Wednesday, June 20, 2018


"When I was a lawyer, I used to say, 'The best business getter any lawyer has is the work that's already on his desk.''s a very old-fashioned idea. You just do well with what you already have and more of the same comes in." --Charlie Munger (2001)

Buffett, Bezos, Dimon appoint Dr. Atul Gawande as CEO of their newly formed health-care company (LINK)

Tom Peters on the Recode Decode Podcast (LINK)

How To Stop Worrying: 7 Powerful Secrets From Mindfulness (LINK)

Parasites Can Mind-Control Animals Without Infecting Them - by Ed Yong (LINK)

Tuesday, June 19, 2018


"It does not matter what you bear, but how you bear it." --Seneca ("Of Providence")

Warren Buffett and Bill Gates visit a candy store in Omaha (LINK)

The Behavioral Economics Guide 2018 (Introduction by Robert Cialdini) (LINK)

Theranos Lessons - by Morgan Housel (LINK)

The Koch Brothers Say No to Tariffs (podcast) (LINK)

TED Talk: The surprising science of alpha males | Frans de Waal (LINK)


An excerpt from Burton Malkiel that I came across today in The Inflation-beater's Investment Guide: Winning Strategies for the 1980s that seemed to fit well with the latest Howard Marks memo:
I believe that the start of the 1980s is the ideal time to pick individual stocks on the basis of my rules. Unlike the early 1970s, it will not be hard to find an abundant selection of strong companies that fill the bill. 
But remember that a large number of other investors—including the pros—are trying to play the same game. And the efficient-market theory suggests that the odds of anyone's consistently beating the market are pretty slim. Nevertheless, for many of us, trying to outguess the market is a game that is much too fun to give up. Even if you were convinced you would not do any better than average, I'm sure that most of you with speculative temperaments would still want to keep on playing the game of selecting individual stocks. 
Picking the Manager 
There's an easier, more profitable way to gamble in the race for investment performance: instead of pricing the individual horses (stocks), pick the best jockeys (investment managers). 
...While some readers may well be disappointed that I do not "name" stocks in this book, I have absolutely no hesitation about citing mutual fund managers who run their portfolios by following rules similar to the rules I use and who have enjoyed perfectly splendid records. John Marks Templeton is one such person. 
...According to every mutual fund rating service, the fund that bears John Marks Templeton's name has been the outstanding performer over the past two decades. Indeed, Templeton's record of beating the broad stock indexes extends as far back as the 1930s. In a field crowded with mediocrity, Templeton seems to be one of the true investment greats—a living embarrassment to the efficient-market theory.

Monday, June 18, 2018

Howard Marks Memo: Investing Without People

Link to Memo: Investing Without People
Over the last twelve months I’ve devoted three memos to discussing macro developments, market outlook, and recommendations for investor behavior.  These are important topics, but usually not the ones that interest me most; I prefer to discuss things that are likely to affect the functioning of markets for years to come.  Since little in the environment has changed from what I described in those three memos, I feel I now have the liberty to turn to some bigger-picture issues. 
This memo covers three ways in which securities markets seem to be moving toward reducing the role of people: (a) index investing and other forms of passive investing, (b) quantitative and algorithmic investing, and (c) artificial intelligence and machine learning. 


Giving it Away: The Other Buffett Family Business (LINK)

AT&T, Time Warner, and the Need for Neutrality - by Ben Thompson (LINK)

Oaktree Capital CEO Jay Wintrob at the 7th Annual Fink Investing Conference at UCLA Anderson (video) (LINK)

Steven Kotler: "The Science of Maximizing Human Potential" | Talks at Google (LINK)
Related book: Stealing Fire

Inevitables vs. Highly Probables

From Warren Buffett's 1996 Letter to Shareholders:
Companies such as Coca-Cola and Gillette might well be labeled "The Inevitables."  Forecasters may differ a bit in their predictions of  exactly how much soft drink or shaving-equipment business these companies  will be doing in ten or twenty years.  Nor is our talk of inevitability meant to play down the vital work that these companies must continue to carry out, in such areas as manufacturing, distribution, packaging and product innovation.  In the end, however, no sensible observer - not even these companies' most vigorous competitors, assuming they are assessing the matter honestly -questions that Coke and Gillette will dominate their fields worldwide for an investment lifetime. Indeed, their dominance will probably strengthen.  Both companies have significantly expanded their already huge shares of market during the past ten years, and all signs point to their repeating that performance in the next decade. 
Obviously many companies in high-tech businesses or embryonic industries will grow much faster in percentage terms than will The Inevitables.  But I would rather be certain of a good result than hopeful of a great one. 
Of course, Charlie and I can identify only a few Inevitables, even after a lifetime of looking for them.  Leadership alone provides no certainties:  Witness the shocks some years back at General Motors, IBM and Sears, all of which had enjoyed long periods of seeming invincibility.  Though some industries or lines of business exhibit characteristics that endow leaders with virtually insurmountable advantages, and that tend to establish Survival of the Fattest as almost a natural law, most do not.  Thus, for every Inevitable, there are dozens of Impostors, companies now riding high but vulnerable to competitive attacks.  Considering what it takes to be an Inevitable, Charlie and I recognize that we will never be able to come up with a Nifty Fifty or even a Twinkling Twenty.  To the Inevitables in our portfolio, therefore, we add a few "Highly Probables." 
You can, of course, pay too much for even the best of businesses.  The overpayment risk surfaces periodically and, in our opinion, may now be quite high for the purchasers of virtually all stocks, The Inevitables included.  Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid. 
A far more serious problem occurs when the management of a great company gets sidetracked and neglects its wonderful base business while purchasing other businesses that are so-so or worse.  When that happens, the suffering of investors is often prolonged.  Unfortunately, that is precisely what transpired years ago at both Coke and Gillette.  (Would you believe that a few decades back they were growing shrimp at Coke and exploring for oil at Gillette?)  Loss of focus is what most worries Charlie and me when we contemplate investing in businesses that in general look outstanding.  All too often, we've seen value stagnate in the presence of hubris or of boredom that caused the attention of managers to wander.  
Mr. Buffett also added a little more in response to a question at the 1997 annual meeting about whether or not McDonald's fit in the same category as Coca-Cola and Gillette:
In the annual report, we talked about Coca-Cola and Gillette in terms of their base business being what I call “The Inevitables.” But that related, obviously, to the soft drink business in the case of Coca-Cola and the shaving products with Gillette. It doesn’t extend to necessarily everything they do. But fortunately in both those companies those are very important products.  
I would say that in the food business, you would never get the total certainty of dominance that you would get in products like Coca-Cola and Gillette. People move around in the food business, from where they eat, from — they may favor McDonald’s but they will go to different places at different times. And somebody starts shaving with a Gillette Sensor Plus is very unlikely to go elsewhere, in my view.  
So they do not — you just — you never would get in the food business, in my judgment, quite the inevitability that you would get in the soft drink business with a Coca-Cola.  
You’ll never get it again in the soft drink business. I mean, it took a hundred — I guess it’d be 1886, so it’d be about 111 years to get to the point where they are. And the infrastructure’s incredible, and — so I wouldn’t put it quite in the same class, in terms of inevitability. 
And then he added more color in his answer to the next question at that meeting:
But I should — I’m glad you brought up the subject of the annual report. Because what I was doing in the annual report is I had talked about Coke and Gillette as being “The Inevitables,” and what wonderful businesses they were.  
And I thought it appropriate, particularly — the report goes to a lot of people — that they would not take that as an unqualified buy recommendation about the companies, because they’re absolutely wonderful companies run by outstanding managers.  
But you can pay too much, at least in the short run, for businesses like that. So I thought it was only appropriate to point out that no matter how wonderful a business it is, that there always is a risk that you will pay a price where it will take a few years for the business to catch up with the stock. That the stock can get ahead of the business.  
And I don’t know where that point is with those companies or any other companies, but I did say that I thought that the risks were fairly high that that situation existed with most securities in the market, including companies such as “The Inevitables.”  
But it was designed to be sure that people did not take the remarks that I made about those companies, and just take that as an unqualified buy recommendation regardless of price.  
We have no intention of selling those two stocks. We wouldn’t sell them if they were selling at prices considerably higher than they are now.  
But I didn’t want — particularly — relatively unsophisticated people to see those names there and then think, “This guy is touting these as a wonderful buy.” Generally speaking, I think if you’re sure enough about a business being wonderful, it’s more important to be certain about the business being a wonderful business than it is to be certain that the price is not 10 percent too high or 5 percent too high or something of the sort.  
And that’s a philosophy that I came slowly to. I originally was incredibly price conscious. We used to have prayer meetings before we would raise our bid an eighth, you know, around the office. (Laughter)  
But that was a mistake. And in some cases, a huge mistake. I mean, we’ve missed things because of that.  
And so what I said in the report was not a market prediction in any sense. We never try to predict the stock market.  
We do try to price securities. We try to price businesses, is what we try to do. And we find it hard to find wonderful, good, average, substandard businesses that look to us like they’re cheap now. But, you know, you don’t always get a chance to buy things cheap. 

Sunday, June 17, 2018


Afternoon tea with Sir James Dyson (LINK)

Mohnish Pabrai's Talk With Dakshana Scholars (JNV Silvassa), Feb. 25, 2018 (video) (LINK)

The Knock-On Effect Podcast: Demographics And Doorways (LINK)

The Art of Manliness Podcast: Theodore Roosevelt, Writer and Reader (LINK)
Related book: Theodore Roosevelt: A Literary Life
Fear of Humans Is Making Animals Around the World Go Nocturnal [H/T Linc] (LINK)

The Neuroscientific Case for Facing Your Fears - by Ed Yong (LINK)

Asteroids and Adversaries: Challenging What NASA Knows About Space Rocks (LINK)
Two years ago, NASA dismissed and mocked an amateur’s criticisms of its asteroids database. Now Nathan Myhrvold is back, and his papers have passed peer review.

Thursday, June 14, 2018


Why You Will See Bigger, Not Cheaper, Cable Bundles (LINK)

Grantham says capitalism is making climate change worse (LINK)

The World According to Boyar Podcast: Episode 4 with Larry Cunningham (LINK)

a16z Podcast: Tech Under Construction — Info Flows (LINK)

Crazy/Genius Podcast: Who Killed Local News? (LINK)

Revisionist History Podcast: General Chapman’s Last Stand (LINK)

American Innovations Podcast: Nuclear Energy | E = MC Squared | 1 (LINK)

Dan Harris: "Meditation for Fidgety Skeptics" | Talks at Google (LINK)

TED Talk: How to get empowered, not overpowered, by AI | Max Tegmark (LINK)
Related book: Life 3.0: Being Human in the Age of Artificial Intelligence 
The Search for Cancer Treatment That Is Personal and Useful - by Siddhartha Mukherjee (LINK)

When the Next Plague Hits - by Ed Yong (LINK) [This long-form piece is also available via audio format, HERE.]
The epidemics of the early 21st century revealed a world unprepared, even as the risk of pandemics continues to multiply. Much worse is coming. Is Donald Trump ready?

Tuesday, June 12, 2018


"We’re looking at quantitative and quality—we aren’t looking at the aspects of the stock, we’re looking at the aspects of a business. It’s very important to have that mindset, that we are buying businesses, whether we’re buying 100 shares of something or whether we’re buying the entire company. We always think of them as businesses." --Warren Buffett

"There is a substantial distinction between people who are investors and people who are owners of businesses. An owner in a business is far more interested in the survival, the first instance, than its necessary monetary value. No owner of a business wakes up every morning asking himself what he's worth. He doesn't know what he's worth. He's concerned with his products. He's concerned his employees. He's concerned with his suppliers. He's concerned with his customers. To do that, you have to have a time preference that is different from other people." --Tony Deden

CNBC's full interview with Paul Tudor Jones (video) (LINK)

The Quest of Laurene Powell Jobs [H/T Linc] (LINK)

IP Capital Partners' latest investor report, which discusses Anheuser-Busch InBev (LINK)

Invest Like the Best Podcast: Tim Cook’s Dashboard, with Michael Reece (LINK)

The After On Podcast: Stewart Brand | De-Extinction, The Whole Earth, & Way More (LINK)

How to Tame a Zombie Fungus - by Ed Yong (LINK)

Monday, June 11, 2018


"We must take a higher view of all things, and bear with them more easily: it better becomes a man to scoff at life than to lament over it. Add to this that he who laughs at the human race deserves better of it than he who mourns for it, for the former leaves it some good hopes of improvement, while the latter stupidly weeps over what he has given up all hopes of mending.... Yet it is better to accept public morals and human vices calmly without bursting into either laughter or tears; for to be hurt by the sufferings of others is to be forever miserable, while to enjoy the suffering of others is an inhuman pleasure." --Seneca [Source]

Everyone Makes Investing Mistakes — Even Warren Buffett - by Jason Zweig ($) (LINK)
Related book: Big Mistakes: The Best Investors and Their Worst Investments
Deductive vs Inductive Reasoning: Make Smarter Arguments, Better Decisions, and Stronger Conclusions (LINK)

Black-Scholes, Volatility, & Risky Tales - by Frank K. Martin (LINK)

The Scooter Economy - by Ben Thompson (LINK)

Business and Investing Lessons from Rebecca Lynn (Canvas Ventures) - by Tren Griffin (LINK)

The Investors Podcast: Small Cap Investing & Intrinsic Value Calculations w/ Eric Cinnamond (LINK)

Grant’s Podcast: The Tesla episode (LINK)

Donald Trump and Kim Jong Un’s Nuclear Summit and the Bid for History - by Evan Osnos (LINK)

TED Talk: Why the secret to success is setting the right goals | John Doerr (LINK)
Related book: Measure What Matters
Trees That Have Lived for Millennia Are Suddenly Dying - by Ed Yong (LINK)


For Audible members, Audible's latest sale has some good titles [And if you're not a member, and haven't yet done a free trial, you can get a free trial and 2 free audiobook credits by signing up HERE.]. Some of the titles that stood out to me are below:

Friday, June 8, 2018

Tony Deden on independence

From Tony Deden's chat with Grant Williams on Real Vision, which is probably one of the best investing-related interviews I've ever watched, and an example of the value they provide for a $180 yearly subscription:
And the third part was the idea of independence. So it was scarcity, permanence, independence.... And independence is even of significant value as well in the sense that much of what we see today in our world is interdependent.... We depend on so many external factors. We depend on suppliers. We depend on the light coming on when we turn on the switch. We take it for granted that the light will come on. We depend on the water company.  
But more so, in a business sense, we depend on, perhaps, key suppliers, that often, perhaps, their situation is not as strong as we think it is. We have competitive pressures that come as a result of competition that would not have been there had there not been credit. So credit creation—the debasement of money—has created an environment in which there is falsity within the competitive arena in which companies operate. And in order to survive, they have to, more or less, adapt to the conditions. So there's dependence on government for subsidies, or for tax abatements, or other such things. Sometimes there's dependence on one customer. 
So dependence makes a system fragile. So the more independent an organism is from external weaknesses, the more likely it is to add to its endurance, or its strength. So independence is very valuable, and is actually costly. There's an element of freedom. Freedom doesn't come free. You have to work at it. The threats to your freedom and to your liberty and to your independence are many, and they change from time to time and from apple to apple. 
But a successful practice...which seeks to protect, preserve, and enhance the patrimony over many years is one that must be concerned with these three components.