Tuesday, January 31, 2017


"There are tricks in startups, as there are in any domain, but they are an order of magnitude less important than solving the real problem. Someone who knows zero about fundraising, but has made something users really love, will have an easier time raising money than someone who knows every trick in the book but has a flat usage graph." -Paul Graham (2014 class video lecture)

David Kass with 10 Highlights from the “Becoming Warren Buffett” documentary [H/T ValueWalk] (LINK) [And the quote I posted on Twitter while I was watching it last night was: "It's kind of crazy to spend your life painting if you're painting a subject you don't want to look at." -Warren Buffett]

Are Great Men and Women a Product of Circumstance? (LINK)

Greek Bond Yields Surge Amid Stalled Bailout Review, IMF Quarrel [H/T Matt] (LINK)

Brexit as a game of Chicken - by Tim Harford (LINK)

The “Wind and Solar Will Save Us” Delusion - by Gail Tverberg (LINK)

Inspired Media - by Ben Thompson (LINK)

William Ury on the Wavemaker Conversations podcast (LINK)
Related book: Getting to Yes: Negotiating Agreement Without Giving In
Book of the day [H/T @John_Hempton]: Genentech: The Beginnings of Biotech

A nice chat between Patrick O’Shaughnessy and Brent Beshore (audio) (LINK)

If you don't have time for the entire O’Shaughnessy/Beshore podcast above, you may at least want to go to the 1:51:14 mark for the brief discussion on meeting Charlie Munger. Beshore mentions (at about the 1:55:00 mark) some advice he took away from the Munger meeting:
One of the biggest pieces of advice that I took out of it was that he said, "Don't feel like you need to be impressive to people." He said that for the longest time, [it was] the single biggest thing that affected his life negatively.... He said that his need to show people that he was right, and that he was smarter than them, and that they were doing something stupid...he said he would have been much more successful than he was if he had just been able to, I think he said "disguise your judgment."
This also reminded me of similar advice Munger gave in his 2007 USC School of Law commencement speech (VIDEO). In my notes, I recorded it as "My advice to you is to learn sometimes to keep your light under a bushel." And in Poor Charlie's Almanack, in the longer transcript of that talk, that particular piece of advice is written as: 
Even though I was a good poker player when I was young, I wasn't good enough at pretending when I thought I knew more than my supervisors did. And I didn't try as hard at pretending as would have been prudent. So I gave a lot of offense. Now, I'm generally tolerated as a harmless eccentric who will soon be gone. But, coming up, I had a difficult period to go through. My advice to you is to be better than I was at keeping insights hidden. 

Monday, January 30, 2017


"A wise man seeks wisdom; a madman thinks that he has found it." 
-Persian proverb (via A Calendar of Wisdom)

The video of Warren Buffett and Bill Gates on Charlie Rose (LINK)

'Becoming Warren Buffett' Goes Beyond a $74 Billion Fortune [H/T Linc] (LINK)

‘Becoming Warren Buffett’ is a timely reassurance that some billionaires have a heart [H/T Linc] (LINK)

The $99 Billion Idea: How Uber and Airbnb Won (LINK)
Related book (released tomorrow): The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World - by Brad Stone
James Grant on WealthTrack (video) (LINK)

The Hidden Fees Inside Managed-Future Funds - by Jason Zweig (LINK)

Everyone Poops and has Customer Churn (and a Dozen Notes) - by Tren Griffin (LINK)

Billionaire Steve Wynn: Building Las Vegas (2014 video) [H/T @iancassel] (LINK) ["We never risked the firm. Never risked the firm. My responsibility to my employees, my stockholders and such; that I can't promise to be right all the time. No one can. You make calls. Sometimes they're right, sometimes they're wrong. But capital structure allows you to survive the inevitable cycles of business, which go up and down as surely as sunrise and sunset, except we don't know the timing. They allow you to survive your own miscalculations. Capital structure, I learned at a young age, thanks to Mike Milken who taught me this story; capital structure is everything. And I've always had a capital structure that was bulletproof."] [Wynn's answer about building a good company culture from the 33:50-40:58 mark is also worth a close listen.]

Hussman Weekly Market Comment: On Governance (LINK)
Those who aspire to “right speech” often measure their words with four questions: Is it true? Is it kind? Is it necessary? Is it the right time? Right speech should not escalate conflict, but it doesn’t retreat from necessary truth, and criticisms don’t always seem kind. The question of right speech is the question of how one might best serve others. Criticism with the intent to offend is not constructive, but silence is equally detrimental when it quietly endorses a pattern of offense, or encourages the silence of others. 
Those of you who have followed my work over the decades know that I look at the world holistically in terms of the interconnection and responsibility we have toward others, and I’ve never been much for separating “business” from those larger values. After all, most of my income regularly goes to charity, and nearly everything that remains follows our own investment discipline. Whether my comments on matters like peace, civility, economic policy or governance are well-received or not (and I'm grateful that they have been over the years), there are moments when one has the responsibility to speak if one has a voice.
How Mark Sisson grew a loyal tribe before launching a niche health food line (podcast) (LINK)
Related book: The New Primal Blueprint
Amor Fati: The Immense Power of Learning To Love Your Fate (LINK)
Related previous post: Friedrich Nietzsche quotes on amor fati ("love of fate")
Book of the day (mentioned by Warren Buffett at Columbia): Essays In Persuasion – by John Maynard Keynes

Saturday, January 28, 2017

Having time to think...

“It has struck me that all men’s misfortunes spring from the single cause that they are unable to stay quietly in one room.” -Blaise Pascal

On Charlie Rose last night, there was an exchange between Rose, Warren Buffett and Bill Gates that once again reminded me of the importance of keeping some free time (or "white space") in one's schedule; and making sure to leave plenty of time for reading and thinking. After a discussion about Buffett's relatively open schedule being something Gates learned from him earlier in their relationship, here was the exchange (my transcription, and slightly edited for clarity):
Gates: I also remember Warren showing me his calendar. [For me], I had every minute packed [and thought] that was the only way you could do things....The fact that he is so careful about his time. He has days that there's nothing on it.  
Rose: That taught you what? Not to crowd yourself? Give yourself time to read and think? 
Gates: Right. You control your time. And sitting and thinking may be of much higher priority than a normal CEO who, you know, there's all this demand, and you feel like you need to go and see all these people. It's not a proxy of your seriousness that you filled every minute in your schedule. 
Buffett: People are going to want your time. That's the only thing you can't buy. I can buy anything I want, basically, but I can't buy time. 
Rose: So to have time is the most precious thing you can have. 
Buffett: It is. I better be careful with it. There's no way I will be able to buy more time. 
Rose: And living in Omaha makes that easier?  
Buffett: That makes it a lot easier. For 54 years, I've spent 5 minutes going each way [his commute to the office]. Just imagine if that was a half an hour each way. I'd know the words to a lot more songs, and that's about it.  
Rose: It adds up, doesn't it? 
Buffett: It really adds up. 
This last point was also similar to advice Mr. Buffett recently gave to a group of students. As described in an article by a student that was attending from Dartmouth:
Live where you want to live, then build your business around that. Buffett lived in New York for many years, where he had a thirty-minute commute to the office. In Omaha, his commute is five minutes. “I’m more productive when I’m happy. I have a better life in Omaha than I did in New York.” 
And the importance of keeping an open schedule was also discussed by Charlie Munger at the 2016 Daily Journal Meeting:
There’re two things that Warren and I have done and Rick Guerin has done, too, to a considerable extent. One is that we spend a lot of time thinking. Our schedules are not that crowded. We look like academics more than we look like businessmen. 
Our system has been to sift life for a few opportunities and seize a few of them. We don’t mind long periods in which nothing happens. Warren is exactly the same way. Warren’s sitting on top of an empire now. You look at his schedule sometime and there’s a haircut. 
Tuesday, haircut day. 
That’s what created [one of the] world’s most successful business records in history. He has a lot of time to think.

Bill Gates and Warren Buffett at Columbia University - 27th Jan 2017

They were also on the Charlie Rose show last night, but that video isn't yet available.

Link to video

Friday, January 27, 2017


“The greatest hindrance to living is expectancy, which depends upon the morrow and wastes today. You dispose of that which lies in the hands of Fortune, you let go that which lies in your own. Whither do you look? At what goal do you aim? All things that are still to come lie in uncertainty; live straightway!” -Seneca (On the Shortness of Life)

Transcript of a talk Sanjay Bakshi gave this week: What Do Conservative Value Investors Look For In Risk Seeking Entrepreneurs? (LINK)

Michael Mauboussin reflects on 30 years in the markets (FT Alphachat podcast) (LINK)
Related paper: Reflections on the Ten Attributes of Great Investors
Small Things that Make a Big Difference - by Ian Cassel (LINK)

Renowned value investor Francis Chou is willing to wait on a bargain (LINK)

BNSF Announces Plan for 2017 Capital Investments [H/T Linc] (LINK)

A Default in China Spreads Anxiety Among Investors [H/T Matt] (LINK)

What did NAFTA really do? [H/T @cullenroche] (LINK)

Ed Thorp on the Chat With Traders podcast (LINK)
Related book: A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market - by Edward O. Thorp
Exponent podcast: Episode 102 — Snakes and Ladders (LINK)
Ben and James discuss the history of messaging apps, the rise of Snapchat, and why Instagram Stories was such a brilliant move.
Tim Ferriss on the Recode Decode podcast (LINK)
Related book: Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers
Scientists create a part-human, part-pig embryo — raising the possibility of interspecies organ transplants [H/T Linc] (LINK)

How Life (and Death) Spring From Disorder [H/T @mjmauboussin] (LINK)
Life was long thought to obey its own set of rules. But as simple systems show signs of lifelike behavior, scientists are arguing about whether this apparent complexity is all a consequence of thermodynamics.
Book of the day: Process and Reality - by Alfred North Whitehead


[Below is a section from the Oaktree video linked to yesterday--a discussion between Howard Marks and Ian Schapiro--that I thought was worth posting here for easy future reference.]

Risks to Avoid:

  • Commodity Risk
  • Turnaround Risk
  • Technology/Start-up/Venture Risk
  • Leverage Risk
  • Regulatory Risk
  • Inertia Risk

Thursday, January 26, 2017


Mohnish Pabrai's Lecture to Univ. of Puerto Rico MBA Class on mental models on Sept. 26, 2016 (video) (LINK)

Kyle Bass on Bloomberg TV (video) (LINK)

Oaktree Capital Management video: Risk Management with Ian Schapiro (LINK)

World’s Biggest Real Estate Buyers Are Suddenly Short on Cash  (LINK)

Amazon adds ocean freight to the pieces of the shipping puzzle it controls (LINK)

It’s More Than Buy, Squeeze & Repeat With 3G Capital (LINK)

Freakonomics Radio podcast: Did China Eat America’s Jobs? (LINK)

Gary Taubes on Joe Rogan's podcast [H/T Campbell] (LINK)
Related book: The Case Against Sugar
How a Scientist Mapped the Entire Peruvian Amazon by Plane - by Ed Yong (LINK)

The Doomsday Clock Issues Its Most Dire Warning Since the Cold War (LINK) [And on a related note, I'm a little over halfway through the latest Hardcore History podcast, and it's fantastic.]

Wednesday, January 25, 2017

GMO's Q4 2016 Quarterly Letter

Link to:  GMO's Q4 2016 Quarterly Letter
The 4Q2016 GMO Quarterly Letter features Ben Inker's "Is Trump a Get Out of Hell Free Card?" and Jeremy Grantham's "The Road to Trumpsville: The Long, Long Mistreatment of the American Working Class"


Not ignorance, but ignorance of ignorance is the death of knowledge. -Alfred North Whitehead

For audiobook listeners, it appears that My Life and Work: An Autobiography of Henry Ford became available on Audible last September. If you buy the Kindle edition for $0.99 (HERE), you can then get the Audible edition for $1.99 (HERE, or just check the "Add Audible narration to your purchase for just $1.99" box when buying the Kindle edition).

The Sage of Omaha: Words of Wisdom from Warren Buffett [H/T Linc] (LINK)

Dan Carlin's latest Hardcore History episode is now available -- Show 59 - (Blitz) The Destroyer of Worlds (audio) (LINK)
What happens if human beings can’t handle the power of their own weaponry? This show examines the dangerous early years of the Nuclear Age and humankind’s efforts to avoid self-destruction at the hands of its own creation.
Dow 20000: Don’t Be Euphoric. Be Very Cautious - by Jason Zweig (LINK)

Harvard to Outsource Management of Its $35.7 Billion Endowment (LINK)

The Parasite That Compels Other Parasites to Shove Their Heads Into Holes...and then eats them (LINK)

It's been quite a few years since I've read this, but it may be worth a re-read [H/T @hussmanjp]: George Washington's Farewell Address (also available as a BOOK, on KINDLE, or on AUDIBLE)

“Take a good hard look at people’s ruling principle, especially of the wise, what they run away from and what they seek out.” -Marcus Aurelius (via The Daily Stoic)

Tuesday, January 24, 2017


'Regular dude': Personal details set 'Becoming Warren Buffett' apart in HBO documentary [H/T Linc] (LINK)

Warren Buffett Just Quietly Bought Up Another German Company [H/T Linc and Will] (LINK)

NPR Planet Money podcast -- Episode 749: Professor Blackjack (audio and transcript) (LINK)
Related book: A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market
Chan Zuckerberg Initiative Makes Its First Acquisition, Meta [H/T Matt] (LINK)

Speed Reading is Bullshit - by Shane Parrish (LINK)

The Heroism of Incremental Care - by Atul Gawande [H/T Ben Carlson] (LINK)

Davos 2017 - A Conversation on the Future of Medicine (video) (LINK)
Join Atul Gawande, renowned surgeon and author of Being Mortal, and Francis Collins, celebrated geneticist and science policy leader, on the future of healthcare leadership and biomedical research.
Curiosity Finds An(other) Alien Visitor on Mars (LINK)

Book of the day: The Agony and the Ecstasy: A Biographical Novel of Michelangelo - by Irving Stone

Monday, January 23, 2017


Released tomorrow: A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market - by Edward O. Thorp

How I Built This podcast -- Zappos: Tony Hsieh (LINK)
Related book: Delivering Happiness
Warren Buffett’s old proposal to end trade wars applies today [H/T Vishal and Linc] (LINK)

How Kraft Heinz Plans to Build a New Global Food Giant [H/T Linc] (LINK)

Analyst Ratings and the Institutional Imperative - by John Huber (LINK)

Product Study: Falcon 9 (LINK)

Amazon's next frontier to conquer? Auto parts [H/T @GSpier] (LINK)

Robert Cialdini on the Mixergy podcast (LINK)
Related book: Pre-Suasion
Charley Ellis has another chat with Barry Ritholtz on the Masters in Business podcast (LINK)

Book of the day: The Discovery of Slowness

I came across the book above in this excerpt from How to Live: Or A Life of Montaigne in One Question and Twenty Attempts at an Answer:
Montaigne would make a good model for the modern “Slow Movement,” which has spread (in a leisurely fashion) to become something of a cult since its inception in the late twentieth century. Like Montaigne, its adherents make slow speed into a moral principle. Its founding text is Sten Nadolny’s novel The Discovery of Slowness, which relates the life of Arctic explorer John Franklin, a man whose natural pace of living and thinking is portrayed as that of an elderly sloth after a long massage and a pipe of opium. Franklin is mocked as a child, but when he reaches the far North he finds the environment perfectly suited to his nature: a place where one takes one’s time, where very little happens, and where it is important to stop and think before rushing into action. Long after its publication in Germany in 1983, The Discovery of Slowness remained a best seller and was even marketed as an alternative management manual. Meanwhile, Italy generated the Slow Food movement, which began in protest against the Rome branch of McDonald’s and grew to become an entire philosophy of good living. 
Montaigne would have understood all this very well. For him, slowness opened the way to wisdom, and to a spirit of moderation which offset the excess and zealotry dominating the France of his time. He was lucky enough to be naturally immune to both, having no tendency to be carried away by the enthusiasms others seemed prone to. “I am nearly always in place, like heavy and inert bodies,” he wrote. Once planted, it was easy for him to resist intimidation, for nature had made him “incapable of submitting to force and violence.” 
As with most things in Montaigne, this is only part of the story. As a young man he could fly off the handle, and he was restless: in the Essays he says, “I know not which of the two, my mind or my body, I have had more difficulty in keeping to one place.” Perhaps he only played the sloth when it suited him.

“Forget much of what you learn” and “Be slow-witted” became two of Montaigne’s best answers to the question of how to live. They freed him to think wisely rather than glibly; they allowed him to avoid the fanatical notions and foolish deceptions that ensnared other people; and they let him follow his own thoughts wherever they led — which was all he really wanted to do.

Sunday, January 22, 2017

Linamar and being entrepreneurial

As Linamar was one of Meryl Witmer's picks for the 2017 Barron's Roundtable, I thought I'd post another of the excerpts I have saved from the excellent book on the company and its founder, Driven to Succeed: How Frank Hasenfratz Grew Linamar from Guelph to Global
If there is one word that captures the corporate culture of Linamar, that word would be “entrepreneurial.” The 1994 annual report featured a short essay on the topic. “An entrepreneur is defined as someone who runs a business at his own financial risk.” 
...Frank has his own definition. “To be an entrepreneur, you’ve got to believe, follow through, and never give up. A lot of entrepreneurs fail because they don’t recognize when it’s time to change,” he said. “You can teach someone to be an entrepreneur by teaching them to truly believe in themselves. But the problem is when you believe in yourself so much you come across as being cocky. If you ask me what did I do wrong in my life, I’d have to think about it. I can find it in the archives somewhere, but I don’t harp on it, it happened, it’s done, let’s move on. I don’t get headaches, I give headaches.”
And here was Witmer's thoughts on the company and its valuation: 
Witmer: My next pick is Linamar [LNR.Canada]. It is a global auto-parts supplier, based about an hour from Toronto. The stock price is 60 Canadian dollars [$45]. There are 66 million shares outstanding, and the market cap is C$3.9 billion. Linamar has two segments: powertrain/driveline and industrial. The former generates about 80% of operating income. The company utilizes precision machining, casting, and forging technology to make powertrain and driveline components for automotive OEMs [original equipment manufacturers]. Linamar focuses on sophisticated components that are lightweight and fuel-efficient. 
What does the industrial division do? 
Witmer: It makes aerial work platforms, such as scissor lifts, under the Skyjack brand. There are two major competitors: Terex [TEX] and OshKosh [OSK]. Linamar purchased Skyjack in 2001-’02 for $32 million. Skyjack is on track to earn $140 million, pre-tax, in 2016, so it was a good buy. Linamar was founded by Frank Hasenfratz, a remarkable man. An ethnic German, he was born in Hungary and fled to Canada in the 1950s after the Hungarian uprising against the Soviets failed. The Canadian government gave him $5 and sent him on his way. Frank had an advanced skill set as a machinist from an apprenticeship in Hungary, and started a predecessor to Linamar in 1964 in his basement. 
In 2002, his capable daughter Linda took over as CEO. She has a chemistry degree and an M.B.A., and started on the shop floor. Together, they own about a third of the stock. They think long-term about growing the business and achieving 20% pre-tax returns on capital. The company is relentless about keeping costs low through process efficiency and product innovation. Every plant manager at its more than 50 plants worldwide is responsible for his or her own P&L [profit and loss]. Despite its growth, Linamar has retained an entrepreneurial culture. 
Linamar is benefiting from the trend toward outsourcing powertrain and driveline manufacturing, the last major area of automotive production that is still done partly in-house. OEMs realize they can achieve better and more cost-effective results by outsourcing. Linamar is well-positioned to garner new business as a trusted supplier. It often has sole-source status as a supplier on these critical elements. It can grow through a downturn. If North American vehicle sales fell by one million units, Linamar would lose only about $150 million of revenue. While it is valued like a run-of-the-mill auto supplier, it deserves a higher valuation. 
What would you give it? 
Witmer: The company projects that with flat automotive production, revenue will grow by about 30%, from C$6 billion to more than C$7.8 billion over the next four years, based solely on new business wins it has already signed. Past projections have been conservative by about C$500 million. We estimate that Linamar will earn more than C$7 a share in 2016, growing to more than C$9 a share by 2020. The stock could trade north of C$90 a share in a few years, based on a pricing/earnings multiple of 10. We’d argue a multiple of 12 is more appropriate, producing a target price of C$110 a share.

Friday, January 20, 2017


“Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.” -Warren Buffett, 1992 Letter to Shareholders

Warren Buffett says the US will do fine under Trump because we've got the 'secret sauce' (short video and article) (LINK)

AIG to Pay Berkshire $9.8 Billion in Insurance Transfer Deal (LINK)

Student Debt Payback Far Worse Than Believed (LINK)

The Most Coveted Ball in Golf Is From Costco (LINK)

The Art of Holding - by Ian Cassel (LINK)

January 2017 Data Update 3: Cracking the Currency Code - by Aswath Damodaran (LINK)

Five Good Questions for Marko Dimitrijevic about his book Frontier Investor (video) (LINK)

Exponent Podcast: Episode 101 — TV is the Oak Tree  (LINK)

The Illusions Driving Up US Asset Prices - by Robert Shiller (LINK)

Some videos from the World Economic Forum in Davos (more HERE):

A Conversation With George Soros at Davos 2017

Ray Dalio: Populism Threatens Multinational Corporations

The Crisis of the Middle Class: Davos Panel (Ray Dalio, et al.)

Davos 2017 - Strategic Update: The Future of Innovation

Davos 2017 - An Insight, An Idea with Sergey Brin

Davos 2017 - An Insight, An Idea with Jack Ma

Davos 2017 - An Insight, An Idea with Ginni Rometty

Davos 2017 - Artificial Intelligence

Davos 2017 - Strategic Update: The Future of Finance

Davos 2017 - The Global Fintech Revolution

Davos 2017 - Strategic Update: The Future of Energy [I don't have any idea if this is true, and it is dangerous to make an investment on any kind of macro forecast, but it was an interesting enough comment that I thought was worth mentioning, though it's also worth remembering that demand is only one side of the supply/demand equation: "Last year...less than one car [sold in a] hundred was an electric car...If we were to assume that, as of tomorrow, every second car sold was an electric car...for twenty-five years, global oil demand will still continue to grow.']

An Evening with Richard Dawkins and Sam Harris (audio) (Part 1, Part 2)

Most Primate Species Threatened With Extinction, Scientists Find (LINK)

Decoding the Origami That Drives All Life - by Ed Yong (LINK)

Books of the day:

The Transformed Cell (1992) [H/T Peter Attia]

Humans Are Underrated: What High Achievers Know That Brilliant Machines Never Will - by Geoff Colvin

I'm not sure I had previously read Martin Luther King Jr.'s entire "Letter from a Birmingham Jail." But given the recent holiday in his honor, I decided to give it a listen on Audible, and I think it'll now be something I listen to every year. Here's one particular quote that I saved: 
"My friends, I must say to you that we have not made a single gain in civil rights without determined legal and nonviolent pressure. Lamentably, it is an historical fact that privileged groups seldom give up their privileges voluntarily. Individuals may see the moral light and voluntarily give up their unjust posture; but, as Reinhold Niebuhr has reminded us, groups tend to be more immoral than individuals."

Thursday, January 19, 2017

Warren Buffett on circle of competence, and the stock market in 1999

We made few portfolio changes in 1999. As I mentioned earlier, several of the companies in which we have large investments had disappointing business results last year. Nevertheless, we believe these companies have important competitive advantages that will endure over time. This attribute, which makes for good long-term investment results, is one Charlie and I occasionally believe we can identify. More often, however, we can't -- not at least with a high degree of conviction. This explains, by the way, why we don't own stocks of tech companies, even though we share the general view that our society will be transformed by their products and services. Our problem -- which we can't solve by studying up -- is that we have no insights into which participants in the tech field possess a truly durable competitive advantage. 
Our lack of tech insights, we should add, does not distress us. After all, there are a great many business areas in which Charlie and I have no special capital-allocation expertise. For instance, we bring nothing to the table when it comes to evaluating patents, manufacturing processes or geological prospects. So we simply don't get into judgments in those fields.  
If we have a strength, it is in recognizing when we are operating well within our circle of competence and when we are approaching the perimeter. Predicting the long-term economics of companies that operate in fast-changing industries is simply far beyond our perimeter. If others claim predictive skill in those industries -- and seem to have their claims validated by the behavior of the stock market -- we neither envy nor emulate them. Instead, we just stick with what we understand. If we stray, we will have done so inadvertently, not because we got restless and substituted hope for rationality. Fortunately, it's almost certain there will be opportunities from time to time for Berkshire to do well within the circle we've staked out. 
Right now, the prices of the fine businesses we already own are just not that attractive. In other words, we feel much better about the businesses than their stocks. That's why we haven't added to our present holdings. Nevertheless, we haven't yet scaled back our portfolio in a major way: If the choice is between a questionable business at a comfortable price or a comfortable business at a questionable price, we much prefer the latter. What really gets our attention, however, is a comfortable business at a comfortable price.

Wednesday, January 18, 2017


Tren Griffin on the Inside/Outside Innovation podcast (LINK)
Related book: Charlie Munger: The Complete Investor
The Great Unbundling - by Ben Thompson (LINK)
Related books: 1) Over The Top; 2) Entertainment Industry Economics
Amazon is Eating the Retail World - by Ben Carlson (LINK)

Greenlight Capital's Q4 2016 Letter (LINK)

Some notes and thoughts on a Charley Ellis interview (The Waiter's Pad) (LINK)

Marcus Aurelius on Business, Investing, and Modern Life (LINK)
Related book: Meditations 
Related previous post: Stoicism quotes, thoughts, and readings
2016 Was the Hottest Year on Record (LINK)

Book of the day: Insurance and Behavioral Economics: Improving Decisions in the Most Misunderstood Industry

Tuesday, January 17, 2017


Farnam Street: Under One Roof: What Can we Learn from the Mayo Clinic? (LINK)

Lenovo Thought It Knew How to Fix Tarnished Brands—Then It Bought Motorola (LINK)

Invest Like the Best podcast: Machine Intelligence and Risk Management, with Jeremiah Lowin (LINK)

Mark Carney and Amartya Sen at the LSE -- Policy Issues Affecting the Bank of England: inflation control and social choice (audio) (LINK)

Plenty of Room at the Bottom - by Richard P. Feynman [H/T @Sanjay__Bakshi] (LINK)
This is the transcript of a talk presented by Richard P. Feynman to the American Physical Society in Pasadena on December 1959, which explores the immense possibilities afforded by miniaturization.
Book of the day: In Praise of Simple Physics: The Science and Mathematics behind Everyday Questions

Someone transcribed a reply by Debbie Millman in her podcast interview with Tim Ferriss about a 10-year plan for a remarkable life that may be worth thinking about:
“It is Winter 2027. What does your life look like? What are you doing? Where are you living? Who are you living with? Do you have pets? What kind of house are you in? Is it an apartment are you in the city are you in the country? What does your furniture look like? What is your bed like? What are your sheets like? What kind of clothes do you wear? What kind of hair do you have? Tell me about your pets, tell me about your significant other, do you have children? Do you have a car? Do you have a boat? Talk about your career? What do you want? What are you reading? What are you making? What excites you? What is your health like? Write this one day ten years from now. So one day in the winter of 2027, what does your whole day look like? Start from the minute you wake up, brush your teeth, have your coffee or tea, all the way through until minute you tuck yourself in at night. What is that day like for you? Dream big, dream without any fear. Write it all down. You don’t have to share it with anyone other than yourself. Put your whole heart into it. Write like there is no tomorrow; write like your life depends on it because it does. And then read it, once a year, and see what happens.”
That reply also reminded me of something Jeff Bezos once said:
So, it really was a decision that I had to make for myself, and the framework I found which made the decision incredibly easy was what I called -- which only a nerd would call -- a "regret minimization framework." So, I wanted to project myself forward to age 80 and say, "Okay, now I'm looking back on my life. I want to have minimized the number of regrets I have." I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed I wouldn't regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day, and so, when I thought about it that way it was an incredibly easy decision. And, I think that's very good. If you can project yourself out to age 80 and sort of think, "What will I think at that time?"

Monday, January 16, 2017


Part 2 of Mohnish Pabrai on The Investors Podcast (LINK)

Why is it so Hard to Forecast the Future? - by Tren Griffin (LINK)

Data Driven Business: Customer centricity in the platform revolution - Sangeet Paul Choudary (video) (LINK)
Related book: Platform Revolution
Last Lifelines Crumble for Many Greek Families as New Conflict With Creditors Looms [H/T @rationalwalk] (LINK)

For Shale Drillers, Rising Oil Prices Also Come With Rising Costs (LINK)

John Hussman's Weekly Market Comment, especially the non-investing section "On Peace", is worth a read this week (LINK)
It’s often imagined that peace is the result of sufficiently crushing one’s opponent; of inflicting so much injury and suffering that they surrender. There’s little doubt that conflicts can be ended in this way, but only at terrific cost, and with deep scars that feed later hatreds and conflicts. Others somehow come to imagine that waging peace requires one to lay down defenseless. It’s just not so. Peace doesn’t mean that one doesn’t defend oneself, or refrain from criticism. Peace doesn’t demand the absence of strength. It asks each side to see and understand the suffering of the other, whether that suffering is rooted in reality or misperception. It asks us to refrain from needlessly provoking the adversary, or to insult them in order to boost our pride. It asks us to look to address their suffering in ways that are consistent with our own security. If peace demands anything from us, it is to refrain from being infected by hatred. Dr. King recognized that: 
"Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. I have decided to stick with love. Hate is too great a burden to bear." 
Even in the midst of a fight, one can still remember that the goal is reconciliation.
"Why the next generation has trouble running the corporation Daddy founded" [H/T @paulg] (LINK)

Paul Graham on charisma and power (LINK)

Obama’s Secret to Surviving the White House Years: Books [H/T @williamgreen72](LINK)

Friday, January 13, 2017


"The absence of definite information concerning the outcomes of actions one has not taken is probably the single most important factor that keeps regret in life within tolerable bounds....We can never be absolutely sure that we would have been happier had we chosen another profession or another spouse.... Thus, we are often protected from painful knowledge concerning the quality of our decisions." -Danny Kahneman (via The Undoing Project)

A Chat With Daniel Kahneman - by Morgan Housel (LINK)
On persistence: “When I work I have no sunk costs. I like changing my mind. Some people really don’t like it but for me changing my mind is a thrill. It’s an indication that I’m learning something. So I have no sunk costs in the sense that I can walk away from an idea that I’ve worked on for a year if I can see a better idea. It’s a good attitude for a researcher. The main track that young researchers fall into is sunk costs. They get to work on a project that doesn’t work and that is not promising but they keep at it. I think too much persistence can be bad for you in the intellectual world.”
The Sound of Silence - by Jessica Livingston (LINK)

The Risk of Discovery - by Paul Graham (LINK)

How I Got My Attention Back - by Craig Mod [H/T @StevenLevy] (LINK)

Importance of Knowing Your Investment Boundaries (Sears Mini-Case Study) - by John Huber (LINK)

Five Good Questions for Samuel Arbesman about his book Overcomplicated (LINK)

Mike Massimino on the James Altucher podcast (LINK)
Related book: Spaceman: An Astronaut's Unlikely Journey to Unlock the Secrets of the Universe
Exponent podcast: Episode 100 — The Anniversary Episode: iPhone and Exponent (LINK)

a16z Podcast: Real Estate — Asset, Ownership, and the Economy (LINK)

TED Talk - Alejandro Sánchez Alvarado: To solve old problems, study new species (LINK)

A Woman Was Killed By a Superbug Resistant to All 26 American Antibiotics [H/T @edyong209] (LINK)

Why Killer Whales (and Humans) Go Through Menopause - by Ed Yong (LINK)

"Energy Revolution? More like a Crawl" - Dr. Vaclav Smil

Dr. Vaclav Smil was the speaker at a TISED and Fondation 3E event in September 2015 called "Energy Revolution? More like a Crawl". He explored the current state of global and major national energy dependencies and appraised the likely speed of their transformation. In his words, "The desirable development of new renewables should not be guided by wishful preferences and arbitrary targets. Using more energy, albeit more efficiently and with lower specific environmental effects, is unlikely to change our fortunes — yet no serious consideration has been given to how to use less, much less."

Link to video


Related previous post: Vaclav Smil video: Energy Transitions

Related books, HERE.

Thursday, January 12, 2017


Warren Buffett in New HBO Documentary: ‘I’m Getting Down to Salvage Value’ (LINK)

The Benjamin Graham Financial Network - By Jason Zweig (LINK)

Narrative and Numbers: How a number cruncher learned to tell stories! - by Aswath Damodaran (LINK)
Related book (just released): Narrative and Numbers: The Value of Stories in Business
National Western Stock Show Citizen of the West John Malone known for loyalty, can-do Western spirit [H/T @FrancoOlivera] (LINK)
Related book: Cable Cowboy: John Malone and the Rise of the Modern Cable Business
a16z Podcast: Machine Intelligence, from University to Industry (LINK)

Six Questions for Shane Parrish (LINK)

Stephen Hawking’s Productive Laziness (LINK)
In the 1980s, at the height of his intellectual productivity, Stephen Hawking used to head home from his office between five and six. He rarely worked later. 
Here’s how he explained his behavior to his PhD student Bruce Allen (now a professor at the Max Planck Institute for Gravitational Physics): 
“Bruce, here’s some advice: The problem with physics is that most of the days we don’t make any major headway (on our projects). That’s why you should do other stuff: listen to music, meet good friends. There’s one exception to this rule: If you find a solution for a given problem, you work 24 hours a day and forget everything else. Until the problem is solved in its entirety.”
A Break in the Search for the Origin of Complex Life (LINK)

Book of the day: Command and Control: Nuclear Weapons, the Damascus Accident, and the Illusion of Safety (There is also a PBS documentary that originated from this book, which aired a couple of days ago, HERE. And be sure to check out the Freeman Dyson bonus video, HERE.)

Wednesday, January 11, 2017

Howard Marks Memo: Expert Opinion

Link to: Expert Opinion
In August, I mentioned that I had chosen the title “Political Reality” for my memo in part because of my liking for oxymorons.  I classed that title with other internally contradictory statements, such as “jumbo shrimp” and “common sense.”  Now I’m going to discuss one more: “expert opinion.”  
This memo was inspired by a thought that popped into my head when the outcome of the election settled in.  You may point out that at the end of my November 14 memo “Go Figure!,” I said I wouldn’t write any more about politics.  True, but I didn’t say I wouldn’t think about politics.  Anyway, this memo isn’t about politics, it’s about opinions. 
Last spring I attended a dinner where one of Hillary Clinton’s senior advisers was soliciting input, as she and her campaign were struggling to come up with an effective counter to Bernie Sanders’s populist message.  Most of those present expressed frustration on the subject, until an experienced, connected Democrat assured everyone, “Don’t worry.  She’ll win.  The math is irresistible.”  The Hillary supporters were relieved, and he turned out to be right: she won the nomination going away. 
In late October, with the issue of Clinton’s private email server and the FBI’s new investigation further dogging her, that same seasoned Democrat was asked whether the election was in jeopardy.  “Don’t worry,” he said.  “She’ll win.  The math is irresistible.”  We all know the result. 
The opinions of experts concerning the future are accorded great weight . . . but they’re still just opinions.  Experts may be right more often than the rest of us, but they’re unlikely to be right all the time, or anything close to it.  This year’s election season gave us plenty of opportunities to see expert opinion in action.  I’ll start this memo by reflecting on them.

Tuesday, January 10, 2017


Some nice footage of Katharine Graham in 1977 at the 55:38 mark in THIS VIDEO, and at about the 25-minute mark in THIS VIDEO.

An Expert Called Lindy - by Nassim Nicholas Taleb (LINK)
Related book: Antifragile (or the whole collection: INCERTO)
Nassim Taleb also just gave a 5-star Amazon review to the book Perilous Interventions: The Security Council and the Politics of Chaos.

Chuck Klosterman: "But What If We're Wrong" | Talks At Google (LINK)
Related book: But What If We're Wrong?
My Friends are Way Smarter than Me - by Shane Parrish (LINK)

Davis Funds’ Unconventional Wisdom [H/T Will] (LINK)

5 Reasons I’m Optimistic About Africa - By Bill Gates (LINK)

Bill Gross' January 2017 Investment Outlook: "Echoes from Africa" (LINK)

Candy and gum are no longer Mars’ biggest business [H/T Matt] (LINK)

Jazz Pharmaceuticals (JAZZ): Bruce Cozadd’s $7 Billion Decision - by Ian Cassel (LINK)

Product Study: iPhone - by Max Olson (LINK)

Barry Ritholtz talks with Dana Telsey on the Masters in Business podcast (LINK)

U.S.-Canada Paper Dispute Shows Unintended Results of Import Tariffs (LINK)

Sir James Goldsmith on Charlie Rose in 1994 (video) [H/T Venkatesh Rao (video)] (LINK)
Related books: 1) Billionaire: The Life and Times of Sir James Goldsmith; 2) The Trap - by James Goldsmith
Francis Fukuyama on Charlie Rose in 2011 (video) [H/T Venkatesh Rao (video)] (LINK)
Related books: 1) The Origins of Political Order: From Prehuman Times to the French Revolution; 2) Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy
Helen Czerski on the Inquiring Minds podcast (audio) [H/T @mikedariano] (LINK)
Related book: Storm in a Teacup: The Physics of Everyday Life
What is DNA and How Does it Work? (video) [H/T Fred Wilson] (LINK)

A male Japanese macaque monkey has been caught in the act of trying to mate with two Sika deer (LINK)

My God. It’s Full of Black Holes. - By Phil Plait (LINK)

Scientists Predict Star Collision Visible To The Naked Eye In 2022 [H/T Linc] (LINK)

Monday, January 9, 2017


"Our experience has been that the manager of an already high-cost operation frequently is uncommonly resourceful in finding  new ways to add to overhead, while the manager of a tightly-run operation usually continues to find additional methods to curtail  costs, even when his costs are already well below those of his competitors." -Warren Buffett, 1978 Letter to Shareholders (Kindle)

Mohnish Pabrai on The Investors Podcast (LINK)

I finally had a chance to watch Chris Mayer's September MicroCap Leadership Summit presentation on 100-Baggers, and I highly recommend it. He also mentioned a couple of things worth checking out if you have never read them: 1) An Investor's Odyssey: The Search for Outstanding Investments - by Chuck Akre; and 2) Silent Investor, Silent Loser - by Martin Sosnoff

Henry Blodget interviews Ray Dalio [H/T Barry Ritholtz] (LINK)

Inside Sears' death spiral: How an iconic American brand has been driven to the edge of bankruptcy [H/T Linc] (LINK)

Magic Eludes Bubble-Caller Jeremy Grantham, as Assets at GMO Drop by More Than $40 Billion [H/T Matt] (LINK)

Banks rush to bond market ahead of rates rise (LINK)
Banks have flooded the market with debt in the first days of the new year, propelling a record pace of bond sales as companies seek to lock in borrowing costs before interest rates rise further. 
The sales have been met with ample investor appetite ahead of the fourth-quarter earnings season, when the majority of US banks are expected to report improved profitability. 
Banks have sold $42bn of the near $73bn of corporate debt issued so far this year, including a $5.25bn offering from Citigroup, a $5bn deal by Barclays and a $4bn sale from Credit Suisse, according to Dealogic. The issuance has bolstered overall activity at the start of the new year, with two of the 20 busiest corporate bond trading days on record set in the first three trading days of 2017. 
Grandmasters of Work - by Morgan Housel (LINK)

Latticework Of Mental Models: Planning Fallacy (LINK)

The Ten Year Anniversary of the Apple TV - by Ben Thompson (LINK)
On January 9, 2007, ten years ago today, Steve Jobs took the Macworld stage and introduced the Apple TV. 
That the iPhone had to share the stage the same day it was unveiled to the world is a footnote in history, especially given the degree to which that history has been indelibly shaped by the most consequential device the tech industry has ever produced.
Tim Ferriss: If You're Not Happy With What You Have, You Might Never Be Happy (LINK)

Saturday, January 7, 2017


Cicero used to be boring. With Trump around, he’s breathtaking. (LINK)
Related book: On Duties
It’s Time for Investor Fees to Go Even Lower - by Jason Zweig (LINK)

Oscar is Disrupting Health Care in a Hurricane - by Steven Levy (LINK)

Tren Griffin's Advice for Twitter (LINK)

16 Questions About Self Driving Cars (video) (LINK)

Vikram Mansharamani on the demand for avocados (LINK)

Thieves in Italy targeting precious Parmiggiano Reggiano [H/T Abnormal Returns] (LINK)

An Ingenious Experiment of Jungle Bats and Evolving Artificial Flowers - by Ed Yong (LINK)

Friday, January 6, 2017


‘James Bond of Philanthropy’ Gives Away the Last of His Fortune (LINK)
Related book: The Billionaire Who Wasn't: How Chuck Feeney Secretly Made and Gave Away a Fortune
One Man’s Quest to Change the Way We Die [H/T Tim Ferriss, who also interviewed B.J. Miller HERE.] (LINK)
How B.J. Miller, a doctor and triple amputee, used his own experience to pioneer a new model of palliative care at a small, quirky hospice in San Francisco.
The Two Types of Knowledge in the World - by Ben Carlson (LINK)

10 Qualities of Great Investors - by Vishal Khandelwal (LINK)

Five Good Questions for Martin Ford about his book Rise of the Robots (video) (LINK)

The Seven Stages Of Robot Replacement - by Kevin Kelly [H/T The Browser] (LINK)
Related book: The Inevitable
Exponent Podcast: Episode 099 — Fate Has a Sense of Irony (LINK)
Ben and James discuss Amazon Alexa and the history of operating systems
Tendrils of Mess in our Brains - by Sarah Perry (LINK)

Investing thought of the day:
"So how do you really understand and gain that great insight? Pick one business. Any business. And truly understand it. I tell my interns to work through this exercise – imagine a distant relative passes away and you find out that you have inherited 100% of a business they owned. What are you going to do about it? That is the mentality to take when looking at any business. I strongly encourage you to start and understand one business, inside out. That is better than any training possible. It does not have to be a great business, it could be any business. You need to be able to get a feel for how you would do as a 100% owner. If you can do that, you will have a tremendous leg up against the competition. Most people don’t take that first concept correctly and it is quite sad. People view it as a piece of paper and just trade because it is easy to trade. But if it was a business you inherited, you would not be trading. You would really seek out knowledge on how it should be run, how it works. If you start with that, you will eventually know how much that business is worth." -Li Lu (from back in 2010)

Thursday, January 5, 2017


"We cannot know what the future holds, and history cannot tell us. But awareness of that limitation is a key lesson in itself. Mastering it increases our likelihood of investment success." -Howard Marks

Looking for Easy Games: How Passive Investing Shapes Active Management - by Michael Mauboussin, et al. (LINK)

Kyle Bass’s Hayman Capital Rides Bond-Rout Bet to 24.8% Gain for 2016 (LINK)

Venkatesh Rao Interview with Real Vision Television (video) (LINK)

Becoming Michael Lewis - by Walter Isaacson (LINK)
Related book: The Undoing Project
Freakonomics Radio (podcast): The Men Who Started a Thinking Revolution (LINK)
Starting in the late 1960s, the Israeli psychologists Amos Tversky and Danny Kahneman began to redefine how the human mind actually works. Michael Lewis's new book The Undoing Project explains how the movement they started -- now known as behavioral economics -- has had such a profound effect on academia, governments, and society at large.

Wednesday, January 4, 2017


"He who sees the past as surprise-free is bound to have a future full of surprises." -Amos Tversky (via The Undoing Project)

Video trailer for the HBO Documentary "Becoming Warren Buffett" [H/T Linc] (LINK)

Farnam Street: George Marshall’s 1920 Letter on True Leadership (LINK)
Related book: George C. Marshall: Interviews and Reminiscences (or online transcripts HERE)
Valuation and investment analysis - by John Hempton (LINK)

When do you average down? - by John Hempton (LINK)

Alexa: Amazon's Operating System - by Ben Thompson (LINK)

An interview with Robert Shiller [H/T ValueWalk] (LINK)

Exxon Mobil Cashes Out Ex-CEO Tillerson Ahead of Confirmation Hearings (LINK)

The Fake and Distorted News Epidemic and Bridgewater's Recent Experience With The Wall Street Journal - by Ray Dalio (LINK)

Billionaire Hedge-Fund Manager Ties W.S.J. to “Fake” News Epidemic (LINK)

TED Talk - Adam Grant: Are you a giver or a taker? (LINK)
Related book: Give and Take
16 Things You Didn’t Know About Avocados [H/T The Browser] (LINK)

Steven Pinker on The Second Law Of Thermodynamics [H/T The Browser] (LINK) [You can see all responses to the Edge annual question HERE.]

Tuesday, January 3, 2017

Buying right and holding on, and trading vs. investing

Sanjay Bakshi's blog post, after attending a lunch with Charlie Munger, reminded me of Thomas Phelps' advice in his book, 100 to 1 in the Stock Market, of buying right and holding on. It's advice he gives throughout the book, with the excerpt below being one example:
The investor trying to buy right and hold on could buy as many different stocks as appealed to him. The difference is not in the focussing of investment money but in the intent of the buyer. The trader believes that in a swift-moving, rapidly changing world, with visibility always limited, he can make a series of commitments with better chance of success than trying to decide which companies will do well for the next twenty years. The investor dedicated to buying right and holding on picks managements, products, and processes he thinks able to cope with the unforeseeable as it hoves into view. 

Monday, January 2, 2017


"I've always felt ideas were a dime a dozen. If you had one that didn't work out, you should not fight too hard to save it, just go find another." -Danny Kahneman (via The Undoing Project)

Charlie Munger on the Paradox in Hold vs. Buy Decisions in Long Term Investing - by Sanjay Bakshi (LINK)

A Half-Dozen Ways to Look at the Unit Economics of a Business - by Tren Griffin (LINK)

To Be a Great Investor, Worry More About Being Wrong Than Right - by Jason Zweig (LINK)

Inequality and Skin in the Game - by Nassim Nicholas Taleb (LINK)

Mohnish Pabrai's Interview with BTVi about markets and commodities (video) (LINK)

Mutual Fund Observer, January 2017 (LINK)

a16z Podcast: The Movement of Money (LINK)

a16z Podcast: New Year, New Horizons: Pluto! (LINK)