Links

Elon Musk's talk on Making Humans a Multiplanetary Species (video) (LINK)

All I Want To Know Is Where I’m Going To Die So I’ll Never Go There (LINK)

Related previous posts: 1) "You have to have a temperament to grab ideas and do sensible things..."; 2) Charlie Munger: This is the way you win big in the world...

Bloomberg Surveillance Primetime: Julian Robertson (video) (LINK)

Julian Robertson, Tiger Management's chairman and chief executive officer, sits down with Bloomberg's Tom Keene and Mike McKee to discuss his thoughts on the U.S. presidential election, the stock market, hedge funds and the global economy. 

Oh, Canada, You Have the Bubbliest City (LINK)

The bubbliest housing market in the world isn’t to be found in Asia, the U.S. or even Europe. Vancouver is the most overpriced city on earth according to an index released by investment bank UBS. Its inaugural Global Real Estate Bubble Index identifies five other global cities that are in “bubble risk” territory: London, Stockholm, Sydney, Munich and Hong Kong.

Quants Do the Math on a New Target: Insurance [H/T Will] (LINK)

Grocery Prices Are Plunging [H/T Matt] (LINK)

In a startling development, almost unheard of outside a recession, food prices have fallen for nine straight months in the U.S. It’s the longest streak of food deflation since 1960 -- with the exception of 2009, when the financial crisis was winding down. Analysts credit low oil and grain prices, as well as cutthroat competition from discounters. Consumers are winning out; grocery chains, not so much. Their margins and, in some cases, their stock prices, are taking a hit.

Marriott Is Using Its Muscle to Fight Off Expedia and Priceline [H/T Matt] (LINK)

Related previous link: The Definitive Oral History of Online Travel

Tom Russo's 2nd Quarter Semper Vic Partners Investor Letter [H/T @jvembuna] (LINK)

Richard Perry Walks Away, Hoping for a Shot at Vindication (video plays) (LINK)

Legendary value investor Charles Brandes on where he’s investing now (video plays) [H/T Linc] (LINK)

Related book: Brandes on Value

IVA Funds Update Call Transcript (September 13, 2016) [H/T @chriswmayer] (LINK)

The Busyness Paradox, Oliver Burkeman Is Busy (BBC Radio 4) [H/T @TimHarford] (LINK)

An Interview with the Master: Robert Greene on Stoicism (LINK)

Related book: The Daily Stoic: 366 Meditations on Wisdom, Perseverance, and the Art of Living

What Separates Champions From ‘Almost Champions’? [H/T @DanielPink] (LINK)

The best goal is also the simplest: Get better. Super champions were driven from within. Their primary concern was self-improvement. They held themselves to high standards, but judged themselves against prior versions of themselves, not against others. 

Almost champions, however, were focused on external benchmarks, like national rankings or how they compared to rivals, a mind-set the researchers speculate explains why almost champions got discouraged during rough patches.

Five wild lionesses grow a mane and start acting like males (LINK)

Links

Mark Zuckerberg's latest book club book is also a Charlie Munger recommendation, Genome: The Autobiography of a Species in 23 Chapters (LINK)

Charles Brandes and the orthodoxy of value investing (LINK)

Related book: Brandes on Value

Bruce Berkowitz's Semi-Annual Letter (LINK)

Horizon Kinetics: Asia Opportunity Second Quarter Commentary (LINK)

Fred Wilson: The Bull Case For Solar (LINK)

Scott Adams: Living by the Odds (LINK)

Book of the day: The Contrarian's Guide to Leadership

Quote of the day, from Seneca:

"...it is praiseworthy to pursue wholesome studies even if they lead to no practical outcome. Is it so remarkable if those who attempt to scale the heights do not attain the summit? But if you are a man, look up with admiration at those who attempt great things, even if they fall. This is the sign of a noble heart--to aim at high things, measuring one's effort, not by one's own strength, but by the strength of one's nature, and to envisage enterprises beyond the accomplishment even of those equipped with heroic courage."

Investing and speculation...

From Brandes on Value:

Benjamin Graham addressed the differences between investing and speculation on the very first page of his book The Intelligent Investor: “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” 

This still rings true today. Yet, with my contemporary perspective, I add two more criteria that define speculation:   

• Any contemplated holding period shorter than a normal business cycle (typically three to five years)  

• Any purchase based solely on anticipated market movements

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Related previous posts:

Graham and Dodd on the ‘Relation of the Future to Investment and Speculation’

Warren Buffett on investment, speculation, and gambling

James Grant quote

Charles Brandes quote

From Brandes on Value:

To borrow a few words from Sir John Templeton, a respected pioneer in global money management, “There is too much emphasis now on everything yesterday.”

As I see it, we are no longer as thrifty as we should be, and this is leading to more speculation, more danger, and more risk. Investors are bombarded by data from an escalating number of sources, such as 24-hours-a-day financial news on cable television, the Internet, broadcast and satellite radio, and a good but shrinking number of capable print media. As our appetites for information and our expectations have increased, our ability to wait and anticipate has decreased.

Charles Brandes quote

From Brandes on Value:

However, when it comes to future earnings growth, it is extremely difficult to project it with a high degree of confidence. Additionally, the farther out the prediction, the more likely it is that it’s going to be off-target. Building long-term forecasts of well-above-average earnings growth for companies is particularly questionable, as unforeseen competition will almost certainly arise to wrest away some of these hyperprofits, making such predictions very unreliable. Value investors believe that the best approach is to focus on the current state of the business: what it would be worth now to someone who wanted to buy the whole company. Not only is this more prudent, but it’s more grounded in sanity because you’re not trying to outforecast other investors.

Discounts are the building blocks of value...

From Brandes on Value:

Often, it takes a great deal of conviction to stick to value investment disciplines, especially when a company’s stock price declines while you own it. For those who focus only on price, share price declines can be devastating emotionally. Even worse, they can lead to bad decisions, such as selling out just because the price is down. Some market participants focus only on how much money they are losing in the short term. However, for long-term investors who evaluate share price in relation to business value, price declines can represent a tremendous opportunity in the form of discounts. Discounts are the building blocks of value.

Charles Brandes on risk

From Brandes on Value:

Risk has now been popularly redefined as the impact of short-term volatility, not as what it really is, which is the permanent loss of capital. In my more than 40-year career, I have never seen risk as misunderstood yet as overemphasized as it is today, especially in the institutional world. Many people are fixated on reducing short-term volatility, not positioning for long-term growth. In this process, indexing is now taking a front seat, whether because of its perceived cost benefits, its supposed lower risk profile, or someone’s viral idea that active investing just doesn’t get the job done over the long run. 

Charles Brandes quote

From Brandes on Value:

Investing should be grounded in basic fundamentals. If you rely on speculation, it will fail you every time. Reliance on fundamentals means looking past the hype and right into the heart and soul of a company. This will get you a lot further down the road to your goals, or at least give you more than a fighting chance when the market takes a swing at you.

Charles Brandes quote

From Brandes on Value:

With each ebb and flow, Mr. Market entices investors with the “quick and the new,” leading them to believe that this time is very different, and that we’ve never seen the likes of this before. His pattern of tricks changes slightly each time, but usually only enough to mine the one constant: investor behavior. Why doesn’t investor behavior change? We like to think it would, especially when you look at all the lessons of past markets. Short-term thinking, however, is human nature—it’s in our DNA. It’s how we are wired. We tend to process decisions relatively quickly based on what we see in front of us at the moment, or on what we believe others may be seeing. Such irrational behavior is ages old and is based on primal instincts like fear—we are afraid of either getting hurt or missing out. Many years later, this behavioralism was recognized as a key feature of value investing.

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Related link: Charles Brandes' Q4 2014 Commentary

Value investing is not necessarily absolute...

From Brandes on Value:

What resonated most with me was [Ben Graham's] prescient view that value investing, while fundamentally sound, is not necessarily absolute. Its principles can be adapted in different ways based on one’s own unique and independent way of looking at the world and at individual companies.