Project Punch Card Conference 2019

This was a great conference last year, and it looks like it will be another great conference this year. For those interested, the Early Bird Discount will be expiring soon. So if you plan on coming, here's a link to more information (including the speaker lineup) and the portal to buy tickets: 

Project Punch Card Value Investing Conference 2019

Links

Note to readers: I'm traveling with limited internet access over the next week or two, so posting will probably be less frequent than normal.

***

"We think that when we make a decision, there ought to be such a margin of safety that it ought to be so attractive that you don’t have to carry it out to three decimal places." --Warren Buffett (1995)

Beachheads and Obstacles - by Ben Thompson (LINK)

Bubble Yet? (The Brooklyn Investor blog) (LINK)

The Absolute Return Letter - October 2019: How to invest in a low growth world (Part 1 of 2) (LINK)

Michael Bloomberg’s Answer to the U.N. General Assembly - by Evan Osnos (LINK)

Some takeaways from The Autobiography of Benjamin Franklin (LINK)

Kyle Bass: Hong Kong Protests are Chinese Regime’s “Worst Nightmare” in US China Trade War (video) (LINK)

Odd Lots Podcast: How Financial Repression in China Helped Cause the Trade War (LINK)

Hidden Forces Podcast: Financial Fault Lines, Central Banks, and the Law of Unintended Consequences | William White (LINK)

Masters in Business Podcast: Brian Grazer Discusses Imagine Entertainment (LINK)

The James Altucher Show (podcast): 493 -- Frank Abagnale (LINK)

What Got You There Podcast: #158 Brent Beshore (LINK)

The Knowledge Project Podcast -- Jim Collins: Keeping the Flywheel in Motion (LINK)

Externalities: Why We Can Never Do “One Thing” (LINK)

The Messy World of Crime-Solving Genealogists - by Sarah Zhang (LINK)

Montaigne and trying to see things as they are...

From How to Live: Or A Life of Montaigne in One Question and Twenty Attempts at an Answer:

Even his simplest perceptions cannot be relied upon. If he has a fever or has taken medicine, everything tastes different or appears with different colors. A mild cold befuddles the mind; dementia would knock it out entirely. Socrates himself could be rendered a vacant idiot by a stroke or brain damage, and if a rabid dog bit him, he would talk nonsense. The dog’s saliva could make “all philosophy, if it were incarnate, raving mad.” And this is just the point: for Montaigne, philosophy is incarnate. It lives in individual, fallible humans; therefore, it is riddled with uncertainty. “The philosophers, it seems to me, have hardly touched this chord.” 

And what of the perceptions of different species? Montaigne correctly guesses (as Sextus did before him) that other animals see colors differently from humans. Perhaps it is we, not they, who see them “wrongly.” We have no way of knowing what the colors really are. Animals have faculties that are weak or lacking in us, and maybe some of these are essential to a full understanding of the world. “We have formed a truth by the consultation and concurrence of our five senses; but perhaps we needed the agreement of eight or ten senses, and their contribution, to perceive it certainly and in its essence.” 

This seemingly casual remark proposes a shocking idea: that we may be cut off by our very nature from seeing things as they are. A human being’s perspective may not merely be prone to occasional error, but limited by definition, in exactly the way we normally (and arrogantly) presume a dog's intelligence to be. Only someone with an exceptional ability to escape his immediate point of view could entertain such an idea, and this was precisely Montaigne’s talent: being able to slip out from behind his eyes so as to gaze back upon himself with Pyrrhonian suspension of judgment. Even the original Skeptics never went so far. They doubted everything around them, but they did not usually consider how implicated their innermost souls were in the general uncertainty. Montaigne did, all the time. 

We, and our judgment, and all mortal things go on flowing and rolling unceasingly. Thus nothing certain can be established about one thing by another, both the judging and the judged being in continual change and motion. 

This might seem a dead end, closing off all possibility of knowing anything, since nothing can be measured against anything else, but it can also open up a new way of living. It makes everything more complicated and more interesting: the world becomes a vast multidimensional landscape in which every point of view must be taken into account. All we need to do is to remember this fact, so as to “become wise at our own expense,” as Montaigne put it.  

Even for him, the discipline of attention required constant effort: “We must really strain our soul to be aware of our own fallibility.” The Essays helped. By writing them, he set himself up like a lab rat and stood over himself with notebook in hand. Each observed oddity made him rejoice. He even took pleasure in his memory lapses, for they reminded him of his failings and saved him from the error of insisting that he was always right. 

Links

"If thou wilt make a man happy, add not unto his riches but take away from his desires." --Epicurus

Penny-Pinching Funds Are Going to Get Even Cheaper - by Jason Zweig ($) (LINK)

Jim Grant Is a Wall Street Cult Hero. Does It Matter If He’s Often Wrong? (LINK)

Miami Real Estate Is About To Collapse... (LINK)

Five Good Questions Podcast: John Browne - Make, Think, Imagine (LINK)

Related book: Make, Think, Imagine: Engineering the Future of Civilization

Acquired Podcast: Sequoia Capital (Part 1) (LINK)

The Life-Changing Magic of Having ‘Enough’ - by Ryan Holiday (LINK)

"It is not the man who has too little, but the man who craves more, that is poor. What does it matter how much a man has laid up in his safe, or in his warehouse, how large are his flocks and how fat his dividends, if he covets his neighbour's property, and reckons, not his past gains, but his hopes of gains to come? Do you ask what is the proper limit to wealth? It is, first, to have what is necessary, and, second, to have what is enough." --Seneca (Source)

Charlie Munger and Warren Buffett on compensation systems

From the 2003 Berkshire Hathaway Annual Meeting...

Charlie Munger: 

Where a business requires practically no capital, we tend to reward the management based on the earnings. The minute the business starts requiring capital we tend to put a capital factor into this compensation system.  

We don’t have any one standard system. They’re all different, based on accidents of history and circumstances.  

But where capital’s an important factor, of course, we take it into account. 

Warren Buffett:

When capital is an important part of the business, we stick a charge for capital in. If it’s an unimportant part of the business, we don’t stick it in. We don’t believe in making things more complex than needed. 

So, we don’t try for...all kinds of little refinements — which a compensation consultant would come in and tell you was needed, because that’s how he would justify a large bill. And he would also come in and tinker with it a little the following year, and the following year, and so on.  

We have very simple systems on comp. But some of our businesses are terrific businesses, and so we have very high standards of performance before people get performance bonuses.  

Some of our businesses are very tough businesses, and the threshold is much lower, but the managerial talent needed to reach that threshold is just as much as...with the higher threshold in other businesses. 

Compensation is not rocket science. I mean, people will want you to think it is, and you read these proxy statements and it blows your mind, what they get into.

Charlie Munger: 

And on EVA, there are ideas implicit in that that we use. For instance, hurdle rates by — based on opportunity costs. Perfectly reasonable concept.  

But to us, that system, with all its labels and lingo, has a lot of baggage that we don’t need. We just use the implicit, simple stuff that’s buried in EVA. 

Links

"Do external things distract you? Then make time for yourself and learn something worthwhile; stop letting yourself be pulled in all directions. People who labor all their lives but have no purpose to direct every thought and impulse toward are wasting their time—even when hard at work." --Marcus Aurelius (Meditations)

Howard Marks picks not losing money over fear of missing out (LINK)

Brookfield CEO Flatt Says Business Has Been Good Since Brexit (video) (LINK)

Neither, and New: Lessons from Uber and Vision Fund - by Ben Thompson (LINK)

WeWork Lessons That Apply To Lots of Stuff - by Morgan Housel (LINK)

Decrypted Podcast: Inside WeWork’s IPO Disaster (LINK)

Are Company Visits Good or Bad? [H/T @jasonzweigwsj] (LINK)

Walmart’s First Healthcare Services ‘Super Center’ Opens [H/T @BrentBeshore] (LINK)

Are autonomous vehicles actually disruptive? It all depends on this often overlooked question (LINK)

Why I'm Worried About the Repo Market - by Narayana Kocherlakota (LINK)

Invest Like the Best Podcast: Bill Gurley – Direct Listing vs. IPO (LINK)

The Meb Faber Show: #177 - Alex Rubalcava - We Want To Help Build Companies That Are Solving Hard Problems That Matter (LINK)

TIFF Industry Conference Panel -- The Big Screen: Have Rumours of My Demise Been Greatly Exaggerated? (video) (LINK)

The Art of Manliness Podcast: #546: How to Get a Memory Like a Steel Trap (LINK)

Genetic Deep Dive Helps Explain How Whales Evolved to Become Aquatic (LINK)

Thousands-of-Years-Old Baby Bottles Reveal How Ancient Infants Were Fed (LINK)

Talking To Strangers - by David Perell (LINK)

8 Life Lessons From a Primal Elder to Younger Groks - by Mark Sisson (LINK)

Links

The Messy Marketplace Podcast is now available. I enjoyed the book (my review is HERE), and I think I'll likely enjoy this audiobook—in podcast format—even more, given it has the added benefit of commentary from Brent and Emily. For more details, see INTRODUCING ‘THE MESSY MARKETPLACE’ PODCAST. 

The Slow-Burning Success of Disney’s Bob Iger (LINK)

Related book: The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company

Thomas Cook Collapses, Ending 178-Year Reign in the Travel Business (LINK)

Fallout From Thomas Cook’s Demise Will Reach Far and Wide in Travel (LINK)

‘The Bells Start Going Off.’ How Doctors Uncovered the Vaping Crisis ($) (LINK)

IEX Exchange to Exit Listings Business ($) (LINK)

The Amazon of 2030 - by Ted Seides (LINK)

Amazon stock ballooned, crashed, and then not so gradually rebounded to what it is today. Remind you of anything?

Capital Allocators Podcast: Gary Klein with Paul Sonkin and Paul Johnson – Conducting Pre-Mortem Analysis (LINK)

Related paper: "Rendering a Powerful Tool Flaccid: The Misuse of Premortems on Wall Street"

Jeffrey Towson reviews the book Red AI: Victories and Warnings From China’s Rise In Artificial Intelligence (Part 1, Part 2)

Comedy Wildlife Photography Awards [H/T Linc] (LINK)

Links

The Netflix three-part docuseries, "Inside Bill's Brain: Decoding Bill Gates," was released today.

A Taxonomy of Moats - by Jerry Neumann (LINK)

How We Should Bust an Investing Myth - by Jason Zweig ($) (LINK)

Three Things I Think I Think – Repo Madness! - by Cullen Roche (LINK)

Jim Chanos videos on CNBC on why he's shorting DaVita and shorting Grubhub.

Exponent Podcast: 173 — The Exponent IPO (LINK)

The Bill Simmons Podcast: Malcolm Gladwell (LINK)

Related book: Talking to Strangers

The Quiet Disappearance of Birds in North America - by Ed Yong (LINK)

Though the continent has lost 3 billion birds since 1970, those losses are hard to glean because it’s the commonest species that have been hit hardest.

The Real Danger of Booze-Making Gut Bacteria - by Ed Yong (LINK)

Microbes can produce so much alcohol that people become drunk—and sustain liver damage—without touching any booze.

Book of the day [H/T @mjmauboussin]: Patient Capital: The Challenges and Promises of Long-Term Investing

Links

"The whole secret of investment is to find places where it’s safe and wise to non-diversify. It’s just that simple. Diversification is for the know-nothing investor; it’s not for the professional."  --Charlie Munger (2008) 

"And there’s nothing wrong with the know-nothing investor practicing it. It’s exactly what they should practice. It’s exactly what a good professional investor should not practice. There’s no contradiction in that. A know-nothing investor will get decent results as long as they know they’re a know-nothing investor, diversify as to time they purchase their equities, and as to the equities they purchase. That’s crazy for somebody that really knows what they’re doing. And you will find opportunities that, if you put 20 percent of your net worth in it, you’ll have wasted the opportunity of a lifetime, in terms of not really loading up. And we’ve had the chance to do that, way, way in our past, when we were working with small sums of money. We’ll never get a chance to do that working with the kinds of money that Berkshire does. We try to load up on things. And there will be markets when we get a chance to from time to time, but very seldom do we get to buy as much of any good idea as we would like to." --Warren Buffett (2008)

What Really Brought Down the Boeing 737 Max? - by William Langewiesche (LINK)

Bob Iger Remembers Steve Jobs, the Pixar Drama, and the Apple Merger That Wasn't. (LINK)

Related book: The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company

Insights on VC Pricing: Lessons from Uber, WeWorks and Peloton! - by Aswath Damodaran (LINK)

Am I a market fundamentalist? - by Russ Roberts (LINK)

Steve Schwarzman talks with James Altucher about his new book, What It Takes: Lessons in the Pursuit of Excellence (podcast) (LINK)

Malcolm Gladwell talks with Oprah about his new book, Talking to Strangers (podcast) (LINK)

One Protein Makes Ebola Deadly. Scientists Can Turn it Off (LINK)

A final message from T. Boone Pickens shared before his passing on September 11, 2019 (LINK)

Links

"There have been...several times I had 75 percent of my net worth in one situation.... You will see things that it would be a mistake — if you’re working with smaller sums — it would be a mistake not to have half your net worth in. You really do, sometimes in securities, see things that are lead-pipe cinches. And you’re not going to see them often and they’re not going to be talking about them on television or anything of the sort, but there will be some extraordinary things happen in a lifetime where you can put 75 percent of your net worth or something like that in a given situation.... There’s quite a few people in this room that have close to a hundred percent of their net worth in Berkshire, and some of them have had it for 40 or more years. Berkshire was not in a cinch category. It was in the strong probability category, I think. But I saw things in 2002 in the junk bond field. I saw things in the equity markets. If you could have bought Cap Cities with Tom Murphy running it in 1974, it was selling at a third or a fourth what the properties were worth and you had the best manager in the world running the place and you had a business that was pretty damn good even if the manager wasn’t. You could have put a hundred percent of your net worth in there and not worry. You could put a hundred percent of your net worth in Coca-Cola, earlier than when we bought it, but certainly around the time we bought it, and that would not have been a dangerous position." --Warren Buffett (2008)

Warren Buffett Protege to Leave Berkshire, Start Own Firm ($) (LINK)

Tracy Britt Cool says she wants to work with companies ‘too small for Berkshire’

Q&A with Brandes: Why Look for Opportunities Overseas? [H/T @MebFaber] (LINK)

‘This Is Not the Way Everybody Behaves.’ How Adam Neumann’s Over-the-Top Style Built WeWork. ($) (LINK)

The skills that helped fuel We Co.’s breakneck growth are piling up as potential liabilities as the company prepares to go public

Is the Price of Gold Manipulated? (2018 video w/ Grant Williams) (LINK)

How billionaire philanthropy provides reproductive health care when politicians won’t [H/T @NicoleFriedman] (LINK)

This is how we’ve arrived at a point where Bill Gates and Warren Buffett, two of the biggest philanthropists in the world, are the leading providers of access to contraception worldwide, and Buffett is the leading provider of abortion access for poor women in the U.S.

The Case for Being a Multi-Hyphenate - by Ryan Holiday (LINK)

Use ancient remains more wisely [H/T @edyong209] (LINK)

How Ancient DNA Can Help Recast Colonial History - by Ed Yong (LINK)

Book of the day: That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea