Monday, August 21, 2017

Negotiation and loss aversion

The excerpt below from Peter Bevelin's All I Want To Know Is Where I'm Going To Die So I'll Never Go There is one that seems timely to think about; and to use as a lens to help understand some of the political-related events in today's world, and why some negotiations may end up the way they do. It is also is a good example of why I think I'll continuously be reading Peter's book over the years, as I gain insights to help me think about the world each time I open it up.


Librarian  "If we can only gain from a situation, we avoid risk, but when we feel threatened or are in really deep trouble, we fight a lot harder and take larger risks. No one is as dangerous as the opponent who fights for his survival. It is like the story about the rabbit and the fox. Why does a rabbit run faster than a fox?"

Seeker  "You tell me."

Librarian  "Aesop said, 'The rabbit runs faster than the fox, because the rabbit is running for his life while the fox is only running for his dinner.' Any many studies of animals show that 'defenders of a territory almost invariably overcome intruders of the same species who try to take over their territory. Residents who face the risk of losing their territory exert more effort than challengers who try to gain new territory.'"

"As Baltasar Gracián said, 'Never contend with a man who has nothing to lose.' Or someone who has everything to lose. So you can imagine what happens in a negotiation where one party can only gain and the other one has everything to lose. Or when both parties face losses."

Seeker  "It increases the chance of conflict. If I had faced a choice between losing for sure and 'surviving by fighting' -- even if the chance was minuscule -- I pick the fight."

Librarian  "Then you can understand how difficult it is to reach some agreement in cases where both parties have to give up something or make a concession to get something else. We'd rather take a conflict than make a concession."

Seeker  "Let me have a try on concessions -- getting one feels like a gain but giving one feels like a loss. And since we hate losses more than we like equal gains it will be tough to reach a 'fair' agreement since both parties see it as unfair."

Librarian  "Yes, and our loss aversion explains why we always undervalue what we get relative to what we give."

"Instead, try to see things from your counterparty's point of view and don't mind [making] concessions on minor matters if that more easily leads to the more important matters settled to your advantage. Only take a firm stand on really important things."

Friday, August 18, 2017


"If my mind could gain a firm footing, I would not make essays, I would make decisions; but it is always in apprenticeship and on trial." -Michel de Montaigne

The Financial Crisis Inquiry Report as a Harbinger - by Frank K. Martin (LINK)

Exponent podcast: Episode 121 — The Uber Mutation (LINK)

FT Alphachat podcast: Buchheit and Gulati on restructuring Venezuela's debt (LINK)
Lee Buchheit and Mitu Gulati, two of the world's foremost experts on sovereign debt restructuring, join the FT's Robin Wigglesworth to explain Venezuela's looming debt crisis and options for solving it, while the country's economic collapse and humanitarian problems continue to worsen.
Henry Kissinger talks to Charlie Rose (video) (LINK)
Henry Kissinger, former secretary of state, shares his thoughts on resolving the North Korea crisis, the U.S. relationship with China, and Donald Trump.
Here are the paths of the next 15 total solar eclipses (LINK)

Thursday, August 17, 2017


Berkshire Hathaway Energy Stands Firm on Its Offer to Acquire Oncor (LINK)

The Canadian Housing Market is Bananas - by Ben Carlson (LINK)

A 2014 book review of Technological Revolutions and Financial Capital [H/T @sanguit] (LINK)
Related video: Web 2.0 Expo NY 2011, A Conversation with Fred Wilson and Carlota Perez
Lessons from 50,000 Interviews: Larry King and Cal Fussman (podcast) (LINK)

Revisionist History podcast: “The Basement Tapes” (LINK)
A cardiologist in Minnesota searches through the basement of his childhood home for a missing box of data from a long-ago experiment. What he discovers changes our understanding of the modern American diet — but also teaches us something profound about what really matters when we honor our parents’ legacy.
Frederick Douglass’s 1866 essay for The Atlantic on how Congress can cope with a chief executive who refuses to recognize the rights of all citizens (LINK)

At Last, A Big, Successful Trial of Probiotics - by Ed Yong (LINK)

The Origin Story of Animals Is a Song of Ice and Fire - by Ed Yong (LINK)

Book of the day [H/T @chriswmayer]: Pitch the Perfect Investment: The Essential Guide to Winning on Wall Street - by Paul D. Sonkin and Paul Johnson

Wednesday, August 16, 2017


The FPA Crescent Fund's Q2 Commentary and Webcast are available.

One of the World’s Widest Moats - by John Huber (LINK) [John's presentation pairs nicely with the Naspers/Tencent arbitrage discussed in the FPA Crescent Commentary above.]

A Conversation with Naval Ravikant about blockchains (video) (LINK)

Robert Sapolsky on the Waking Up podcast discussing his book Behave: The Biology of Humans at Our Best and Worst (LINK) [As Michael Mauboussin‏ tweeted earlier this week: "Just finished 'Behave' by the brilliant Robert Sapolsky. The best book I have ever read on human behavior. Sapolsky is an amazing teacher."]

Robert E. Lee opposed Confederate monuments (LINK)

How to be a Stoic, in practice - by Massimo Pigliucci (LINK)

Why did single cells start to cooperate? (LINK)

What Scientists Have Learned from Eclipses (video) (LINK)

Today's Audible Daily Deal ($2.95) is a short Neil deGrasse Tyson course from The Great Courses: My Favorite Universe

Tuesday, August 15, 2017


GMO White Paper -- The S&P 500: Just Say No (LINK)
In this white paper, Matt Kadnar and James Montier, members of GMO’s Asset Allocation team, examine current US equity market valuations using several measures, starting with GMO’s own seven-year asset class forecast framework. They come to the same conclusion each time – the S&P 500 is exceptionally expensive. With this in mind, they then weigh in on what investors should and shouldn’t do in such an environment.
Warren Buffett Cashes Out on GE, Cashing In on Crisis Loan (LINK)

The Awesome But Mostly Unknown Story of Carlsberg Beer in China (Part 1, Part 2)
Related book: The One Hour China Consumer Book
Jason Zweig and Morgan Housel talk with Patrick O'Shaughnessy (podcast) (LINK)

Grant's Podcast: Alpine slide (LINK)

Why Cryptocurrencies Will Never Be Safe Havens - by Mark Spitznagel (LINK)

The next wave of computing – by Muneeb Ali (LINK)

Can Humans Understand Chimps? - by Ed Yong (LINK)

Monday, August 14, 2017


Nassim Nicholas Taleb on Work, Slavery, the Minority Rule, and Skin in the Game (EconTalk podcast) (LINK)

The Uber Dilemma - by Ben Thompson (LINK)

The Butterfly Effect: Everything You Need to Know About this Powerful Mental Model (LINK)

When Cheaper P/E Ratios Mean Nothing - by Jason Zweig (LINK)

What’s Happenin’ - by Eric Cinnamond (LINK)

An interview with Kenneth Jeffrey Marshall, author of Good Stocks Cheap (LINK)

Now Advising China’s State Firms: The Communist Party ($) [H/T Matt] (LINK)
A push to establish the Communist Party in Chinese state enterprises is rolling through Hong Kong, raising corporate-governance concerns in one of the year’s best-performing stock markets. 
Since 2016, at least 32 Chinese state-owned companies or units listed in Hong Kong have proposed changes to their corporate structures to install Communist Party committees that advise their boards of directors. The moves, most coming in recent months, are prompting questions from market participants about who holds power at these companies, and whether they will be run for the benefit of investors. 
The changes follow directives from Beijing, which has been pushing to establish the Communist Party’s role in corporate charters on the mainland. They make explicit what many had already assumed: that China’s ruling party—the country’s sole governing authority despite the existence of several other political parties—keeps a tight grip on the country’s state-owned firms. Those firms now make up the bulk of Hong Kong’s market.
How I Read When Researching a Book - by Cal Newport (LINK)

The Next Chapter in a Viral Arms Race - by Ed Yong (LINK)

Sunday, August 13, 2017


Joel Tillinghast Finds Big Returns in Small Stocks ($) (LINK)
Related book: Big Money Thinks Small: Biases, Blind Spots, and Smarter Investing
10,000 Hours With Claude Shannon: How A Genius Thinks, Works, and Lives [H/T @chriswmayer] (LINK)
Related book: A Mind at Play: How Claude Shannon Invented the Information Age
A Dozen Lessons about Product and Services Pricing (Including being “Too Hungry to Eat”) - by Tren Griffin (LINK)

A Tesla 2017 Update: A Disruptive Force and a Debt Puzzle! - by Aswath Damodaran (LINK)

Benchmark Capital sues Travis Kalanick for fraud (LINK)

Walter Isaacson video: What Leonardo can teach us (LINK)
Related book (to be released in October): Leonardo da Vinci
Scott Galloway on the FT Alphachat podcast (LINK)
Related book (to be released in October): The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google
a16z Podcast: Centers of Power, War, and History (LINK)
Related book: Destined for War: Can America and China Escape Thucydides’s Trap?
A Conversation With Richard Dawkins [H/T The Browser] (LINK)
Related book: Science in the Soul: Selected Writings of a Passionate Rationalist
How Humans Turned a Sea Snake to the Dark Side - by Ed Yong (LINK)

Thursday, August 10, 2017


"There is always a better way of doing everything than the way which is standard at the moment. It is a good thing for a man to be pushed into finding that better way." -Harvey Firestone (via Men and Rubber: The Story of Business)

Howard Marks on CNBC (Video 1, Video 2)

Hot-Stock Rally Tests the Patience of a Choosy Lot: Value Investors ($) [H/T Matt] (LINK)

Wells Fargo: What It Will Take to Clean Up the Mess [H/T Linc] (LINK)

Dan Carlin's Hardcore History Podcast: Show 60 - The Celtic Holocaust (LINK)
Julius Caesar is our travel guide as he takes us through his murderous subjugation of the native Celtic tribal peoples of ancient Gaul. It sounds vaguely like other, recent European colonial conquests...until the natives nearly win.
The Tim Ferriss Show: From Long-Shot to $50 Billion Empire – Bill Rasmussen (LINK)
Bill Rasmussen is the co-founder of ESPN. He turned a massive gamble into an opportunity to create the 24-hour programming cycle used universally by networks today.
Revisionist History Podcast: "McDonald's Broke My Heart" (LINK)
McDonald’s used to make the best fast food french fries in the world — until they changed their recipe in 1990. Revisionist History travels to the top food R&D lab in the country to discover what was lost, and why for the past generation we’ve been eating french fries that taste like cardboard.
These Scientists Took Over a Computer by Encoding Malware in DNA - by Ed Yong (LINK)

"The mind, unconquered by violent passions, is a citadel, for a man has no fortress more impregnable in which to find refuge and remain safe forever." -Marcus Aurelius (Source)

Wednesday, August 9, 2017


"We rule out people 90% of the time. Maybe we're wrong sometimes, but what's important is the ones we let in." -Warren Buffett (Source)

With e-commerce hurting malls, See’s Candies seeks way forward [H/T Linc] (LINK)

Metaphorically speaking about business and investing - by Sanjay Bakshi (LINK)

Intuition & Einstein’s Greatest Ideas - by Frank Martin (LINK)

Broyhill Mid-Year Letter (LINK)

Returns on Capital and an Investment Idea - by John Huber (LINK)

Funds target 'unknown' stocks as Wall Street cuts analyst jobs [H/T Matt] (LINK)

Grant’s Podcast: Texas teatime (LINK)

Invest Like the Best Podcast: Just Manageable Challenges, with Brad Stulberg (LINK)

The Knowledge Project Podcast: Ed Latimore on The Secret to a Happy Life (LINK)

Meet Patagotitan, the Biggest Dinosaur Ever Found - by Ed Yong (LINK)

Monday, August 7, 2017


IBM PC: The complete history [H/T @chriswmayer] (Part 1, Part 2)

To Catch a Counterfeiter [H/T @chriswmayer] (LINK)

EconTalk podcast: Tyler Cowen on Stubborn Attachments, Prosperity, and the Good Society (LINK)

How I Built This podcast -- Rent The Runway: Jenn Hyman (LINK)

a16z Podcast: The Strategies and Tactics of Big (LINK)

Confirmed: Night Lights Drive Pollinators Away From Plants - by Ed Yong (LINK)

Venezuela Is Collapsing: Interview with Stanford political scientist Terry Lynn Karl [H/T The Browser] (LINK)
Related book: The Paradox of Plenty: Oil Booms and Petro-States

The wise know their limitations; the foolish do not.

From The Tao of Pooh:
"A fish can't whistle and neither can I." Coming from a wise mind, such a statement would mean, "I have certain limitations, and I know what they are." Such a mind would act accordingly. There's nothing wrong with not being able to whistle, especially if you're a fish. But there can be lots of things wrong with blindly trying to do what you aren't designed for. Fish don't live in trees, and birds don't spend too much time underwater if they can help it. Unfortunately, some people—who always seem to think they're smarter than fish and birds, somehow—aren't so wise, and end up causing big trouble for themselves and others. 
That doesn't mean that we need to stop changing and improving. It just means that we need to recognize What's There. If you face the fact that you have weak muscles, say, then you can do the right things and eventually become strong. But if you ignore What's There and try to lift someone's car out of a ditch, what sort of condition will you be in after a while? And even if you have more muscle than anyone alive, you still can't push over a freight train. The wise know their limitations; the foolish do not. 
...A saying from the area of Chinese medicine would be appropriate to mention here: "One disease, long life; no disease, short life." In other words, those who know what's wrong with them and take care of themselves accordingly will tend to live a lot longer than those who consider themselves perfectly healthy and neglect their weaknesses. So, in that sense at least, a Weakness of some sort can do you a big favor, if you acknowledge that it's there. The same goes for one's limitations, whether Tiggers know it or not—and Tiggers usually don't. That's the trouble with Tiggers, you know: they can do everything. Very unhealthy. 
Once you face and understand your limitations, you can work with them, instead of having them work against you and get in your way, which is what they do when you ignore them, whether you realize it or not. And then you will find that, in many cases, your limitations can be your strengths. 

Sunday, August 6, 2017


The Market Really Is Different This Time - by Jason Zweig (LINK)
The market has hit Dow 22000 not because of the individual investors Wall Street calls “the dumb money” but in spite of them. 
Over the past month, small investors have pulled $17 billion out of U.S. stock mutual funds and exchange-traded funds and added $29 billion to bond funds. That’s the latest leg of a long-term trend: Since the internet-stock bubble burst in 2000, investors have withdrawn half a trillion dollars from U.S. stock mutual funds.
Jeff Brotman Hit the Big Time With Costco (LINK)
“He was one of the smartest businessmen that has ever operated in America,” said Charles Munger, a Costco board member and vice chairman of Berkshire Hathaway Inc.
Rick Bookstaber is going to start blogging again (LINK)

More Bookstaber: The Four Horsemen of the Econopocalypse (LINK)
Related book: The End of Theory
Counting Boxes - by Eric Cinnamond (LINK)

A Dozen Lessons about Angel Investing from Jason Calacanis (Poker Edition) - by Tren Griffin (LINK)

Finding “Unicorns:” Questions to Ask Before You Invest in a Startup (LINK)

The Transformation of the ‘American Dream’ - by Robert Shiller (LINK)

Masters in Business podcast: Richard Clarida of Pimco on the New Neutral of Monetary Policy (LINK)

a16z Video: What is the S-curve? (LINK)

Have Smartphones Destroyed a Generation? [H/T @morganhousel] (LINK)

Friday, August 4, 2017


The 2Q2017 GMO Quarterly Letter (LINK)
Ben Inker discusses his current view of emerging market equities, making the case that emerging value is currently the cheapest asset class. In fact, based on one portfolio construction technique GMO’s Asset Allocation team uses, emerging value is the best asset we have ever seen. Jeremy Grantham updates a behavioral P/E model to show that the stock market’s responses to major market factors over the years have been typically quite different from what one might expect from an “efficient” market. The market P/E level does not primarily reflect future prospects, but, contrary to theory, reflects current conditions. It weights variables that make investors feel comfortable, but that are not academically or economically correct.
Ruane, Cunniff & Goldfarb Investor Day Transcript (May 2017) (LINK)

Howard Marks on Bloomberg TV (video from earlier this week) (LINK)

Macro Voices podcast -- Raoul Pal & Julian Brigden: When will the dollar route end? (LINK)
Erik Townsend welcomes Julian Brigden and Raoul Pal back to MacroVoices. Erik, Julian & Raoul discuss their views on the US Dollar, the equity markets and the business cycle. They further explore the outlook on the bond bull market, demographics and the coming pension crisis.
Graham Allison talks with Charlie Rose (video) (LINK)
Related book: Destined for War: Can America and China Escape Thucydides’s Trap?
A Dinosaur So Well Preserved It Looks Like a Statue - by Ed Yong (LINK)

Thursday, August 3, 2017


"To attain knowledge, add things every day. To attain wisdom, remove things every day." -Lao Tzu

Jeremy Grantham talks to Charlie Rose (video) (LINK)

Leithner Letter No. 213-214 (26 July - 26 August 2017) (LINK)

The Unreformed Stock Picker: Without A Boss Bill Miller Is Betting On Amazon, Bitcoin And Bob Dylan (LINK)

Why the Hatchet Men of 3G Spent $10 Million on a Better Oscar Mayer Weiner (LINK)

The Conglomerate That Troubles China [H/T Matt] (LINK)

Apple and the Oak Tree - by Ben Thompson (LINK)

The Crypto Currency Debate: Future of Money or Speculative Hype? - by Aswath Damodaran (LINK)

Mutual Fund Observer, August 2017 (LINK)

Freakonomics Radio: Everything You Always Wanted to Know About Money (But Were Afraid to Ask) (LINK)

a16z Podcast: From Mind at Play to Making the Information Age (LINK)
Related book: A Mind at Play: How Claude Shannon Invented the Information Age
Revisionist History podcast:  “Mr. Hollowell Didn’t Like That” (part two of a two-part story) (LINK)

A Kerfuffle About Diversity in the Roman Empire (LINK)

The Designer Baby Era Is Not Upon Us - by Ed Yong (LINK)

Tuesday, August 1, 2017

Practice and Training

"That’s why the philosophers warn us not to be satisfied with mere learning, but to add practice and then training. For as time passes we forget what we learned and end up doing the opposite, and hold opinions the opposite of what we should." -Epictetus (via The Daily Stoic)

"The person who has practiced philosophy as a cure for the self becomes great of soul, filled with confidence, invincible—and greater as you draw near." -Seneca (via The Daily Stoic)

The above quotes reminded me of Charlie Munger's Use-It-or-Lose-It Tendency from his "The Psychology of Human Misjudgment" speech. Why take the time to develop and curate a philosophy — on life, investing, diet/health, etc. — if one isn't going to practice it on a constant basis? As Munger wrote in his speech: 
All skills attenuate with disuse. I was a whiz at calculus until age twenty, after which the skill was soon obliterated by total nonuse. The right antidote to such a loss is to make use of the functional equivalent of the aircraft simulator employed in pilot training. This allows a pilot to continuously practice all of the rarely used skills that he can’t afford to lose. 
Throughout his life, a wise man engages in practice of all his useful, rarely used skills, many of them outside his discipline, as a sort of duty to his better self. If he reduces the number of skills he practices and, therefore, the number of skills he retains, he will naturally drift into error from man with a hammer tendency. His learning capacity will also shrink as he creates gaps in the latticework of theory he needs as a framework for understanding new experience. It is also essential for a thinking man to assemble his skills into a checklist that he routinely uses. Any other mode of operation will cause him to miss much that is important. 
Skills of a very high order can be maintained only with daily practice. The pianist Paderewski once said that if he failed to practice for a single day, he could notice his performance deterioration and that, after a week’s gap in practice, the audience could notice it as well. 
The hard rule of Use-It-or-Lose-It Tendency tempers its harshness for the diligent. If a skill is raised to fluency, instead of merely being crammed in briefly to enable one to pass some test, then the skill (1) will be lost more slowly and (2) will come back faster when refreshed with new learning. These are not minor advantages, and a wise man engaged in learning some important skill will not stop until he is really fluent in it.
And specifically in regards to investing, Tren Griffin added this in his book on Charlie Munger:
To be a successful investor, a person must regularly devote the necessary time and effort. Even if you once felt that you knew a lot about investing, it does not mean your skills are current. Maintaining a circle of competence requires constant work and diligence.