Friday, June 3, 2016


Michael Lewis Explores Why People Tend to Go With Their Guts (in his next book, The Undoing Project: A Friendship that Changed Our Minds) [H/T Linc] (LINK)
“The Undoing Project” explores the groundbreaking work of two psychologists, Daniel Kahneman and Amos Tversky, whose research into decision making and judgment has challenged fundamental beliefs about human nature. In study after study, they showed that when it comes to making decisions, humans are predisposed to irrationality. Their surprising findings have had profound implications for everything from behavioral economics and politics, to advanced medicine and sports. 
Their work, and its impact, is hardly obscure. Mr. Kahneman won the 2002 Nobel Prize in Economics (Mr. Tversky died in 1996.) But Mr. Lewis wasn’t aware of their research, and how much it had influenced his own writing, until 2003, when he came across a reference to them in a review of “Moneyball” in the New Republic. He has been working on “The Undoing Project” on and off for the last eight years, and conducted countless interviews with Mr. Kahneman.
Mohnish Pabrai Lecture at Univ of CA, Irvine, May 24, 2016 (video) [H/T ValueWalk] (LINK)

Latticework of Mental Models: Economies of Scale (LINK)

Fastenal: A Video History [H/T @iancassel] (LINK)
Related article: The Cheapest CEO in America
Bill Gross' June Investment Outlook: Bon Appetit! (LINK)
With interest rates near zero and now negative in many developed economies, near double digit annual returns for stocks and 7%+ for bonds approach a 5 or 6 Sigma event, as nerdish market technocrats might describe it. You have a better chance of observing another era like the previous 40-year one on the planet Mars than you do here on good old Earth. The “top dollar rooms in the financial market’s grand hotel” may still be occupied by attractive relative asset classes, but the room rate is extremely high and the view from the penthouse is shrouded in fog, which is my meteorological metaphor for high risk. 
Here’s my thesis in more compact form: For over 40 years, asset returns and alpha generation from penthouse investment managers have been materially aided by declines in interest rates, trade globalization, and an enormous expansion of credit – that is debt. Those trends are coming to an end if only because in some cases they can go no further. Those historic returns have been a function of leverage and the capture of “carry”, producing attractive income and capital gains. A repeat performance is not only unlikely, it is impossible unless you are a friend of Elon Musk and you’ve got the gumption to blast off for Mars. Planet Earth does not offer such opportunities.
New car, new reality: Auto loan borrowing hits fresh highs (video plays) (LINK)
Americans are paying more every month for a new vehicle and making those payments for a longer time than ever. 
The latest data on auto loans by Experian shows Americans are taking out record-size loans, making larger monthly payments than ever before and extending their loans farther than ever. 
The numbers from millions of auto loans tracked in the first quarter of this year are striking. 
Average auto loan: $30,032 — the first time the amount borrowed to buy a new vehicle has topped $30,000. 
Average monthly payment: $503 — the first time the average auto payment has gone over the $500 mark. 
Average term for an auto loan: 68 months — this is the longest average term ever seen by Experian.
Jamie Dimon Says Auto-Loan Market Stressed, Sees Pain for Banks (LINK)
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the market for U.S. automobile lending is “a little stressed” and that he foresees higher losses ahead for some competitors. 
“Someone will get hurt in auto lending,” but not JPMorgan, Dimon, 60, said Thursday during an investor presentation in New York.
Video is the new HTML - by Benedict Evans (LINK)

Exponent Podcast: Episode 081 — We Have Always Been at War with Amazon (LINK)