Monday, February 1, 2016


I'm getting caught up after being away for a bit, so some of these are several days old...

The Best Teacher I Never Had - By Bill Gates (LINK)
Thirty years ago I went on vacation and fell for Richard Feynman. 
A friend and I were planning a trip together and wanted to mix a little learning in with our relaxation. We looked at a local university’s film collection, saw that they had one of his lectures on physics, and checked it out. We loved it so much that we ended up watching it twice. Feynman had this amazing knack for making physics clear and fun at the same time. I immediately went looking for more of his talks, and I’ve been a big fan ever since. 
Related books:  
Six Easy Pieces: Essentials of Physics Explained by Its Most Brilliant Teacher  
Surely You're Joking, Mr. Feynman!  (also a good audiobook)
"What Do You Care What Other People Think?" (also a good audiobook)
Musk vs. Buffett: The Billionaire Battle to Own the Sun (LINK)

As Berkshire Hathaway meeting set to be streamed online, will fewer make Omaha pilgrimage? [H/T Linc] (LINK)

Conversation that Matters: Freeman Dyson (video, from last year) [H/T @SpaceWeather101] (LINK)
Related previous post: The Civil Heretic 
Related link: Freeman Dyson: By the Book  
Related book: Dreams of Earth and Sky
Nearly all of our medical research is wrong (LINK)

Matt Ridley reassesses Richard Dawkins's pivotal reframing of evolution, 40 years on. (LINK)
Related book: The Selfish Gene [And on a related note, one of the key things on my mental model to-do list is to go a little deeper into the differences between Dawkins and E.O. Wilson and their disagreements about things.... A small example of which can be found in the article: Biological warfare flares up again between EO Wilson and Richard Dawkins]
Investing by Design: Parallels between Architecture and Investing (LINK)

Graham & Doddsville newsletter, Winter 2016 (LINK)

Ray Dalio: Pay attention to long-term debt cycle (LINK)

The Absolute Return Letter, February 2016 (LINK)

Mutual Fund Observer, February 2016 (LINK)

Theranos Is Running Out of Time (video plays) (LINK)

Alphabet Passes Apple To Become the World’s Most Valuable Company (LINK)

Hussman Weekly Market Comment: The Gas Pedal Is Useless When The Spark Plugs Are Gone (LINK) [On a side note, I've gotten several comments about why I link to John Hussman, both because of his more macro focus and what I suspect is a poor record post economic crisis. The reason is that I respect the work he does, and I always think it is good to read things by people whom one thinks are informed about what they are talking about, even if one disagrees about the applicability and predictability of much of what they say. When it comes to the macro, I like to take the approach of being a risk-identifier--as opposed to being a forecaster--and so listening to people who are intelligent and spend way more time on certain macro things than I do helps me get a sense for whether or not I might be missing something big while I spend most of my time thinking about individual companies. And because this blog also serves as a bit of a real-time journal for me as to what was going on at a given time and to see what I thought was interesting at a given time as I get older and (hopefully) wiser, having him write weekly and highlight certain key developments in the macro landscape, sentiment readings, implied market returns and valuations, etc. is a great point-in-time summary that I can review years down the road by just posting some key paragraphs about something I might not touch on anywhere else. The excerpt from this week's comment below is an example of that.]
Last week, Bank of Japan Governor Haruhiko Kuroda, supported by a slim 5-4 board vote, announced a move to cut short-term interest rates to negative -0.1%, effectively charging banks for deposits held with the BOJ. While the knee-jerk response to central bank easing moves is invariably positive, investors should be careful to recognize the context surrounding this move. Based on the broad market action of Nikkei component stocks, market internals in Japan have deteriorated sharply since December, in contrast to most of the period since August 2012. Following a doubling of the Nikkei over that horizon, the current policy shift comes at a time when both valuations and market internals in Japan have shifted to the most unfavorable status in years. 
...What’s somewhat striking is that having moved the Japanese monetary base from 20% of GDP to more than 75% of GDP in recent years, with very little economic response, anyone would seriously call this liquidity “ammunition.” From an economic perspective, the expansion in the BOJ balance sheet has been accompanied by a precisely offsetting collapse in monetary velocity, with little effect on either real GDP or inflation. From a speculative perspective, while the Nikkei Index remains lower than it was in 1986, 30 years ago, investors have demonstrated risk-seeking inclinations in recent years, holding the Nikkei above its 40-week average during most of the period from 2012 until mid-December of last year. 
At present, however, one should take quite a negative signal from the BOJ's action, because it's clearly a response to deteriorating economic prospects. A favorable shift in market internals would be supportive of speculation in Japan, but that possibility should be monitored explicitly. One can’t rule it out, but there is no inherent or reliable tendency for central bank easing to reverse unfavorable market internals, or to avoid steep further market losses (recall 2000-2002 and 2007-2009 in the U.S.).