Audible's "Treat Yourself Sale 2016"

Audible's latest sale is a big one, with some great titles. Below are some that stood out to me (prices range from $4.95 to $6.95):

Titan: The Life of John D. Rockefeller, Sr. - by Ron Chernow

The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance - by Ron Chernow

Endurance: Shackleton's Incredible Voyage - by Alfred Lansing

The Black Swan: The Impact of the Highly Improbable - by Nassim Nicholas Taleb

Boomerang: Travels in the New Third World - by Michael Lewis

The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers - by Ben Horowitz

Think and Grow Rich - by Napoleon Hill

Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else - by Geoff Colvin

The Virgin Way: Everything I Know about Leadership - by Richard Branson

Freakonomics: Revised Edition - by Steven D. Levitt,  Stephen J. Dubner

Naked Statistics: Stripping the Dread from the Data - by Charles Wheelan

10% Happier: How I Tamed the Voice in My Head, Reduced Stress Without Losing My Edge, and Found a Self-Help That Actually Works - by Dan Harris

Algorithms to Live By: The Computer Science of Human Decisions - by Brian Christian,  Tom Griffiths

Leaders Eat Last: Why Some Teams Pull Together and Others Don't - by Simon Sinek

Lincoln - by David Herbert Donald

John Quincy Adams - by Harlow Giles Unger

The Greater Journey: Americans in Paris - by David McCullough

The Graveyard Book (Full-Cast Production) - by Neil Gaiman

The Fellowship of the Ring: Book One in The Lord of the Rings Trilogy - by J.R.R. Tolkien

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As a reminder around holiday shopping season, you can support this blog by shopping on Amazon through THIS LINK (also available on the right side of the homepage). If you choose not to use the link for this blog, consider using the link for one of your other favorite blogs. Overall, it's a good way to support the bloggers of the world without directly using their sites' donation tabs and tip jars.

Links

Surprise! Warren Buffett turns out to be more prescient about stocks than politics - by  Carol J. Loomis (LINK)

...Buffett’s prediction concerned what magnitude of total returns—stock appreciation plus reinvested dividends—U.S. investors would reap in the 17 years that began as 1999 was moving to its close. Buffett made the prediction originally in July of that year in a speech he gave at an Allen & Co. conference; repeated it in several speeches over the next few months; and worked with this writer to turn the speeches into a Fortune article, “Mr. Buffett on the Stock Market,” that ran in our Nov. 22, 1999 issue. You will notice that today is precisely 17 years later. 

...Net of the trading and management costs that investors incur, he said—implying that these costs could strip investors of a percentage point in their return—he predicted they might realize annual returns in the 17-year period from late 1999 to late 2016 that would be a so-so 6%. 

Today, with the 17 years having passed, what is the answer? 

First of all, be reminded that the stock market—as it is presented by the Dow and Standard & Poor’s indices, for example—does not deal in “net” returns. What you monitor on your computer screens are gross returns, before any trading and management costs are deducted. 

But the record shows that the period’s gross returns are anemic enough to confirm Buffett’s general accuracy. From mid-November, 1999, to last Friday’s trading day, the annualized total return to investors from the Dow Industrials was 5.9%.

Q&A With Jack Bogle: ‘We’re in the Middle of a Revolution’ (LINK)

Ackman Admits Mistake, but Chipotle Bet Could Be Another [H/T @HurriCap] (LINK)

Ed Yong "I Contain Multitudes" | Talks at Google (LINK)

Related book: I Contain Multitudes: The Microbes Within Us and a Grander View of Life

David Macaulay: "The Way Things Work Now" | Talks at Google (LINK)

Related book: The Way Things Work Now

Mars Is Going Through a Bit of a Dry Spell. How Do We Know? Rusty Meteorites. (LINK)

These Web-Footed Monkeys Are Built For Swimming (video) (LINK)

Links

How I Built This is a podcast - Southwest Airlines: Herb Kelleher (LINK)

Related book: Nuts!: Southwest Airlines' Crazy Recipe for Business and Personal Success

Fairholme Capital Management Public Conference Call Transcript [H/T Will] (LINK)

Alfred P. Sloan on Automobile Distribution (LINK)

Related book: My Years with General Motors

Don’t Be A Chicken - by Ian Cassel (LINK)

Reflecting on Mass Customization - by Shai Dardashti (LINK)

In the game of life, anything times zero must still be zero - by Rory Sutherland (LINK)

Edge #482: Glitches - A Conversation With Laurie Santos (LINK)

Links

Notes from Warren Buffett’s Meeting with University of Maryland Students (LINK)

25iq: Why Moats are Essential for Profitability (Restaurant Edition) - by Tren Griffin (LINK)

Morgan Creek Capital Management's Q3 Letter (LINK)

Udemy: Value Investing, Taught by Six Superinvestors [H/T @HurriCap] (LINK)

Mohnish Pabrai's Interview with ET NOW on Trump, Demonetization and Value Investing (LINK)

Decoding Amazon's Fashion Ambitions [H/T @BaseHitInvestor] (LINK)

Inside a Moneymaking Machine Like No Other [H/T Matt] (LINK)

The Medallion Fund, an employees-only offering for the quants at Renaissance Technologies, is the blackest box in all of finance.

The Big Short: is the next financial crisis on its way? [H/T Hurricane Capital] (LINK)

Steve Eisman saw the last crash coming and was portrayed in an Oscar-winning film. Now he believes Europe’s banks, especially Italy’s, are at risk

50 Things That Made the Modern Economy podcast: The Shipping Container (LINK)

Related book: The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

Links

Capital Allocation Outside the U.S. -- Evidence, Analytical Methods, and Assessment Guidance - by Michael Mauboussin, et al. [H/T @HurriCap] (LINK)

Latticework of Mental Models: Porter’s Five Forces Analysis (LINK)

An interview with Guy Spier (Part 1, Part 2)

Family Feuds: The Promise and Peril of Family Group Companies! - by Aswath Damodaran (LINK)

The Strange Consequences of India’s Banknote Ban (audio plays) [H/T Matt] (LINK)

Valeant's Pharmacy Ties Get Even Murkier (LINK)

Valeant and Philidor after the criminal charges - by John Hempton (LINK)

Wal-Mart Tackles Food Safety With Trial of Blockchain [H/T Matt] (LINK)

Exponent podcast: Episode 096 — Sins of Commission and Omission (LINK)

The Economist reviews the book The Great Convergence: Information Technology and the New Globalization (LINK)

Obama Reckons with a Trump Presidency - by David Remnick (LINK)

Professor Stephen Hawking: Humanity will not survive another 1,000 years if we don’t escape our planet [H/T Will] (LINK)

Charlie Munger flashback of the day.... At the 2015 Daily Journal Annual Meeting, Munger was asked a question relating to how he reads. His response:

"I've never taken notes. I never kept notes when I was a student. I just read what I please when I feel like reading it, and I think what I think when I feel like thinking it. And that's my system. I don't think it's the right system for everybody, but it seems to have worked well enough for me to enable me to get by."

Links

Microsoft Founder Bill Gates addressing India's top policy makers (video) [H/T @oraunak] (LINK)

A Perfume that Smells Like Poop? - By Bill Gates (LINK)

Sustainable Sources of Competitive Advantage - by Morgan Housel (LINK)

Someone with a 110 IQ but the ability to recognize when the world changes will always beat the person with a 140 IQ and rigid beliefs. The world is filled with smart people who get nowhere because their intelligence was acquired 20 or 30 years ago in a vastly different world than we live in today. And since intelligence has a lot of sunk costs – college is expensive and hard, for example – people tend to cling to what they learn, even while the world around them constantly changes. So the ability to realize when you’re wrong and when things changed can be more effective than an ability to solve problems that are no longer relevant. This seems obvious until you watch, say, Kodak or Sears trying to solve 1980’s problems in the 2000s. 

Marc Andreessen promotes the idea of “strong beliefs, weakly held,” which I love. Few things are more powerful than strongly believing in an idea (focus) but being willing to let go of it when it’s proven wrong or outdated (humility).

Quality Companies, Compounders and Value Traps (LINK)

Jim Chanos on Trump's Election Win and Stocks [H/T ValueWalk] (LINK)

Theranos Whistleblower Shook the Company—And His Family (LINK)

Amazon.com’s Marketplace Concept Spreads to Other Retailers [H/T Matt] (LINK)

Unmoored From Reality: DryShips Halted After 1,500% Post-Election Rally [H/T Matt] (LINK) [It dropped quite a bit when it re-opened, though still up significantly from where it was before the election.]

Default Clouds Hang Over Commercial Property Sector [H/T @IntrinsicInv] (LINK)

Want to Really Make America Great Again? Stop Reading the News. - By Ryan Holiday (LINK)

Freakonomics Radio: How to Make a Bad Decision (audio) (LINK)

Some of our most important decisions are shaped by something as random as the order in which we make them. The gambler's fallacy, as it's known, affects loan officers, federal judges -- and probably you too. How to avoid it? The first step is to admit just how fallible we all are.

TED Talk - Steven Johnson: How play leads to great inventions (LINK)

Related book: Wonderland: How Play Made the Modern World

Links

Reflections on the Trump Presidency, One Week after the Election - by Ray Dalio (LINK)

Bill Gross' November 2016 Investment Outlook: "Populism Takes a Wrong Turn" (LINK)

James Montier says nothing is cheap and his GMO is holding cash ($) (LINK)

TED Talk - Bettina Warburg: How the blockchain will radically transform the economy (LINK)

Fake News - by Ben Thompson (LINK)

CRISPR gene-editing tested in a person for the first time (LINK)

If you're looking for a health/diet book, Mark Sisson just came out with an updated version of his main book: The New Primal Blueprint

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

Howard Marks Memo: Go Figure!

Link to: Go Figure!

Think back to just before last week’s election.  What did we know?

• The polls were almost unanimous in saying Hillary Clinton would win the popular vote by about 3%.

• FiveThirtyEight, an analytical website whose forecasts had proved quite accurate in the two prior presidential elections, gave Clinton a 71% probability of winning, and almost everyone else was between 80% and 90%.

• Clinton was favored in most of the “swing states” that would make the difference in the Electoral College.  Thus she was expected to win more than 290 electoral votes, leaving just 250 or so for Donald Trump.

• Clinton was the obvious choice of the people who move the markets.  This could be seen in the fact that the markets went up when Clinton’s odds improved in late October (recovering from some unpleasant Wikileaks disclosures), and then they fell after the FBI’s James Comey announced the discovery of an additional cache of Clinton emails on October 28, lifting Trump’s chances.

• Thus there was a near-universal belief that a Trump victory – as unlikely as it was – would be bad for the markets.

So what happened?  First Clinton didn’t win.  There’s much soul-searching, particularly among the forecasting fraternity.  Everyone knew intellectually that Trump had a non-zero chance of winning, but few people thought it could actually happen. 

And second, the U.S. stock market had its best week since 2014!  The Dow Jones Industrials rose almost 5% for the week, taking them to a new all-time high.  The Dow was up every day last week.  It rose on Monday and Tuesday, when Clinton was expected to win.  And then it rose Wednesday, Thursday and Friday, after she had lost. 

That behavior calls to mind my January memo, “On the Couch,” on the subject of the market’s irrationality.  Clearly, the election was the biggest event last week, so it must have been the main influence behind the changes in stock prices.  But how could the expectation of a Clinton victory make stock prices rise, and then the reality of her defeat make them rise further?

Links

Farnam Street - Remembering More of Everything: The Memory Palace (LINK)

Related previous post: Memortation, or One Way to Put What You Learn to Practical Use [There was also a nice sentence in The Daily Stoic that describes how I essentially use "Memortation" as a form of preparation for the day: "The Stoics were pioneers of the morning and nightly rituals: preparation in the morning, reflection in the evening."]

You might not like the TPP. You are going to like the alternative less. - by John Hempton (LINK)

Fairfax Financial Holdings Limited: Reduction in Defensive Equity Hedges (LINK)

How T. Boone Pickens Sits Tight in the Riskiest of Businesses [H/T @iancassel] (LINK)

50 Things That Made the Modern Economy podcast: The Haber-Bosch Process (LINK)

It has been called the greatest invention of the 20th Century – and without it almost half the world’s population would not be alive today. A 100 years ago two German chemists, Fritz Haber and Carl Bosch, figured out a way (worked out how) to use nitrogen from the air to make ammonia, which makes fertiliser. It was like alchemy; “Brot aus Luft”, as Germans put it. “Bread from air.”

Tim Harford on EconTalk (podcast) (LINK)

Related book: Messy: The Power of Disorder to Transform Our Lives

Why Facebook Rules the World - by Jonah Lehrer (LINK)

Investing book of the day: Frontier Investor: How to Prosper in the Next Emerging Markets

Investing thought of the day, via Seth Klarman in Margin of Safety:

The single most crucial factor in trading is developing the appropriate reaction to price fluctuations. Investors must learn to resist fear, the tendency to panic when prices are falling, and greed, the tendency to become overly enthusiastic when prices are rising. One half of trading involves learning how to buy. In my view, investors should usually refrain from purchasing a “full position” (the maximum dollar commitment they intend to make) in a given security all at once. Those who fail to heed this advice may be compelled to watch a subsequent price decline helplessly, with no buying power in reserve. Buying a partial position leaves reserves that permit investors to “average down”, lowering their average cost per share, if prices decline.   

Evaluating your own willingness to average down can help you distinguish prospective investments from speculations. If the security you are considering is truly a good investment, not a speculation, you would certainly want to own more at lower prices. If, prior to purchase, you realize that you are unwilling to average down, then you probably should not make the purchase in the first place. Potential investments in companies that are poorly managed, highly leveraged, in unattractive businesses, or beyond understanding may be identified and rejected.