Links

Jamie Dimon's 2019 Letter to Shareholders (LINK)

Coronavirus and Credibility - by Paul Graham (LINK)

The Bare Necessities You Need for a Bear Market - by Jason Zweig ($) (LINK)

Daniel Kahneman: Why We Underestimated COVID-19 (LINK)

The World Has No Pause Button (LINK)

Unlikely Optimism: The Conjunctive Events Bias (LINK)

Daniel Kahneman: Thinking Fast and Slow, Deep Learning, and AI

Daniel Kahneman is winner of the Nobel Prize in economics for his integration of economic science with the psychology of human behavior, judgment and decision-making. He is the author of the popular book "Thinking, Fast and Slow" that summarizes in an accessible way his research of several decades, often in collaboration with Amos Tversky, on cognitive biases, prospect theory, and happiness. The central thesis of this work is a dichotomy between two modes of thought: "System 1" is fast, instinctive and emotional; "System 2" is slower, more deliberative, and more logical. The book delineates cognitive biases associated with each type of thinking. This conversation is part of the Artificial Intelligence podcast.

This conversation was recorded in the summer of 2019.

Link to video

[or, Link to podcast]

Links

"Wealth is not his that has it, but his that enjoys it." --Benjamin Franklin

Jeff Bezos’s Master Plan (LINK)

Fall 2019 issue of Graham & Doddsville (LINK)

The Heilbrunn Center's Schloss Archive is also worth going back and checking out periodically (LINK)

The Knowledge Project Podcast: #68 Daniel Kahneman: Putting Your Intuition on Ice (LINK)

Exponent Podcast: 175 — The Abyss Stares Back (LINK)

The Next Big Idea Podcast: Malcolm Gladwell and David Epstein on the Keys to Success (LINK)

Related book: Range: Why Generalists Triumph in a Specialized World

Links

"Charlie and I have circles of competence that extend to evaluating a number of types of businesses, and there are a whole lot of businesses that we won’t be able to evaluate.... We are best at the businesses where we can come to a judgment that they’re going to look a good bit like they do now five years from now, ten years from now. They’ll be bigger. They’ll be doing different things, but the fundamentals will be the same." --Warren Buffett (2006) 

Transcript of Jason Zweig on the North Star podcast (LINK)

Kyle Bass' full letter: "The Quiet Panic in Hong Kong" (LINK)

Global imbalances and the international footprint of firms: what role for exchange rates? [H/T @Trinhnomics] (LINK)

David Tepper is reportedly converting hedge fund into a family office, returning outside capital (LINK)

Daniel Kahneman's forward to the latest Edge Annual Question book (LINK)

The Investing City Podcast: 22 - Bluegrass Capital: Securities Analysis (LINK)

The Wright Show (podcast): Completing the Darwinian Revolution (Robert Wright & David Sloan Wilson) (LINK)

Related book: This View of Life

The Secret of Coral Reefs: Tiny Fish That Are Great at Dying - by Ed Yong (LINK)

Links

"We think the best way to minimize risk is to think." --Warren Buffett (2004)

Brookfield to Buy 62% of Oaktree Capital Management (LINK)

Daniel Kahneman in conversation with Sam Harris (podcast) (LINK)

Where [Elizabeth] Warren’s Wrong - by Ben Thompson (LINK)

Adam Smith, Loneliness, and the Limits of Mainstream Economics - by Russ Roberts (LINK)

Prem Watsa on PM Modi, elections and Fairfax’s India investments (LINK)

The Decivilization of Venezuela - by Peter Zeihan (LINK)

The College Admissions Scandal Is About More Than Just Bribery - by Tyler Cowen (LINK)

Hallucination vs. Vision, Selling Your Art in the Real World: Brian Koppelman Interviews Marc Andreessen (LINK)

The Acquirers Podcast: Chris Cole chats with Tobias Carlisle [from last month] (LINK)

Related paper (July 2018): "What is Water in Markets?"

Invest Like the Best Podcast: Michael Mayer – Pseudonymous Social Capital and Bottomless Coffee (LINK)

Raghuram Rajan talks with Tyler Cowen (podcast) (LINK)

Big Questions with Cal Fussman (podcast): Simon Sinek: The Infinite Game (LINK)

Related book (June release date): The Infinite Game

The School of Greatness with Lewis Howes (podcast): The Power of Digital Detox with Cal Newport (LINK)

Related book: Digital Minimalism: Choosing a Focused Life in a Noisy World

This Is a Truly Lousy Experiment About Evolution - by Ed Yong (LINK)

Book of the day [H/T Tom Russo]: The Monk of Mokha

Links

"Study the past, if you would divine the future." --Confucius 

Berkshire Hathaway Reduces Home Capital Investment (LINK)

Investing Ideas That Changed My Life - by Morgan Housel (LINK)

The 2018 Stratechery Year in Review - by Ben Thompson (LINK)

A new way to look at Leonardo - by Bill Gates (LINK)

Chris Cole talks with Meb Faber (podcast) (LINK)

Daniel Kahneman talks with Tyler Cowen (podcast) (LINK)

Why Do These Dinosaurs Have Long, Twisted Tubes in Their Heads? - by Ed Yong (LINK)

Links

The Dangers of Persistence - by Vishal Khandelwal (LINK)

The above reminded me of a Kahneman quote worth frequently thinking about:

"When I work I have no sunk costs. I like changing my mind. Some people really don’t like it but for me changing my mind is a thrill. It’s an indication that I’m learning something. So I have no sunk costs in the sense that I can walk away from an idea that I’ve worked on for a year if I can see a better idea. It’s a good attitude for a researcher. The main track that young researchers fall into is sunk costs. They get to work on a project that doesn’t work and that is not promising but they keep at it. I think too much persistence can be bad for you in the intellectual world." --Daniel Kahneman (Source)

Natural Maniacs - by Morgan Housel (LINK)

Musk’s Money Mystery Intrigues SEC (LINK)

American Innovations Podcast: The Future Of | Health | 2 (LINK)

Scientists Take a Harder Look at Genetic Engineering of Human Embryos (LINK)

An Ancient Genetic Quirk Could Doom Whales Today - Ed Yong (LINK)

The Wonder Plant That Could Slash Fertilizer Use - by Ed Yong (LINK)

Links... and What can go wrong?

"The best way to get what you want is to deserve what you want." --Charlie Munger

Daniel Kahneman on Expertise, Bias, and the Investment Industry [H/T Phil] (video) (LINK)

Ray Dalio at the Aspen Ideas Festival -- Success in Leadership and Life: A Function of Principles (video) (LINK)

Aspen Ideas Festival -- Deep Dive: Leading Transformational Change (video) (LINK)

Little Money Rules - by Morgan Housel (LINK)

Twists and Turns in the Tesla Story: A Boring, Boneheaded Update! - by Aswath Damodaran (LINK)

Rocket Men Precision - by Ben Carlson (LINK)

Related book: Rocket Men: The Daring Odyssey of Apollo 8 and the Astronauts Who Made Man's First Journey to the Moon

The Knock-On Effect Podcast: Rising dollar to unleash unusual ice cream flavors? (LINK) [Interesting topic of vanilla beans, which have risen in price from $20/kilo to about $600/kilo since 2016. It looks like there is also a recent article in the The Globe and Mail (Canada) on the topic.]

How One Number Could Change the Lives of People With a Rare Disorder - by Ed Yong (LINK)

Book of the day: Social Value Investing - by Howard W. Buffett and William B. Eimicke

Also, for Audible members, Pre-Suasion by Robert Cialdini is the Daily Deal today ($3.95).

*****

Posting may be light over the next 7-10 days, so before the weekend, I'll leave you with a little more wisdom from Warren Buffett (via Alice Schroeder) and Tony Deden. I enjoy learning something from one great investor that reminds me of a lesson from another, as it gives one a new perspective on which to build the mental model in one's mind. Deden's discussion in regards to the question "What can go wrong?" reminded me of a story Schroeder told about Buffett's investment in Mid-Continent Tab, when she described Buffett's first filter as being "What can go wrong?" First, the excerpt from Deden, where he made the point using his firm's investment in a salmon business (which I believe is Bakkafrost):

So we have a relatively important stake in the business of salmon farming, for argument's sake. Well, not just myself, perhaps, but we have a team that knows, more or less, everything there is to know about salmon farming literally everywhere in the world. We know what can go wrong. We know where the strengths are. We know where the abilities, where the skill is.    

And not just merely from what will happen in the price of...salmon today or tomorrow, the demand or supply of it, but in terms of those ingredients that contribute to the long-term viability of a business. But we also pay to understand what can go wrong. What can go wrong is really more important than what can go right, because over time, even a marginally good business will profit, will do well.    

So you really need to understand, you don't know what anything is worth until you know what can go wrong. Because we value things differently because we weigh components differently. There's no such thing as valuation metrics based on some standardized formula, unless you see it in connection with other issues.

And then Schroeder's story, from a 2008 talk, about Buffett and Mid-Continent Tab (from a file I have compiled on investing wisdom over the years, but I believe the original source for this excerpt is the CS Investing blog):

So when Wayne Ace and Warren Cleary who were two friends of Warren’s saw that IBM was going to have to divest in this business, and they thought, “We are going to buy a Carroll Press which was a press that makes these cards. And we are going to compete with IBM because we are based in the Mid West, we can ship faster. We can provide better service. And they went to Warren and they said, “Should we invest in this company and would you come in with us? And Warren said, “No.” 

Well, why did he say no? He didn’t say no because it was a technology company. He said no because he went through the first step in his investing process. This is where I think what he does is very automatic but it isn’t well understood. He acted like a horse handicapper. The first stop in Warren’s investing process is always to say, “What are the odds that this business could be subject to any type of catastrophe risk—that could make it (the business) fail? And if there is any chance that any significant part of his capital would be subject to catastrophe risk, he just stops thinking. NO. He just won’t go there. 

It is backwards the way most people think because most people find an interesting idea and figure out the math, they look at the financials, they do a projection and then at the end, they ask, “What could go wrong?” 

 Warren starts with what could go wrong and here he thought that a start-up business competing with IBM can fail. Nope, pass, sorry.  And he didn’t think anymore about it. But Wayne and Cleary went ahead anyway and within a year they were printing 35 million tab cards a month. At that point, they knew they had to buy more Carroll Presses so they came back to Warren and said, we need money—would you like to come in? 

So now, Warren is interested because the catastrophe risk is gone.  They are competing successfully against IBM. So he asks them the numbers, and they explain to him that they are turning their capital over 7 times a year. A Carroll Press costs $78,000 dollars and every time they run a set of cards through and turn their capital over, they are making over $11,000.  So basically their gross profit on a press (7 x $11,000 = $77,000) is enough to buy another printing press. At this point Warren is very interested because their net profit margins are 40%. It is one of the most profitable businesses he has ever had the opportunity to invest in. 

Notably people are now bringing Warren special deals to invest in—it is 1959. He has been in business for 2.5 years running the partnership. Why are they doing that? It is not because he is a great stock picker. They don’t know that. He hasn’t yet made that record.   It is because he knows so much about business, and he started so early he has a lot of money. So this is something interesting about Warren Buffett—people were bringing him special deals like they are today with Goldman Sachs and GE. 

He decided to come in and invest in the Mid-Continent Tab Company but, interestingly, he did not take Wayne and John’s word for it because the numbers they gave him were very enticing. But, again, he went through, and he acted like a horse handicapper. 

Now here is another point of departure. Everyone that I know or knew as an analyst would have created a model for this company and projected out its earnings or looked at its return on investment in the future. Warren didn’t do that. In going through hundreds of his files, I never saw anything that looked like a model. What he did is he did what you would do with a horse….he figured out the one or two factors that determined the success of the investment. In this case, it was the cost advantage that had to continue for the investment to work. And then he took all the historical data, quarter by quarter for every single plant and he obtained similar information as best he could from every competitor they had, and he filled several pages with little hen scratches with all this information and then he studied that information. 

Then he made a yes/no decision. He looked at—they were getting 36% margins, they were growing over 70% a year on a $1 million of sales—so those were the historical numbers. He looked at them in great detail like a horse handicapper would studying the races and then he said to himself, “I want a 15% return on $2 million of sales and said, Yes, I can get that.” Then he came in as an investor. 

OK, what he did was he incorporated his whole earnings model and compounding (discounted cash flow or DCF) into that one sentence.  He wanted 15% on $2 million of sales (a doubling from $1 million current sales). Why does he choose 15%? Warren is not greedy, he always wants 15% day one return on investment, and then it compounds from there. That is all he has ever wanted and he is happy with that.  …You are not laughing, what’s wrong? (Laughs)  

It is a very simple thing, nothing fancy about it. And that is another important lesson because he is a very simple guy. He doesn’t do any DCF models or anything like that. He has said for decades, “I want a 15% day one return on my capital and I want it to grow from there-ta da! The $2 million of sales was pretty simple too. It had a million in sales already and it was growing at 70% so there was a big margin of safety built into those numbers. 

It had a 36% profit margin—he said I would take half that or 18%. And he ended up putting in $60,000 of his personal, non-partnership money which was 20% of his net worth at that time. He got 16% of the company’s stock plus some subordinated notes.   And the way he thought about it was really simple. It was a one step decision. He looked at historical data and he had this generic return that he wants on everything. It was a very easy decision for him. He relied totally on historical figures with no projections.  

I think that is a really interesting way to look at it because I saw him do it over and over again in different investments.

Links

Some great compilations, via @AustinValue, on Charlie Munger, Warren Buffett, Berkshire Transcripts (1994-2018), and Ben Graham.

Markel Brunch Notes [H/T Linc] (LINK)

Bill Gates' Summer Books for 2018 (LINK)

The books: 1) Leonardo da Vinci - by Walter Isaacson; 2) Everything Happens for a Reason and Other Lies I’ve Loved - by Kate Bowler; 3) Lincoln in the Bardo - by George Saunders; 4) Origin Story: A Big History of Everything - by David Christian; 5) Factfulness - by Hans Rosling, with Ola Rosling and Anna Rosling Ronnlund

Grant's Podcast: Surf and turf (LINK)

Jonathan Tepper, chief editor of Variant Perception, and John Hempton, chief investment officer of Bronte Capital Management, share their macro and micro expertise on corporate concentration and corporate fraud. 

Invest Like the Best Podcast: Data, Decisions, and Basketball with Sam Hinkie (LINK)

Where Humans Meet Machines: Intuition, Expertise and Learning [H/T @morganhousel] (LINK)

Erik Brynjolfsson, Director, MIT IDE, speaks with Nobel Laureate, Daniel Kahneman about AI decision-making

The Origins of Us (LINK)

Links

"My perspective...is that we’re really not surprised nearly often enough, because one of the things that really happens, as soon as an event occurs, we have a story. That’s automatic, that System 1 generates stories. It looks for causes, it looks for stories, and it generates its tentative stories that, if endorsed by System 2, become beliefs and opinions. But the speed at which we find explanations for things that happened makes it difficult for us to learn the deep truth. And the deep truth is that the world is much more uncertain than we feel it is. We see a version of the world that is...a lot simpler and a lot more certain than the world really is." - Daniel Kahneman (Source)

How to Remember What You Read (LINK)

Our Biggest Economic, Social, and Political Issue The Two Economies: The Top 40% and the Bottom 60% - by Ray Dalio (LINK)

A Dozen Lessons from Megan Quinn about a Growth Mindset - by Tren Griffin (LINK)

Richard Bookstaber on WealthTrack (video) [H/T Will] (LINK)

Eddie Lampert and ESL's response to The Globe and Mail article about Sears Canada (LINK)

What Mongolian Nomads Teach Us About the Digital Future - by Kevin Kelly (LINK)

Why Facebook Shouldn't Be Allowed to Buy thb - by Ben Thompson (LINK)

Tim O’Reilly: ‘Generosity is the thing that is at the beginning of prosperity’ (LINK)

Related book: WTF?: What's the Future and Why It's Up to Us

EconTalk (podcast): Jennifer Burns on Ayn Rand and the Goddess of the Market (LINK)

Related book: Goddess of the Market: Ayn Rand and the American Right

Jonathan Haidt talks with Krista Tippett (LINK)

Jocko Willink guest hosts The Tim Ferriss Show, and discusses his book Discipline Equals Freedom: Field Manual (podcast) (LINK)

7 Lessons from the New Paleo (LINK)

Art De Vany's keynote and panel sessions at Paleo f(x) (LINK)

Robert Sapolsky’s Behave is a tour de force of science writing (LINK)

Links

"...we take the reasons that people give for their actions and beliefs, and our own reasons for our actions and beliefs, much too seriously." -Daniel Kahneman

Daniel Kahneman: Why We Contradict Ourselves and Confound Each Other [H/T Phil] (LINK)

The Theory of Maybes - by Morgan Housel (LINK)

More '29 than '87 - By Edward Chancellor (LINK)

Mohnish Pabrai's ET NOW Interview on Compounding [Part 1 was linked to previously.] (LINK)

Warren Buffett's Mosquito: Mark Cohodes [H/T Linc] (LINK)

The Big Story: Edge of The Cliff | Real Vision (video) (LINK)

Canceling Puerto Rico Debt ‘Impractical,’ Says Hedge Fund Billionaire Klarman (LINK)

Why Investors Can’t Get Enough of Tajikistan’s Debt [H/T @Connor_Leonard] (LINK)

A Boom in Credit Cards: Great News for Banks, Less So Consumers [H/T @Sanjay__Bakshi] (LINK)

Amazon Expands in Brazil, Making Worst-Kept Secret Official (LINK)

Google Is So Big, It Is Now Shaping Policy to Combat the Opioid Epidemic. And It's Screwing It Up. (LINK) [You can also listen to this article on YouTube, HERE.]

The people vs. the opioid industrial complex. (LINK)

Adventures in Finance podcast -- Black Monday: First Hand Accounts of the 87 Crash (LINK)

Grant’s Podcast: Financial revelations of the day [Starts with an apology to Bridgewater about one of the claims they made in a recent Grant's issue.] (LINK)

Exponent podcast: Episode 128 — Counterfactuals (LINK)

Sam Altman: "The Winding Path of Progress" | Talks at Google (LINK)

Insects Are In Serious Trouble - by Ed Yong (LINK)

Will the World's Most Worrying Flu Virus Go Pandemic? - by Ed Yong (LINK)

Links

"I am satisfied, if every day I take away something from my vices and correct my faults. I have not arrived at perfect soundness of mind, indeed, I never shall arrive at it." -Seneca ("On the Happy Life")

"Be at war with your vices, at peace with your neighbors, and let every new year find you a better man." -Benjamin Franklin

Great notes from a July workshop given by Sanjay Bakshi (LINK)

An audience with Jack Bogle: 'Warren can get a little intoxicating' [H/T Linc] (LINK)

Income Investors: It’s OK to Be Sad, But Don’t Get Desperate - by Jason Zweig (LINK)

Sir Richard Branson talks to Tim Ferriss (podcast) (LINK)

The Final Episode of Patrick O'Shaughnessy's audio documentary on the world of blockchain and cryptocurrencies: Hash Power – Ep. 3 – Funding, Forking, and Our Creative Future (LINK)

Tim O'Reilly on EconTalk (podcast) (LINK)

Related book: WTF?: What's the Future and Why It's Up to Us

The Making of Richard Thaler's Economics Nobel [H/T Linc] (LINK)

Related book: Misbehaving: The Making of Behavioral Economics - by Richard Thaler

Edge #501: Richard Thaler Wins Nobel Prize in Economics (LINK) [A re-post of... Edge Master Class 2008: Richard Thaler, Sendhil Mullainathan, Daniel Kahneman - A Short Course in Behavioral Economics]

Links

Things That Don’t Make Sense (LINK)

To quote Jason Zweig: "An extraordinary & exemplary note from Danny Kahneman" (LINK)

Morgan Creek Capital Management's Q4 Letter (LINK)

A new spike in mortgage delinquencies spells trouble (video and article) [H/T Matt] (LINK)

a16z Podcast: Securing Infrastructure and Enterprise Services (LINK)

Daniel Dennett: "From Bacteria to Bach and Back: The Evolution of Minds" | Talks at Google (video) (LINK)

***

Some early notes from today's Daily Journal Annual Meeting, via the following people on Twitter: @BrentBeshore, @TheCharlieton, @AlexRubalcava, @EricJorgenson.

[Below are some of the quotes that stood out to me. They are from the notes above, and thus possibly not exactly as Charlie Munger said them...]

"Deferred gratification really works if you want to get better and better."

"I've never succeeded in something I wasn't interested in."

"The success of Berkshire came from making two decisions a year over 50 years."

"Diversification is great for people who know nothing...one (investment) will work if you do it right."

"You only need one cinch. When you get the chance, step up to the pie cart with a big pan."

"We're too soon old and too late smart. That's the biggest problem we have."

"I don't think operating over many disciplines is a good idea for most people...get good at something that society rewards."

"Even if you specialize, you should still spend 10-20% of your time learning the big ideas of the major disciplines."

"I do not want a proctologist who knows Schopenhauer. On the other hand, a life devoted solely to proctology isn't much of a life."

"If you think you know what the state of the payments system 10 years out you're in a state of delusion."

"Both Warren and I know you can't trust numbers put out by the banking industry."

"We have a lot of businesses that neither Warren or I could run, but we've gotten good at judging which people can succeed."

"One of the reasons I don't go around talking about how the Fed should work is because I'd mostly be pounding my own ideas into my head."

"Am I comfortable with a non-diversified portfolio? Yes. The Mungers have three stocks: Berkshire, Costco, and Li Lu's fund."

"Arrange your affairs so you can handle a 50% decline with aplomb...if it never happens to you, you're not being aggressive enough."

"The value of my partnership went down 50%...it's a mark of manhood. You better be able to handle it without much fussing."

"I like the Buffett system (0% fee, 6% hurdle, 25% gain-share). I'm looking at at Mohnish Pabrai who still uses it. I wish it would spread."

"In many areas of life the only way to win is to grind away and work hard for a very long time."

Links

"The absence of definite information concerning the outcomes of actions one has not taken is probably the single most important factor that keeps regret in life within tolerable bounds....We can never be absolutely sure that we would have been happier had we chosen another profession or another spouse.... Thus, we are often protected from painful knowledge concerning the quality of our decisions." -Danny Kahneman (via The Undoing Project)

A Chat With Daniel Kahneman - by Morgan Housel (LINK)

On persistence: “When I work I have no sunk costs. I like changing my mind. Some people really don’t like it but for me changing my mind is a thrill. It’s an indication that I’m learning something. So I have no sunk costs in the sense that I can walk away from an idea that I’ve worked on for a year if I can see a better idea. It’s a good attitude for a researcher. The main track that young researchers fall into is sunk costs. They get to work on a project that doesn’t work and that is not promising but they keep at it. I think too much persistence can be bad for you in the intellectual world.”

The Sound of Silence - by Jessica Livingston (LINK)

The Risk of Discovery - by Paul Graham (LINK)

How I Got My Attention Back - by Craig Mod [H/T @StevenLevy] (LINK)

Importance of Knowing Your Investment Boundaries (Sears Mini-Case Study) - by John Huber (LINK)

Five Good Questions for Samuel Arbesman about his book Overcomplicated (LINK)

Mike Massimino on the James Altucher podcast (LINK)

Related book: Spaceman: An Astronaut's Unlikely Journey to Unlock the Secrets of the Universe

Exponent podcast: Episode 100 — The Anniversary Episode: iPhone and Exponent (LINK)

a16z Podcast: Real Estate — Asset, Ownership, and the Economy (LINK)

TED Talk - Alejandro Sánchez Alvarado: To solve old problems, study new species (LINK)

A Woman Was Killed By a Superbug Resistant to All 26 American Antibiotics [H/T @edyong209] (LINK)

Why Killer Whales (and Humans) Go Through Menopause - by Ed Yong (LINK)

Links

"I've always felt ideas were a dime a dozen. If you had one that didn't work out, you should not fight too hard to save it, just go find another." -Danny Kahneman (via The Undoing Project)

Charlie Munger on the Paradox in Hold vs. Buy Decisions in Long Term Investing - by Sanjay Bakshi (LINK)

A Half-Dozen Ways to Look at the Unit Economics of a Business - by Tren Griffin (LINK)

To Be a Great Investor, Worry More About Being Wrong Than Right - by Jason Zweig (LINK)

Inequality and Skin in the Game - by Nassim Nicholas Taleb (LINK)

Mohnish Pabrai's Interview with BTVi about markets and commodities (video) (LINK)

Mutual Fund Observer, January 2017 (LINK)

a16z Podcast: The Movement of Money (LINK)

a16z Podcast: New Year, New Horizons: Pluto! (LINK)

Links

From Michael Lewis, a Portrait of the Men Who Shaped ‘Moneyball’ (LINK)

Related book (released tomorrow): The Undoing Project

Video: Author Michael Lewis on "The Undoing Project" [H/T Linc] (LINK)

There’s a Big New Investor in Stock Markets: The State (LINK)

Two of the world’s most important stock markets have a big new investor—the state.

About 30% of all the companies in Japan’s three main equity indexes now count the country’s central bank as one of their top 10 shareholders, according to a Wall Street Journal analysis of data as of the end of September. Six years ago, the Bank of Japan’s presence in the market was trivial.

In China, two major state-owned investment funds that are part of the so-called national team have become top 10 shareholders in 39% of listed companies over the past year, according to UBS, which analyzed shareholdings as of the end of September.

Huawei’s Hard-Charging Workplace Culture Drives Growth, Demands Sacrifice [H/T Matt] (LINK)

Stephen Hawking: This is the most dangerous time for our planet (LINK)

We can’t go on ignoring inequality, because we have the means to destroy our world but not to escape it

A few notes I took after reading Michael Mauboussin’s Base Rate book - by Stefan Cheplick (LINK)

Latticework of Mental Models: Illusion Of Control (LINK)

The myth of quick - by Seth Godin (LINK)

Five Things You Notice When You Quit the News (LINK)

Some nice thoughts about reading in a Tweetstorm from Patrick O’Shaughnessy (LINK)

For Kindle readers, I just noticed that some of the books that Charlie Munger has recommended have been made available in Kindle format over the last few years, such as: Models of My Life, Ice Age, and A Matter of Degrees.

Links

Warren Buffett's Berkshire makes surprise U.S. airline bet (LINK) [While Mr. Buffett may have just changed his mind, it seems likely it was Todd Combs or Ted Weschler that made the investment, given Buffett's comments over the years on airlines.... Such as: 1) "We have no ability to forecast the economics of the investment banking business, the airline industry, or the paper industry."; 2) "When Richard Branson, the wealthy owner of Virgin Atlantic Airways, was asked how to become a millionaire, he had a quick answer: 'There’s really nothing to it. Start as a billionaire and then buy an airline.'"; 3) "The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money.  Think airlines.  Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers.  Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down."; 4) "I have an 800 number now that I call if I get the urge to buy an airline stock. I call at 2 in the morning and I say: 'My name is Warren, and I'm an aeroholic.' And then they talk me down."]

Chris Mayer's September MicroCap Leadership Summit presentation on 100-Baggers (video) (LINK)

Related books: 1) 100 Baggers: Stocks That Return 100-to-1 and How To Find Them; 2) 100 to 1 in the Stock Market 

Related video presentation: Mohnish Pabrai's Lecture at Peking University: "The Quest for 10-100 Baggers"

Sanjay Bakshi: Rental Yield vs. Dividend Yield (LINK)

Bill Gates Talks to Dr. Siddhartha Mukherjee (LINK)

Related book: The Gene: An Intimate History

Marc Andreessen on Change, Constraints, and Curiosity (video) [H/T ValueWalk] (LINK)

How Two Trailblazing Psychologists Turned the World of Decision Science Upside Down - by Michael Lewis (LINK)

Related book: The Undoing Project - by Michael Lewis

Book of the day (just released): Payoff: The Hidden Logic That Shapes Our Motivations - by Dan Ariely

Links

Noise: How to Overcome the High, Hidden Cost of Inconsistent Decision Making (LINK)

This column will change your life: interestingness v truth - by Oliver Burkeman (from 2014) (LINK)

James Dimon's interview at The Economic Club of Washington, D.C. (video) (LINK)

Oaktree's Power Opportunities & Infrastructure Investing Platform Video (LINK)

Author Interview: Sean Iddings and Ian Cassel - "Intelligent Fanatics" (LINK)

Related book (this is the paperback, which is now available): Intelligent Fanatics Project: How Great Leaders Build Sustainable Businesses

Delivering Alpha Conference Notes 2016 (LINK)

a16z Podcast: Apple and the Case of Invisible But Audible Innovation (LINK)

Tony Seba on the driverless car disruption - 2016 DSA State of Downtown (video) [H/T Matt] (LINK)

On Deep Breaks - by Cal Newport (LINK)

Related book: Deep Work: Rules for Focused Success in a Distracted World

Book of the day: The Art of Taking Action: Lessons from Japanese Psychology

Links

The Latticework blog has posted some excerpts from the Boyles Q2 letter, where we discussed Brexit as well as our new Greek holding.

Mental Model: Bias from Envy and Jealousy (LINK)

The Insurance Industry Has Been Turned Upside Down by Catastrophe Bonds (LINK)

Without Freddie and Fannie, could 30-year mortgage be a thing of the past? [H/T ValueWalk] (LINK)

Miamian Bruce Berkowitz has taken on a fight few would dare: He’s suing Uncle Sam. 

Berkowitz — whose mutual fund Fairholme Fund owns 14 percent of Fannie Mae and Freddie Mac preferred stock — is among a group of investors suing the U.S. government over the two government-backed mortgage insurance giants. They claim the U.S. Treasury Department illegally confiscated the companies’ earnings after their bailout, gutting the firms when it was supposed to rehabilitate them and setting a dangerous precedent for shareholders’ rights.

Mark Zuckerberg on the next 10 years of Facebook [H/T Barry Ritholtz] (LINK)

Jim Koch: "Quench Your Own Thirst" | Talks at Google (LINK)

Related book: Quench Your Own Thirst

Barry Ritholtz interviews Daniel Kahneman (podcast) (LINK)

Related book: Thinking, Fast and Slow

TED Talk - Anthony Goldbloom: The jobs we'll lose to machines — and the ones we won't (LINK)

Iridium: story of a communications solution no one listened to (LINK)

Related book: Eccentric Orbits: The Iridium Story

New Hardcore History podcast: Episode 58 – Kings of Kings III (LINK)

Long on Epictetus (Part 1, Part 2)

Related book: Epictetus: A Stoic and Socratic Guide to Life

Links

Jim Grant on Fed, Signet (video) (LINK)

Discussing the Federal Reserve's outlook on the U.S. economy and Signet CEO's criticism of Grant's bearish report with Jim Grant, Founder & Editor of Grant's Interest Rate Observer.

Hopcat bar owner's Titanic holdings are sinking fast [H/T Linc] (LINK)

Enterpreneur Mark Sellers has seen a lot of success in recent years as CEO of Barfly Ventures LLC, the Grand Rapids-based company which owns a growing string of popular Hopcat bars in college towns throughout the Midwest. 

But Sellers' early investment in Premium Exhibits Inc., a company that owns and exhibits artifacts of the RMS Titanic, which sank in 1912, and other attractions, have been sinking fast in recent weeks. 

The Atlanta-based company's stock price fell to 20 cents per share – down 17 cents, or 45 percent -- in trading on Wednesday, June 15, after the company announced it was entering Chapter 11 bankruptcy.

Bolivia rejects 'offensive' chicken donation from Bill Gates (LINK)

An interview with Professor Richard Thaler [H/T @jasonzweigwsj] (LINK)

The first episode ("The Lady Vanishes") of Malcolm Gladwell's Revisionist History podcast is now available (LINK)

Gladwell was also on the latest episode of Recode Media with Peter Kafka (audio) (LINK)

a16z Podcast: Apple and the Widgetification of Everything (LINK)

Edge #470: Deontology Or Trustworthiness? - A Conversation Between Molly Crockett and Daniel Kahneman (LINK)

This looks like it'll be an interesting book when it is released in a couple of weeks: The End of Accounting and the Path Forward for Investors and Managers