Friday, January 25, 2019


"To the extent that the method of estimating future cash flow requires projections, I would say that projections, while they’re logically required by the circumstances, on average, do more harm than good in America. Most of them are put together by people who have an interest in a particular outcome. And the subconscious bias that goes into the process, and its apparent precision makes it...fatuous, or dishonorable, or foolish, or what have you. Mark Twain used to say a mine is a hole in the ground owned by a liar. And a projection prepared in America by anybody with a commission, or an executive trying to justify a particular course of action, will frequently be a lie. It’s not a deliberate lie, in most cases. The man has gotten to believe it himself. And that’s the worst kind.... Projections are to be handled with great care, particular when somebody has an interest in misleading you." --Charlie Munger (1995)

"Charlie and I, I think it’s fair to say, we’ve never looked at a projection in connection with either a security we’ve bought or a business we’ve bought. We’ve had them offered to us in great quantities.... We voluntarily turn them away when people try to thrust them upon us.... It’s a ritual that managers go through to justify doing what they wanted to do in the first place, in about nine cases out of ten." --Warren Buffett (1995)

"We don’t give a hoot about anybody’s projections. We don’t even want to hear about them, in terms of what they’re going to do in the future. We’ve never found any value in anything like that." --Warren Buffett (2003)

"Usually, I don’t use formal projections. I don’t let people do them for me because I don’t like throwing up on the desk (laughter), but I see them made in a very foolish way all the time, and many people believe in them, no matter how foolish they are. It’s an effective sales technique in America to put a foolish projection on a desk." --Charlie Munger (“Academic Economics: Strengths and Faults After Considering Interdisciplinary Needs”)


When Charlie Munger Calls, Listen and Learn ($) (LINK)
An unexpected phone call from Charlie Munger says at least as much about him as it does about you. 
Jacob Taylor, chief executive of Farnam Street Investments, a tiny asset-management firm in Folsom, Calif., was stunned when Mr. Munger—Warren Buffett’s business partner at Berkshire Hathaway Inc. and one of Mr. Taylor’s heroes—called him late last month. 
All investors should strive to match Mr. Munger’s focus, intensity and insatiable appetite for reading. He turned 95 on Jan. 1. 
Mr. Munger was calling to say that he had read the novel Mr. Taylor was about to self-publish, “The Rebel Allocator.” He was “surprisingly engaged,” recalls Mr. Taylor, 37, who had sent the book to Mr. Munger without much hope the great investor would read it. Mr. Munger proceeded to reel off roughly 20 minutes of unsolicited, detailed advice, mostly about plot and character.
GMO Quarterly Letter (LINK)
2018 was a lousy year for almost all assets, with no major asset class around the world able to keep pace with U.S. Treasury Bills. The poor returns have a silver lining, however, in that today a number of asset classes are priced at levels that embody much more achievable expectations and decent long-term returns. In general, it looks to be the best opportunity set we have seen since 2009. This means it is reasonably straightforward to put together a diversified portfolio priced to achieve something close to +5% real return. But as U.S. equities and nominal government bonds are not among the appealing assets, we believe the portfolio you should own today looks more or less nothing like a traditional 60% stock/40% bond portfolio. In particular, liquid alternatives now look poised to deliver attractive real returns and outperform developed equity markets in the coming years.
Jack Bogle: Crusader for Investment Professionalism (LINK)

Advertising is in crisis, but it's not because it doesn't work - by Rory Sutherland (LINK)

How To Be Successful - by Sam Altman (LINK)

Howard Schultz: Leading a Values-Based Business | MasterClass | Official Trailer [H/T @Sanjay__Bakshi] (LINK) [More info on the class HERE. Bob Woodward's class on investigative journalism would also probably be a useful class for the fundamental, value investor.]

Five Good Questions Podcast: Brent Beshore - The Messy Marketplace (LINK)

Exponent Podcast: Zeros All the Way Down (LINK)

TED Talk: A powerful way to unleash your natural creativity | Tim Harford (LINK)

One of Earth’s oldest rocks may have been found… on the Moon - by Phil Plait (LINK)

When Modern Men Throw Ancient Weapons - by Ed Yong (LINK)