Links

"Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object." --John Maynard Keynes

Warren Buffett’s Optimistic? Pessimistic? No, Realistic - by Andrew Ross Sorkin (LINK)

Sam Zell on Market Valuations, Real Estate, Post-Virus Economy (video) [H/T Linc] (LINK)

Spring 2020 issue of Graham & Doddsville (LINK)

Content, Cars, and Comparisons in the "Streaming Wars" - by Matthew Ball (LINK)

Invest Like the Best Podcast: Ali Hamed – An Update on Private Credit (LINK)

Against the Rules with Michael Lewis (podcast): The Invisible Coach (LINK)

The Case for Deeply Negative Interest Rates - by Kenneth Rogoff (LINK)

MacroVoices Podcast #217 Dr. Lacy Hunt: The Road Through Deflation Toward Eventual Hyperinflation (LINK)

Hope, Through History Podcast: Episode 3 | The Polio Epidemic (LINK)

The Daily Stoic Podcast: Ask Daily Stoic: Ryan and Robert Greene Talk Plagues, Politics, and Polarization (LINK)

All You Need Are a Few Small Wins Every Day - by Ryan Holiday (LINK)

Our message to the class of 2020 - by Bill and Melinda Gates (LINK)

It is time to take seriously the link between Vitamin D deficiency and more serious Covid-19 symptoms - by Matt Ridley (LINK)

Links

"In the main, therefore, slumps are experiences to be lived through and survived with as much equanimity and patience as possible. Advantage can be taken of them more because individual securities fall out of their reasonable parity with other securities on such occasions, than by attempts at wholesale shifts into and out of equities as a whole. One must not allow one’s attitude to securities which have a daily market quotation to be disturbed by this fact." --John Maynard Keynes

Gates to Leave Boards of Microsoft, Berkshire Hathaway (LINK)

Microsoft Corp. co-founder Bill Gates is stepping down from the company’s board of directors, marking the biggest boardroom departure in the tech industry since the death of longtime rival and Apple Inc. co-founder Steve Jobs. 

Mr. Gates, who also is vacating his board seat at Berkshire Hathaway Inc., intends to focus more on his philanthropic efforts. He will continue to serve as a technical adviser to Microsoft Chief Executive Satya Nadella, the software company said late Friday.

Coronavirus and Insurance Policies: What Is Covered? ($) (LINK)

Stocks Are in Chaos. Control the One Thing You Can. - by Jason Zweig ($) (LINK)

Remember: You Don’t Control What Happens, You Control How You Respond - by Ryan Holiday (LINK)

Himalaya Capital Hosts Discussion on COVID-19 with Experts from China (video) [H/T @ShaiDardashti] (LINK)

Li Lu, Founder and Chairman of Himalaya Capital, hosted a video conference on March 13th, 2020 between three leading COVID-19 experts from China to share their valuable experiences fighting the virus on the frontlines over the past two months with leading scientists, health practitioners, and policy makers in the United States.

How A Country Serious About Coronavirus Does Testing And Quarantine (video) (LINK)

Inside the Rope with David Clark (podcast): 59: John Hempton - Central Banks aren’t the answer to Coronavirus (LINK)

Hidden Forces Podcast: Passive Investing’s Role in the Coronavirus Market Melt-Down & Prospects for a Melt-Up | Mike Green (LINK)

The Peter Attia Drive Podcast: #97 - Peter Hotez, M.D., Ph.D.: COVID-19: transmissibility, vaccines, risk reduction, and treatment (LINK)

The Peter Attia Drive Podcast: #98 - Peter Attia, M.D. and Paul Grewal, M.D.: Coronavirus (COVID-19) FAQ (LINK)

The Man Who Saw the Pandemic Coming (LINK)

John Maynard Keynes' move away from market timing

From Concentrated Investing: Strategies of the World's Greatest Concentrated Value Investors:

As he had demonstrated in the early 1930s wrestle with the board of the P.R. Finance Company, Keynes began by explaining why he no longer believed in market timing driven by his credit cycling theory: 

We have not proved able to take much advantage of a general systematic movement out of and into ordinary shares as a whole at different phases of the trade cycle. Credit cycling means in practice selling market leaders on a falling market and buying them on a rising one and, allowing for expenses and loss of interest, it needs phenomenal skill to make much out of it.   

. . .   

As a result of these experiences I am clear that the idea of wholesale shifts is for various reasons impracticable and indeed undesirable. Most of those who attempt to sell too late and buy too late, and do both too often, incurring heavy expenses and developing too unsettled and speculative a state of mind, which, if it is widespread has besides the grave social disadvantage of aggravating the scale of the fluctuations. 

(In a note to his student Richard Kahn that accompanied the letter sent, Keynes mourned the failure of market timing strategies based on credit-cycling, writing, “. . . I have seen it tried by five different parties . . . over a period of nearly twenty years. . . . I have not seen a single case of success.”) He went on in the letter to King’s College to describe the core of his philosophy in three principles that he believed would result in sound investing. He proposed: 

1. A careful selection of a few investments (or a few types of investment) having regard to their cheapness in relation to their probable actual and potential intrinsic value over a period of years ahead and in relation to alternative investments at the time;    

2. A steadfast holding of these in fairly large units through thick and thin, perhaps for several years, until either they have fulfilled their promise or it is evident that they were purchased on a mistake;   

3. A balanced investment position, i.e., a variety of risks in spite of individual holdings being large, and if possible, opposed risks.

...................

Related previous post: John Maynard Keynes' change in investment philosophy

Links

Buffett’s Berkshire Plans $9 Billion Bond Sale to Repay Loan [H/T Linc] (LINK)

Strong investor demand allowed the company to tighten yields on the offering. The longest part of the sale was $2.5 billion of 3.125 percent of 10-year bonds offering yielding 1.3 percentage points more than similar-maturity Treasuries, according to Bloomberg data.

Investor orders for Berkshire Hathaway bond sale hit $34bn (LINK)

Investor orders for a piece of a $9bn Berkshire Hathaway bond sale eclipsed $30bn on Tuesday, as the conglomerate headed by Warren Buffett sought to repay bank loans used to finance its $36bn takeover of Precision Castparts. 

The deal, spread across seven tranches, underscored the accessibility to the market that high-grade companies have enjoyed over the past several weeks, and stands in sharp contrast to the experience of junk-rated groups which have struggled under heightened volatility and erratic fund flows.

Berkshire Hathaway Energy Valuation Indicators (LINK)

Comments on Mistakes and Buffett’s Original Berkshire Purchase (LINK)

Latticework of Mental Models: Network Effect (LINK)

Gary Channon: the three things I look for when buying a company (LINK)

Bruce Berkowitz on Fannie and Freddie: People are going to call this 'The Big Lie' [H/T Linc] (LINK)

Being punished for doing the obvious: Peabody Energy Corp edition - by John Hempton (LINK)

Tim Harford: The lost leisure time of our lives (LINK)

Three hours a day is quite enough,” wrote John Maynard Keynes in his 1930 essay Economic Possibilities for our Grandchildren. The essay continues to tantalise its readers today, thanks in part to a forecast that is looking magnificently right — that in advanced economies people could be up to eight times better off in 2030 than in 1930 — coupled with a forecast that is looking spectacularly wrong, that we would be working 15-hour weeks. 

In 2008, economists Lorenzo Pecchi and Gustavo Piga edited a book in which celebrated economists pondered Keynes’s essay. One contributor, Benjamin Friedman of Harvard University, has recently revisited the question of what Keynes got wrong, and produced a thought-provoking answer.

Bitcoin and Diversity - by Ben Thompson (LINK)

a16z Podcast: Disruption in Business… and Life (with Marc Andreessen and Clayton Christensen) (LINK)

a16z Podcast: Data Network Effects (LINK)

CRISPR: gene editing is just the beginning (LINK)

Yellowstone's Supervolcano Gets a Lid (LINK)

Book of the day: Rise of the Robots: Technology and the Threat of a Jobless Future

Links

The world’s greatest investors: John Maynard Keynes [H/T CIO] (LINK)

Related previous post: John Maynard Keynes' change in investment philosophy

A Conversation With Robert J. Shiller (video) [H/T CIO] (LINK)

Related books: Irrational Exuberance 3rd edition; Phishing for Phools

Andre Kostolany, bon vivant and speculator (LINK)

Seth Godin: On saying "no" (LINK)

John Maynard Keynes' change in investment philosophy

Via Chris Mayer in his book, 100 Baggers:

Keynes’s investment performance improved markedly after adopting these ideas. Whereas in the 1920s he generally trailed the market, he was a great performer after the crash. Walsh dates Keynes’s adoption of what we might think of as a Warren Buffett sort of approach as beginning in 1931. From that time to 1945, the Chest Fund rose tenfold in value in 15 years, versus no return for the overall market. That is a truly awesome performance in an awfully tough environment. 

A more recent paper is “Keynes the Stock Market Investor,” by David Chambers and Elroy Dimson. They add more interesting details about how his investing style changed. As Chambers and Dimson note, “As a young man, Keynes was supremely self-assured about his capabilities, and he traded most actively to the detriment of performance in the first period of his stewardship of the College endowment up to the early 1930s.”  

In the early 1930s, he changed his approach. With the exception of 1938, he would never trail the market again. This change showed up in a number of ways. First, he traded less frequently. He became more patient and more focused on the long-term. 

Here is his portfolio turnover by decade: 

1921–1929:  55%

1930–1939:  30%

1940–1946:  14% 

Turnover was just one aspect of Keynes’s change. Another was how he reacted during market declines. From 1929 to 1930, Keynes sold one-fifth of his holdings and switched to bonds. But when the market fell in the 1937–1938, he added to his positions. He stayed 90 percent invested throughout. 

This is a remarkable change. It again reflects less concern about short-term stock prices. He was clearly more focused on the value of what he owned, as his letters show. The authors of the paper note of Keynes’s change, “Essentially, he switched from a macro market-timing approach to bottom-up stock-picking.” 

In a memorandum in May of 1938, Keynes offered the best summing up of his own philosophy: 

1. careful selection of a few investments (or a few types of investment) based on their cheapness in relation to their probable actual and potential intrinsic value over a period of years ahead and in relation to alternative investments; 

2. a steadfast holding of these investments in fairly large units through thick and thin, perhaps for several years, until either they have fulfilled their promise or it has become evident that their purchase was a mistake; and 

3. a balanced investment position, that is, a portfolio exposed to a variety of risks in spite of individual holdings being large, and if possible, opposed risks. 

Here is one last bit of advice from the same memo: 

In the main, therefore, slumps are experiences to be lived through and survived with as much equanimity and patience as possible. Advantage can be taken of them more because individual securities fall out of their reasonable parity with other securities on such occasions, than by attempts at wholesale shifts into and out of equities as a whole. One must not allow one’s attitude to securities which have a daily market quotation to be disturbed by this fact.

...................

Related book: Keynes and the Market: How the World's Greatest Economist Overturned Conventional Wisdom and Made a Fortune on the Stock Market

Related video: John Wasik on "Keynes's Way to Wealth: Timeless Investment Lessons from the Great Economist"

John Maynard Keynes quote

"To suppose that safety-first consists in having a small gamble in a large number of different [companies] where I have no information to reach a good judgment, as compared with a substantial stake in a company where one's information is adequate, strikes me as a travesty of investment policy." - John Maynard Keynes