You can discard most of the junk that clutters your mind—things that exist only there—and clear out space for yourself:
… by comprehending the scale of the world
… by contemplating infinite time
… by thinking of the speed with which things change—each part of every thing; the narrow space between our birth and death; the infinite time before; the equally unbounded time that follows.
Related books:
Dying Every Day: Seneca at the Court of Nero
The Greatest Empire: A Life of Seneca
Letters from a StoicElizabeth Holmes, Theranos: Transforming Healthcare by Embracing Failure (video) [H/T ValueWalk] (LINK) [There are a lot of other great videos from Stanford listed HERE as well.]
Related books:
Mindstorms: Children, Computers, And Powerful Ideas
Code: The Hidden Language of Computer Hardware and SoftwareSteve Romick's Q4 2014 Letter (LINK)
The competition for such values is fiercer in the United States, but they can be found, especially, again, when some broader trend punishes an entire sector of the market. In 2001, for instance, energy stocks were cheap (as was the price of oil). Graham and Dodd would not have advised speculating on the price of oil—which is dependent on myriad uncertain factors from OPEC to the growth rate of China’s economy to the weather. But because the industry was depressed, drilling companies were selling for less than the value of their equipment. Ensco International was trading at less than $15 per share, while the replacement value of its rigs was estimated at $35. Patterson-UTI Energy owned some 350 rigs worth about $2.8 billion. Yet its stock was trading for only $1 billion. Investors were getting the assets at a huge discount. Though the subsequent oil price rise made these stocks home runs, the key point is that the investments weren’t dependent on the oil price. Graham and Dodd investors bought into these stocks with a substantial margin of safety.
Related previous post: John Wasik on "Keynes's Way to Wealth: Timeless Investment Lessons from the Great Economist"
Related book: Keynes's Way to Wealth: Timeless Investment Lessons from The Great EconomistRobert Shiller Says It’s Time to Buy Greek Stocks (LINK) [One possible ETF to consider not just for Greek stocks, but also for other low-priced markets is GVAL.]
IF the broader markets still remain fairly sanguine about the election of Syriza, that is certainly not true of investors in Greece itself. The yield on three-year bonds is now up to nearly 17% and Greek bank shares are down 20% today, with the broader stockmarket off 8%.
John Kay: Why worry about deflation? (LINK)Neither sell-off is an immediate problem. Greece wouldn't want to borrow from the markets at current rates (or even the rates that prevailed last week) and share prices rise and fall. But both developments are a symptom of wider worries. If there is any chance of Greece leaving the euro, a process that would probably involve capital controls and the forcible conversion of euro deposits into devalued drachma (akin to Argentina's corralito), then why would you leave your money in a Greek bank? Even if that doesn't happen, wealthy Greeks might be tempted to move their money overseas to escape higher taxes.
Related book: Berkshire Beyond BuffettJeff Gundlach reveals his biggest mistake — and how you can avoid it [H/T @trengriffin] (LINK)
Related book: MONEY Master the Game: 7 Simple Steps to Financial Freedom
Amidst all these distractions, I omitted to post a link to GMO's 3Q report, with another compelling exposition from Jeremy Grantham on what I consider the key issue of our time. While acknowledging short term benefits from the fall in the oil price, as income is transferred from producers to consumers with a greater propensity to spend, he explains with great clarity why the current fall in the oil price 'does nothing to offset the squeeze on the total economy from rising costs', and provides some alarming illustrations of the magnitude of that squeeze. We differ on coal: as mentioned here six months ago, the usage of coal in Asia is rising and not falling, as oil and gas production falters. However, Grantham's central message could hardly be clearer - or further from complacent assumptions of business-as-usual. '... other parts of the complex economic system have to be sacrificed to retain the ability to acquire sufficient oil... if oil costs continue to rise the trade-offs become more and more painful. Our complex system has been trained by experience to deal with steady growth. Now it must deal with slowing growth and one day it may face contraction. In this changed world we can only guess how robust the stressed system will be. We may hope it will be tough but quite possibly it will be brittle. At the extreme it might even threaten the viability of our current economic system. It is vital therefore, if we want to reduce these stresses, to emphasize fuel efficiency, reduce wastage of all kinds, and encourage the rapid development of sustainable "alternative" forms of energy... Clearly the writing is on the wall. It is now up to our leadership and to us as individuals to read it and act accordingly.' First read the rest: 'The Beginning of the End of the Fossil Fuel Revolution (from Golden Goose to Cooked Goose)'.
See’s Candies Case Study (LINK)If only we knew how to invest accordingly. Portfolio turnover in 2014 was low, at 12%. With the world in turmoil, we may well need to make more changes in the year ahead. Some of the changes we made earlier have not, as yet, gone to plan. Suggestions, as always, are welcome.
Related book: Daily Rituals: How Artists WorkBuffett, 'Dilbert' creator Scott Adams differ on passion [H/T Will] (LINK)
Related book: How to Fail at Almost Everything and Still Win BigScott Adams: Speed is the New Intelligence (LINK)
Related book: Bold: How to Go Big, Create Wealth and Impact the WorldWilliam Ury, co-author of the Charlie Munger recommended Getting to Yes: Negotiating Agreement Without Giving In, is out with a new book; Getting to Yes with Yourself
In this piece, I’m going to show that the profit margin expansion seen in the U.S. corporate sector over the last two decades has been driven largely by gains in the financial and technology sectors. I’m then going to examine arguments for and against the sustainability of this shift.Barry Ritholtz talks to Bill Gross (Part 2) (LINK)
Last week, the ECB announced that it will begin a new program of quantitative easing on March 15 – a delay that allows plenty of time for various rugs to be pulled out, if the experience of recent years is informative. Assuming that the program proceeds as announced, the ECB envisions bond purchases of 60 billion euros per month. Fully 92% of these purchases must be made by the central banks of individual countries in the Eurosystem, with the ECB sharing the risk of losses on only 20% of it (12% being investment-grade institutional debt, and 8% being the sovereign debt of Euro-area countries). This was essentially as expected, but - thus far - without an option for national central banks to treat their share of purchases as discretionary. I still suspect that this shoe will drop in the weeks ahead, but there's actually a much more important factor driving our outlook.Broyhill Case Study: Time Warner Value Creation (LINK)
Once a year, I consider the question, “If I could own only one stock, what would it be?” This year I wrote about Cowen Group, Inc. & Co. (COWN) in my first-quarter letter. Cowen is traditionally known for being a boutique broker-dealer which has been around for nearly 100 years. Actually, the public company, Cowen Group, Inc. & Co., was bought a few years ago by Ramius LLC, which was a 20-year-old privately owned alternative equity management firm. It was a very successful firm and bought the broker-dealer to have a permanent capital base, expand its operations and capitalize on the synergies between the two firms. What we have seen is a very successful turnaround of the broker-dealer business—it has now been profitable for the last five quarters. Ramius LLC has grown its assets under management from $9.4 billion to $11.6 billion from year end to July 1, 2014. The stock still trades below its tangible asset value despite having two businesses that are operating very solidly now. We think it is a very misunderstood company. If you said “Cowen Group, Inc. & Co.,” most investors would still think of the broker-dealer business, which was in trouble a few years ago, and not even realize that this successful $11+ billion asset management business was the driving force behind the company. Additionally, it has very strong leadership. The CEO is Peter Cohen, who was the CEO of Shearson Lehman Hutton from 1983 to 1990. He and his team, who founded Ramius LLC years ago, have very significant stock in the company, so we feel good about the incentive structure.And for those micro-cap investors out there that might be interested, we recently released our Boyles Q4 letter and mentioned two recent purchases: Mastermyne Group Limited (ASX:MYE) and Cambria Automobiles plc (AIM:CAMB). As always, this is for information purposes only and not a recommendation to buy or sell a security. We currently own shares in both companies but that may change at any time. Please do your own work before making an investment decision.