Tuesday, September 16, 2014


Tim Ferriss interviews Brendan Moynihan, co-author of What I Learned Losing a Million Dollars (LINK)

Oaktree Is Said to Seek $10 Billion for Distressed Fund (LINK)
“Credit standards have dropped and non-investment grade debt issuances reached record levels,” John Frank, Oaktree’s managing principal, said July 31 on a conference call with investors and analysts. “Aggressive extensions of credit of the sort we’re seeing today have always been a precursor to a substantial distressed-debt opportunity.”
Century bond surge defies rate fears [H/T Will] (LINK)
Investors are seizing the chance to lend money to US companies and municipalities for up to 100 years in exchange for a chance to capture higher yields for longer. 
Sales of the so-called ultra long bonds, those maturing in 50 years or longer, have exploded this year despite expectations of higher US bond yields, which may hit long-dated corporate and municipal debt. 
Cleveland Clinic, the Ohio-based medical and research centre giant, became on Thursday the first not-for-profit healthcare company to sell 100-year bonds....Cleveland Clinic completed the sale of $400m in securities maturing in 2114, with yields of about 4.85 per cent, compared with 3.27 per cent for the US 30-year note, according to people familiar with the sale.
Venture Capitalist Sounds Alarm on Silicon Valley Risk (LINK)

What Shane Parrish learned from Peter Thiel's Zero to One (LINK)
I also posted these quotes from Thiel's book on Twitter earlier this morning that may be of interest:
  • "You should focus relentlessly on something you're good at doing, but before that you must think hard about whether it will be valuable in the future."
  • "...you can't trust a world that denies the power law to accurately frame your decisions for you, so what's important is rarely obvious."
And if you follow this blog in an RSS reader, you may have missed the Ben Franklin stuff I added later in the day to yesterday's links, which you may want to check out.

Monday, September 15, 2014


Jim Grant's Three Part Interview With The Epoch Times (LINK)

Peter Thiel Op-Ed: Competition Is for Losers (LINK)
Related book: Zero to One
Woman of 24 found to have no cerebellum in her brain [H/T James] (LINK)

An important book worth checking out, which I believe is mentioned somewhere in Poor Charlie's Almanack and also by Robert Shiller in his (also important) article I linked to the other day: The Moral Consequences of Economic Growth - by Benjamin M. Friedman

Learning From Benjamin Franklin (LINK)
Related books: A Benjamin Franklin Reader, Benjamin Franklin, Benjamin Franklin: An American LifePoor Richard's AlmanackThe Way to Wealth: to which is added: The Whistle & The Advantages of Drunkenness
Related previous posts: Ben Franklin - 3 Essays - The Ephemera; The Whistle; Franklin and the GoutBen Franklin and the JuntoBen Franklin on Humility (and some crafty advice on persuasion)Ben Franklin's 13 Virtues
"I have always thought that one man of tolerable abilities may work great changes, and accomplish great affairs among mankind if he first forms a good plan and, cutting off all amusements or other employments that would divert his attention, makes the execution of that same plan his sole study and business." -Ben Franklin

Hussman Weekly Market Comment: A Warning from Graham and Dodd

“During the latter stage of the bull market culminating in 1929, the public acquired a completely different attitude towards the investment merits of common stocks… Why did the investing public turn its attention from dividends, from asset values, and from average earnings to transfer it almost exclusively to the earnings trend, i.e. to the changes in earnings expected in the future? The answer was, first, that the records of the past were proving an undependable guide to investment; and, second, that the rewards offered by the future had become irresistibly alluring. 
“Along with this idea as to what constituted the basis for common-stock selection emerged a companion theory that common stocks represented the most profitable and therefore the most desirable media for long-term investment. This gospel was based on a certain amount of research, showing that diversified lists of common stocks had regularly increased in value over stated intervals of time for many years past. 
“These statements sound innocent and plausible. Yet they concealed two theoretical weaknesses that could and did result in untold mischief. The first of these defects was that they abolished the fundamental distinctions between investment and speculation. The second was that they ignored the price of a stock in determining whether or not it was a desirable purchase. 
“The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new-era theory led directly to this thesis… An alluring corollary of this principle was that making money in the stock market was now the easiest thing in the world. It was only necessary to buy ‘good’ stocks, regardless of price, and then to let nature take her upward course. The results of such a doctrine could not fail to be tragic.” 
Benjamin Graham & David L. Dodd, Security Analysis, 1934

Sunday, September 14, 2014


Charlie Rose interviews Tim Cook (LINK)

How lunch with Warren Buffett changed Guy Spier's life (LINK)
Related book: The Education of a Value Investor
Horizon Kinetics: September 2014 Commentary (LINK)

Audit Interview: Carol J. Loomis [H/T The Big Picture] (LINK)

How the WordPress Machine Works [H/T The Big Picture] (LINK)

From White Knight to Thief (LINK)

Book worth checking out: Broca's Brain: Reflections on the Romance of Science by Carl Sagan

Friday, September 12, 2014

Charlie Munger on the balance between competency and gumption...

A quote from Jason Zweig's article, "A Fireside Chat With Charlie Munger," worth a post of its own:
You have to strike the right balance between competency or knowledge on the one hand and gumption on the other. Too much competency and no gumption is no good. And if you don’t know your circle of competence, then too much gumption will get you killed. But the more you know the limits to your knowledge, the more valuable gumption is.

Jason Zweig also put it this way in his other article on the meeting, "The Secrets of Berkshire’s Success: An Interview with Charlie Munger":
Successful investing, Mr. Munger told me, requires “this crazy combination of gumption and patience, and then being ready to pounce when the opportunity presents itself, because in this world opportunities just don’t last very long.”

Jason Zweig: A Fireside Chat With Charlie Munger

Link to: A Fireside Chat With Charlie Munger
I don’t love Ben Graham and his ideas the way Warren does. You have to understand, to Warren — who discovered him at such a young age and then went to work for him — Ben Graham’s insights changed his whole life, and he spent much of his early years worshiping the master at close range. But I have to say, Ben Graham had a lot to learn as an investor. His ideas of how to value companies were all shaped by how the Great Crash and the Depression almost destroyed him, and he was always a little afraid of what the market can do. It left him with an aftermath of fear for the rest of his life, and all his methods were designed to keep that at bay.

I think Ben Graham wasn’t nearly as good an investor as Warren Buffett is or even as good as I am. Buying those cheap, cigar-butt stocks [companies with limited potential growth selling at a fraction of what they would be worth in a takeover or liquidation] was a snare and a delusion, and it would never work with the kinds of sums of money we have. You can’t do it with billions of dollars or even many millions of dollars. But he was a very good writer and a very good teacher and a brilliant man, one of the only intellectuals – probably the only intellectual — in the investing business at the time.


Confucius said that real knowledge is knowing the extent of one’s ignorance. Aristotle and Socrates said the same thing. Is it a skill that can be taught or learned? It probably can, if you have enough of a stake riding on the outcome. Some people are extraordinarily good at knowing the limits of their knowledge, because they have to be. Think of somebody who’s been a professional tightrope walker for 20 years – and has survived. He couldn’t survive as a tightrope walker for 20 years unless he knows exactly what he knows and what he doesn’t know. He’s worked so hard at it, because he knows if he gets it wrong he won’t survive. The survivors know.

Knowing what you don’t know is more useful than being brilliant.


On how innovative Berkshire Hathaway has been:

There isn’t one novel thought in all of how Berkshire is run. It’s all about what [Mr. Munger’s friend] Peter [Kaufman] calls ‘exploiting unrecognized simplicities.’ We [Messrs. Buffett and Munger, their shareholders and the companies they have acquired] have selected one another. It’s a community of like-minded people, and that makes most decisions into no-brainers. Warren and I aren’t prodigies. We can’t play chess blindfolded or be concert pianists. But the results are prodigious, because we have a temperamental advantage that more than compensates for a lack of IQ points.

Nobody has a zero incidence of bad news coming to them too late, but that’s really low at Berkshire. Warren likes to say, ‘Just tell us the bad news, the good news can wait.’ So people trust us in that, and that helps prevent mistakes from escalating into disasters. When you’re not managing for quarterly earnings and you’re managing only for the long pull, you don’t give a damn what the next quarter’s earnings look like.


Jason Zweig - The Secrets of Berkshire’s Success: An Interview with Charlie Munger (LINK)

Some more notes from the Daily Journal Meeting (LINK)

TED Talk - Hans and Ola Rosling: How not to be ignorant about the world (LINK)

Robert Shiller: Parallels to 1937 (LINK)

Deutsche Bank Just Released A 104-Page Report On What May Be The World's Last Mega-Bubble [I'd love to see the report if anyone happens to have it and be able to pass it along to me.] (LINK)

Third Avenue Funds 3Q 2014 Shareholder Letters [H/T ValueWalk] (LINK)

Excerpt from the Baupost 2004 letter that is just as relevant and wise today (LINK)

George Cooper: Monetary Reform – Be Careful what you aim for (LINK)
Related books: Money, Blood and Revolution, The Origin of Financial Crises

Shortening product lives...

From Capital Account (this excerpt was written in September of 1994):
..shortening product lives are rarely caught by reported earnings. Indeed, the appearance of rising profits from a new product may be more than offset by a reduced product life. Technology investors in the early 1980s paid dearly to learn this lesson.

Thursday, September 11, 2014


Jason Zweig on Charlie Munger's comments at the Daily Journal Annual Meeting (LINK)

Bloomberg on Charlie Munger's comments at the Daily Journal Annual Meeting (LINK)

Guy Spier on Bloomberg TV discussing his book The Education of a Value Investor (H/T ValueWalk) (LINK)

Christopher Begg On Mispricing, Finding Superior Business (LINK)

George Soros: Britain needs greater unity not a messy break-up (LINK)

Sal Khan - The Learning Myth: Why I'll Never Tell My Son He's Smart (LINK)

How Do They Get Caffeine Out of Coffee Beans? (LINK)

Fossils push back origins of modern mammals (LINK)

Wednesday, September 10, 2014

Seth Klarman Q2 letter excerpts

Via ValueWalk:
Our team is continually improving at knowing where to look  for opportunity. Our analysts are doing some really creative work thinking about structural changes in some companies and industries, which has led to several new public equity investments. Pulling threads  on existing stock investments has led to a few others...I view it as a substantial positive that our  team has the background, talent, and drive to source opportunity in new areas of the markets, generally  with very favorable results. I am also pleased that this old dog (your Portfolio Manager) is still open (I’m always cautious but open) to learning a few new tricks. 
With investment bankers and hedge fund executives canvassing Europe today to bet on recovery, you have the increasingly common circumstance of proliferating “opportunity funds,” absent only the investment opportunity. Some clients of hedge funds today are, in a sense, disintermediating themselves, funding new entities to bid higher for the same sort of assets their other, more disciplined managers are already bidding more judiciously for. The discipline problem in this case is not that of the legacy managers; it may just be that of the clients.