Latticework of Mental Models: The Power Law (LINK)
Negative Gross Margins (LINK)
The Individual Investor’s Edge (LINK)
John Hempton: Some comments on the Valeant conference call (LINK) [The stock was also halted earlier today as it took a nose-dive.... Some well-known investors that have this as a huge position, as of the end of Q2, may have some explaining to do.]
Leithner Letter Nos. 192-195 (Part 1, Part 2)
Claire Barnes' Q3 Report: Tides and tsunamis (LINK)
Tectonic plate shifts have far-reaching consequences that are hard to time or predict: as with geology, so with geopolitics. The great realignment now under way in the Middle East and worldwide may have momentous consequences. Many people seem oblivious to the dangers, and to the need to discriminate between news and propaganda. There is much talk in the investment world of innovation, and much excitement about powerful disruptors - but perhaps too much in the context of new technologies, and too little in relation to political and military strategy. We too spend a lot of time thinking about innovation and potential disruptors in the context of business models, but try not to be so focussed on our own sandcastle that we fail to notice incoming tides and occasional tsunamis.
In the event of an approaching tsunami it may be advisable to run for the hills - if the hills themselves remain stable, and not too far undermined or overloaded. Another option is to head for deep water and float. In this world of rapid and interconnected change, traditional safe havens may be unavailable. Neither bonds nor bank deposits now offer safety, and a new War on Cash seeks to block savers fleeing in that direction. (The unintended consequences of this may well cause as much disruption to efficiency as the closure of physical borders.) We have no great confidence about price performance, but are more concerned about optimising our chances of preserving purchasing power and minimising the risks of permanent loss: in this context a portfolio of carefully chosen equities still seems a relatively attractive option.
Poo turns naked mole rats into better babysitters (LINK)