Links

Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’ (LINK)

"The Practice of Value Investing" by Li Lu (November 2019 speech, translated) (LINK)

Has This California Lab Fixed America’s Covid Test Problem? - by Michael Lewis (LINK)

Who Pays For This? - by Morgan Housel (LINK)

Rob Arnott: Why the Stock Market Hasn't Even Gotten Cheap Yet (video) (LINK)

The NBA and Microsoft - by Ben Thompson (LINK)

Mohnish Pabrai and Francis Chou Q&A with Harvard class (podcast) (LINK)

Value Investing with Legends Podcast: Dan Davidowits & Jeff Mueller – Compounding with Polen Capital (LINK)

MacroVoices Podcast #215 - Chris Cole: Dragon portfolio revisited in the eye of the storm (LINK)

Related paper: "The Allegory of the Hawk and the Serpent"

The Peter Attia Drive Podcast: #107 - John Barry: 1918 Spanish flu pandemic—historical account, parallels to today, and lessons (LINK)

Related book: The Great Influenza: The Story of the Deadliest Pandemic in History

Links

"If the business changes in a material way, you’d better change your business model. Or somebody else will. And then you’ll even have more changes facing you.... Capitalism is creative destruction. And sometimes, you’re on the short end of that." --Warren Buffett (2009)

"Some of our businesses have a shared-hardship model, where they don’t layoff, at least not yet. And the businesses with that model tend to be very strongly placed economically. So I guess it shows that Benjamin Franklin was right, when he said, 'It's hard for an empty sack to stand upright.' So we’re all over the map on that, and so is all of industry. But I do think an ideal model would be a business so strong that it could operate in the shared-hardship mode instead of the layoffs." --Charlie Munger (2009)

"Yeah, some are doing that, where you give up hours. But a lot of operations don’t lend themselves to that very well, either. So...in other cases, you basically have to close down whole plants. That’s just the nature of it. You really can’t operate every plant at 50 percent and have it work as effectively as shutting down the least-productive plants." --Warren Buffett (2009)

"In a world where you sometimes have to amputate a limb to stay alive, you can’t expect that every business can stay exactly as it is." --Charlie Munger (2009)

***

Klarman Made $1 Billion Hedging Markets. He Still Lost Money (LINK) [If anyone happens to have a copy of a Baupost quarterly update letter during this time, and is willing to share, it would be greatly appreciated (valueinvestingworld@gmail.com).]

The first 4 video replays of Grant Williams' 2020 Hmmminar Series are available online (LINK) [Marc Cohodes is the latest one from last night, and the next one is scheduled for tonight, with John Hussman.]

FUNDSMITH Annual Shareholders' Meeting - 25th February 2020 (video) (LINK)

Apple, Amazon, and Common Enemies -  by Ben Thompson (LINK)

Invest Like the Best Podcast: Sarah Tavel - Consumer & Marketplace Investing (LINK)

The Daily Podcast: A Kids’ Guide to Coronavirus (LINK)

The Peter Attia Drive (podcast): #104 - COVID-19 for kids with Olivia Attia (LINK)

Recode Decode Podcast: Niall Ferguson: How viruses (and fake news stories) spread, and how America screwed up its coronavirus response (LINK)

TED Connects: Why sleep matters now more than ever | Matt Walker (video) (LINK)

The Gene | Part 1: Dawn of the Modern Age of Genetics | PBS (video) (LINK) [A Ken Burns documentary, inspired by Siddhartha Mukherjee's book The Gene.]

WHO must answer serious questions before it is trusted with leading a Covid-19 inquiry - by Matt Ridley (LINK)

The Shelves Are Empty, the Test Swabs Are Gone - by Michael Lewis (LINK)

Some of Warren Buffett’s comments on inflation over the years (LINK)

Book of the day (PDF): Dying of Money: Lessons of the Great German and American Inflations - by Jens O. Parsson

Links

"I think it’s hugely a mistake to think only about your probable misfortunes. You should also think about what’s good about your situation." --Charlie Munger (2009)

We Can’t Prevent Market Panics. We Can Control How We React. - by Jason Zweig ($) (LINK)

The Corona Crisis is Not a Black Swan: Nassim Nicholas Taleb (video) (LINK)

Viral Prohibition, Eminent Domain, and the Path Ahead - by Brent Beshore (LINK)

COVID Impacts [on media & entertainment businesses] - by Matthew Ball (LINK)

Unmasking Twitter - by Ben Thompson (LINK)

Socializing Corporate Risk-taking: Moral hazard 2.0 - by Frank K. Martin (LINK)

Absolute Return Letter, March 2020: The Economic Cost of Social Distancing (LINK)

The Oil Glut Is Getting Critical ($) (LINK)

Pressure Mounts on Insurance Companies to Pay Out for Coronavirus ($) (LINK)

Lawmakers and regulators are pressuring insurers to go beyond the legal language of policies to get cash to Americans amid the mounting cost of shutdowns from the coronavirus pandemic.

What happens to mortgage-investment firms will shed light on what may be in store for the rest of the market ($) (LINK)

The Acquirers Podcast: Long Term: Tweedy Browne (LINK)

Capital Allocators Podcast: Ben Inker – Value Investing at GMO (LINK)

Invest Like the Best Podcast: D.A. Wallach – Investing in Healthcare (LINK)

Political Economy Podcast: Ben Thompson: Big Tech monopoly, data privacy, and the rise of China (LINK)

Acquired Podcast: Adapting Episode 2: Sequoia’s Black Swan Memo (LINK)

As research progresses, the nature of our enemy is becoming ever clearer - by Matt Ridley (LINK)

Links

"Our model is a seamless web of trust that’s deserved on both sides. That’s what we’re aiming for. The Hollywood model, where everyone has a contract, and no trust is deserved on either side, is not what we want at all." --Charlie Munger (2009)

Howard Marks on Bloomberg TV discussing his latest memo (video) (LINK)

Sam Zell on CNBC (video) (LINK)

The End of Pay-TV - by Matthew Ball (LINK)

How To Manage Change (LINK)

Value Investing with Legends Podcast: David Samra - Leveraging Fundamentals to Remain Relevant (LINK)

One Doctor’s Life on the Coronavirus Front Lines. ‘If We Fail, What Happens to You All?’ ($) (LINK)

Coronavirus: The Black Swan of 2020 - Sequoia Capital Publication (LINK)

Scott Adams and Naval Ravikant talk about Coronavirus (video) (LINK)

The Tim Ferriss Show (podcast): #413: Tyler Cowen on Rationality, COVID-19, Talismans, and Life on the Margins (LINK)

Freeman Dyson’s Letters Offer Another Glimpse of Genius (LINK)

Links

"GEICO to me is very much like Costco. And one of the reasons it’s succeeded is that they really feel a holy duty to have a wonderful product at a very low price. A lot of people talk that game, but very few have it just right down under the body and soul of the company. But GEICO does, and companies like that do tend to grind ahead over time.... It’s easy to talk the game, but living the game is something else. I mean, it’s against the human nature of many entrepreneurial people to try and get the price down and the service quality up all the time." --Charlie Munger (2014)

How to Hedge a Coronavirus ($) (LINK)

Universa, managed by Mark Spitznagel, a protégé of “The Black Swan: The Impact of the Highly Improbable” author Nassim Nicholas Taleb, managed a little over $4 billion in assets as of the end of 2018. Claude Bovet, founder of Lionscrest Capital and a long time investor in the fund, estimates that Universa’s tail risk hedging strategy, representing part of its capital, earned more than 1,000% in a matter of days.

Market Corrosion and the Catalyst of COVID-19 - by Frank K. Martin (LINK)

How Are You Different? - by Ian Cassel (LINK)

Death, Taxes, and Three Other Inevitable Things - by Morgan Housel (LINK)

Invest Like the Best Podcast: Jeff Lawson – How to Build a Platform (LINK)

Venture Stories Podcast: Jerry Neumann on Technological Revolutions, Picking Winners, and VC Returns (LINK)

The Knowledge Project Podcast: #77 Mike Maples: Living in the Future (LINK)

Second Order Risk - by Kevin Kelly (LINK)

Coronavirus Is No 1918 Pandemic (LINK)

What’s the Difference Between Dark Matter and Dark Energy? (LINK)

No master plan...

From Warren Buffett at the 1997 Berkshire Hathaway Annual Meeting: 

30 years ago we didn’t know we would be in the insurance business.  

We have no master plan. Charlie and I did not sit down in 1960 — early ’65 — and say, “We’re going to do this and that,” and all that.  

We’re going to try and do sensible things as we go along. The more money we have, the harder it is to find sensible things. But that’s the criterion.

Insurance is certainly a major area of opportunity for us. It’s been a major opportunity.  

In certain fields we have a terrific advantage for the three reasons I laid out in the annual report. We have capital strength, and a willingness to take on risk, and a speed of action, and a certainty of payment, that in aggregate no one matches.  

Now, how much demand there is for that depends on circumstances in the business and how much supply there is at lower prices that we think don’t make sense is another question. But I think we’ll do OK in insurance over time. 

From Warren Buffett at the 2001 Berkshire Hathaway Annual Meeting: 

We don’t have a master plan. Charlie and I do not sit around and strategize or talk about the future of various industries or do anything of that sort. It just doesn’t happen. We don’t have any reports. We don’t have any staff. We don’t have any of that.  

We try to survey the whole financial field. We try to look at what comes in and look for things we understand, where we think they have a durable, competitive advantage, where we like the management, and where the price is sensible.  

We had no idea two or three years ago, that we would be the 87 percent owner of the largest broadloom carpet company in the world. 

We don’t plan these things. But I would tell you in a general way that 20 or so years from now, we will own a lot more businesses. 

...So we have no more master plan now than we had back in 1965 when we bought the textile mill, really. I mean, we had a lousy business. I didn’t realize it was as lousy as it was when I got into it. And we just had to start trying to deploy capital in an intelligent way.... That’s our business and we enjoy it.

From Charlie Munger in 2013: 

Therein lies a lesson in life. I think most lives work best when you simply react intelligently to the opportunities and difficulties you encounter, and just take the results as they fall.  

Some people think that by master planning, you will solve everything, but what I find is that the master plan gets a life of its own, and people believe it because they previously decided on that then, and they make all kinds of mistakes.  

(Thomas) Carlyle was a very smart man, and one of his favorite sayings was, the task of man is not to see what lies dimly in the distance but to do what lies clearly at hand. [Ed: actual quote: “Our main business is not to see what lies dimly at a distance, but to do what clearly lies at hand.”]

Links

"Another thing to avoid is extremely intense ideology because it cabbages up one's mind. You see a lot of it in the worst of the TV preachers. They have different, intense, inconsistent ideas about technical theology, and a lot of them have minds reduced to cabbage. And that can happen with political ideology. And if you're young, it's particularly easy to drift into intense and foolish political ideology and never get out. When you announce that you're a loyal member of some cult-like group and you start shouting out the orthodox ideology, what you're doing is pounding it in, pounding it in, pounding it in. You're ruining your mind, sometimes with startling speed. So you want to be very careful with intense ideology. It presents a big danger for the only mind you're ever going to have." --Charlie Munger (Poor Charlie's Almanack, Talk Ten: USC Gould School of Law Commencement Address)

First, Do No Harm - by Ben Thompson (LINK) [Thompson was also on a panel for a Public Workshop on Venture Capital and Antitrust: VIDEO.]

Hidden Forces Podcast: The Decline of Active Management, the Rise of Market Nihilism, & the Fall of the Roman Republic | Mike Green (LINK)

Conversations with Tyler (podcast): Tim Harford on Persuasion and Popular Economics (LINK)

Ryan Holiday interviews Tim Ferriss (podcast) (LINK)

Ezra Klein with Malcolm Gladwell: Why We’re Polarized (video) (LINK)

China’s “Iron House”: Struggling Over Silence in the Coronavirus Epidemic - by Evan Osnos (LINK)

Charlie Munger at the Daily Journal Annual Meeting 2020

Link to video

Links

Famed investor Charlie Munger shares insights into the ‘basic math of life’ at Redlands Forum [H/T @robertmackenzie)] (LINK) [Hopefully a video of this conversation, as well as the Daily Journal Annual Meeting occurring later this week, will become publicly available.]

The Gates Foundation's 2020 Annual Letter from Bill and Melinda Gates (LINK)

The Coming Retirement Crisis Part II - by Raoul Pal (video) (LINK)

Why We're in the Biggest Financial Bubble in History (w/ Steve Bregman & Mike Green) (video) (LINK)

Odd Lots Podcast: Why The Rise of Passive Investing Might Be Distorting The Market (w/ Mike Green) (LINK)

Hidden Forces Podcast: The Hundred Year Portfolio: How to Grow & Protect Generational Wealth | Christopher Cole (LINK)

Related paper: "The Allegory of the Hawk and the Serpent"

EconTalk Podcast: Marty Makary on the Price We Pay (LINK)

Related book: The Price We Pay: What Broke American Health Care--and How to Fix It

The Ezra Klein Show (podcast): Tim Urban on humanity’s wild future (LINK)

Related link: "The Story of Us"

In Praise of Irrationality (LINK)

Related book: Alchemy

Mental Models in Space (LINK)

Related book: An Astronaut's Guide to Life on Earth

Yuval Noah Harari Gives the Really Big Picture (LINK)

Related book: Sapiens

Links

"I think most people get very few, what I call, no-brainer opportunities, where it’s just so damned obvious that this is going to work. And since they are very few and they may be separated by periods of years, I think people have to learn to have the courage and the intelligence to step up in a major way when those rare opportunities come by." --Charlie Munger (1997)

"Yeah. You've got to be willing to take a really big bite. And it’s crazy if you don’t. And it’s crazy if you dabble around at the edges, so you’re not prepared to take a big bite when the time comes." --Warren Buffett (1997)

Why it only costs $10k to ‘own’ a Chick-fil-A franchise [H/T @cristinagberta] (LINK)

The chicken chain is known for having the lowest entry cost of any major fast-food franchise — but there’s a catch.

Vanguard Broadens Reach With Entry Into Private Equity ($) (LINK)

Ray Dalio's response to the recent WSJ article on him and Bridgewater (LINK)

Corner Office from Marketplace (podcast): Janet Yellen and David Malpass on global economic slowdown (LINK)

1,000 True Fans? Try 100 (LINK)

Links

"People underrate the importance of a few simple big ideas. And I think that to the extent Berkshire Hathaway is a didactic enterprise teaching the right systems of thought, I think that the chief lessons are that a few big ideas really work, as I think these filters of ours have worked pretty well. Because they’re so simple." --Charlie Munger (1997)

"We have a bunch of filters we’ve developed in our minds over time. We don’t say they’re perfect filters. We don’t say that those filters don’t occasionally leave things out that should get through. But they’re efficient.... I think most of the people in this room, if they just focused on what made a good business or didn’t make a good business and thought about it a little while, they could develop a set of filters that would let them, in five minutes, figure out pretty well what made sense or didn’t make sense." --Warren Buffett (1997)

Warren Buffett Is Giving Up on Newspapers ($) (LINK)

Warren Buffett’s Berkshire Hathaway Inc. is selling its newspapers to publisher Lee Enterprises Inc. for $140 million, a rare admission by the billionaire investor that he views his newspaper business as unsustainable. 

Mr. Buffett, a lifelong newspaper lover, has said for years that Berkshire’s newspaper business declined faster than he expected. In mid-2018, Berkshire hired Lee to manage all of its newspapers except the Buffalo News. 

The sale announced Wednesday includes the Buffalo News along with the dozens of newspapers that Lee already manages for Berkshire, Lee said.

Martin Capital Management 2019 Annual Report (LINK)

High-Yield Was Oxy. Private Credit Is Fentanyl. (LINK)

The Tragic iPad - by Ben Thompson (LINK)

Different Kinds of Easy - by Morgan Housel (LINK)

Venture Stories Podcast: What Silicon Valley Doesn’t Get About Private Equity with Brent Beshore (LINK)

Invest Like the Best Podcast: Chetan Puttagunta – Go Slow to Go Fast: Software Building and Investing (LINK)

a16z Podcast: The Truth about 1000 True Fans + the Price of Our Attention (LINK)

Acquired Podcast: WhatsApp (LINK)

Trailblazers with Walter Isaacson (podcast): Meat: Breaking a 2.5 Million Year Old Habit (LINK)

WEF2020: A Conversation with Lee Hsien Loong, Prime Minister of Singapore (LINK)

The Deceptively Simple Number Sparking Coronavirus Fears - by Ed Yong (LINK)

Links

"I can’t give you a formulaic approach [to determining intrinsic value] because I don’t use one. I just mix all the factors and if the gap between value and price is not attractive, I go on to something else. And sometimes it’s just quantitative. For instance, when Costco was selling at about 12 or 13 times earnings, I thought that was a ridiculously low value, just because the competitive strength of the business was so great and it was so likely to keep doing better and better. Well, I can’t reduce that to a formula for you. I liked the cheap real estate. I liked the competitive position. I liked the way the personnel system worked. I liked everything about it. And I thought, even though it’s three times book, or whatever it was then, that it’s worth more. If you want a formula, you should go back to graduate school. They’ll give you lots of formulas that won’t work." --Charlie Munger (2018)

Morgan Housel Interviews Brent Beshore at MicroCap Leadership Summit 2019 (LINK)

The next U.S. president will have little effect on the stock market. Here’s why. - by Roger Lowenstein [H/T @pcordway] (LINK)

Forecasts or Nowcasts? What’s on the Horizon for the 2020s? - by Rob Arnott & Jonathan Treussard (LINK)

Inside-Out vs. Outside-In: The Adoption of New Technologies (LINK)

Exponent Podcast: 179 — The Water We Swim In (LINK)

North Star Podcast: Robert Cottrell: The Secrets of Reading (LINK)

**********

For Audible Members, the current sale ($5.95 each) has some titles worth noting:

Billion Dollar Whale

Endurance: Shackleton's Incredible Voyage

Never Split the Difference

Ten Drugs: How Plants, Powders, and Pills Have Shaped the History of Medicine

The Fall of Carthage

Stuff Matters: Exploring the Marvelous Materials That Shape Our Man-Made World

Liquid Rules: The Delightful and Dangerous Substances That Flow Through Our Lives

I Contain Multitudes

The Rise and Fall of the Dinosaurs

Origin Story: A Big History of Everything

Links

"When we own stock, we are not there to try and change people. Our luck in changing them is very low, anyway. In fact, Charlie and I have been on boards of directors where we’re the largest shareholders and we’ve had very little luck in changing behavior. So, we think that if you buy stock in a company, you better not count on the fact that you’re going to change their course of action." --Warren Buffett (2009)

The Financial Lesson of 2008-09 That Most Investors Have Forgotten - by Jason Zweig ($) (LINK)

If your memory minimizes how much you lost in the last bear market, you can easily overestimate how brave you will be in the next one

CFP Board to Tighten Oversight of Financial Advisers ($) (LINK)

Understanding Money (LINK)

The Financial Illiteracy Epidemic (LINK)

The 2019 Stratechery Year in Review – by Ben Thompson (LINK)

Jobs-to-be-Done - by Mike Dariano (Kindle ebook, PDF, Podcast)

What Does an Oil Refinery Do? (podcast) (LINK)

The Cutting Room Files, Part 6: The Future of the China - by Melissa Taylor and Peter Zeihan (LINK)

Related book: Disunited Nations: The Scramble for Power in an Ungoverned World

How to Fix Our Prisons? Let the Public Inside [H/T @RogerLowenstein] (LINK)

Across the Universe, it's the normal galaxies doing all the star-making work - by Phil Plait (LINK)

Extraordinary Routines [H/T @ChrisPavese] (LINK)

A couple of books mentioned by Marc Andreessen in his recent chat with Kevin Kelly: 1) VC: An American History; 2) More from Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources―and What Happens Next

"There is so much that’s false and nutty in modern investment practice, and in modern investment banking, and in modern academia in the business schools, even in the Economics departments, that if you just reduce the nonsense, that’s all I think you should reasonably hope for." --Charlie Munger (2009)

Links

"If you need to use a computer or a calculator to make the calculation, you shouldn’t buy it. It should be so obvious that you don’t have to carry it out to tenths of a percent or hundredths of a percent. It should scream at you. So if you really need a calculator to figure out that the discount rate is 9.6 percent instead of 9.8 percent — forget about the whole exercise. Just go onto something that shouts at you. And essentially, we look at every business that way. But you’re right, we do not sit down with spreadsheets and do all that sort of thing. We just see something that obviously is better than anything else around, that we understand. And then we act." --Warren Buffett (2009)

"I’d say some of the worst business decisions I’ve ever seen are those that are done with a lot of formal projections and discounts back. Shell Oil Company did that when they bought the Belridge Oil Company. And they had all these engineers make all these elaborate figures. And the trouble is you get to believe the figures. And it seems that the higher mathematics, with more false precision, should help you. But it doesn’t. The effects, averaged out, are negative when you try and formalize it to the degree you’re talking about. They do that in business schools because, well, they got to do something." --Charlie Munger (2009)

"It’s a terrible mistake to think that mathematics will take you a long place in investing. You have to understand certain aspects of mathematics. But you don’t have to understand higher mathematics. And higher mathematics may actually be dangerous and it will lead you down pathways that are better left untrod." --Warren Buffett (2009)

***

Brent Beshore's‬⁩ 2019 Annual Letter (LINK)

The Money Men Who Enabled Adam Neumann and the WeWork Debacle ($) (LINK)

Notes on a Reading Framework - by Venkatesh Jayaraman (LINK)

Hidden Forces Podcast: The Greatest Story Ever Sold: The Rise of Passive Investing & the Fall of the Free Market | Mike Green (LINK)

Starting Greatness Podcast: Marc Andreessen: “Was Netscape an Overnight Success?” (LINK)

The Acquirers Podcast: Endowment Value: Mark Yusko on the endowment model, value investing and bitcoin, crypto and digital assets (LINK)

The Investor’s Podcast Network: TIP273: Billionaire Jim Simons’ Quant Revolution w/ Gregory Zuckerman (LINK)

Related book: The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

Odd Lots Podcast: How Online Dating Is Reshaping the Entire Economy (LINK)

Related paper: The Dating Market: Thesis Overview

There’s No Such Thing as ‘Quality’ Time - by Ryan Holiday (LINK)

Jupiter is still really weird: A new monster storm has formed around its south pole - by Phil Plait (LINK)

Links

"I would argue that differing people learn in differing ways. With me, I was put together by nature to learn from reading. If some guy’s talking to me, he’s telling me something I don’t know, I don’t want to know, I already know, or he’s doing it too slow or too fast. In reading, I can learn what I want at the speed that works. So, to me, reading is what works for my nature. And to all of you who are at all like me, I say welcome. It’s a nice fraternity.... My father was the type that always did more than his share of the work and took more of his share of the risk. All that kind of example was, of course, very helpful, and you learn it better from a person close to you. But in terms of the conceptual stuff, I’d say I learned it from books. Now, those are fathers in a difference sense." --Charlie Munger (2008)

Marc Andreessen and Kevin Kelly: Why You Should Be Optimistic About the Future (video) (LINK)

How You Can Get Big Gains That Wall Street Can’t - by Jason Zweig ($) (LINK)

Acquisition Vehicle EverArc Raises $340 Million ($) (LINK)

EverArc Holdings Ltd., a British Virgin Islands-based acquisition vehicle, said it raised $340 million in an initial offering in London. 

The company said in a filing that it expects to use the proceeds to “acquire a business with a significant proportion of its activities in North America.” It didn’t offer further details. The firm said it expects its shares to begin trading on the London Stock Exchange on Dec. 17. 

EverArc’s board includes Tracy Britt Cool, one of Berkshire Hathaway Inc. Chief Executive Warren Buffett’s key lieutenants in recent years. She announced in September that she plans to leave Berkshire next year to create her own investment firm.

David Perell's Coolest Things Learned in 2019 (LINK)

David Rosenberg on the WealthTrack Podcast (Part 1, Part 2)

The Tim Ferriss Show (podcast): #401: Gary Keller — How to Focus on the One Important Thing (LINK) ["My life is better when I'm spontaneous after I've done my most important thing. Being spontaneous before that, that's where it becomes a distraction and does me harm." --Gary Keller]

Related book: The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results

So, about that 'too massive' black hole… yeah, not so much. - by Phil Plait (LINK)

The Startling Secret of an Invincible Virus - by Ed Yong (LINK)

Links

"We could make a lot of decisions about a lot of things very fast and very easily. And we’re unusual in that respect. And the reason we’re able to do that is there’s such an enormous other lot of things that we won’t allow ourselves to think about at all. It’s just that simple. I have a little phrase when people make pitches to me, and about halfway through the first sentence, I say, 'We don’t do startups.' They don’t exist. Well, if you blot out startups, there’s a whole layer of complexity that goes out of your life. And we’ve got other little blotter-out systems. And using those, we finally find out that what remains is still a pretty large territory that we can handle." --Charlie Munger (2008)

Value Investing with Legends Podcast: Joel Greenblatt - Investing Off the Beaten Path (LINK)

Scaling Fallacy in Investing (LINK)

The Softbank-WeWork End Game: Savior Economics or Sunk Cost Problem? - by Aswath Damodaran (LINK)

The Brooklyn Investor blog: What It Takes, Dimon, Twitter etc. (LINK)

The Acquirers Podcast: Growth Underwriter: Marcelo Lima on valuing SaaS businesses Amazon, Facebook, and Netflix (LINK)

Five Good Questions Podcast: Alan Klement - When Coffee and Kale Compete (LINK)

The Disruptive Voice Podcast: Disruption and electrification in the auto industry featuring Cliff Maxwell and Ned Calder (LINK)

Apes Might Know That You Don’t Know What They Know - by Ed Yong (LINK)

Links

"I would say that I like a certain amount of social intervention that takes some of the inequality out of results in capitalism. But I hate, with a passion, rewarding anything that can be easily faked. Because I think then people lie, and lying works, and the lying spreads. And I think your whole civilization deteriorates." --Charlie Munger (1996)

Sam Zell on Bloomberg TV discussing buying distressed oil assets, discussing WeWork, and discussing why he's not investing in Hong Kong.

Past as Prologue - by Frank K. Martin (LINK)

The Case Against Boeing (LINK)

Stephen Schwarzman on The David Rubenstein Show (video) (LINK)

Related book: What It Takes: Lessons in the Pursuit of Excellence

Planet MicroCap Podcast: 100 - Investing: It’s All About the Journey with Ian Cassel (LINK)

The Joe Rogan Experience (podcast): #1383 - Malcolm Gladwell (LINK)

Related book: Talking to Strangers

The Tim Ferriss Show (podcast): #395: Jocko Willink Takeover — On Quitting, Relationships, Financial Discipline, Contrast Baths, and More (LINK)

Links

"It’s crazy to have people get so big and so important that you can’t allow them to fail, and allow them to be run with as much knavery and stupidity as permeated the major investment banks. It’s not that Berkshire hasn’t had wonderful service from investment banking all these years, because we have. It’s just that, as an industry, this crazy culture of greed and overreaching and overconfidence in trading algorithms and so on creeps in. I would argue it’s quite counterproductive for the country, and it ought to be reigned way back. These institutions are too big to fail, and it was demented to allow derivative trading to end up the way it’s ended up and with the current risks that are embedded in the present system. And it’s amazing how few people spoke against it as it was happening. There was just so much easy money to be reported. A lot of the money that was reported as being earned wasn’t really being earned. It was in that wonderful category of assets that I call 'good until reached for.' They sit there on the balance sheet, and when you reach for it, it just fades away like — mist." --Charlie Munger (May 3, 2008)

Bill Gates at the DealBook conference (video) (LINK)

Reed Hastings at the DealBook conference (video) (LINK)

[The rest of the DealBook conference videos can be found HERE.]

The World Has Gone Mad and the System Is Broken - by Ray Dalio (LINK)

Three Things I Think I Think – Has The World Gone Mad? - by Cullen Roche (LINK)

The Acquirers Podcast: Ian Cassel turns the tables and interviews Tobias Carlisle (LINK)

Masters of Scale with Reid Hoffman (podcast): Bill Gates — How to accelerate history (LINK)

The Hazards of Talking to Strangers (LINK)

Charlie Munger and Warren Buffett on compensation systems

From the 2003 Berkshire Hathaway Annual Meeting...

Charlie Munger: 

Where a business requires practically no capital, we tend to reward the management based on the earnings. The minute the business starts requiring capital we tend to put a capital factor into this compensation system.  

We don’t have any one standard system. They’re all different, based on accidents of history and circumstances.  

But where capital’s an important factor, of course, we take it into account. 

Warren Buffett:

When capital is an important part of the business, we stick a charge for capital in. If it’s an unimportant part of the business, we don’t stick it in. We don’t believe in making things more complex than needed. 

So, we don’t try for...all kinds of little refinements — which a compensation consultant would come in and tell you was needed, because that’s how he would justify a large bill. And he would also come in and tinker with it a little the following year, and the following year, and so on.  

We have very simple systems on comp. But some of our businesses are terrific businesses, and so we have very high standards of performance before people get performance bonuses.  

Some of our businesses are very tough businesses, and the threshold is much lower, but the managerial talent needed to reach that threshold is just as much as...with the higher threshold in other businesses. 

Compensation is not rocket science. I mean, people will want you to think it is, and you read these proxy statements and it blows your mind, what they get into.

Charlie Munger: 

And on EVA, there are ideas implicit in that that we use. For instance, hurdle rates by — based on opportunity costs. Perfectly reasonable concept.  

But to us, that system, with all its labels and lingo, has a lot of baggage that we don’t need. We just use the implicit, simple stuff that’s buried in EVA. 

Links

"The whole secret of investment is to find places where it’s safe and wise to non-diversify. It’s just that simple. Diversification is for the know-nothing investor; it’s not for the professional."  --Charlie Munger (2008) 

"And there’s nothing wrong with the know-nothing investor practicing it. It’s exactly what they should practice. It’s exactly what a good professional investor should not practice. There’s no contradiction in that. A know-nothing investor will get decent results as long as they know they’re a know-nothing investor, diversify as to time they purchase their equities, and as to the equities they purchase. That’s crazy for somebody that really knows what they’re doing. And you will find opportunities that, if you put 20 percent of your net worth in it, you’ll have wasted the opportunity of a lifetime, in terms of not really loading up. And we’ve had the chance to do that, way, way in our past, when we were working with small sums of money. We’ll never get a chance to do that working with the kinds of money that Berkshire does. We try to load up on things. And there will be markets when we get a chance to from time to time, but very seldom do we get to buy as much of any good idea as we would like to." --Warren Buffett (2008)

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