Friday, August 31, 2012

Nassim Taleb quote

“…invest in preparedness, not in prediction.” –Nassim Taleb, The Black Swan

Look to the east for cheap yield – By Merryn Somerset Webb

"We are all atomic beings..."

From the book Cracking the Code:

“We are all atomic beings, made up of molecules and cells. The processes by which our cells operate and interact make us who we are. Once we understand that we are biochemical beings, albeit incredibly complex ones, it becomes easier to see how the fusion of computing power and chemistry will take humankind way beyond the somewhat crude medical practices that have been in operation to date.”

Thursday, August 30, 2012

Bill Gates: Big History Project Update


Link to The Great Courses: Big History: The Big Bang, Life on Earth, and the Rise of Humanity (not on sale now, but all courses go on sale for at least 70% off at least once a year).

Chou Funds: 2012 Semi-Annual Report



Zicom Group update

I linked to a great write-up and mentioned Zicom in a post here before (HERE). It remains one of our favorite ideas at Chanticleer. For those that are following it, they filed their Preliminary Final Report.

I recommend reading the Kelpie Capital write-up for more background, but here’s a summary of the valuation using the fiscal year-end numbers (the stock closed in Australia today at 0.18 AUD):

P/E: 6.3x
P/TBV: 0.68
Dividend Yield: 5.56%

Disclosure: I am a portfolio manager at Chanticleer Advisors and Chanticleer Investment Partners and the fund and separate accounts Chanticleer manages own shares in Zicom Group. We may in the future buy or sell shares and are under no obligation to update our activities. This is not a recommendation to buy or sell a security. Please do your own research before making an investment decision.

Carl Sagan’s last interview (on Charlie Rose)


Related previous post: The Full Sagan Series

Warren Buffett gives 'reverse birthday gift' to children's foundations

The letter to his kids is also posted HERE.

Wednesday, August 29, 2012

The Full Sagan Series



Link to Part 1 - Beauty

Link to Part 2 - Honours

Link to Part 3 - Curiousity

Link to Part 4 - The Key to Science

How I learnt the power of checklists – By John Kay

Found via Abnormal Returns.


Related previous posts:

James Grant on Markets, Fed Policy, Gold Standard


Bill Gross on CNBC


Notes from the John Paulson Call - by Joshua Brown

Richard Feynman quote

“I believe, therefore, that although it is not the case today, that there may some day come a time, I should hope, when it will be fully appreciated that the power of government should be limited; that governments ought not to be empowered to decide the validity of scientific theories, that that is a ridiculous thing for them to try to do; that they are not to decide the various descriptions of history or of economic theory or of philosophy. Only in this way can the real possibilities of the future human race be ultimately developed.”

Tuesday, August 28, 2012

The Billion-Dollar Coach


Active in Cloud, Amazon Reshapes Computing

Mark Hanson On Case Shiller

The Secret Of Bridgewater's Success Is In Its Understanding Of The Recession

“Nonsense Economics” and the Deepening Greek Crisis

Found via Naked Capitalism.


Who’s Fooling Whom? – By Michael Lewitt

IBM's Watson and the healthcare industry

From the book Cracking the Code:

“One such application for Watson could be in the field of medicine; Watson’s virtually limitless data storage capability combined with its incredible recall ability makes it a natural diagnostician. Imagine if Watson’s memory contained the medical history of every patient, as well as all medical knowledge known to humans so far, including experimental treatments. If provided with all the symptoms of a patient with a disease that doctors have been unable to diagnose correctly, Watson could come up with a few likely diagnoses as well as suggest the best course of action given the results from thousands of previous cases.

Better still, if Watson had an additional module installed that allowed it to extract all the information it needs from a patient’s blood or tissue sample, it could be an all-in-one medical provider. Taking it one step further, Watson could also be programmed to find certain patterns in disease and treatment. Its vast database would be able to pick up trends and patterns that may be too subtle for humans to detect.

In fact, IBM has already entered into a research agreement with a company called Nuance Communications, to explore, develop and commercialize Watson’s advanced analytical capabilities in the healthcare industry. Nuance Communications (NASDAQ: NUAN) has a market capitalization of over US$7 billion at the time of writing and is trading at almost 50 times its trailing earnings, so clearly the market strongly believes in the huge commercial opportunity that lies ahead in this sector. The law would be another wonderfully powerful application for Watson. Totally impartial, Watson the lawyer, or perhaps more controversially, the judge would have access to every case in history as well as all the world’s laws and legal systems. Think of how quickly and efficiently cases could be heard and resolved. Most of all, think about the potential billions of dollars saved in legal fees that would otherwise be racked up by using human lawyers!”


Related articles:

Watson in healthcare (Thanks to Andrew for passing this link along.)

Far From Wall Street and Silicon Valley, a Focus on Family Ties

Are Retail Investors ‘Fleeing’ Stocks? – By Jason Zweig

John Mauldin’s Outside The Box: Australia: Running Out of Luck Down Under

Monday, August 27, 2012

The trouble with freedom – By John Gray

Found via Farnam Street.

Focus Media - my new obsession – By John Hempton

The World's Richest Restaurateur Has A Secret: It's Not About The Food

Thanks to Mike for passing this along.

Inside Warren Buffett's Private Poker Game

It's More Important to Be Kind than Clever – By Bill Taylor

Found via @HowardSchilit.

Mauboussin on Strategy: The Importance of Expectations

King World News Interviews from this weekend

Links to interviews with:

One Giant Leap: A Minute to Remember Neil Armstrong (video)

(Bloomberg) -- Neil Armstrong, the first man to walk on the moon, passed away on August 25 at the age of 82. Here are a handful or important facts about his life and career.


Sen. Rand Paul Speaks Out Against Senators Voting without Reading the Bills - 6/29/12

Found via Mish.


Will These Royal Yields Rule? – By Jason Zweig

Warren and Charlie and the chocolate factory

Arnott: Emerging Markets Still Look Good

Bill Nye: Creationism Is Not Appropriate For Children

Found via The Big Picture.



Marc Faber's forecasts for the global economy

Found via Santangel’s Review.


Hussman Weekly Market Comment: The Trend is Your Fickle Friend

My concern is that in the face of very widespread complacency about global economic recession, and the nearly infinite faith in the redemptive capacity of monetary policy, investors have neither taken an inventory of their risks, nor have any sense of the low prospective long-term returns (and potentially awful intermediate-term returns) that are presently associated with those risks.

John Mauldin: Boomers Are Breaking the Deal

Sunday, August 26, 2012

Competitive Advantages

These quotes are from the book The Investment Checklist by Michael Shearn.

"Competitive advantages are less sustainable when they are affected by changes in technology or if they are in rapidly emerging industries. Changes in technology threaten a competitive advantage when they expand customer choice, whether by offering the same product for less or by offering greater benefits for the same price or less."

"The greatest gains in a stock are usually made as a business is developing its competitive advantage rather than after it already has developed one."

"Do not confuse a competitive strength or a business that is successful because it is in the right place at the right time with having a competitive advantage."

Becoming Human (NOVA Documentary)


Sex, Lies and Julian Assange

Found via Naked Capitalism. This aired at the end of July.

Theocracy in America, Ten Point Vision Finalist


Friday, August 24, 2012

Mohnish Pabrai on position sizing

In the UC Davis class discussion, Mohnish Pabrai mentioned how he switched from a 10x10 model of position sizing (10 positions of about 10% each) to a more diversified model after the 2008-2009 crisis. He then went on to discuss how he has switched back and what he thinks the real lesson to learn was (the quote is my transcription and not an exact quotation, so errors are mine….the discussion on position sizing began at the 42:40 mark of the video):

“In hindsight, I think the correct lesson to learn from 2008-2009 was to hold cash. And I didn’t have cash at the time….I have now gone back to the 10% allocations that I had done for most of my investing career, with the caveat that I always want—except in times of extremely severe distress—to [not] be fully invested. And so for example, as I talk to you today, I’m sitting on plenty of cash….It is an interesting market right now. There are very few bargains around, but the bargains we have been able to find are wildly undervalued, so it actually lends itself very well to be a concentrated investor. I could not today come up with 20 stocks that I thought were undervalued, but I could easily come up with 5 or 6…I think the game is just perfect for me to play with a concentrated portfolio and holding cash. So that’s where we are, and I think it’s the way to go. I think Munger always says that a well diversified portfolio just needs 4 stocks.”

Guy Spier mentioned that he thinks Mohnish is right, but that there are two good reasons to be less concentrated: 1) being congenitally more fearful and risk averse (i.e. internal comfort); and 2) having a relationship set up with your investors that makes it proper to be more diversified.


Related: For Seth Klarman’s thoughts on position sizing, see the bottom paragraph HERE.

Michael Burry's 2008 1st Quarter Letter

Thanks to Dang for reminding me about these letters being online, which prompted me to go back and read this one, which is full of great insights.

Walter Schloss quote

A quote from the book The Value Investors (which I was lucky enough to receive an early copy of, and which I highly recommend) with some good advice from the late Walter Schloss:
“When it comes to investing,” Schloss advised, “my suggestion is to first understand your strengths and weaknesses, and then devise a simple strategy so that you can sleep at night! Remember that a share of stock represents a part of a business, and so you need to understand its financials before making a judgment. When you have made a sound decision, make sure you have the courage to stay true to your convictions and not let the market affect your emotions. After all, investing should be fun and challenging, not stressful and worrying.”

Book (comes out next month, but you can pre-order now): The Value Investors: Lessons from the World's Top Fund Managers - By Ronald Chan

Mohnish Pabrai & Guy Spier at UC Davis

Found via the Corner of Berkshire & Fairfax.


Wednesday, August 22, 2012

Grant's Interest Rate Observer: Summer Break Issue

Nassim Taleb quote

“Don’t look for the precise and the local. Simply, do not be narrow-minded. The great discoverer Pasteur, who came up with the notion that chance favors the prepared, understood that you do not look for something particular every morning but work hard to let contingency enter your working life. As Yogi Berra, another great thinker, said, “You got to be very careful if you don’t know where you’re going, because you might not get there.” Likewise, do not try to predict precise Black Swans—it tends to make you more vulnerable to the ones you did not predict.” –Nassim Taleb, The Black Swan

Star is caught devouring planet

Found via Naked Capitalism.

Contracts For Difference (CFDs)

I had never heard of these before until yesterday, but it seems they are essentially a way for smaller investors to make extremely leveraged bets by putting up very little margin (hence the bucket shop reference).