“Dream, People, Culture”: Carlos Brito, CEO of Anheuser-Busch InBev

Link to video

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Related book: DREAM BIG: How the Brazilian Trio behind 3G Capital - Jorge Paulo Lemann, Marcel Telles and Beto Sicupira - acquired Anheuser-Busch, Burger King and Heinz


[H/T Santangel's Review]

Eric Hoffer videos

Link to videos:

Eric Hoffer pt. 1 of 5

Eric Hoffer pt. 2 of 5

Eric Hoffer pt. 3 of 5

Eric Hoffer pt. 4 of 5

Eric Hoffer pt. 5 of 5

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Related books:

The True Believer: Thoughts on the Nature of Mass Movements

Eric Hoffer: An American Odyssey

American Iconoclast: The Life and Times of Eric Hoffer

Links

This weekend, receive an extra 30% off when you buy a book on Amazon, using the promo code "HOLIDAY30". Terms and conditions:

▪ To use this promotion, you must enter "HOLIDAY30" at checkout under the "Gift cards & promotional codes" section to receive 30% off any ONE (1) book purchased in your order (up to $10 promotional credit).
▪ This offer is only valid on print books. Excludes Kindle eBooks and Audible Audiobooks.
▪ The promotion is valid for a limited time only, from November 26, 2014 at 9pm PST to November 30, 2014 at 11:59pm PST. Amazon reserves the right to modify or cancel this offer at any time.
▪ Offer only applies to products sold and shipped by Amazon.com.

 Given what's happening to oil lately, you may want to consider using it on one of these books:

• Fundamentals of Investing in Oil and Gas
• Oil 101
• The Prize: The Epic Quest for Oil, Money & Power
• The Quest: Energy, Security, and the Remaking of the Modern World
• Private Empire: ExxonMobil and American Power

Mohnish Pabrai's Million-Dollar Advice For A 12-Year-Old Investor (LINK)

James Altuchar interviews Dan Ariely (LINK)

Aswath Damodaran's presentation at the CFA Conference – Numbers and Narratives: Modeling, Storytelling, and Investing [H/T ValueWalk] (LINK)

Ben Inker: Investment hell - or purgatory? (video) [H/T ValueWalk] (LINK)

Related previous post: GMO's Q3 2014 Letter

Russell Napier talks to Merryn Somerset Webb (LINK)

Barry Ritholtz interviews Lakshman Achuthan, Co-Founder & Chief Operations Officer of ECRI (audio) (LINK)

Andrew Smithers: Japan’s disappointing gross domestic product (LINK)

China has ‘wasted’ $6.8tn in investment, warn Beijing researchers (LINK)

Mark Buchanan: Has big business captured the economists? (LINK)

For Amazon, the right price isn’t always the lowest price (LINK)

A Rare Peek Into The Massive Scale of AWS [H/T The Big Picture] (LINK)

Amazon: a valuation debate (LINK)

Stoic optimism: Ryan Holiday at TEDxUChicago 2014 (video) (LINK)

Related book: The Obstacle Is the Way 

Related previous post: Stoicism quotes, thoughts, and readings

Peter Cundill on investment committees...

From There's Always Something to Do:

To my knowledge there are no good records that have been built by institutions run by committee. In almost all cases the great records are the product of individuals, perhaps working together, but always within a clearly defined framework. Their names are on the door and they are quite visible to the investing public. In reality outstanding records are made by dictators, hopefully benevolent, but nonetheless dictators. And another thing, most top managers really do exchange ideas without fear or ego. They always will. I don’t think I’ve ever walked into an excellent investor’s office who hasn’t openly said “Yeah sure, here’s what I’m doing.” or, “What did you do about that one? I blew it.” We all know we aren’t always going to get it right and it’s an invaluable thing to be able to talk to others who understand.

Peter Cundill on macro forecasting...

From There's Always Something to Do:

Synchronicity begins where pure chance ends, with one event leading to another, like a chain reaction, but all brought about by the initial event which cannot be predicted or explained. In other words – don’t waste your time. Just have patience and make sure you’re confident about the margin of safety in each investment.

Best Books for Investors: A Short Shelf - by Jason Zweig

Link to: Best Books for Investors

Here’s a list that I would still be comfortable with decades from now. Every book below has stood the test of time and, I’m confident, will remain useful for generations to come. You will quickly note that some aren’t even about investing. But they all will help teach you how to think more clearly, which is the only way to become a wiser and better investor.

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The books:

Why Smart People Make Big Money Mistakes and How to Correct Them

Against the Gods: The Remarkable Story of Risk

Common Sense on Mutual Funds

Triumph of the Optimists

Surely You're Joking, Mr. Feynman! (Adventures of a Curious Character)

"What Do You Care What Other People Think?": Further Adventures of a Curious Character

The Intelligent Investor (or for advanced readers, Security Analysis)

How to Lie with Statistics

Thinking, Fast and Slow

Manias, Panics, and Crashes

Buffett: The Making of an American Capitalist

A Random Walk Down Wall Street

Sceptical Essays 

The Scientific Outlook

The Snowball: Warren Buffett and the Business of Life

Where Are the Customers’ Yachts?

The Money Game

Links

Ndamukong Suh and Warren Buffett: The Bruiser and the Billionaire [H/T Linc] (LINK)

Rick Bookstaber on Uber (LINK)

Pershing Square Holdings' first letter to public shareholders (LINK)

Ten bites of turkey trivia for your holiday meal (LINK)

Links

Interview In VII with Larry Pitkowsky and Keith Trauner of the GoodHaven Fund (LINK)

Tom Murphy: The man who taught Warren Buffett how to manage a company [H/T Phil] (LINK)

Related books: Berkshire Beyond Buffett, The Outsiders

A Bearish Hedge Fund Bets Against the Bulls and Still Profits [H/T Jim] (LINK)

Related book: The Dao of Capital

How to compete with Amazon (LINK)

Tim Harford: Why a house-price bubble means trouble (LINK)

Joseph Tainter on the McAlvany Weekly Podcast (from October) (LINK)

Related book: The Collapse of Complex Societies 

Related previous post: Collapse of Complex Societies by Dr. Joseph Tainter

A good summary of the Primal Blueprint Podcast episodes (LINK)

Related book: The Primal Blueprint

Graham and Dodd quote

From Security Analysis:

When in his capacity as investor or speculator the business man elects to pay no attention whatever to corporate balance sheets, he is placing himself at a serious disadvantage in several different respects: In the first place, he is embracing a new set of ideas that are alien to his everyday business experience. In the second place, instead of the twofold test of value afforded by both earnings and assets, he is relying upon a single and therefore less dependable criterion. In the third place, these earnings statements on which he relies exclusively are subject to more rapid and radical changes than those which occur in balance sheets. Hence an exaggerated degree of instability is introduced into his concept of stock values. In the fourth place, the earnings statements are far more subject to misleading presentation and mistaken inferences than is the typical balance sheet when scrutinized by an investor of experience.

Links

As part of Stoic Week, Stoicism Today: Selected Writings can be downloaded for free from the Amazon Kindle store Monday to Friday [H/T Stoicism Today].

The Wisdom of Alan Watts in Four Thought-Provoking Animations (LINK)

Related audiobook: You're It!: On Hiding, Seeking, and Being Found

Startup Aims to Be Amazon.com of Indonesia [H/T Matt] (LINK)

John Mauldin: Thoughts from the Frontline - On the Verge of Chaos (LINK)

Dilution, Index Evolution, and the Shiller CAPE: Anatomy of a Post-Crisis Value Trap (LINK)

Hussman Weekly Market Comment: A Most Important Distinction (LINK)

“Science is the systematic classification of experience.” – George Henry Lewes  

I’ve noted frequently in recent months that the lessons to be drawn from the recent market cycle are not that historically overvalued, overbought, overbullish extremes can be dismissed. Rather, the lessons to be drawn have to do with the criteria that distinguish when such extremes have little near-term impact from periods where they suddenly matter with a vengeance. 

Although we agree, as John Templeton once observed, that the four most dangerous words in investing are “this time it's different,” the fact is that one very specific effect of quantitative easing made the half-cycle since 2009 different from history, and forced us to struggle quite a bit. Market cycles throughout history have demonstrated an important regularity: once a syndrome of overvalued, overbought, overbullish conditions was established (not one condition alone, but the full syndrome), the behavior of the stock market took on what I’ve often called an “unpleasant skew” – the market would typically follow with a few weeks of persistent small advances, followed by an abrupt and steep vertical plunge that wiped out weeks or months of gains in a handful of sessions. 

In the face of quantitative easing, however, that pattern changed. As short-term interest rates have been held near zero, investors have been drawn into “carry trade” mentality, believing that they must take risk in stocks, regardless of valuation, because they have “no other choice.” Given that mentality – and make no mistake, this ispsychology at work, not financial calculation – overvalued, overbought, overbullish syndromes have persisted and extended in the half-cycle since 2009, often with no downside effects at all. Admittedly, I relied too heavily on the wicked historical record of these syndromes. But rather than discarding the lessons of history altogether, we did what we always do when faced with a challenge – which is to look for adaptations that are consistent both with historical fact and with new evidence. 

The upshot is this. Quantitative easing only “works” to the extent that default-free, low interest liquidity is viewed as an inferior holding. When investor psychology shifts toward increasing risk aversion – which we can reasonably measure through the uniformity or dispersion of market internals, the variation of credit spreads between risky and safe debt, and investor sponsorship as reflected in price-volume behavior – default-free, low-interest liquidity is no longer considered inferior. It’s actually desirable, so creating more of the stuff is not supportive to stock prices. We observed exactly that during the 2000-2002 and 2007-2009 plunges, which took the S&P 500 down by half in each episode, even as the Fed was easing persistently and aggressively. A shift toward increasing internal dispersion and widening credit spreads leaves risky, overvalued, overbought, overbullish markets extremely vulnerable to air-pockets, free-falls, and crashes. 

What’s rather beautiful about this distinction is that it applies equally well to bubble periods such as the late-1990’s, the housing bubble, and on imputed sentiment data, the advance to the 1929 peak, and these considerations help to identify the shifts that invited subsequent crashes. So unless one believes there’s something magical about quantitative easing that goes beyond any well-articulated or identifiable transmission mechanism, it’s quite a good idea to pay close attention to market internals and risk premiums here.