I wrote an article for GuruFocus about a few management teams that I think are of high quality in the micro-cap world: HERE
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Tuesday, February 24, 2009
Monday, February 23, 2009
Ben Franklin - 3 Essays - The Ephemera; The Whistle; Franklin and the Gout
Below are three of my favorite Ben Franklin essays that I think are worth going back and occasionally re-reading.
I. The Ephemera: An Emblem of Human Life
Benjamin Franklin (1706–1790)
To Madame Brillon, of Passy
YOU may remember, my dear friend, that when we lately spend that happy day in the delightful garden and sweet society of the Moulin Joly, I stopped a little in one of our walks, and stayed some time behind the company. We had been shown numberless skeletons of a kind of little fly, called an ephemera, whose successive generations, we were told, were bred and expired within the day. I happened to see a living company of them on a leaf, who appeared to be engaged in conversation. You know I understand all the inferior animal tongues. My too great application to the study of them is the best excuse I can give for the little progress I have made in your charming language. I listened through curiosity to the discourse of these little creatures; but as they, in their national vivacity, spoke three or four together, I could make but little of their conversation. I found, however, by some broken expressions that I heard now and then, they were disputing warmly on the merit of two foreign musicians, one a cousin, the other a moscheto; in which dispute they spent their time, seemingly as regardless of the shortness of life as if they had been sure of living a month. Happy people! thought I; you are certainly under a wise, just, and mild government, since you have no public grievances to complain of, nor any subject of contention but the perfections and imperfections of foreign music. I turned my head from them to an old gray-headed one, who was single on another leaf, and talking to himself. Being amused with his soliloquy, I put it down in writing, in hopes it will likewise amuse her to whom I am so much indebted for the most pleasing of all amusements, her delicious company and heavenly harmony.
“It was,” said he, “the opinion of learned philosophers of our race, who lived and flourished long before my time, that this vast world, the Moulin Joly, could not itself subsist more than eighteen hours; and I think there was some foundation for that opinion, since, by the apparent motion of the great luminary that gives life to all nature, and which in my time has evidently declined considerably towards the ocean at the end of our earth, it must then finish its course, be extinguished in the waters that surround us, and leave the world in cold and darkness, necessarily producing universal death and destruction. I have lived seven of those hours, a great age, being no less than four hundred and twenty minutes of time. How very few of us continue so long! I have seen generations born, flourish, and expire. My present friends are the children and grandchildren of the friends of my youth, who are now, also, no more! And I must soon follow them; for, by the course of nature, though still in health, I cannot expect to live above seven or eight minutes longer. What now avails all my toil and labor in amassing honey-dew on this leaf, which I cannot live to enjoy! What the political struggles I have been engaged in for the good of my compatriot inhabitants of this bush, or my philosophical studies for the benefit of our race in general! for in politics what can laws do without morals? Our present race of ephemera will in a course of minutes become corrupt, like those of other and older bushes, and consequently as wretched. And in philosophy how small our progress! Alas! art is long, and life is short! My friends would comfort me with the idea of a name they say I shall leave behind me; and they tell me I have lived long enough to nature and to glory. But what will fame be to an ephemera who no longer exists? And what will become of all history in the eighteenth hour, when the world itself, even the whole Moulin Joly, shall come to its end and be buried in universal ruin?”
To me, after all my eager pursuits, no solid pleasures now remain, but the reflection of a long life spent in meaning well, the sensible conversation of a few good lady ephemeræ, and now and then a kind smile and a tune from the ever amiable Brillante.
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II. The Whistle
Benjamin Franklin (1706–1790)
To Madame Brillon
I RECEIVED my dear friend’s two letters, one for Wednesday and one for Saturday. This is again Wednesday. I do not deserve one for to-day, because I have not answered the former. But, indolent as I am, and averse to writing, the fear of having no more of your pleasing epistles, if I do not contribute to the correspondence, obliges me to take up my pen; and as Mr. B. has kindly sent me word that he sets out to-morrow to see you, instead of spending this Wednesday evening, as I have done its namesakes, in your delightful company, I sit down to spend it in thinking of you, in writing to you, and in reading over and over again your letters.
I am charmed with your description of Paradise, and with your plan of living there; and I approve much of your conclusion, that, in the meantime, we should draw all the good we can from this world. In my opinion we might all draw more good from it than we do, and suffer less evil, if we would take care not to give too much for whistles. For to me it seems that most of the unhappy people we meet with are become so by neglect of that caution.
You ask what I mean? You love stories, and will excuse my telling one of myself.
When I was a child of seven years old, my friends, on a holiday, filled my pocket with coppers. I went directly to a shop where they sold toys for children; and being charmed with the sound of a whistle, that I met by the way in the hands of another boy, I voluntarily offered and gave all my money for one. I then came home, and went whistling all over the house, much pleased with my whistle, but disturbing all the family. My brothers, and sisters, and cousins, understanding the bargain I had made, told me I had given four times as much for it as it was worth; put me in mind what good things I might have bought with the rest of the money; and laughed at me so much for my folly, that I cried with vexation; and the reflection gave me more chagrin than the whistle gave me pleasure.
This, however, was afterwards of use to me, the impression continuing on my mind; so that often, when I was tempted to buy some unnecessary thing, I said to myself, Don’t give too much for the whistle; and I saved my money.
As I grew up, came into the world, and observed the actions of men, I thought I met with many, very many, who gave too much for the whistle.
When I saw one too ambitious of court favor, sacrificing his time in attendance on levees, his repose, his liberty, his virtue, and perhaps his friends, to attain it, I have said to myself, This man gives too much for his whistle.
When I saw another fond of popularity, constantly employing himself in political bustles, neglecting his own affairs, and ruining them by that neglect, He pays, indeed, said I, too much for his whistle.
If I knew a miser, who gave up every kind of comfortable living, all the pleasure of doing good to others, all the esteem of his fellow-citizens, and the joys of benevolent friendship, for the sake of accumulating wealth, Poor man, said I, you pay too much for your whistle.
When I met with a man of pleasure, sacrificing every laudable improvement of the mind, or of his fortune, to mere corporeal sensations, and ruining his health in their pursuit, Mistaken man, said I, you are providing pain for yourself, instead of pleasure; you give too much for your whistle.
If I see one fond of appearance, or fine clothes, fine houses, fine furniture, fine equipages, all above his fortune, for which he contracts debts, and ends his career in a prison, Alas! say I, he has paid dear, very dear, for his whistle.
When I see a beautiful sweet-tempered girl married to an ill-natured brute of a husband, What a pity, say I, that she should pay so much for a whistle!
In short, I conceive that great part of the miseries of mankind are brought upon them by the false estimates they have made of the value of things, and by their giving too much for their whistles.
Yet I ought to have charity for these unhappy people, when I consider that, with all this wisdom of which I am boasting, there are certain things in the world so tempting, for example, the apples of King John, which happily are not to be bought; for if they were put to sale by auction, I might very easily be led to ruin myself in the purchase, and find that I had once more given too much for the whistle.
Adieu, my dear friend, and believe me ever yours very sincerely and with unalterable affection.
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III. Dialogue Between Franklin and the Gout
Benjamin Franklin (1706–1790)
Midnight, 22 October, 1780.
FRANKLIN. Eh! Oh! eh! What have I done to merit these cruel sufferings?
GOUT. Many things; you have ate and drank too freely, and too much indulged those legs of yours in their indolence.
FRANKLIN. Who is it that accuses me?
GOUT. It is I, even I, the Gout.
FRANKLIN. What! my enemy in person?
GOUT. No, not your enemy.
FRANKLIN. I repeat it, my enemy; for you would not only torment my body to death, but ruin my good name; you reproach me as a glutton and a tippler; now all the world, that knows me, will allow that I am neither the one nor the other.
GOUT. The world may think as it pleases; it is always very complaisant to itself, and sometimes to its friends; but I very well know that the quantity of meat and drink proper for a man, who takes a reasonable degree of exercise, would be too much for another, who never takes any.
FRANKLIN. I take—eh! oh!—as much exercise—eh!—as I can, Madam Gout. You know my sedentary state, and on that account, it would seem, Madam Gout, as if you might spare me a little, seeing it is not altogether my own fault.
GOUT. Not a jot; your rhetoric and your politeness are thrown away; your apology avails nothing. If your situation in life is a sedentary one, your amusements, your recreation, at least, should be active. You ought to walk or ride; or, if the weather prevents that, play at billiards. But let us examine your course of life. While the mornings are long, and you have leisure to go abroad, what do you do? Why, instead of gaining an appetite for breakfast, by salutary exercise, you amuse yourself with books, pamphlets, or newspapers, which commonly are not worth the reading. Yet you eat an inordinate breakfast, four dishes of tea, with cream, and one or two buttered toasts, with slices of hung beef, which I fancy are not things the most easily digested. Immediately afterwards you sit down to write at your desk, or converse with persons who apply to you on business. Thus the time passes till one, without any kind of bodily exercise. But all this I could pardon, in regard, as you say, to your sedentary condition. But what is your practice after dinner? Walking in the beautiful gardens of those friends with whom you have dined would be the choice of men of sense; yours is to be fixed down to chess, where you are found engaged for two or three hours! This is your perpetual recreation, which is the least eligible of any for a sedentary man, because, instead of accelerating the motion of the fluids, the rigid attention it requires helps to retard the circulation and obstruct internal secretions. Wrapt in the speculations of this wretched game, you destroy your constitution. What can be expected from such a course of living, but a body replete with stagnant humors, ready to fall prey to all kinds of dangerous maladies, if I, the Gout, did not occasionally bring you relief by agitating those humors, and so purifying or dissipating them? If it was in some nook or alley in Paris, deprived of walks, that you played awhile at chess after dinner, this might be excusable; but the same taste prevails with you in Passy, Auteuil, Montmartre, or Sanoy, places where there are the finest gardens and walks, a pure air, beautiful women, and most agreeable and instructive conversation; all which you might enjoy by frequenting the walks. But these are rejected for this abominable game of chess. Fie, then, Mr. Franklin! But amidst my instructions, I had almost forgot to administer my wholesome corrections; so take that twinge,—and that.
FRANKLIN. Oh! eh! oh! Ohhh! As much instruction as you please, Madam Gout, and as many reproaches; but pray, Madam, a truce with your corrections!
GOUT. No, Sir, no,—I will not abate a particle of what is so much for your good,—therefore—
FRANKLIN. Oh! ehhh!—It is not fair to say I take no exercise, when I do very often, going out to dine and returning in my carriage.
GOUT. That, of all imaginable exercises, is the most slight and insignificant, if you allude to the motion of a carriage suspended on springs. By observing the degree of heat obtained by different kinds of motion, we may form an estimate of the quantity of exercise given by each. Thus, for example, if you turn out to walk in winter with cold feet, in an hour’s time you will be in a glow all over; ride on horseback, the same effect will scarcely be perceived by four hours’ round trotting; but if you loll in a carriage, such as you have mentioned, you may travel all day and gladly enter the last inn to warm your feet by a fire. Flatter yourself then no longer, that half an hour’s airing in your carriage deserves the name of exercise. Providence has appointed few to roll in carriages, while he has given to all a pair of legs, which are machines infinitely more commodious and serviceable. Be grateful, then, and make a proper use of yours. Would you know how they forward the circulation of your fluids, in the very action of transporting you from place to place; observe when you walk, that all your weight is alternately thrown from one leg to the other; this occasions a great pressure on the vessels of the foot, and repels their contents; when relieved, by the weight being thrown on the other foot, the vessels of the first are allowed to replenish, and, by a return of this weight, this repulsion again succeeds; thus accelerating the circulation of the blood. The heat produced in any given time depends on the degree of this acceleration; the fluids are shaken, the humors attenuated, the secretions facilitated, and all goes well; the cheeks are ruddy, and health is established. Behold your fair friend at Auteuil; a lady who received from bounteous nature more really useful science than half a dozen such pretenders to philosophy as you have been able to extract from all your books. When she honors you with a visit, it is on foot. She walks all hours of the day, and leaves indolence, and its concomitant maladies, to be endured by her horses. In this, see at once the preservative of her health and personal charms. But when you go to Auteuil, you must have your carriage, though it is no farther from Passy to Auteuil than from Auteuil to Passy.
FRANKLIN. Your reasonings grow very tiresome.
GOUT. I stand corrected. I will be silent and continue my office; take that, and that.
FRANKLIN. Oh! Ohh! Talk on, I pray you.
GOUT. No, no; I have a good number of twinges for you to-night, and you may be sure of some more tomorrow.
FRANKLIN. What, with such a fever! I shall go distracted. Oh! eh! Can no one bear it for me?
GOUT. Ask that of your horses; they have served you faithfully.
FRANKLIN. How can you so cruelly sport with my torments
GOUT. Sport! I am very serious. I have here a list of offenses against your own health distinctly written, and can justify every stroke inflicted on you.
FRANKLIN. Read it then.
GOUT. It is too long a detail; but I will briefly mention some particulars.
FRANKLIN. Proceed. I am all attention.
GOUT. Do you remember how often you have promised yourself, the following morning, a walk in the grove of Boulogne, in the garden de la Muette, or in your own garden, and have violated your promise, alleging, at one time, it was too cold, at another too warm, too windy, too moist, or what else you pleased; when in truth it was too nothing, but your insuperable love of ease?
FRANKLIN. That I confess may have happened occasionally, probably ten times in a year.
GOUT. Your confession is very far short of the truth; the gross amount is one hundred and ninety-nine times.
FRANKLIN. Is it possible?
GOUT. So possible, that it is fact; you may rely on the accuracy of my statement. You know M. Brillon’s gardens, and what fine walks they contain; you know the handsome flight of an hundred steps, which lead from the terrace above to the lawn below. You have been in the practice of visiting this amiable family twice a week, after dinner, and it is a maxim of your own, that “a man may take as much exercise in walking a mile, up and down stairs, as in ten on level ground.” What an opportunity was here for you to have had exercise in both these ways! Did you embrace it, and how often?
FRANKLIN. I cannot immediately answer that question.
GOUT. I will do it for you; not once.
FRANKLIN. Not once?
GOUT. Even so. During the summer you went there at six o’ clock. You found the charming lady, with her lovely children and friends, eager to walk with you, and entertain you with their agreeable conversation; and what has been your choice? Why, to sit on the terrace, satisfy yourself with the fine prospect, and passing your eye over the beauties of the garden below, without taking one step to descend and walk about in them. On the contrary, you call for tea and the chess-board; and lo! you are occupied in your seat till nine o’clock, and that besides two hours’ play after dinner; and then, instead of walking home, which would have bestirred you a little, you step into your carriage. How absurd to suppose that all this carelessness can be reconcilable with health, without my interposition!
FRANKLIN. I am convinced now of the justness of Poor Richard’s remark, that “Our debts and our sins are always greater than we think for.”
GOUT. So it is. You philosophers are sages in your maxims, and fools in your conduct.
FRANKLIN. But do you charge among my crimes, that I return in a carriage from M. Brillon’s?
GOUT. Certainly; for, having been seated all the while, you cannot object the fatigue of the day, and cannot want therefore the relief of a carriage.
FRANKLIN. What then would you have me do with my carriage?
GOUT. Burn it if you choose; you would at least get heat out of it once in this way; or, if you dislike that proposal, here’s another for you; observe the poor peasants, who work in the vineyards and grounds about the villages of Passy, Auteuil, Chaillot, etc.; you may find every day among these deserving creatures, four or five old men and women, bent and perhaps crippled by weight of years, and too long and too great labor. After a most fatiguing day, these people have to trudge a mile or two to their smoky huts. Order your coachman to set them down. This is an act that will be good for your soul; and, at the same time, after your visit to the Brillons, if you return on foot, that will be good for your body.
FRANKLIN. Ah! how tiresome you are!
GOUT. Well, then, to my office; it should not be forgotten that I am your physician. There.
FRANKLIN. Ohhh! what a devil of a physician!
GOUT. How ungrateful you are to say so! Is it not I who, in the character of your physician, have saved you from the palsy, dropsy, and apoplexy? one or other of which would have done for you long ago, but for me.
FRANKLIN. I submit, and thank you for the past, but entreat the discontinuance of your visits for the future; for, in my mind, one had better die than be cured so dolefully. Permit me just to hint, that I have also not been unfriendly to you. I never feed physician or quack of any kind, to enter the list against you; if then you do not leave me to my repose, it may be said you are ungrateful too.
GOUT. I can scarcely acknowledge that as any objection. As to quacks, I despise them; they may kill you indeed, but cannot injure me. And, as to regular physicians, they are at last convinced that the gout, in such a subject as you are, is no disease, but a remedy; and wherefore cure a remedy?—but to our business,—there.
FRANKLIN. Oh! oh!—for Heaven’s sake leave me! and I promise faithfully never more to play at chess, but to take exercise daily, and live temperately.
GOUT. I know you too well. You promise fair; but, after a few months of good health, you will return to your old habits; your fine promises will be forgotten like the forms of the last year’s clouds. Let us then finish the account, and I will go. But I leave you with an assurance of visiting you again at a proper time and place; for my object is your good, and you are sensible now that I am your real friend.
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Related books:
The Oxford Book of American Essays
The Art of Virtue
I. The Ephemera: An Emblem of Human Life
Benjamin Franklin (1706–1790)
To Madame Brillon, of Passy
YOU may remember, my dear friend, that when we lately spend that happy day in the delightful garden and sweet society of the Moulin Joly, I stopped a little in one of our walks, and stayed some time behind the company. We had been shown numberless skeletons of a kind of little fly, called an ephemera, whose successive generations, we were told, were bred and expired within the day. I happened to see a living company of them on a leaf, who appeared to be engaged in conversation. You know I understand all the inferior animal tongues. My too great application to the study of them is the best excuse I can give for the little progress I have made in your charming language. I listened through curiosity to the discourse of these little creatures; but as they, in their national vivacity, spoke three or four together, I could make but little of their conversation. I found, however, by some broken expressions that I heard now and then, they were disputing warmly on the merit of two foreign musicians, one a cousin, the other a moscheto; in which dispute they spent their time, seemingly as regardless of the shortness of life as if they had been sure of living a month. Happy people! thought I; you are certainly under a wise, just, and mild government, since you have no public grievances to complain of, nor any subject of contention but the perfections and imperfections of foreign music. I turned my head from them to an old gray-headed one, who was single on another leaf, and talking to himself. Being amused with his soliloquy, I put it down in writing, in hopes it will likewise amuse her to whom I am so much indebted for the most pleasing of all amusements, her delicious company and heavenly harmony.
“It was,” said he, “the opinion of learned philosophers of our race, who lived and flourished long before my time, that this vast world, the Moulin Joly, could not itself subsist more than eighteen hours; and I think there was some foundation for that opinion, since, by the apparent motion of the great luminary that gives life to all nature, and which in my time has evidently declined considerably towards the ocean at the end of our earth, it must then finish its course, be extinguished in the waters that surround us, and leave the world in cold and darkness, necessarily producing universal death and destruction. I have lived seven of those hours, a great age, being no less than four hundred and twenty minutes of time. How very few of us continue so long! I have seen generations born, flourish, and expire. My present friends are the children and grandchildren of the friends of my youth, who are now, also, no more! And I must soon follow them; for, by the course of nature, though still in health, I cannot expect to live above seven or eight minutes longer. What now avails all my toil and labor in amassing honey-dew on this leaf, which I cannot live to enjoy! What the political struggles I have been engaged in for the good of my compatriot inhabitants of this bush, or my philosophical studies for the benefit of our race in general! for in politics what can laws do without morals? Our present race of ephemera will in a course of minutes become corrupt, like those of other and older bushes, and consequently as wretched. And in philosophy how small our progress! Alas! art is long, and life is short! My friends would comfort me with the idea of a name they say I shall leave behind me; and they tell me I have lived long enough to nature and to glory. But what will fame be to an ephemera who no longer exists? And what will become of all history in the eighteenth hour, when the world itself, even the whole Moulin Joly, shall come to its end and be buried in universal ruin?”
To me, after all my eager pursuits, no solid pleasures now remain, but the reflection of a long life spent in meaning well, the sensible conversation of a few good lady ephemeræ, and now and then a kind smile and a tune from the ever amiable Brillante.
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II. The Whistle
Benjamin Franklin (1706–1790)
To Madame Brillon
I RECEIVED my dear friend’s two letters, one for Wednesday and one for Saturday. This is again Wednesday. I do not deserve one for to-day, because I have not answered the former. But, indolent as I am, and averse to writing, the fear of having no more of your pleasing epistles, if I do not contribute to the correspondence, obliges me to take up my pen; and as Mr. B. has kindly sent me word that he sets out to-morrow to see you, instead of spending this Wednesday evening, as I have done its namesakes, in your delightful company, I sit down to spend it in thinking of you, in writing to you, and in reading over and over again your letters.
I am charmed with your description of Paradise, and with your plan of living there; and I approve much of your conclusion, that, in the meantime, we should draw all the good we can from this world. In my opinion we might all draw more good from it than we do, and suffer less evil, if we would take care not to give too much for whistles. For to me it seems that most of the unhappy people we meet with are become so by neglect of that caution.
You ask what I mean? You love stories, and will excuse my telling one of myself.
When I was a child of seven years old, my friends, on a holiday, filled my pocket with coppers. I went directly to a shop where they sold toys for children; and being charmed with the sound of a whistle, that I met by the way in the hands of another boy, I voluntarily offered and gave all my money for one. I then came home, and went whistling all over the house, much pleased with my whistle, but disturbing all the family. My brothers, and sisters, and cousins, understanding the bargain I had made, told me I had given four times as much for it as it was worth; put me in mind what good things I might have bought with the rest of the money; and laughed at me so much for my folly, that I cried with vexation; and the reflection gave me more chagrin than the whistle gave me pleasure.
This, however, was afterwards of use to me, the impression continuing on my mind; so that often, when I was tempted to buy some unnecessary thing, I said to myself, Don’t give too much for the whistle; and I saved my money.
As I grew up, came into the world, and observed the actions of men, I thought I met with many, very many, who gave too much for the whistle.
When I saw one too ambitious of court favor, sacrificing his time in attendance on levees, his repose, his liberty, his virtue, and perhaps his friends, to attain it, I have said to myself, This man gives too much for his whistle.
When I saw another fond of popularity, constantly employing himself in political bustles, neglecting his own affairs, and ruining them by that neglect, He pays, indeed, said I, too much for his whistle.
If I knew a miser, who gave up every kind of comfortable living, all the pleasure of doing good to others, all the esteem of his fellow-citizens, and the joys of benevolent friendship, for the sake of accumulating wealth, Poor man, said I, you pay too much for your whistle.
When I met with a man of pleasure, sacrificing every laudable improvement of the mind, or of his fortune, to mere corporeal sensations, and ruining his health in their pursuit, Mistaken man, said I, you are providing pain for yourself, instead of pleasure; you give too much for your whistle.
If I see one fond of appearance, or fine clothes, fine houses, fine furniture, fine equipages, all above his fortune, for which he contracts debts, and ends his career in a prison, Alas! say I, he has paid dear, very dear, for his whistle.
When I see a beautiful sweet-tempered girl married to an ill-natured brute of a husband, What a pity, say I, that she should pay so much for a whistle!
In short, I conceive that great part of the miseries of mankind are brought upon them by the false estimates they have made of the value of things, and by their giving too much for their whistles.
Yet I ought to have charity for these unhappy people, when I consider that, with all this wisdom of which I am boasting, there are certain things in the world so tempting, for example, the apples of King John, which happily are not to be bought; for if they were put to sale by auction, I might very easily be led to ruin myself in the purchase, and find that I had once more given too much for the whistle.
Adieu, my dear friend, and believe me ever yours very sincerely and with unalterable affection.
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III. Dialogue Between Franklin and the Gout
Benjamin Franklin (1706–1790)
Midnight, 22 October, 1780.
FRANKLIN. Eh! Oh! eh! What have I done to merit these cruel sufferings?
GOUT. Many things; you have ate and drank too freely, and too much indulged those legs of yours in their indolence.
FRANKLIN. Who is it that accuses me?
GOUT. It is I, even I, the Gout.
FRANKLIN. What! my enemy in person?
GOUT. No, not your enemy.
FRANKLIN. I repeat it, my enemy; for you would not only torment my body to death, but ruin my good name; you reproach me as a glutton and a tippler; now all the world, that knows me, will allow that I am neither the one nor the other.
GOUT. The world may think as it pleases; it is always very complaisant to itself, and sometimes to its friends; but I very well know that the quantity of meat and drink proper for a man, who takes a reasonable degree of exercise, would be too much for another, who never takes any.
FRANKLIN. I take—eh! oh!—as much exercise—eh!—as I can, Madam Gout. You know my sedentary state, and on that account, it would seem, Madam Gout, as if you might spare me a little, seeing it is not altogether my own fault.
GOUT. Not a jot; your rhetoric and your politeness are thrown away; your apology avails nothing. If your situation in life is a sedentary one, your amusements, your recreation, at least, should be active. You ought to walk or ride; or, if the weather prevents that, play at billiards. But let us examine your course of life. While the mornings are long, and you have leisure to go abroad, what do you do? Why, instead of gaining an appetite for breakfast, by salutary exercise, you amuse yourself with books, pamphlets, or newspapers, which commonly are not worth the reading. Yet you eat an inordinate breakfast, four dishes of tea, with cream, and one or two buttered toasts, with slices of hung beef, which I fancy are not things the most easily digested. Immediately afterwards you sit down to write at your desk, or converse with persons who apply to you on business. Thus the time passes till one, without any kind of bodily exercise. But all this I could pardon, in regard, as you say, to your sedentary condition. But what is your practice after dinner? Walking in the beautiful gardens of those friends with whom you have dined would be the choice of men of sense; yours is to be fixed down to chess, where you are found engaged for two or three hours! This is your perpetual recreation, which is the least eligible of any for a sedentary man, because, instead of accelerating the motion of the fluids, the rigid attention it requires helps to retard the circulation and obstruct internal secretions. Wrapt in the speculations of this wretched game, you destroy your constitution. What can be expected from such a course of living, but a body replete with stagnant humors, ready to fall prey to all kinds of dangerous maladies, if I, the Gout, did not occasionally bring you relief by agitating those humors, and so purifying or dissipating them? If it was in some nook or alley in Paris, deprived of walks, that you played awhile at chess after dinner, this might be excusable; but the same taste prevails with you in Passy, Auteuil, Montmartre, or Sanoy, places where there are the finest gardens and walks, a pure air, beautiful women, and most agreeable and instructive conversation; all which you might enjoy by frequenting the walks. But these are rejected for this abominable game of chess. Fie, then, Mr. Franklin! But amidst my instructions, I had almost forgot to administer my wholesome corrections; so take that twinge,—and that.
FRANKLIN. Oh! eh! oh! Ohhh! As much instruction as you please, Madam Gout, and as many reproaches; but pray, Madam, a truce with your corrections!
GOUT. No, Sir, no,—I will not abate a particle of what is so much for your good,—therefore—
FRANKLIN. Oh! ehhh!—It is not fair to say I take no exercise, when I do very often, going out to dine and returning in my carriage.
GOUT. That, of all imaginable exercises, is the most slight and insignificant, if you allude to the motion of a carriage suspended on springs. By observing the degree of heat obtained by different kinds of motion, we may form an estimate of the quantity of exercise given by each. Thus, for example, if you turn out to walk in winter with cold feet, in an hour’s time you will be in a glow all over; ride on horseback, the same effect will scarcely be perceived by four hours’ round trotting; but if you loll in a carriage, such as you have mentioned, you may travel all day and gladly enter the last inn to warm your feet by a fire. Flatter yourself then no longer, that half an hour’s airing in your carriage deserves the name of exercise. Providence has appointed few to roll in carriages, while he has given to all a pair of legs, which are machines infinitely more commodious and serviceable. Be grateful, then, and make a proper use of yours. Would you know how they forward the circulation of your fluids, in the very action of transporting you from place to place; observe when you walk, that all your weight is alternately thrown from one leg to the other; this occasions a great pressure on the vessels of the foot, and repels their contents; when relieved, by the weight being thrown on the other foot, the vessels of the first are allowed to replenish, and, by a return of this weight, this repulsion again succeeds; thus accelerating the circulation of the blood. The heat produced in any given time depends on the degree of this acceleration; the fluids are shaken, the humors attenuated, the secretions facilitated, and all goes well; the cheeks are ruddy, and health is established. Behold your fair friend at Auteuil; a lady who received from bounteous nature more really useful science than half a dozen such pretenders to philosophy as you have been able to extract from all your books. When she honors you with a visit, it is on foot. She walks all hours of the day, and leaves indolence, and its concomitant maladies, to be endured by her horses. In this, see at once the preservative of her health and personal charms. But when you go to Auteuil, you must have your carriage, though it is no farther from Passy to Auteuil than from Auteuil to Passy.
FRANKLIN. Your reasonings grow very tiresome.
GOUT. I stand corrected. I will be silent and continue my office; take that, and that.
FRANKLIN. Oh! Ohh! Talk on, I pray you.
GOUT. No, no; I have a good number of twinges for you to-night, and you may be sure of some more tomorrow.
FRANKLIN. What, with such a fever! I shall go distracted. Oh! eh! Can no one bear it for me?
GOUT. Ask that of your horses; they have served you faithfully.
FRANKLIN. How can you so cruelly sport with my torments
GOUT. Sport! I am very serious. I have here a list of offenses against your own health distinctly written, and can justify every stroke inflicted on you.
FRANKLIN. Read it then.
GOUT. It is too long a detail; but I will briefly mention some particulars.
FRANKLIN. Proceed. I am all attention.
GOUT. Do you remember how often you have promised yourself, the following morning, a walk in the grove of Boulogne, in the garden de la Muette, or in your own garden, and have violated your promise, alleging, at one time, it was too cold, at another too warm, too windy, too moist, or what else you pleased; when in truth it was too nothing, but your insuperable love of ease?
FRANKLIN. That I confess may have happened occasionally, probably ten times in a year.
GOUT. Your confession is very far short of the truth; the gross amount is one hundred and ninety-nine times.
FRANKLIN. Is it possible?
GOUT. So possible, that it is fact; you may rely on the accuracy of my statement. You know M. Brillon’s gardens, and what fine walks they contain; you know the handsome flight of an hundred steps, which lead from the terrace above to the lawn below. You have been in the practice of visiting this amiable family twice a week, after dinner, and it is a maxim of your own, that “a man may take as much exercise in walking a mile, up and down stairs, as in ten on level ground.” What an opportunity was here for you to have had exercise in both these ways! Did you embrace it, and how often?
FRANKLIN. I cannot immediately answer that question.
GOUT. I will do it for you; not once.
FRANKLIN. Not once?
GOUT. Even so. During the summer you went there at six o’ clock. You found the charming lady, with her lovely children and friends, eager to walk with you, and entertain you with their agreeable conversation; and what has been your choice? Why, to sit on the terrace, satisfy yourself with the fine prospect, and passing your eye over the beauties of the garden below, without taking one step to descend and walk about in them. On the contrary, you call for tea and the chess-board; and lo! you are occupied in your seat till nine o’clock, and that besides two hours’ play after dinner; and then, instead of walking home, which would have bestirred you a little, you step into your carriage. How absurd to suppose that all this carelessness can be reconcilable with health, without my interposition!
FRANKLIN. I am convinced now of the justness of Poor Richard’s remark, that “Our debts and our sins are always greater than we think for.”
GOUT. So it is. You philosophers are sages in your maxims, and fools in your conduct.
FRANKLIN. But do you charge among my crimes, that I return in a carriage from M. Brillon’s?
GOUT. Certainly; for, having been seated all the while, you cannot object the fatigue of the day, and cannot want therefore the relief of a carriage.
FRANKLIN. What then would you have me do with my carriage?
GOUT. Burn it if you choose; you would at least get heat out of it once in this way; or, if you dislike that proposal, here’s another for you; observe the poor peasants, who work in the vineyards and grounds about the villages of Passy, Auteuil, Chaillot, etc.; you may find every day among these deserving creatures, four or five old men and women, bent and perhaps crippled by weight of years, and too long and too great labor. After a most fatiguing day, these people have to trudge a mile or two to their smoky huts. Order your coachman to set them down. This is an act that will be good for your soul; and, at the same time, after your visit to the Brillons, if you return on foot, that will be good for your body.
FRANKLIN. Ah! how tiresome you are!
GOUT. Well, then, to my office; it should not be forgotten that I am your physician. There.
FRANKLIN. Ohhh! what a devil of a physician!
GOUT. How ungrateful you are to say so! Is it not I who, in the character of your physician, have saved you from the palsy, dropsy, and apoplexy? one or other of which would have done for you long ago, but for me.
FRANKLIN. I submit, and thank you for the past, but entreat the discontinuance of your visits for the future; for, in my mind, one had better die than be cured so dolefully. Permit me just to hint, that I have also not been unfriendly to you. I never feed physician or quack of any kind, to enter the list against you; if then you do not leave me to my repose, it may be said you are ungrateful too.
GOUT. I can scarcely acknowledge that as any objection. As to quacks, I despise them; they may kill you indeed, but cannot injure me. And, as to regular physicians, they are at last convinced that the gout, in such a subject as you are, is no disease, but a remedy; and wherefore cure a remedy?—but to our business,—there.
FRANKLIN. Oh! oh!—for Heaven’s sake leave me! and I promise faithfully never more to play at chess, but to take exercise daily, and live temperately.
GOUT. I know you too well. You promise fair; but, after a few months of good health, you will return to your old habits; your fine promises will be forgotten like the forms of the last year’s clouds. Let us then finish the account, and I will go. But I leave you with an assurance of visiting you again at a proper time and place; for my object is your good, and you are sensible now that I am your real friend.
Link
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Related books:
The Oxford Book of American Essays
The Art of Virtue
Hollywood Success: Luck or Skill? - 2006 Article by Leonard Mlodinow
The magic of Hollywood success—how can one account for it? Were the executives at Fox and Sony who gambled more than $300 million to create the hits “X-Men: The Last Stand” and “The Da Vinci Code” visionaries? Were those at Universal responsible for the box-office disaster “United 93” and their peers at Warner Bros. and Virtual Studios who pumped $160 million into the flop “Poseidon” just boneheads?
The 2006 summer blockbuster season is upon us, one of the two times each year (the other is Christmas) when a film studio’s hopes for black ink are decided by the gods of movie fortune—namely, you and me. Americans may not scurry with enthusiasm to vote for our presidents, but come summer, we do vote early and often for the films we love, to the tune of about $200 million each weekend. For the people who make the movies, it’s either champagne or Prozac as a river of green flows through Tinseltown, dragging careers with it, sometimes for a happy, wild ride, sometimes directly into a rock.
But are the rewards (and punishments) of the Hollywood game deserved, or does luck play a far more important role in box-office success (and failure) than people imagine?
We all understand that genius doesn’t guarantee success, but it’s seductive to assume that success must come from genius. As a former Hollywood scriptwriter, I understand the comfort in hiring by track record. Yet as a scientist who has taught the mathematics of randomness at Caltech, I also am aware that track records can deceive. That no one can know whether a film will hit or miss has been an uncomfortable suspicion in Hollywood at least since novelist and screenwriter William Goldman enunciated it in his classic 1983 book “Adventures in the Screen Trade.” If Goldman is right and a future film’s performance is unpredictable, then there is no way studio executives or producers, despite all their swagger, can have a better track record at choosing projects than an ape throwing darts at a dartboard.
That’s a bold statement, but these days it is hardly conjecture: With each passing year the unpredictability of film revenue is supported by more and more academic research.
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Related book: The Drunkard's Walk: How Randomness Rules Our Lives
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Saturday, February 21, 2009
Friday, February 20, 2009
Analysis of Berkshire Hathaway
The paragraphs below are from an article by Whitney Tilson in November of last year when people were worried about Berkshire's index puts. T2's full analysis of Berkshire is available HERE. As Mr. Tilson pointed out, the worries were overblown and Mr. Buffett didn't need to earn a real high return for them to end up profitable, even if the markets didn't recover in any dramatic fashion over the next 13.5 years. Since then, Buffett has been putting money to work, in senior position securities, at rates higher than those Tilson mentioned, in high quality companies such as Harley Davidson and Tiffany (among others). If anything, Berkshire's value has probably increased a bit since Tilson's article, unless, of course, you assume Buffett has lost his touch, which a big portion of sellers seems to think is the case. I tend to disagree and think that Buffett has gotten better. Economic times are tough, markets are volatile and it may be tough to keep a cool head. But what do you want to own coming out of this? Maybe a diversified business that is stacked with competitively advantaged businesses with good balance sheets to take advantage of weaker competitors, where the excess cash and float from all of the businesses are being reinvested by the man who is very likely the greatest investor of all time, at a valuation that may be the cheapest on a price to current value than it has ever been since Mr. Buffett took over in the 1960's? I think so, and I think this is one of those 20 punch card investments that Buffett has talked about. As I type, the Berkshire B shares are at $2,340 per share. There is actually a greater than 6% difference from what the A shares are and should be trading at in relation to the B shares, so there is some added pressure on the B's (divide T2's valuation of the A shares by 30 to get the equivalent value for the B's). I think this is a value that, although we can't predict what will happen over the short run, will prove to be one of the greatest risk vs. reward opportunities I will ever see. The question the investor needs to ask now is: Do I have the fortitude to be greedy when others are fearful?
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Valuation
At $77,500, Berkshire’s stock today is the cheapest, by far, we have ever seen it, going back at least a dozen years.
We estimate Berkshire’s valuation the same way Buffett does: we value the investment per share (cash, bonds and stocks) at market and then place a 12 multiple on the pre-tax operating profits of the company (for more details on this as well as our entire analysis of Berkshire, see our presentation, which is posted here). As of the end of last year, investments per share were $90,343 and our estimate of normalized pretax earnings was $5,500-$5,700/share, which resulted in an estimate of intrinsic value of $156,300-$158,700.
As of the end of the third quarter, investments per share had fallen to $86,000 due to declines in the prices of stocks Berkshire holds as well as Buffett investing tens of billions of cash in a wide range of operating businesses. In light of the severe market decline in October and so far in November plus additional investments Buffett has made, we estimate that investments per share might have fallen to as low as $76,000.
As for Berkshire’s earnings, they are obviously impacted by the weak economy, but this is offset by the many new businesses Buffett has purchased. Over time, the many investments and acquisitions Buffett’s made this year will lead to much higher earnings, but for the next 12 months, to be conservative, let’s assume that pretax earnings are $5,000/share (assuming the severe recession continues and a normal super cat year). This results in an estimate of intrinsic value of $136,000, 76% above today’s level.
...
Another way to think about Berkshire’s value is to consider that Berkshire’s share price today barely exceeds investments. Thus, today one can own the collection of fabulous businesses that Buffett has acquired over the years for less (pretty much for free).
In this environment, it’s not surprising to us that the stocks of companies with shaky balance sheets, poor business models and/or weak competitive positions are getting clobbered, but Berkshire’s freefall in the past few weeks is certifiably crazy – and a buying opportunity that will long be remembered.
At $77,500, Berkshire’s stock today is the cheapest, by far, we have ever seen it, going back at least a dozen years.
We estimate Berkshire’s valuation the same way Buffett does: we value the investment per share (cash, bonds and stocks) at market and then place a 12 multiple on the pre-tax operating profits of the company (for more details on this as well as our entire analysis of Berkshire, see our presentation, which is posted here). As of the end of last year, investments per share were $90,343 and our estimate of normalized pretax earnings was $5,500-$5,700/share, which resulted in an estimate of intrinsic value of $156,300-$158,700.
As of the end of the third quarter, investments per share had fallen to $86,000 due to declines in the prices of stocks Berkshire holds as well as Buffett investing tens of billions of cash in a wide range of operating businesses. In light of the severe market decline in October and so far in November plus additional investments Buffett has made, we estimate that investments per share might have fallen to as low as $76,000.
As for Berkshire’s earnings, they are obviously impacted by the weak economy, but this is offset by the many new businesses Buffett has purchased. Over time, the many investments and acquisitions Buffett’s made this year will lead to much higher earnings, but for the next 12 months, to be conservative, let’s assume that pretax earnings are $5,000/share (assuming the severe recession continues and a normal super cat year). This results in an estimate of intrinsic value of $136,000, 76% above today’s level.
...
Another way to think about Berkshire’s value is to consider that Berkshire’s share price today barely exceeds investments. Thus, today one can own the collection of fabulous businesses that Buffett has acquired over the years for less (pretty much for free).
In this environment, it’s not surprising to us that the stocks of companies with shaky balance sheets, poor business models and/or weak competitive positions are getting clobbered, but Berkshire’s freefall in the past few weeks is certifiably crazy – and a buying opportunity that will long be remembered.
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Tuesday, February 17, 2009
MCM 2008 Annual Report
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Previous reports available HERE
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Related Book: Speculative Contagion: An Antidote for Speculative Epidemics
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Previous reports available HERE
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Related Book: Speculative Contagion: An Antidote for Speculative Epidemics
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The No-Stats All-Star - by Michael Lewis
This story reminds me of the quote, "There's no limit to what a man can do or where he can go if he doesn't mind who gets the credit."
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Battier’s game is a weird combination of obvious weaknesses and nearly invisible strengths. When he is on the court, his teammates get better, often a lot better, and his opponents get worse — often a lot worse. He may not grab huge numbers of rebounds, but he has an uncanny ability to improve his teammates’ rebounding. He doesn’t shoot much, but when he does, he takes only the most efficient shots. He also has a knack for getting the ball to teammates who are in a position to do the same, and he commits few turnovers. On defense, although he routinely guards the N.B.A.’s most prolific scorers, he significantly reduces their shooting percentages. At the same time he somehow improves the defensive efficiency of his teammates — probably, Morey surmises, by helping them out in all sorts of subtle ways. “I call him Lego,” Morey says. “When he’s on the court, all the pieces start to fit together. And everything that leads to winning that you can get to through intellect instead of innate ability, Shane excels in. I’ll bet he’s in the hundredth percentile of every category.”
There are other things Morey has noticed too, but declines to discuss as there is right now in pro basketball real value to new information, and the Rockets feel they have some. What he will say, however, is that the big challenge on any basketball court is to measure the right things. The five players on any basketball team are far more than the sum of their parts; the Rockets devote a lot of energy to untangling subtle interactions among the team’s elements. To get at this they need something that basketball hasn’t historically supplied: meaningful statistics. For most of its history basketball has measured not so much what is important as what is easy to measure — points, rebounds, assists, steals, blocked shots — and these measurements have warped perceptions of the game. (“Someone created the box score,” Morey says, “and he should be shot.”) How many points a player scores, for example, is no true indication of how much he has helped his team. Another example: if you want to know a player’s value as a rebounder, you need to know not whether he got a rebound but the likelihood of the team getting the rebound when a missed shot enters that player’s zone.
There is a tension, peculiar to basketball, between the interests of the team and the interests of the individual. The game continually tempts the people who play it to do things that are not in the interest of the group. On the baseball field, it would be hard for a player to sacrifice his team’s interest for his own. Baseball is an individual sport masquerading as a team one: by doing what’s best for himself, the player nearly always also does what is best for his team. “There is no way to selfishly get across home plate,” as Morey puts it. “If instead of there being a lineup, I could muscle my way to the plate and hit every single time and damage the efficiency of the team — that would be the analogy. Manny Ramirez can’t take at-bats away from David Ortiz. We had a point guard in Boston who refused to pass the ball to a certain guy.” In football the coach has so much control over who gets the ball that selfishness winds up being self-defeating. The players most famous for being selfish — the Dallas Cowboys’ wide receiver Terrell Owens, for instance — are usually not so much selfish as attention seeking. Their sins tend to occur off the field.
It is in basketball where the problems are most likely to be in the game — where the player, in his play, faces choices between maximizing his own perceived self-interest and winning. The choices are sufficiently complex that there is a fair chance he doesn’t fully grasp that he is making them.
…
Knowing the odds, Battier can pursue an inherently uncertain strategy with total certainty. He can devote himself to a process and disregard the outcome of any given encounter. This is critical because in basketball, as in everything else, luck plays a role, and Battier cannot afford to let it distract him. Only once during the Lakers game did we glimpse a clean, satisfying comparison of the efficient strategy and the inefficient one — that is, an outcome that reflected the odds. Ten feet from the hoop, Bryant got the ball with his back to the basket; with Battier pressing against him, he fell back and missed a 12-foot shot off the front of the rim. Moments earlier, with Battier reclining in the deep soft chair that masquerades as an N.B.A. bench, his teammate Brent Barry found himself in an analogous position. Bryant leaned into Barry, hit a six-foot shot and drew a foul. But this was the exception; normally you don’t get perfect comparisons. You couldn’t see the odds shifting subtly away from the Lakers and toward the Rockets as Bryant was forced from 6 feet out to 12 feet from the basket, or when he had Battier’s hand in his eyes. All you saw were the statistics on the board, and as the seconds ticked off to halftime, the game tied 54-54, Bryant led all scorers with 16 points.
But he required 20 possessions to get them. And he had started moaning to the referees. Bryant is one of the great jawboners in the history of the N.B.A. A major-league baseball player once showed me a slow-motion replay of the Yankees’ third baseman Alex Rodriguez in the batter’s box. Glancing back to see where the catcher has set up is not strictly against baseball’s rules, but it violates the code. A hitter who does it is likely to find the next pitch aimed in the general direction of his eyes. A-Rod, the best hitter in baseball, mastered the art of glancing back by moving not his head, but his eyes, at just the right time. It was like watching a billionaire find some trivial and dubious deduction to take on his tax returns. Why bother? I thought, and then realized: this is the instinct that separates A-Rod from mere stars. Kobe Bryant has the same instinct. Tonight Bryant complained that Battier was grabbing his jersey, Battier was pushing when no one was looking, Battier was committing crimes against humanity. Just before the half ended, Battier took a referee aside and said: “You and I both know Kobe does this all the time. I’m playing him honest. Don’t fall for his stuff.” Moments later, after failing to get a call, Bryant hurled the ball, screamed at the ref and was whistled for a technical foul.
…
In 1996 a young writer for The Basketball Times named Dan Wetzel thought it might be neat to move into the life of a star high-school basketball player and watch up close as big-time basketball colleges recruited him. He picked Shane Battier, and then spent five months trailing him, with growing incredulity. “I’d covered high-school basketball for eight years and talked to hundreds and hundreds and hundreds of kids — really every single prominent high-school basketball player in the country,” Wetzel says. “There’s this public perception that they’re all thugs. But they aren’t. A lot of them are really good guys, and some of them are very, very bright. Kobe’s very bright. LeBron’s very bright. But there’s absolutely never been anything like Shane Battier.”
Wetzel watched this kid, inundated with offers of every kind, take charge of an unprincipled process. Battier narrowed his choices to six schools — Kentucky, Kansas, North Carolina, Duke, Michigan and Michigan State — and told everyone else, politely, to leave him be. He then set out to minimize the degree to which the chosen schools could interfere with his studies; he had a 3.96 G.P.A. and was poised to claim Detroit Country Day School’s headmaster’s cup for best all-around student. He granted each head coach a weekly 15-minute window in which to phone him. These men happened to be among the most famous basketball coaches in the world and the most persistent recruiters, but Battier granted no exceptions. When the Kentucky coach Rick Pitino, who had just won a national championship, tried to call Battier outside his assigned time, Battier simply removed Kentucky from his list. “What 17-year-old has the stones to do that?” Wetzel asks. “To just cut off Rick Pitino because he calls outside his window?” Wetzel answers his own question: “It wasn’t like, ‘This is a really interesting 17-year-old.’ It was like, ‘This isn’t real.’ ”
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Related book: Moneyball: The Art of Winning an Unfair Game-
There are other things Morey has noticed too, but declines to discuss as there is right now in pro basketball real value to new information, and the Rockets feel they have some. What he will say, however, is that the big challenge on any basketball court is to measure the right things. The five players on any basketball team are far more than the sum of their parts; the Rockets devote a lot of energy to untangling subtle interactions among the team’s elements. To get at this they need something that basketball hasn’t historically supplied: meaningful statistics. For most of its history basketball has measured not so much what is important as what is easy to measure — points, rebounds, assists, steals, blocked shots — and these measurements have warped perceptions of the game. (“Someone created the box score,” Morey says, “and he should be shot.”) How many points a player scores, for example, is no true indication of how much he has helped his team. Another example: if you want to know a player’s value as a rebounder, you need to know not whether he got a rebound but the likelihood of the team getting the rebound when a missed shot enters that player’s zone.
There is a tension, peculiar to basketball, between the interests of the team and the interests of the individual. The game continually tempts the people who play it to do things that are not in the interest of the group. On the baseball field, it would be hard for a player to sacrifice his team’s interest for his own. Baseball is an individual sport masquerading as a team one: by doing what’s best for himself, the player nearly always also does what is best for his team. “There is no way to selfishly get across home plate,” as Morey puts it. “If instead of there being a lineup, I could muscle my way to the plate and hit every single time and damage the efficiency of the team — that would be the analogy. Manny Ramirez can’t take at-bats away from David Ortiz. We had a point guard in Boston who refused to pass the ball to a certain guy.” In football the coach has so much control over who gets the ball that selfishness winds up being self-defeating. The players most famous for being selfish — the Dallas Cowboys’ wide receiver Terrell Owens, for instance — are usually not so much selfish as attention seeking. Their sins tend to occur off the field.
It is in basketball where the problems are most likely to be in the game — where the player, in his play, faces choices between maximizing his own perceived self-interest and winning. The choices are sufficiently complex that there is a fair chance he doesn’t fully grasp that he is making them.
…
Knowing the odds, Battier can pursue an inherently uncertain strategy with total certainty. He can devote himself to a process and disregard the outcome of any given encounter. This is critical because in basketball, as in everything else, luck plays a role, and Battier cannot afford to let it distract him. Only once during the Lakers game did we glimpse a clean, satisfying comparison of the efficient strategy and the inefficient one — that is, an outcome that reflected the odds. Ten feet from the hoop, Bryant got the ball with his back to the basket; with Battier pressing against him, he fell back and missed a 12-foot shot off the front of the rim. Moments earlier, with Battier reclining in the deep soft chair that masquerades as an N.B.A. bench, his teammate Brent Barry found himself in an analogous position. Bryant leaned into Barry, hit a six-foot shot and drew a foul. But this was the exception; normally you don’t get perfect comparisons. You couldn’t see the odds shifting subtly away from the Lakers and toward the Rockets as Bryant was forced from 6 feet out to 12 feet from the basket, or when he had Battier’s hand in his eyes. All you saw were the statistics on the board, and as the seconds ticked off to halftime, the game tied 54-54, Bryant led all scorers with 16 points.
But he required 20 possessions to get them. And he had started moaning to the referees. Bryant is one of the great jawboners in the history of the N.B.A. A major-league baseball player once showed me a slow-motion replay of the Yankees’ third baseman Alex Rodriguez in the batter’s box. Glancing back to see where the catcher has set up is not strictly against baseball’s rules, but it violates the code. A hitter who does it is likely to find the next pitch aimed in the general direction of his eyes. A-Rod, the best hitter in baseball, mastered the art of glancing back by moving not his head, but his eyes, at just the right time. It was like watching a billionaire find some trivial and dubious deduction to take on his tax returns. Why bother? I thought, and then realized: this is the instinct that separates A-Rod from mere stars. Kobe Bryant has the same instinct. Tonight Bryant complained that Battier was grabbing his jersey, Battier was pushing when no one was looking, Battier was committing crimes against humanity. Just before the half ended, Battier took a referee aside and said: “You and I both know Kobe does this all the time. I’m playing him honest. Don’t fall for his stuff.” Moments later, after failing to get a call, Bryant hurled the ball, screamed at the ref and was whistled for a technical foul.
…
In 1996 a young writer for The Basketball Times named Dan Wetzel thought it might be neat to move into the life of a star high-school basketball player and watch up close as big-time basketball colleges recruited him. He picked Shane Battier, and then spent five months trailing him, with growing incredulity. “I’d covered high-school basketball for eight years and talked to hundreds and hundreds and hundreds of kids — really every single prominent high-school basketball player in the country,” Wetzel says. “There’s this public perception that they’re all thugs. But they aren’t. A lot of them are really good guys, and some of them are very, very bright. Kobe’s very bright. LeBron’s very bright. But there’s absolutely never been anything like Shane Battier.”
Wetzel watched this kid, inundated with offers of every kind, take charge of an unprincipled process. Battier narrowed his choices to six schools — Kentucky, Kansas, North Carolina, Duke, Michigan and Michigan State — and told everyone else, politely, to leave him be. He then set out to minimize the degree to which the chosen schools could interfere with his studies; he had a 3.96 G.P.A. and was poised to claim Detroit Country Day School’s headmaster’s cup for best all-around student. He granted each head coach a weekly 15-minute window in which to phone him. These men happened to be among the most famous basketball coaches in the world and the most persistent recruiters, but Battier granted no exceptions. When the Kentucky coach Rick Pitino, who had just won a national championship, tried to call Battier outside his assigned time, Battier simply removed Kentucky from his list. “What 17-year-old has the stones to do that?” Wetzel asks. “To just cut off Rick Pitino because he calls outside his window?” Wetzel answers his own question: “It wasn’t like, ‘This is a really interesting 17-year-old.’ It was like, ‘This isn’t real.’ ”
………………..
Related book: Moneyball: The Art of Winning an Unfair Game-
Monday, February 16, 2009
Friday, February 13, 2009
GMO - Jeremy Grantham's 4Q 2008 Letter (Parts 1 & 2)
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The Year of the Value Trap
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The value problems of the last two years were particularly bad because of the outperformance that value stocks had between 2002 and 2007. They won for five years in a row, so that by mid 2007 the value/growth spread was about as unfavorable as possible for value stocks in the U.S. (see Exhibit 1). (We recognize that some value investors disagreed with this data when it was first presented. We were, and still are, puzzled by how they arrived at their more positive conclusion.)
To put a measure on how awful the value trap was during this time, please see the Fall 2007 edition of the Outstanding Investor Digest. This publication concentrates on a dozen or so of the top value investors and is readable, interesting, and chock-full of insight. However, that particular issue is a heartbreaker as one after another of these superior investors put forward the case that – down 30% to 50% – AIG, Lehman, Wachovia, Fannie Mae, etc., were ridiculously underpriced, and represented enormous long-term franchise value that the nervous market was missing.
…
The value problems of the last two years were particularly bad because of the outperformance that value stocks had between 2002 and 2007. They won for five years in a row, so that by mid 2007 the value/growth spread was about as unfavorable as possible for value stocks in the U.S. (see Exhibit 1). (We recognize that some value investors disagreed with this data when it was first presented. We were, and still are, puzzled by how they arrived at their more positive conclusion.)
To put a measure on how awful the value trap was during this time, please see the Fall 2007 edition of the Outstanding Investor Digest. This publication concentrates on a dozen or so of the top value investors and is readable, interesting, and chock-full of insight. However, that particular issue is a heartbreaker as one after another of these superior investors put forward the case that – down 30% to 50% – AIG, Lehman, Wachovia, Fannie Mae, etc., were ridiculously underpriced, and represented enormous long-term franchise value that the nervous market was missing.
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Michael Farrell - Annaly: Just Save, Baby, Just Save
As we sit on the precipice of the greatest fiscal stimulus package in our nation’s history, the question we are asked most often during our discussions with market participants is “When will it end?” Well, we can’t tell you the exact date, but I believe that a precursor will be the stabilization of mortgage cash flows. I can say that with certainty because from where we sit the current instability in the economy began showing its teeth in the mortgage market in 2002 and it will ultimately end once those cash flows stabilize again. When this occurs—at some uncertain future date—property valuations will have found a bottom and new run rates in GDP will have been established.
The sooner this happens, the better; but in the interim, we as a nation will be faced with policies designed to maintain the consumption-driven force of our domestic economy. My view is that this is what got us into this problem in the first place, and it runs counter to what Americans are now doing as rational economic beings—we are reducing consumption and increasing savings. The following is a construct of Newton’s principles. For every action, there is an equal and opposite reaction. We are witnessing the reaction of America’s primary Gross Domestic Product component, its consumers, as they retrench and repair their own balance sheets.
...
We should set a national target personal savings rate of 15% to provide the balance required to properly value and control our domestic economy. The increase to 15% amounts to a diversion of about $1.2 trillion in personal savings away from consumption, or a little more than the size of the proposed stimulus package. Our national security interests are at stake here, not simply the price of our standard of living. We all sense that higher taxes are coming at the Federal and municipal levels. Entitlements are going to be renegotiated. Social Security will be reformatted to reflect the fact that we are living longer and the pool of payers is shrinking. Medicare/Medicaid and healthcare will be restructured to a socialist model. But, we still need to pay for it. At this point in the economic cycle, savers are the key to survival, not consumers. With this in place, the America of the immediate future will look, at best, a lot like the America of the 1950’s. If we truly think that there is a short term solution via consumption then we deserve our fate. The long term view and solutions are much harder to take in the short run, but if Americans are incentivized to save their stimulus checks rather than spend them, it would help provide structurally sustainable fiscal health in the long run. This would position the country to win the economic war rather than the current battle.
The answer is that we need to swallow the full tablespoon of medicine or, to paraphrase Al Davis, the legendary owner of the Oakland Raiders, “Just save, baby.”
………………..
Related book:
The Richest Man in Babylon (also available in an Audio Book)
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The sooner this happens, the better; but in the interim, we as a nation will be faced with policies designed to maintain the consumption-driven force of our domestic economy. My view is that this is what got us into this problem in the first place, and it runs counter to what Americans are now doing as rational economic beings—we are reducing consumption and increasing savings. The following is a construct of Newton’s principles. For every action, there is an equal and opposite reaction. We are witnessing the reaction of America’s primary Gross Domestic Product component, its consumers, as they retrench and repair their own balance sheets.
...
We should set a national target personal savings rate of 15% to provide the balance required to properly value and control our domestic economy. The increase to 15% amounts to a diversion of about $1.2 trillion in personal savings away from consumption, or a little more than the size of the proposed stimulus package. Our national security interests are at stake here, not simply the price of our standard of living. We all sense that higher taxes are coming at the Federal and municipal levels. Entitlements are going to be renegotiated. Social Security will be reformatted to reflect the fact that we are living longer and the pool of payers is shrinking. Medicare/Medicaid and healthcare will be restructured to a socialist model. But, we still need to pay for it. At this point in the economic cycle, savers are the key to survival, not consumers. With this in place, the America of the immediate future will look, at best, a lot like the America of the 1950’s. If we truly think that there is a short term solution via consumption then we deserve our fate. The long term view and solutions are much harder to take in the short run, but if Americans are incentivized to save their stimulus checks rather than spend them, it would help provide structurally sustainable fiscal health in the long run. This would position the country to win the economic war rather than the current battle.
The answer is that we need to swallow the full tablespoon of medicine or, to paraphrase Al Davis, the legendary owner of the Oakland Raiders, “Just save, baby.”
………………..
Related book:
The Richest Man in Babylon (also available in an Audio Book)
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