Links

"The very best businesses, the really wonderful businesses, require no book value...We want to buy businesses, really, that will deliver more and more cash and not need to retain cash, which is what builds up book value over time. Admittedly, the prices of marketable securities, at any given time, are not a great indication of their intrinsic value. They are far better, though, than the book value of those companies in indicating intrinsic value.... It’s a factor we ignore. We do look at what a company is able to earn on invested assets and what it can earn on incremental invested assets. But the book value, we do not give a thought to." --Warren Buffett (2000)

A Jolt To The Jugular! You’re Insured But Still Owe $109K For Your Heart Attack [H/T @RosenthalHealth] (LINK)

Submerging Markets Got You Down? Reflexivity Explains Why (LINK)

Uber’s Bundles - by Ben Thompson (LINK)

Charles Wagner’s 100-Year-Old Warning About Social Media - by Cal Newport (LINK)

Invest Like the Best Podcast: Elad Gil – How to Identify Interesting Markets (LINK)

Related book: High Growth Handbook

The Art of Manliness Podcast: How to Achieve Hyperfocus – Chris Bailey (LINK)

Related book: Hyperfocus: How to Be More Productive in a World of Distraction

5 decades after his death, George Gamow’s contributions to science survive (LINK)

Related book: My World Line: An Informal Autobiography - by George Gamow

When Conservation Backfires - by Ed Yong (LINK)

Links

"The most important thing in investments is not having a high IQ, thank God. I mean, the important thing is realism and discipline. And you don’t need to be extraordinarily bright to do well in investments, if you are realistic and disciplined." --Warren Buffett

Buffett's Berkshire Hathaway loosens policy on stock buybacks (LINK)

Related previous post: Warren Buffett on Share Repurchases

O’Shaughnessy Quarterly Investor Letter Q2 2018 (LINK)

Mindsets: Optimism vs. Complacency vs. Pessimism - by Morgan Housel (LINK) [This reminded me of Charlie Munger's labeling of himself as a "cheerful pessimist," as well as the story Bill Miller told about Warren Buffett in Miller's Q2 2008 letter.]

Short-selling legend Chanos says short Envision Healthcare (video) (LINK)

Top short seller Chanos' strategy for shorting stocks (video) (LINK)

Facebook CEO Mark Zuckerberg on the Recode Decode Podcast (LINK)

George Soros Bet Big on Liberal Democracy. Now He Fears He Is Losing. (LINK)

Why diagnosing Alzheimer’s today is so difficult—and how we can do better - By Bill Gates (LINK)

What Can Odd, Interesting Medical Case Studies Teach Us? - by Siddhartha Mukherjee (LINK)

Links

Amazon, Berkshire Hathaway and JPMorgan Chase & Co. to partner on U.S. employee healthcare (LINK)

Winter 2018 Issue of Graham & Doddsville (LINK)

The Winter 2018 edition of Graham & Doddsville features Leon Cooperman (MBA ’67) of Omega Advisors, David Poppe and John Harris of Ruane, Cunniff & Goldfarb, C.T. Fitzpatrick of Vulcan Value Partners and Seth Fischer of Oasis Management Company. It also includes 3 student stock pitches and pictures from the 27th Annual Graham & Dodd Breakfast.

George Soros' speech at the World Economic Forum (LINK)

Decade of Easy Cash Turns Bond Market Upside Down ($) [H/T Matt] (LINK)

The Best Way to Lose $5 Billion Dollars [H/T @iancassel] (LINK)

How to Beat Amazon - by Sophie Bakalar (LINK)

Chemotherapy, a Trusty Weapon Against Cancer, Falls Out of Favor ($) (LINK)

Released today: The Culture Code: The Secrets of Highly Successful Groups - by Daniel Coyle

George Soros on recognizing mistakes, and forgiving oneself

"I recognize that I may be wrong...I am a very critical person who looks for defects in myself as well as in others. But, being so critical, I am also quite forgiving. I couldn't recognize my mistakes if I couldn't forgive myself. To others, being wrong is a source of shame; to me, recognizing my mistakes is a source of pride. Once we realize that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes." -George Soros

(Source)

Links

"Unfortunately in this kind of work, where you are trying to determine relationships based upon past behavior, the almost invariable experience is that by the time you have had a long enough period to give you sufficient confidence in your form of measurement, just then new conditions supersede and the measurement is no longer dependable for the future." -Benjamin Graham

Jason Zweig‏ has annotated, added links, and highlighted some of his favorite passages from Benjamin Graham's 1963 lecture, “Securities in an Insecure World” (LINK)

Farnam Street: All Models Are Wrong (LINK)

Sohn Conference Hong Kong Notes 2017 (LINK)

Energy Checklist - by Eric Cinnamond (LINK)

Brexit In Reverse? - by George Soros [H/T Santangel's] (LINK)

MSCI to Add China Shares to Indexes, Opening Market to More Foreign Investors (LINK)

It’s Lonely at the Top—or It Should Be [H/T @pcordway] (LINK)

An Early 20th Century Lesson on the Difference Between Convenience and Value (LINK)

NPR's Planet Money‏ podcast: What the Falcon's Up With Qatar? [H/T @jasonzweigwsj] (LINK)

Geoffrey West: "Scale" | Talks at Google (LINK)

Simon Sinek: "The Finite and Infinite Games of Leadership" | Talks at Google (LINK)

a16z: When We Enter the Century of Biology (LINK)

Y Combinator podcast: How Should Business Schools Prepare Students for Startups?  (LINK)

Cool Tools for Travel – Tim Ferriss and Kevin Kelly (podcast) (LINK)

This Common Butterfly Has an Extraordinary Sex Life - by Ed Yong (LINK)

Book of the day [H/T @Greg_Speicher]: One Buck at a Time: An Insider's Account of How Dollar Tree Remade American Retail

Links

“Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.” -Warren Buffett, 1992 Letter to Shareholders

Warren Buffett says the US will do fine under Trump because we've got the 'secret sauce' (short video and article) (LINK)

AIG to Pay Berkshire $9.8 Billion in Insurance Transfer Deal (LINK)

Student Debt Payback Far Worse Than Believed (LINK)

The Most Coveted Ball in Golf Is From Costco (LINK)

The Art of Holding - by Ian Cassel (LINK)

January 2017 Data Update 3: Cracking the Currency Code - by Aswath Damodaran (LINK)

Five Good Questions for Marko Dimitrijevic about his book Frontier Investor (video) (LINK)

Exponent Podcast: Episode 101 — TV is the Oak Tree  (LINK)

The Illusions Driving Up US Asset Prices - by Robert Shiller (LINK)

Some videos from the World Economic Forum in Davos (more HERE):

A Conversation With George Soros at Davos 2017

Ray Dalio: Populism Threatens Multinational Corporations

The Crisis of the Middle Class: Davos Panel (Ray Dalio, et al.)

Davos 2017 - Strategic Update: The Future of Innovation

Davos 2017 - An Insight, An Idea with Sergey Brin

Davos 2017 - An Insight, An Idea with Jack Ma

Davos 2017 - An Insight, An Idea with Ginni Rometty

Davos 2017 - Artificial Intelligence

Davos 2017 - Strategic Update: The Future of Finance

Davos 2017 - The Global Fintech Revolution

Davos 2017 - Strategic Update: The Future of Energy [I don't have any idea if this is true, and it is dangerous to make an investment on any kind of macro forecast, but it was an interesting enough comment that I thought was worth mentioning, though it's also worth remembering that demand is only one side of the supply/demand equation: "Last year...less than one car [sold in a] hundred was an electric car...If we were to assume that, as of tomorrow, every second car sold was an electric car...for twenty-five years, global oil demand will still continue to grow.']

An Evening with Richard Dawkins and Sam Harris (audio) (Part 1, Part 2)

Most Primate Species Threatened With Extinction, Scientists Find (LINK)

Decoding the Origami That Drives All Life - by Ed Yong (LINK)

Books of the day:

The Transformed Cell (1992) [H/T Peter Attia]

Humans Are Underrated: What High Achievers Know That Brilliant Machines Never Will - by Geoff Colvin

I'm not sure I had previously read Martin Luther King Jr.'s entire "Letter from a Birmingham Jail." But given the recent holiday in his honor, I decided to give it a listen on Audible, and I think it'll now be something I listen to every year. Here's one particular quote that I saved: 

"My friends, I must say to you that we have not made a single gain in civil rights without determined legal and nonviolent pressure. Lamentably, it is an historical fact that privileged groups seldom give up their privileges voluntarily. Individuals may see the moral light and voluntarily give up their unjust posture; but, as Reinhold Niebuhr has reminded us, groups tend to be more immoral than individuals."

Links

"A bubble can be identified partly based on nosebleed valuations, but a bubble is also behavioral. When prices are rising simply because they have been rising, when people on the sidelines are drawn into speculation because they can't stand their friends and neighbors making what seems like free money while they themselves are not, the market may be entering bubble territory. In the words of famed economist John Kenneth Galbraith, 'A bubble comes from rising prices, whether of stocks, real estate, works of art or anything else. A price increase attracts attention and buyers, which results in even higher prices.'" -Seth Klarman ("The 2008 Collapse and Its Aftermath: A Financial Market Perspective", June 2013)

Stock Market Returns Are Lumpy (LINK)

Two technologies—better batteries and local distribution networks—threaten the legacy electric utilities [H/T @ChrisPavese] (LINK)

a16z Podcast: Software Programs the World (LINK)

The Promise of Regrexit - by George Soros (LINK)

John Kay on The implications of Brexit (podcast) (LINK)

The visualizations transforming biology (LINK)

Book of the day: The Book of Life: Daily Meditations with Krishnamurti

Links

Malcolm Gladwell on The Tim Ferriss Show (podcast) (LINK)

The heroes of 'Flash Boys' just scored a landmark victory, but the battle isn't over [H/T Linc] (LINK)

George Soros warns on Brexit (LINK)

To start off, sterling is almost certain to fall steeply and quickly if there is a vote to leave– even more so after yesterday’s rebound as markets reacted to the shift in opinion polls towards remain. I would expect this devaluation to be bigger and more disruptive than the 15% devaluation that occurred in September 1992, when I was fortunate enough to make a substantial profit for my hedge fund investors, at the expense of the Bank of England and the British government. 

It is reasonable to assume, given the expectations implied by the market pricing at present, that after a Brexit vote the pound would fall by at least 15% and possibly more than 20%, from its present level of $1.46 to below $1.15 (which would be between 25% and 30% below its pre-referendum trading range of $1.50 to $1.60). If sterling fell to this level, then ironically one pound would be worth about one euro – a method of “joining the euro” that nobody in Britain would want.

US Railroad Carloads Below 2009/2010 Lows (LINK)

Rigonomics: Is $50 a barrel enough to revive global oil production? (LINK)

Raoul Pal - The Need to Study Real World Economics - Warwick Economics Summit 2015 [video from a little over a year ago] (LINK)

TV Advertising's Surprising Strength — And Inevitable Fall - by Ben Thompson (LINK)

"So busy doing my job, I can't get any work done" - by Seth Godin (LINK)

Quote of the day: "Intuition is pattern recognition. Use with caution: if future doesn't resemble past, lessons of experience can lead us astray." -Adam Grant (source)

Links

Bill Gates: Why I Would Raise Chickens (LINK)

A Bearish George Soros Is Trading Again (LINK)

A 2% Yield on a 50-Year Gilt? Bonkers. Totally Bonkers (LINK)

IEX CEO Brad Katsuyama on lies, 'Flash Boys,' and egregious pricing [H/T Abnormal Returns] (LINK)

Malcolm Gladwell on The Brian Lehrer Show discussing his new podcast, which will start on June 16 (audio) (LINK)

Malcolm Gladwell on The Bill Simmons podcast (mostly discussing basketball) (LINK)

Book of the day: The Joy of x: A Guided Tour of Math, from One to Infinity

Links

Nassim Nicholas Taleb's interview at the Tomorrow Conference in June 2015 (video) [H/T ValueWalk] (LINK)

Related book: Antifragile

Richard Thaler talks to Barry Ritholtz about his book, Misbehaving: The Making of Behavioral Economics (LINK)

Stephen Dubner talks with Google about his new book, When to Rob a Bank (video) [H/T ValueWalk] (LINK)

Brain Pickings - Happy Birthday, Adam Smith: What the Misunderstood Philosopher Can Teach Us about Happiness, Benevolence, and Kindness (LINK)

Related book: How Adam Smith Can Change Your Life

A Partnership with China to Avoid World War - by George Soros (LINK)

Bill Nye talks about fracking (video) (LINK)

TED Talk - Rana el Kaliouby: This app knows how you feel — from the look on your face (LINK) [This reminded me of the book Emotions Revealed, Second Edition: Recognizing Faces and Feelings to Improve Communication and Emotional Life.]

Mark Sisson's Definitive Guide to Napping (LINK)

Related book: The Primal Blueprint

Links

Buffett and Munger on How to be a Hack [H/T The Big Picture] (LINK)

Related book:  The Warren Buffett Portfolio

Benedict Evans on the a16z podcast discussing his article "New questions in mobile" (LINK)

I finally got to the second two segments ("Inside Homs", "Mindfulness")  from the latest 60 Minutes, both of which were interesting (LINK)

The Conventional Wisdom On Oil Is Always Wrong (LINK)

While the title of the above article on oil says "Always", the actual wording in the article is "almost always wrong." This reminded me of an excerpt from George Soros' The Alchemy of Finance: 

In other words, financial markets constantly anticipate events, both on the positive and the negative side, which fail to materialize exactly because they have been anticipated. No wonder that financial markets get so excited in anticipating events that seem quite harmless in retrospect! It is an old joke that the stock market has predicted seven of the last two recessions. We can now understand why that should be so. By the same token, financial crashes tend to occur only when they are unexpected.

This last point should not be overstated. There are many events that actually occur in spite of the fact that they were widely anticipated. The collapse in oil prices is a case in point; the outbreak of the Second World War was another. It has become fashionable to be a contrarian, but to bet against prevailing expectations is far from safe. It will be recalled that, in the boom/bust model, events tend to reinforce prevailing expectations most of the time and contradict them only at the inflection points; and inflection points are notoriously difficult to identify. Now that the contrarian viewpoint has become the prevailing bias, I have become a confirmed anti-contrarian.

Different takes on oil prices in 2008

It’s interesting that the fundamental investor and the economist attribute the 2008 rise in oil to supply and demand while the traders attribute it to speculation. In hindsight, I guess Paul Tudor Jones was probably the most correct in his balance of the two. But I think there’s a lesson in psychology in here somewhere. To the man with only a hammer…

Government Take Force report:

The Task Force’s preliminary assessment is that current oil prices and the increase in oil prices between January 2003 and June 2008 are largely due to fundamental supply and demand factors. During this same period, activity on the crude oil futures market – as measured by the number of contracts outstanding, trading activity, and the number of traders – has increased significantly. While these increases broadly coincided with the run-up in crude oil prices, the Task Force’s preliminary analysis to date does not support the proposition that speculative activity has systematically driven changes in oil prices.

Warren Buffett on CNBC in June 2008:

“It's not speculation, it is supply and demand. … We don't have excess capacity in the world anymore, and that's what you're seeing in oil prices.”

Ben Bernanke in July 2008:

"If financial speculation were pushing all prices above the level consistent with the fundamentals of supply and demand, we would expect inventories of crude oil and petroleum products to increase as supply rose and demand fell. But, in fact, available data on oil inventories shows notable declines over the past year."

George Soros in an interview with the Telegraph in May 2008:

“Speculation… is increasingly affecting the price,” he said. “The price has this parabolic shape which is characteristic of bubbles,” he said.

Paul Tudor Jones in a June 2008 interview with Alpha magazine:

“It’s a very bullish supply-and-demand situation, and the peak oil theory is probably correct. But the run-up in prices is now bringing in an enormous amount of speculative, nontraditional capital such as pension funds and university endowments — principally through index products. Commodities have been the worst-performing asset class behind stocks, bonds and real estate for the past 200 years, but Wall Street doesn’t highlight that long history when selling commodity index instruments today. Instead, it shows a chart of the bull market of the past 12 years to rationalize why some pensioner should be long cattle futures in the derivatives markets as part of a basket. I am sure they were using similar logic about tulips three centuries ago. Oil is a huge mania, and it’s going to end badly. We’ve seen it play out hundreds of times over the centuries, and this is no different. It’s just the nature of a rip-roaring bull market. Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, whereas the mania runs wild and prices go parabolic.”

Quote about George Soros...

I thought the quote below was a great thought, and really distinguishes the difference between the investing styles of someone like Warren Buffett and someone like George Soros, both of whom were wildly successful doing it their own way. This is from the book More Money Than God: Hedge Funds and the Making of a New Elite:

“Soros saw no point in knowing everything about a few stocks in the hope of anticipating small moves; the game was to know a little about a lot of things, so that you could spot the places where the big wave might be coming.”

George Soros quote

“My financial success stands in stark contrast with my ability to forecast events. In this context, we must distinguish between events in financial markets and events in the real world. Events in financial markets determine financial success; events in the real world are relevant only in evaluating the scientific merit of my approach.

Even in predicting financial markets my record is less than impressive: the best that can be said for it is that my theoretical framework enables me to understand the significance of events as they unfold—although the record is less than spotless. One would expect a successful method to yield firm predictions; but all my forecasts are extremely tentative and subject to constant revision in the light of market developments. Occasionally I develop some conviction and, when I do, the payoff can be substantial; but even then, there is an ever-present danger that the course of events fails to correspond to my expectations. The concept of the “bull market of a lifetime” is a case in point: it was highly rewarding in Phase 1 but it became more of a hindrance than a help in Phase 2. My approach works not by making valid predictions but by allowing me to correct false ones.

With regards to events in the real world, my record is downright dismal. The outstanding feature of my predictions is that I keep on expecting developments that do not materialize. During the real-time experiment I often envisioned a recession that was just around the corner, but it never occurred….” –George Soros, The Alchemy of Finance

……………….

Related previous posts (see quotes from Hendry and Taleb in these posts relating to Soros and the quote above):

George Soros on the Coming U.S. Class War

Nassim Taleb on the importance (and difficulty) of being willing to change your mind if the facts change

Financial Crisis Inquiry Commission Interviews

Link to: FCIC Interviews (MP3)

..........

Some notables:

Warren Buffett

Michael Burry

Jim Chanos

Satyajit Das (Interview 1)

Satyajit Das (Interview 2)

David Einhorn
James Grant

Roger Lowenstein

Bethany McLean

John Paulson
Raghuram Rajan

Nouriel Roubini

Robert Shiller

Yves Smith

George Soros

Paul Volcker

George Soros Lectures

I finally got around to reading the transcripts from the lectures given by George Soros at the end of October. They certainly made me think.

Link to the five-part lecture series:

George Soros: Open Society,

the Financial Crisis, and the Way Ahead

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