Tergesen (LINK)
At Fidelity, Schwab and TD Ameritrade, employees win extra pay and other incentives to put clients in products that are more lucrative for them, and the firm 
Investors who seek advice from discount brokerage firms might assume the counsel they get is impartial, given how these firms have rejected the old Wall Street model of working on commissions. 
In fact, advisers at some of the biggest discount brokerage firms make more money if they steer clients toward more-expensive products, according to disclosures from the firms and people who used to work at them. That means customers could end up with investment products and services that are costlier than they need.
What would confound market participants the most in 2018? (LINK)

Josh Steiner: Global Housing Market Analysis [his podcast section starts around the 22-minute mark, and the slide deck to go with it] (LINK)

Adventures in Finance Podcast -- Charge!: The Bull Case for Tesla (LINK)
At long last, a Tesla bull steps up to retort Mark Spiegel’s bear case on the electric car company. Rob Maurer, host of the Tesla Daily podcast, makes an impassioned case for both the company and the stock. 
The Importance of Deep Fun [H/T @AdamMGrant] (LINK)

Want a Learning Culture? Put this Video on Repeat (LINK)
...innovation is about a willingness to get obsessed with solving a problem. About embracing the pain of feedback and improve a little bit each time. About wiping out a bunch. And about having a group rooting you on. 
For groups, this means having leaders that embrace the discomfort of this entire painful, insane, rewarding process.

Jocko Willink on accountability

"From a leadership perspective, I always say that accountability is a tool, but it should not be your leading tool. I've worked with a lot of companies along the way...where their answer to every problem that they're having is that they just need to have more accountability. And it sounds great because, let's face it, if you're my employee and I need you to do x, y, and z every day, and every day I sit there and watch you do x, y, and z.... I've held you accountable for doing them and they get done 100% because I've watched you. But where the problem comes is that I don't just have you as my employee. I've got a team of 15 people and I've got other things that are happening, so I can't watch 15 people.... I can't hold everyone accountable. So accountability from a leadership perspective, it doesn't really work because no leader has the time to hold everyone accountable for every single task that they're doing. So what we actually want to do is we want to lead people. That's what our goal is."  - Jocko Willink  (Source


Related books: 

Friday, January 12, 2018


The Thrill of Uncertainty - by Morgan Housel (LINK)

Dan Pink speaks with Brett McKay about his new book, When: The Scientific Secrets of Perfect Timing (podcast) [H/T Abnormal Returns] (LINK)

Exponent Podcast: Episode 136 — It’s All 1s and 0s (LINK)

a16z Podcast: Revisiting the Gene (LINK)

Robert Sapolsky speaks to CBC Radio Quirks & Quarks (LINK)
Related book: Behave: The Biology of Humans at Our Best and Worst 
Brain Cells Share Information Using a Gene that Came From Viruses - by Ed Yong (LINK)

Animals Have Culture, Too - by Ed Yong (video) (LINK)

The mysterious cycles of ice ages - by Matt Ridley (LINK)

Some great thoughts on network effects from Anu Hariharan on Twitter:
  • Often misunderstood - Network Effects is not the same as scale
  • One simple way to test for that is ask this question - what is the “barrier to exit” for the user?
  • If the barrier to exit for the user is low, then there is no network effect. This implies it is easy for users to switch from your service
  • Ride sharing services (Uber, Lyft) don’t have a network effect (in other words demand side economies of scale). Users often switch apps if it takes longer than 5 mins ETA or if there is surge pricing on one
  • However ride sharing does have supply side economies of scale and therefore opportunity for select players to have monopolistic share in a market
  • On the other hand apps like Facebook, LinkedIn have very strong network effect - because the barrier to exit for the user is really high!
  • A user has invested time and effort in building a social graph on these platforms with connections, history of exchanges and in some cases even maintain them. It is not easy for customers/ users to switch easily and therefore the “barrier to exit” for the user is really high

Thursday, January 11, 2018


"It seems [Fred] Wilson was correct that software alone is a commodity. In the language of legendary investor Warren Buffett, pure software companies don't have an effective "moat" to defend their business; it's easy for competitors to storm the barricades and overwhelm them. Since most software industries have relatively low barriers to entry—especially today, when startup costs are lower than ever—it's practically guaranteed that a competitor will come along and offer customers similar software that's either better or cheaper. That's where network effects come in.... Networks are much harder to duplicate than features are.... Successful platforms have strong moats in the form of their networks and operate at a scale that positions them to dominate their industries." (via Modern Monopolies: What It Takes to Dominate the 21st Century Economy)

Bruce Wayne vs. Leonardo da Vinci - by Christopher Pavese (LINK)
Related book: Leonardo da Vinci
The Most Powerful Research Tool is a Great Network - By Lewis Johnson (LINK)
Disruptive Regulations are coming: This Could Give Shipping Investors Multiple Ways to Win 
The two changes he noted are global environmental standards sponsored by the International Maritime Organization.  The first is the “Ballast Water Management Convention” that went into force late last year.  It requires that newly built ships have waste-water treatment equipment that purifies ballast water to certain minimum levels.  After September 2019, ships that were built before these standards came into force will need a costly upgrade to their equipment to meet this standard for the vessels to pass their periodic inspections.  
The second standard will be implemented in 2020.  I was amazed to learn that the world’s biggest 25 ships emit more sulfur than the entire world’s fleet of cars!  Accordingly, the regulation’s goal is to limit this pollution.  Ship-owners must achieve this goal and have several ways to do so, such as retooling to switch to a less polluting fuel like gas or methanol or by installing scrubbers to lower concentrations of pollutants.
Lessons from the 1980s for disruption. (LINK)

Hype Meets Reality as Electric Car Dreams Run Into Metal Crunch [H/T Matt] (LINK)

When Biology Becomes Engineering (video) (LINK)

Sebastian Junger: "Hell on Earth: The Fall of Syria and the Rise of ISIS" | Talks at Google (LINK)

On the doorstep of victory - By Bill Gates (LINK)
The world is closer than ever before to wiping out polio. 
Last year, the world saw the fewest number of polio cases—just 21, according to the latest figures. 
That’s incredible, especially when you consider that just 30 years ago, there were 350,000 cases of polio per year worldwide.

Wednesday, January 10, 2018


"[The economics profession] has been confident in various formulas, but economics is not physics. The same formula that works in one decade doesn't work in the next. Economics is a difficult subject, and a lot of overconfidence has been removed from the economics profession over the last 20 years. They've been really surprised." - Charlie Munger (on CNBC this morning)


Berkshire Hathaway Boosts Its Board Size (LINK)
Warren Buffett has elevated two longtime Berkshire Hathaway Inc. executives to vice chairman roles at the company, all but confirming years of speculation that one of them is in line to replace him. 
Berkshire said Wednesday that it is expanding its 12-member board of directors by two and naming Gregory Abel and Ajit Jain to fill the spots.
Eddie Lampert: Enhancing Our Liquidity and Accelerating Our Return to Profitability (LINK)

Good Luck Spending Your KodakCoins (LINK)

I Made My Shed the Top Rated Restaurant On TripAdvisor - by Oobah Butler [H/T Santangel's Review] (LINK)

Panel remarks by Claudio Borio: A blind spot in today's macroeconomics? (LINK)
A standard presumption in today's macroeconomics is that when making sense of first-order macroeconomic outcomes we can treat the economy as if its output were a single good produced by a single firm. This means that issues of resource misallocation can be safely ignored. But the link between resource misallocations and macroeconomic outcomes may well be tighter than we think. This speech illustrates the point with reference to two examples that highlight the link between finance and macroeconomics: the impact of resource misallocations induced by financial booms and busts on productivity growth, and an intriguingly close relationship between the growing incidence of "zombie" firms and declining interest rates since the 1980s.
When Humans War, Animals Die - by Ed Yong (LINK)

Why dolphins are deep thinkers (from 2003) [H/T @juliagalef] (LINK)
At the Institute for Marine Mammal Studies in Mississippi, Kelly the dolphin has built up quite a reputation. All the dolphins at the institute are trained to hold onto any litter that falls into their pools until they see a trainer, when they can trade the litter for fish. In this way, the dolphins help to keep their pools clean. 
Kelly has taken this task one step further. When people drop paper into the water she hides it under a rock at the bottom of the pool. The next time a trainer passes, she goes down to the rock and tears off a piece of paper to give to the trainer. After a fish reward, she goes back down, tears off another piece of paper, gets another fish, and so on. This behaviour is interesting because it shows that Kelly has a sense of the future and delays gratification. She has realised that a big piece of paper gets the same reward as a small piece and so delivers only small pieces to keep the extra food coming. She has, in effect, trained the humans.

"Accounting is but an aid to business thinking, not a substitute for it." - Warren Buffett [H/T CIO]

Tuesday, January 9, 2018


'Moneyball' Author Michael Lewis: How I Knew When to Quit a Fancy Wall Street Job to Follow My Dream [H/T Linc] (LINK)
Related book: When to Jump: If the Job You Have Isn't the Life You Want (the audiobook looks like it is read by those who contributed stories to the book)
Ray Dalio’s Secret Sauce – The Truth Machine and The Good Life (LINK)
Related book: Principles
Invest Like the Best Podcast: Creative Investing, with CoVenture’s Ali Hamed (LINK)

Capital Allocators Podcast: Michael Mauboussin – Active Challenges, Rational Decisions and Team Dynamics (LINK)

How do alligators survive the winter weather in a frozen pond? (LINK)

Great Barrier Reef: rising temperatures turning green sea turtles female [H/T Linc] (LINK)

Super-Black Is the New Black - by Ed Yong (LINK)
Feathers on birds of paradise contain light-trapping nanotechnology that makes some of the deepest blacks in the world.