Monday, May 23, 2016


Charlie Munger Q&A at the Berkshire Hathaway Annual Meeting [H/T ValueWalk] (LINK)

Importance of ROIC: “Reinvestment” vs “Legacy” Moats (LINK)

Middleby Corporation (MIDD): Case Study of an Intelligent Fanatic Led 100-Bagger - by Ian Cassel (LINK)

The Remarkable Iscar Story [H/T Linc] (LINK)
Related book: Habit of Labor: Lessons from a Life of Struggle and Success
Ajit Jain’s Memo About the New CEO at Berkshire’s Gen Re [H/T Linc] (LINK)

To understand something, write about it (LINK)
Related book: All I Want To Know Is Where I'm Going To Die So I'll Never Go There
Bill Gates: 5 Books to Read This Summer (LINK)
The books: 1) Seveneves; 2) How Not to Be Wrong; 3) The Vital Question; 4) The Power to Compete; 5) Sapiens
Jeff Bezos wants to see an entrepreneurial explosion in space (LINK)

8 Big Ideas from a Super Investor: Philip Fisher (LINK)

Latticework of Mental Models: Winner’s Curse (LINK)

Latticework of Mental Models: Pari-mutuel System (LINK)

A Dozen Things Learned from Steven Crist About Investing and Handicapping Horses (LINK)

Chris Davis on WealthTrack (video) [H/T Will] (LINK)

Uber as a predatory lender (LINK)

FT Alphachatterbox podcast: The life and times of Paul Volcker (Part 1, Part 2)

Ryan Holiday talks to Shane Parrish on The Knowledge Project podcast (LINK)
Related books: The Obstacle Is the Way; Ego Is the Enemy
Google’s Go-to-Market Gap - by Ben Thompson (LINK)

Exponent Podcast: Episode 079 — Twerk the Algorithm (LINK)

Talks at Google - James Grant discusses The Forgotten Depression: 1921: The Crash That Cured Itself (video) (LINK)

Talks at Google - Steve Case discusses The Third Wave: An Entrepreneur's Vision of the Future (video) (LINK)

Talks at Google - Chris Anderson discusses TED Talks: The Official TED Guide to Public Speaking (video) (LINK)

Niall Ferguson's BBC series based on his book Civilization (videos) (LINK)

Hussman Weekly Market Comment: The Coming Fed-Induced Pension Bust (LINK)
Last week, I observed that based on the most reliable measures we identify (those having the strongest correlation with actual subsequent 10-12 year investment returns across history as well as in recent cycles), “the expected return on a traditional portfolio mix is actually lower at present than at any point in history except the 1929 and 1937 market peaks. QE has effectively front-loaded realized past returns, while destroying the future return prospects of conventional portfolios, at least as measured from current valuations. As a result, the coming years are likely to see a major pension crisis across both corporations and municipalities because the illusory front-loading of returns has encouraged profound underfunding.” 
On Thursday, Chicago’s Municipal Employees Annuity and Benefit Fund reported that its net pension liability soared to $18.6 billion, from $7.1 billion a year earlier, as a result of new accounting rules that prevent governments from using aggressive investment return assumptions (thanks to my friend Mike Shedlock for his post on this news). But here’s the kicker - the rules only apply after pension funds go broke. In Chicago’s case, pension return assumptions had been optimistically set at 7.5%, and the city had vastly underfunded its obligations. Still, this isn’t a Chicago problem. It’s a national, even global problem, and it’s going to get much worse. See, Chicago’s assumptions were actually below the national 7.62% average. The following chart is from the National Association of State Retirement Administrators (NASRA). Chicago is essentially the rule, not the exception.

While on vacation, I listened to the book When Breath Becomes Air, which I highly recommend. I also started the book The Gene, which was recently released and should be a good addition to the mental model bookshelf.