Thursday, April 26, 2018

Time transforms risk...

From Against the Gods: The Remarkable Story of Risk:
Time is the dominant factor in gambling. Risk and time are opposite sides of the same coin, for if there were no tomorrow there would be no risk. Time transforms risk, and the nature of risk is shaped by the time horizon: the future is the playing field.
Time matters most when decisions are irreversible. And yet many irreversible decisions must be made on the basis of incomplete information. Irreversibility dominates decisions ranging all the way from taking the subway instead of a taxi, to building an automobile factory in Brazil, to changing jobs, to declaring war. 
If we buy a stock today, we can always sell it tomorrow. But what do we do after the croupier at the roulette table cries, “No more bets!” or after a poker bet is doubled? There is no going back. Should we refrain from acting in the hope that the passage of time will make luck or the probabilities turn in our favor? 
Hamlet complained that too much hesitation in the face of uncertain outcomes is bad because “the native hue of resolution is sicklied o’er with the pale cast of thought . . . and enterprises of great pith and moment . . . lose the name of action.” Yet once we act, we forfeit the option of waiting until new information comes along. As a result, not-acting has value. The more uncertain the outcome, the greater may be the value of procrastination. Hamlet had it wrong: he who hesitates is halfway home.

[H/T @williamgreen72]

Wednesday, April 25, 2018


"We try to think about things that are both important and knowable. There are important things that are not knowable.... And there are things that are knowable, but not important - and we don't want to clutter up our minds with those. We ask ourselves: 'What's important and knowable?'... There are all kinds of important subjects that Charlie and I don't know anything about. And therefore, we don't think about 'em. Our view about what the world will look like over the next 10 years in business or the state of U.S. competitiveness - we're just no good [at that]." --Warren Buffett (1998 Berkshire Hathaway Annual Meeting, via Outstanding Investor Digest)

"We're not predicting the currents that will come just how some things will swim whatever the currents may be." --Charlie Munger (1998 Berkshire Hathaway Annual Meeting, via Outstanding Investor Digest)

What Does Culture Smell Like? (LINK)

Boyar Value Group's Q1 Letter (LINK) [There are also a bunch of other Q1 Letters HERE.]

Open, Closed, and Privacy - by Ben Thompson (LINK)

MUST SEE VIDEO: Snowstorm on a comet! (LINK)

What's Wrong With Growing Blobs of Brain Tissue? - by Ed Yong (LINK)

Fossilized Human Footprint Found Nestled in a Giant Sloth Footprint - by Ed Yong (LINK)

Tuesday, April 24, 2018


"There's integrity, intelligence, experience and dedication. That's what human enterprises need to run well." --Charlie Munger

Brian Koppelman’s Career Capital (LINK)

An excerpt from John Doerr's new book Measure What Matters (LINK)

2018 Antitrust and Competition conference - Digital Platforms and Concentration (video) (LINK) [Ben Thompson's opening remarks with slides are available HERE.]

Happiness & the Gorilla - By Scott Galloway (LINK)

The Reinvention of America [H/T @StevenLevy] (LINK)

Book of the day [H/T @svafier]: The Go-Giver Influencer

"After crosses and losses men grow humbler and wise." --Ben Franklin [H/T CIO]

Monday, April 23, 2018


"[Charlie and I] really don't worry. We just do the best we can. When we have capital to allocate, sometimes it's very easy to do and sometimes it's almost impossible. However, we’re not going to stay up at night and worry about it - because the world changes. If we were worried about something in the business, we'd correct it....if you're worried about something, the thing to do is to get it corrected and get back to sleep. " --Warren Buffett

Go Fast and Break Things: The Difference Between Reversible and Irreversible Decisions (LINK)

Research Affiliates: Yes. It's a Bubble. So What? (LINK)
With sky-high valuations in the US stock market, and what we believe is a tech bubble that has dangerous implications for other areas of the market, we suggest four actions investors can take now to avoid the inevitable bursting of the bubble, and which will likely benefit their portfolios’ long-term performance potential. 
60 Minutes' segment on MIT's Media Lab (video) (LINK)

Why Everyone Is Insecure (and Why That's Okay) [H/T @susancain] (LINK)

Uranus smells like rotten eggs (just a little) - by Phil Plait (LINK)

What Was The Ancestor Of Everything? (video) [H/T Linc] (LINK)

Sunday, April 22, 2018


"My definition of value is figure out what the business is worth and pay a lot less. It is not low price-to-book, low price-to-sales investing.... As Warren Buffett would say, value and growth are tied at the hip. Growth is part of value.... The reason I’m a value investor, according to our definition, is stocks are actually ownership shares of businesses that you value and try to buy at a discount, they’re not pieces of paper the bounce around that you put Sharpe ratios and Sortina ratios and use computer simulations to balance your portfolios or whatever it is. Basically, they are ownership shares of business that you value and try to buy at a discount. So it’s certainly possible that the market does not reward my valuations even if I’m right over the next two years, but that doesn’t mean we’re going to stop doing what we’re doing. That’s what stocks are: ownership shares of businesses, and that’s very fundamental to the way we look at everything." --Joel Greenblatt

Joel Greenblatt on the Masters in Business podcast (audio and transcript) (LINK)

Buffett's Edge [H/T Abnormal Returns] (LINK)

The Most Valuable Investment Skill - by Sean Iddings (LINK)

How Hedge Funds Hide [H/T Will] (LINK)
Seth Klarman’s Baupost Group buys distressed debt and goes to great lengths to hide it. Here’s why — and how — hedge funds such as his fight to keep secrets. Part 1 of a two-part series.
Mark Leonard's annual letter to Constellation Software shareholders (LINK)

Negative Equity, Veiled Value, and the Erosion of Price-to-Book - by Travis Fairchild (LINK)

Baseball & Waiting for the Fat Pitch - by Frank K. Martin (LINK)

Hugh Hendry’s Life After Hedge Funds [H/T value and opportunity] (LINK)

The Investors Podcast: The Culture Code w/ Daniel Coyle (LINK)

a16z Podcast: Principles and Algorithms for Work and Life (Ray Dalio) (LINK)

Investing and Business Lessons from Aileen Lee (Cowboy Ventures) - by Tren Griffin (LINK)

When the Twitter Mob Came for Me ($) (LINK)
Recently hired by the Atlantic and then promptly fired, the conservative writer Kevin D. Williamson discusses the social-media outrage that made the celebrated magazine retreat
Beyond Black Box Management - by Cal Newport (LINK)

Humans, Gods and Technology - VPRO documentary - 2017

Nobody knows how our world will look like in 25 years. Perhaps our work is taken over by autonomous robots and we become the slaves of the technology we have created ourselves. The big questions about the future of man and his relation to technology are presented to two important thinkers of the moment: Kevin Kelly and Yuval Noah Harari.

Link to video


Related books:

Homo Deus - by Yuval Noah Harari

The Inevitable - by Kevin Kelly

Friday, April 20, 2018


Casualties of Your Own Success - by Morgan Housel (LINK)

Kicked in the Ass with a Golden Horseshoe - by Ian Cassel (LINK)
Home Depot was co-founded by Bernie Marcus (visionary), Arthur Blank (operations/finance), and Pat Farrah (energy), and financed by Ken Langone. Home Depot is yet another example of how great ideas are born out of frustration not greed.
Horizon Kinetics Q1 2018 Portfolio Update slides [H/T @chriswmayer] (LINK)

Alphabet Soup: Google is Alpha, but where are the Bets? - by Aswath Damodaran (LINK)

Silicon Valley has oversold the near-term potential of the technologies of the future (LINK)

"Adam Smith's View of Man" - by Ronald Coase (1976) (LINK)

In a Few Centuries, Cows Could Be the Largest Land Animals Left - by Ed Yong (LINK)

How Asia's Super Divers Evolved for a Life At Sea - by Ed Yong (LINK)

Freeman Dyson reviews Geoffrey West's book Scale (LINK)


"The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new-era theory [of 1927-1929] led directly to this thesis. If a public-utility stock was selling at 35 times its maximum recorded earnings, instead of 10 times its average earnings, which was the preboom standard, the conclusion to be drawn was not that the stock was now too high but merely that the standard of value had been raised. Instead of judging the market price by established standards of value, the new era based its standards of value upon the market price. Hence all upper limits disappeared, not only upon the price at which a stock could sell but even upon the price at which it would deserve to sell. This fantastic reasoning actually led to the purchase at $100 per share of common stocks earning $2.50 per share. The identical reasoning would support the purchase of these same shares at $200, at $1,000, or at any conceivable price.

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 Dodd, Security Analysis

Thursday, April 19, 2018


"Well, we do have filters. And sometimes those filters are very irritating to people who check in with us about businesses - because we really can say "no" in 10 seconds or so to 90%+ of all of the things that come along simply because we have these filters. First, we want businesses that we can understand. And that filters out a lot of things. Second, we want 'em to be good businesses. How do our filters deal with fast changing technology? Very simply. If something has a significant technological component or we think future technology could hurt its business as it presently exists, we look at it as something to worry about. And it won't make it through our filters. But we have some filters in regard to people, too. We want businesses that are being run by people who we’re very comfortable with - which means people with ability and integrity. And we can do that very fast. We've heard a lot of stories in our lives." --Warren Buffett (1998 Berkshire Hathaway Annual Meeting, via Outstanding Investor Digest)

"We have to have an idea that is (A) a good idea and (B) a good idea that we can understand. It's that simple. So our filters are filters against consequences from our own lack of talent." --Charlie Munger (1998 Berkshire Hathaway Annual Meeting, via Outstanding Investor Digest)

The Walter Schloss Archive [H/T Linc] (LINK)

Why All My Books Are Now Free (Aka A Lesson In Amazon Money Laundering) - by Meb Faber (LINK)

EconTalk Podcast: Jerry Muller on the Tyranny of Metrics (LINK)
Related book: The Tyranny of Metrics
Freakonomics Radio: Why the Trump Tax Cuts Are Terrible/Awesome (Part 2) (LINK)

What Tennis Can Teach Us About Technology - by Jonah Lehrer (LINK)

How Good Do You Want To Be? - by Ryan Holiday (LINK)

Scientists Genetically Engineered Flies to Ejaculate Under Red Light - by Ed Yong (LINK)

Wednesday, April 18, 2018


"The financial world is so complex and unpredictable that a fair amount of our analyses will prove to have been flawed.... A dirt-cheap price is an anchor to windward against misperceiving current situations, or being unable to make accurate forecasts." --Marty Whitman

Martin J. Whitman, age 93, Founder of Third Avenue Management, Passes Away (LINK)
Related link: Over 30 Years of Value Insights from Martin J. Whitman
Jeff Bezos' 2017 Letter to Shareholders (LINK)

IMF issues warning on global debt (LINK) [The full report is available HERE.]

WorkLife with Adam Grant Podcast: When Work Takes Over Your Life (LINK)

Edge #512: How To Be a Systems Thinker - A Conversation With Mary Catherine Bateson (LINK)

Drugs from Bugs: Bioprospecting Insects to Fight Superbugs (LINK)

Tuesday, April 17, 2018


"Markets can do anything. If you look at the history of markets, you see everything under the sun. But we have no time frame [for doing something]. If the money piles up, then it piles up. And when we see something that makes sense, we're willing to act very fast and very big. But we're not going to act on anything if it doesn't check out. You don't get paid for activity. You only get paid for being right."  --Warren Buffett (1998 Berkshire Hathaway Annual Meeting, via Outstanding Investor Digest)

My Berkshire Hathaway Reflections - by Shane Parrish (LINK)

Zillow, Aggregation, and Integration - by Ben Thompson (LINK)

In the era of Donald Trump, New England’s biggest GOP donor is funding Democrats [Seth Klarman] [H/T Will & Linc] (LINK)

A $76,000 Monthly Pension: Why States and Cities Are Short on Cash (LINK)

Netflix: The Future of Entertainment or House of Cards? - by Aswath Damodaran (LINK)

A Sidelined Wall Street Legend Bets on Bitcoin [H/T @williamgreen72] (LINK)

The Rise, Reign, and Fall of W.P.P.’s Martin Sorrell - by Ken Auletta (LINK)

To Everyone Who Asks For ‘Just A Little’ Of Your Time: Here’s What It Costs To Say Yes - by Ryan Holiday (LINK)

The Shellfish Gene - by Ed Yong (LINK)


An excerpt from a 2011 article by Nassim Taleb and Mark Blyth ("The Black Swan of Cairo") that may be worth thinking about today:
Political and economic “tail events” are unpredictable, and their probabilities are not scientifically measurable. No matter how many dollars are spent on research, predicting revolutions is not the same as counting cards; humans will never be able to turn politics into the tractable randomness of blackjack. 
Most explanations being offered for the current turmoil in the Middle East follow the “catalysts as causes” confusion. The riots in Tunisia and Egypt were initially attributed to rising commodity prices, not to stifling and unpopular dictatorships. But Bahrain and Libya are countries with high GDPs that can afford to import grain and other commodities. Again, the focus is wrong even if the logic is comforting. It is the system and its fragility, not events, that must be studied—what physicists call “percolation theory,” in which the properties of the terrain are studied rather than those of a single element of the terrain.  
When dealing with a system that is inherently unpredictable, what should be done? Differentiating between two types of countries is useful. In the first, changes in government do not lead to meaningful differences in political outcomes (since political tensions are out in the open). In the second type, changes in government lead to both drastic and deeply unpredictable changes. 
And a related quote from Taleb in The Black Swan (2007):
Likewise, dictatorships that do not appear volatile, like, say, Syria or Saudi Arabia, face a larger risk of chaos than, say, Italy, as the latter has been in a state of continual political turmoil since the second war. I learned about this problem from the finance industry, in which we see “conservative” bankers sitting on a pile of dynamite but fooling themselves because their operations seem dull and lacking in volatility.