Thursday, February 28, 2013

Seth Klarman quote

“When we are surprised by disappointing developments, we set aside emotion and focus solely on the facts as they are presented; our singular focus must then be the price at which we can buy or sell compared to our fresh assessment of value. Only after the dust settles do we examine our successes--and especially our failures--for lessons that could provide insight in the future.”

Baltasar Gracián quote

“We have little to live and much to know, and you cannot live if you do not know.” -Baltasar Gracián, The Art of Worldly Wisdom

Wednesday, February 27, 2013

Jim Chanos and Stephen Roach debate the future of the Chinese economy (video)

Found via ValueWalk.

James Grant quote

I was reminded of the quote below after reading THIS article on ValueWalk.

“An investment is a speculation to the extent that its success is contingent on a forecast of uncertain events.” –James Grant, Mr.Market Miscalculates

Elizabeth Warren Questions Bernanke on 'Too Big to Fail' (video)

Feb. 26 (Bloomberg) -- Sen. Elizabeth Warren (D-MA) questions Fed Chairman Ben Bernanke about the "too big to fail" problem during the chairman's testimony before the Senate Banking Committee.

Bruce Greenwald and Joel Greenblatt Class Videos

Via csinvesting. Links to:

John Mauldin: The Healthcare Blues


Related previous post: Steven Brill on Charlie Rose

A tantalising prospect

Will Programmers Rule? – By Raghuram Rajan

The 40 Highest-Earning Hedge Fund Managers And Traders

Bill Gross – March 2013 Investment Outlook: Rational Temperance

Wake Up Newsletter: Q1 2013

Monday, February 25, 2013

Nassim Taleb and Daniel Kahneman discusses Antifragility at NYPL

I had previously posted the audio of this, but now the video is up. And if you haven't seen their 2009 discussion (available HERE), you may want to check that out too.


Steven Brill on Charlie Rose


Lawrence A. Cunningham: The Essays of Warren Buffett (Third Edition)

For interested readers (which is likely all of you), The Essays of Warren Buffett: Lessons for Corporate America, Third Edition will be released next week.

William Irvine Interview (May 2012)

Irvine’s new book, A Slap in the Face: Why Insults Hurt--And Why They Shouldn't, was just released. It is a follow-up to his book A Guide to the Good Life.

Related previous posts:

Related books:

James Grant on Bloomberg (video)

Hussman Funds Semi-Annual Report

The U.S. economy appears suspended at the boundary between tepid growth and recession, requiring a trillion-dollar federal deficit and unprecedented monetary easing simply to maintain that position. The Federal Reserve continues a well-known and fully-announced policy of quantitative easing, on course to push the monetary base (currency and bank reserves) to 27 cents per dollar of nominal GDP. The last time the monetary base reached even 17 cents per dollar of nominal GDP was in the early 1940’s. This was not unwound by subsequent monetary tightening, but instead by a near-doubling in the consumer price index by 1952. Based on the strong relationship between the monetary base and short-term interest rates, even a normalization of short-term interest rates to 2% would tolerate no more than about 9 cents of base money per dollar of nominal GDP without inflation. As a result, an eventual normalization of Fed policy would require either a 50% contraction in the monetary base, a doubling of the consumer price index, or about 14 years of economic growth at a 5% nominal rate. It is doubtful that the Federal Reserve will be able to extricate itself smoothly from its current policy stance by any of these means.

Saturday, February 23, 2013

The 3-D Printing Revolution - By Rachel Ehrenberg

Friday, February 22, 2013

David Einhorn's Presentation On What Apple Should Do (iPrefs)

Howard Marks and Sheldon Stone Memo: High Yield Bonds Today

Bill Gross on CNBC


Nassim Taleb quote

“The record shows that, for society, the richer we become, the harder it gets to live within our means. Abundance is harder for us to handle than scarcity.” –Nassim Taleb, Antifragile

Wednesday, February 20, 2013

Nolan Watson: Why Mine Finance as You Know it is Dead

At the Mines and Money London conference in December 2012, Sandstorm Gold President and CEO, Nolan Watson, gave a keynote speech on resource finance.


You must always check six o’clock…..

A big thanks to David for passing this along. It is applicable to investing in many ways. This is from The Intelligent Investor (Revised Edition).

“In the Air Force we have a rule: check six. A guy is flying along, looking in all directions, and feeling very safe. Another guy flies up behind him (at "6 o'clock"--"12 o'clock" is directly in front) and shoots. Most airplanes are shot down that way. Thinking that you're safe is very dangerous! Somewhere, there's a weakness you've got to find. You must always check six o'clock.” --U.S. Air Force Gen. Donald Kutyna

John Mauldin: Whatever It Takes

Daily Journal Profiles Munger, Tolles & Olson (December 2012)

Sam Walton on Wal-Mart’s early days

The quote below is from Sam Walton: Made In America.
“I guess everybody who knew I was going ahead with the discounting idea on my own really did think I’d completely lost my mind. I laugh now when I look back on Wal-Mart’s beginning. In 1962, the discount industry was fairly young and full of high-living, big-spending promoters driving around in Cadillacs—guys like Herb Gibson—who had the world by the tail. But it had very few of what you’d call good operators—until 1962, the year which turned out to be the big one for discounting. In that year, four companies that I know of started discount chains. S. S. Kresge, a big, 800-store variety chain, opened a discount store in Garden City, Michigan, and called it Kmart. F. W. Woolworth, the granddaddy of them all, started its Woolco chain. Dayton-Hudson out of Minneapolis opened its first Target store. And some independent down in Rogers, Arkansas, opened something called a Wal-Mart. At the time, and for quite a while after that, I can guarantee you that hardly anybody noticed that last guy. Heck, within five years, Kmart had 250 stores to our 19, and sales of more than $800 million to our $9 million. Here’s what makes me laugh today: it would have been absolutely impossible to convince anybody back then that in thirty years most all of the early discounters would be gone, that three of these four new chains would be the biggest, best-run operators in the business, that the one to fold up would be Woolco, and that the biggest, most profitable one would be the one down in Arkansas. Sometimes even I have trouble believing it. 
I can tell you this, though: after a lifetime of swimming upstream, I am convinced that one of the real secrets to Wal-Mart’s phenomenal success has been that very tendency. Many of our best opportunities were created out of necessity. The things that we were forced to learn and do, because we started out underfinanced and undercapitalized in these remote, small communities, contributed mightily to the way we’ve grown as a company. Had we been capitalized, or had we been the offshoot of a large corporation the way I wanted to be, we might not ever have tried the Harrisons or the Rogers or the Springdales and all those other little towns we went into in the early days. It turned out that the first big lesson we learned was that there was much, much more business out there in small-town America than anybody, including me, had ever dreamed of.”

Nassim Taleb on Bloomberg (video)

Howard Marks on Bloomberg (video)

Feb. 19 (Bloomberg) -- Howard Marks, chairman of Oaktree Capital Group LLC, talks about credit markets and his investment strategy. He speaks with Erik Schatzker and Sara Eisen on Bloomberg Television's "Market Makers.

McAlvany Weekly Commentary Interview with Michael Pettis

McAlvany Weekly Commentary Interview with Richard Duncan

Tuesday, February 19, 2013

Alice Schroeder on Warren Buffett’s filtering process

Thanks to Will for bringing this back up to me. This quote is from my friend Miguel Barbosa’s interview with Alice Schroeder (HERE).

“Typically, and this is not well understood, his way of thinking is that there are disqualifying features to an investment. So he rifles through and as soon as you hit one of those it’s done. Doesn’t like the CEO, forget it. Too much tail risk, forget it. Low-margin business, forget it. Many people would try to see whether a balance of other factors made up for these things. He doesn’t analyze from A to Z; it’s a time-waster.”


That comment from Schroeder is in line with a comment Mr. Buffett made at the Berkshire Hathaway Annual Meeting last year, when he said: "Charlie and I have a number of filters that things have to get through before we'll think about them."

I’ve mentioned filters on a couple of occasions (HEREand HERE), and I’ll reiterate that I think it is one of the most important things to spend time developing well in order to achieve “mastery” in the investment business (note that mastery still means you’ll make plenty of mistakes, especially in the field of investing). If your filters are good enough, it will also make it difficult to attend conferences where you network with a lot of other investors. Many people will try to talk to you (sometimes endlessly) about their favorite stock idea; it won’t pass one or more of your filters, so you will lose interest; and yet they will likely keep talking.

John Donahoe on Charlie Rose

Thanks to Derrick for reminding me about this.

John Lasseter - A Day in a Life


Beating the market by buying back stock – By Carol Loomis

Jeremy Grantham interview on the BBC

Found via The Big Picture.

Value Stocks Are Hot—But Most Investors Will Burn Out – By Jason Zweig

Mohnish Pabrai interview with Outlook India

Monday, February 18, 2013

Hyperinflations, Hysteria, and False Memories - By James Montier

Buffett’s Kind of Deal

Hussman Weekly Market Comment: The Siren's Song of the Unfinished Half-Cycle

Seth Klarman quote

"We make no heroic assumptions in our analysis, hoping, instead, that by compounding multiple conservative assumptions, we will create such a substantial margin of safety that a lot can go wrong without impairing our capital much or even at all. We never invest just to invest and don’t bet blindly on mean reversion or on historical relationships holding up. Our settings are permanently turned to “risk off.”"

Eric Hoffer quote

“When our mode of life is so precarious as to make it patent that we cannot control the circumstances of our existence, we tend to stick to the proven and the familiar. We counteract a deep feeling of insecurity by making of our existence a fixed routine. We hereby acquire the illusion that we have tamed the unpredictable.” –Eric Hoffer, The True Believer

Sunday, February 17, 2013

Carl Sagan quote

"What an astonishing thing a book is. It's a flat object made from a tree with flexible parts on which are imprinted lots of funny dark squiggles. But one glance at it and you're inside the mind of another person, maybe somebody dead for thousands of years. Across the millennia, an author is speaking clearly and silently inside your head, directly to you. Writing is perhaps the greatest of human inventions, binding together people who never knew each other, citizens of distant epochs. Books break the shackles of time. A book is proof that humans are capable of working magic."

Arthur Schopenhauer reading and learning quotes

Found via Farnam Street:

“Ignorance is degrading only when it is found in company with riches. Want and penury restrain the poor man; his employment takes the place of knowledge and occupies his thoughts: while rich men who are ignorant live for their pleasure only, and resemble a beast; as may be seen daily. They are to be reproached also for not having used wealth and leisure for that which lends them their greatest value.

When we read, another person thinks for us: we merely repeat his mental process. It is the same as the pupil, in learning to write, following with his pen the lines that have been pencilled by the teacher. Accordingly, in reading, the work of thinking is, for the greater part, done for us. This is why we are consciously relieved when we turn to reading after being occupied with our own thoughts. But, in reading, our head is, however, really only the arena of some one else’s thoughts. And so it happens that the person who reads a great deal — that is to say, almost the whole day, and recreates himself by spending the intervals in thoughtless diversion, gradually loses the ability to think for himself; just as a man who is always riding at last forgets how to walk. Such, however, is the case with many men of learning: they have read themselves stupid. … And just as one spoils the stomach by overfeeding and thereby impairs the whole body, so can one overload and choke the mind by giving it too much nourishment. For the more one reads the fewer are the traces left of what one has read; the mind is like a tablet that has been written over and over. Hence it is impossible to reflect; and it is only by reflection that one can assimilate what one has read if one reads straight ahead without pondering over it later, what has been read does not take root, but is for the most part lost.”

“One can never read too little of bad, or too much of good books: bad books are intellectual poison; they destroy the mind.

In order to read what is good one must make it a condition never to read what is bad; for life is short, and both time and strength limited.”

“It is because people will only read what is the newest instead of what is the best of all ages, that writers remain in the narrow circle of prevailing ideas, and that the age sinks deeper and deeper in its own mire.”

“It would be a good thing to buy books if one could also buy the time to read them; but one usually confuses the purchase of books with the acquisition of their contents. To desire that a man should retain everything he has ever read, is the same as wishing him to retain in his stomach all that he has ever eaten. He has been bodily nourished on what he has eaten, and mentally on what he has read, and through them become what he is. As the body assimilates what is homogeneous to it, so will a man retain what interests him; in other words, what coincides with his system of thought or suits his ends. Every one has aims, but very few have anything approaching a system of thought. This is why such people do not take an objective interest in anything, and why they learn nothing from what they read: they remember nothing about it.”

“Any kind of important book should immediately be read twice, partly because one grasps the matter in its entirety the second time, and only really understands the beginning when the end is known; and partly because in reading it the second time one’s temper and mood are different, so that one gets another impression; it may be that one sees the matter in another light.”

Saturday, February 16, 2013

Baltasar Gracián quote

“Associate with those you can learn from. Let friendly relations be a school of erudition, and conversation, refined teaching. Make your friends your teachers and blend the usefulness of learning with the pleasure of conversation.” -Baltasar Gracián, The Art of Worldly Wisdom

Friday, February 15, 2013

Atul Gawande quote

“A failure often does not have to be a failure at all. However, you have to be ready for it—will you admit when things go wrong? Will you take steps to set them right?—because the difference between triumph and defeat, you’ll find, isn’t about willingness to take risks. It’s about mastery of rescue.” –Atul Gawande, 2012 Williams College Commencement Address

Nassim Taleb on innovation

“How do you innovate? First, try to get in trouble. I mean serious, but not terminal, trouble. I hold—it is beyond speculation, rather a conviction—that innovation and sophistication spark from initial situations of necessity, in ways that go far beyond the satisfaction of such necessity (from the unintended side effects of, say, an initial invention or attempt at invention)….The excess energy released from overreaction to setbacks is what innovates!” –Nassim Taleb, Antifragile

Seth Klarman quote

“In the financial markets, there is rarely anything new under the sun, but you can never say you've seen it all, and what you thought you would never see can clobber you.”

For those in Toronto on February 27th…

This may be of interest to readers in Toronto:

Thursday, February 14, 2013

Win 2 VIP Tickets to the Hooters International Swimsuit Pageant

For those interested, click on the picture below (or click HERE).

James Grant on CNBC


Steve Forbes talks with Daniel Kahneman

Found via csinvesting.

Charlie Munger quote (diversification)

“Just give me a few decent things to do and I’ll ignore the rest of the world.” –Charlie Munger


I’m not 100% sure if that is an exact quote. I had it saved in an old email from May 3, 2010, so I’m assuming it is from Berkshire’s 2010 Annual Meeting. Next to the quote I wrote that Munger mentioned that once he found BYD, he just ignored the rest of China.

U.S. Funds Score Big by Betting Against Yen

Thanks to Will for passing this along.

The Ketchup Conundrum - By Malcolm Gladwell

In light of Berkshire’s acquisition, I thought this 2004 Gladwell article might be interesting to revisit. Personally, I use Trader Joe’s organic ketchup instead of Heinz.

Warren Buffett on CNBC discussing the Heinz deal

Carol Loomis also write about the deal HERE. Tom Russo was also on Bloomberg discussing the deal HERE.


Buffett’s Favorite Valuation Metric Surges Over the 100% Level

Thanks to Bill for passing this along.

Berkshire Hathaway, 3G Capital to buy Heinz for $23 bln cash

Wednesday, February 13, 2013

John Mauldin: How Not to Run a Pension

For all the focus on the unfunded liabilities of Social Security and Medicare, there is another unfunded crisis brewing, and this one is in your own back yard. It’s coming to you even if you live outside of the US; it just might take a little longer to get there. I wrote ten years ago that state and local pension funds might be underfunded by as much as $2 trillion. It turns out that I was being overly optimistic. New government research suggests that the figure might be as high as $3 trillion. But what if you take into account that retirees are living longer? An IMF study that we’ll look at in a few minutes does just that. And if we live a lot longer? Oh my. The problems are not universal – some cities and states will do fine, while others are already in deep kimchee – but it’s a big problem and getting worse.

IBM makes Watson the size of a pizza box, starts offering cloud access to doctors


My Apology - By Jonah Lehrer

Thanks to Barry for passing this along. I think there is a lot of wisdom in the talk that can apply to investors, especially the parts about putting the right procedures in place to avoid mistakes. I was once again reminded of habits and checklists.

Ray Dalio quote

“The bets are zero sum.  In order for you to beat me in the game, it’s like poker, it’s a zero sum game.  We have 1,500 people that work at Bridgewater, we spend hundreds of millions of dollars on research, and so on.  We’ve been doing this for 37 years and we don’t know that we’re going to win.  We have to have diversified bets.  So it’s very important for most people to know when not to make a bet.  Because if you’re going to come to the poker table, you’re going to have to beat me, and you’re going to have to beat those who take money.  So the nature of investing is that a very small percentage of the people take money essentially in that poker game away from other people who don’t know when prices go up whether that means it’s a good investment or if it’s a more expensive investment.”

Chris Martenson interviews Mark Sisson



Related book: The Primal Connection: Follow Your Genetic Blueprint to Health and Happiness

Related link: Mark's Daily Apple

Tuesday, February 12, 2013

Clayton Christensen Wants to Transform Capitalism

Sixteen years ago a book by Clayton Christensen changed business thinking forever. The Innovator’s Dilemma looked at industries ranging from disk drives to steel to mechanical excavators and exposed a surprising phenomenon: When big companies fail, it’s often not because they do something wrong but because they do everything right. Successful businesses, Christensen explained, are trained to focus on what he calls sustaining innovations—innovations at the profitable, high end of the market, making things incrementally bigger, more powerful, and more efficient. The problem is that this leaves companies vulnerable to the disruptive innovations that emerge in the murky, low-margin bottom of the market. And this is where the true revolutions occur, creating new markets and wreaking havoc within industries. Think: the PC, the MP3, the transistor radio.

Miguel Barbosa's Conversation with Paul Lountzis

Investor Jim Mellon talks about the biotech revolution



Related book: Cracking the Code

Saturday, February 9, 2013

Daniel Kahneman quote

“As you become skilled in a task, its demand for energy diminishes. Studies of the brain have shown that the pattern of activity associated with an action changes as skill increases, with fewer brain regions involved. Talent has similar effects. Highly intelligent individuals need less effort to solve the same problems, as indicated by both pupil size and brain activity. A general “law of least effort” applies to cognitive as well as physical exertion. The law asserts that if there are several ways of achieving the same goal, people will eventually gravitate to the least demanding course of action. In the economy of action, effort is a cost, and the acquisition of skill is driven by the balance of benefits and costs. Laziness is built deep into our nature.”

Friday, February 8, 2013

Leonardo da Vinci quote

“One can have no smaller or greater mastery than mastery of oneself.” —Leonardo da Vinci

Rachel Fox on CNBC

Rachel Fox, whom I did a fun little interview with HERE, was on CNBC today (video below).


Albert Edwards excerpt...

The excerpt below was posted on Business Insider HERE:
And while we are on the theme of mission creep, the incoming Bank of England Governor Mark Carney has given the clear impression from his statements over recent weeks that he does not agree with Mervyn King’s comments that QE is reaching the limits of effectiveness. Carney is willing to be much more aggressive – at least George Osborne will be pleased. In his evidence on Thursday to the Treasury select committee he repeated his idea that if existing QE measures fell short, central banks should consider shifting to targeting nominal gross domestic product, which would allow them to respond much more aggressively to a downturn in economic output and place as much weight on supporting growth as reining in inflation. 
Now personally I have no great ideological attachment to inflation targeting as opposed to any other method to control inflation, but I note with alarm the tendency of policymakers to become more and more interventionist in their monetary experiments. It may be that central bankers will keep control of the tiger they are riding, but history suggests that central bank intervention may make things worse in the long run rather than better. Marc Faber’s comment that he is so bearish that he sometimes wants to throw himself out of the window really resonates with me when I see what the central bankers are doing. 
In 2005 I described Alan Greenspan as an economic war criminal when most others had decided he was “the greatest central banker who ever lived”, Hence I note with alarm that some commentators are so excited about the appointment of Mark Carney to the Bank of England Governorship that now he Carney, is now being dubbed “the world’s greatest central banker”. Oh dear! From everything I have read so far I fear that in the fullness of time he will have more similarities with Alan Greenspan than just this unwanted accolade and his legacy will be equally destructive.

Nassim Taleb and Daniel Kahneman at the NYPL (audio)

Found via Farnam Street.