River Out of Eden and A Universe from Nothing

In a recent reddit Q&A for the movie The Unbelievers, Richard Dawkins and Lawrence Krauss mentioned their favorite books by the other:

Lawrence Krauss:

My favorite book of Richard's is River Out of Eden. It is the most beautifully concise description of evolution I've ever read, I liked it so much I sent Richard a fan letter when it appeared.

Richard Dawkins (his pick was also a Charlie Munger pick):

Universe from Nothing is my favourite book by Lawrence. Beautiful example of my maxim "If you could do physics by common sense, we wouldn't need physicists"

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

Dawkins' other prominent books on evolution are listed, HERE.

Marcus Aurelius quote

From Meditations:

Ambition means tying your well-being to what other people say or do. 

Self-indulgence means tying it to the things that happen to you. 

Sanity means tying it to your own actions.

Leading@Google: Tony Hsieh (July 2010)

Tony Hsieh visits Google in Mountain View to talk about his new book - Delivering Happiness: A Path to Profits, Passion, and Purpose. 

The visionary CEO of Zappos explains how an emphasis on corporate culture can lead to unprecedented success.

Link

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

Related book: Delivering Happiness: A Path to Profits, Passion, and Purpose

Comments from Felix Zulauf, James Montier and David Iben

Link to: We will continue to swim in a sea of liquidity

James, we have slow growth, no inflation, low interest rates and easy monetary policy as far as the eye can see. Are we living in the best of all worlds for investors? 

James Montier: How I wish that that were true. The problem with the policy of raising asset prices is that you borrow returns from the future. You can think of it as the front loading of return. So what you’re really doing is pushing down future returns. So it doesn’t really help anybody a great deal in the longer term. Of course, in the short term the effect is positive as you get some sort of balance sheet repair through rising asset prices. At least that’s what central banks hope. But when you look at today’s opportunity set, you’re left with a set of assets where nothing looks attractive from a valuation point of view. 

Even if interest rates stay low for a long time? 

Montier: Even if we factor in low interest rates for the next twenty years, we’re still not seeing great opportunities. We can find stuff that may be fair value in that scenario, but it’s far from obvious. This is a very difficult time – in contrast to 2007, when risk assets were expensive but cash and bonds were priced to deliver reasonable returns, which is not the case today. It’s much harder to find anywhere to hide. So far from being the best of all possible worlds, this is almost the worst of all possible worlds. 

Do your clients still believe in the much-cited low return environment? The further markets move up, the more you might have a credibility issue. 

Montier: No doubt. We haven’t yet reached the kind of loathing that was displayed towards us in 1999 where we were just told we were complete idiots and several clients banned us from their buildings. I think there is a broader acceptance of the power of valuation, but the longer the rally goes on, the shorter people’s memory gets. Galbraith used to talk about the extreme brevity of financial memory and I fear that’s kind of what we’re experiencing now. People are looking at last year and say look, it can go up 30%, why on earth are you saying future returns are going to be dismal. 

But markets have been expensive for quite some time. How opportunistic should a value investor be? 

Montier: There are two possible states of the world: either they keep rates low for a very long period of time or they don’t. Anyone who says they know which one is going to happen is either a liar or a fool or possibly a linear combination with unknown weights. The reality is, nobody knows the future, particularly when it comes to policy rates. By second guessing we’re playing some sort of ridiculous beauty contest. Therefore we should try to build portfolios which are robust and can survive different outcomes. 

How do these portfolios look like?

Montier: That’s a challenge because the portfolios you want to hold in those two different worlds are almost diametrically opposed. If financial repression continues, you want to own the least bad thing out there, which is equities. In the other world, the only asset which does not hurt you when rates move to normal, is cash. So you end up with this bizarre portfolio where you own some equities where they are cheap. And you want to own some dry powder assets which protect you against inflation, provide liquidity and real return. 

Does cash do the job? 

Montier: Cash historically has done all three of those things very well, but in a world where rates are kept very low, cash does not do at least two of those things very well. So in addition to cash, you have to include some long-short strategies, TIPS and bonds which offer at least some yield. The really unsatisfying thing is that no matter what is going to happen in the future, you won’t hold the best portfolio. But at least, this portfolio allows you to survive.

[H/T Zero Hedge]

Talks at Google: Mebane Faber, "Global Value: How to Spot Bubbles, Avoid Market Crashes, and Earn Big Returns"

Link to video

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

Related book: Global Value: How to Spot Bubbles, Avoid Market Crashes, and Earn Big Returns in the Stock Market

[H/T ValueWalk]

A Billionaire Mathematician’s Life of Ferocious Curiosity

Link to article: Seeker, Doer, Giver, Ponderer: A Billionaire Mathematician’s Life of Ferocious Curiosity

James H. Simons likes to play against type. He is a billionaire star of mathematics and private investment who often wins praise for his financial gifts to scientific research and programs to get children hooked on math. 

But in his Manhattan office, high atop a Fifth Avenue building in the Flatiron district, he’s quick to tell of his career failings. 

He was forgetful. He was demoted. He found out the hard way that he was terrible at programming computers. “I’d keep forgetting the notation,” Dr. Simons said. “I couldn’t write programs to save my life.” 

After that, he was fired. 

His message is clearly aimed at young people: If I can do it, so can you. 

How Not to Be Wrong...

A good friend recommended this book to me this morning, for those who may also be interested: How Not to Be Wrong: The Power of Mathematical Thinking - by Jordan Ellenberg

There are some links to reviews and press on the book HERE.

It also looks like the author has some pretty interesting articles HERE.

Charlie Munger: The Importance of Multiple Mental Models

From Poor Charlie's Almanack, and what I think is the single most important idea I carry with me when it comes to going through life:

You must know the big ideas in the big disciplines and use them routinely--all of them, not just a few. Most people are trained in one model--economics, for example--and try to solve all problems in one way. You know the old saying: To the man with a hammer, the world looks like a nail. This is a dumb way of handling problems.

You need a different checklist and different mental models for different companies. I can never make it easy by saying, "Here are three things." You have to derive it yourself to ingrain it in your head for the rest of your life.

You can't learn those one hundred big ideas you really need the way many students do--where you learn 'em well enough to bang 'em back to the professor and get your grade, and then you empty them out as though you were emptying a bathtub so you can take in more water next time. If that's the way you learn the one hundred big models you're going to need, [you'll be] an "also ran" in the game of life. You have to learn the models so that they become part of your ever-used repertoire. 

By the way, there's no rule that you can't add another model or two even fairly late in life. In fact, I've clearly done that. I got most of the big ones quite early [however].

The happier mental realm I recommend is one from which no one willingly returns. A return would be like cutting off one's hands.

Coal-fired growth: Apollo Asia Fund: the manager's report for 2Q2014

Link to: Coal-fired growth

Many economic forecasters in Asia continue to extrapolate the trends of the recent past, failing to recognise the past contribution of resource windfalls which are dwindling, vanished, or overtaken by domestic consumption. Some of these trends are clearly unsustainable. If coal usage in Malaysia were to rise at its present rate for another 16 years, it would have risen 109 times since the start of the fund, and the consequences for the environment are important to contemplate. In practice it seems likely that coal will continue to increase as a proportion of the Southeast Asian energy mix; growth in energy use will moderate as costs rise and some subsidies are withdrawn; and GDP growth will be less than before. 

Moreover, a higher proportion of economic activity will relate to resource extraction and the costs of environmental change (from water procurement through flood mitigation to health impacts). Anecdotally, we have also noticed a number of cases of forced investment in replacement systems due to individual unobtainable parts, without any of the productivity benefits experienced at the time of the original expenditure. Maintenance and replacement expenditure, along with debt service, may thus consume a rising percentage of income. Exports, the traditional growth driver, have faltered since the global financial crisis erupted in 2008. In several countries it now seems appropriate to focus on companies supplying the goods and services that will be prioritised if disposable income is squeezed.

How Google Map Hackers Can Destroy a Business at Will

Link to article: How Google Map Hackers Can Destroy a Business at Will

Washington DC-area residents with a hankering for lion meat lost a valuable source of the (yes, legal) delicacy last year when a restaurant called the Serbian Crown closed its doors after nearly 40 years in the same location. The northern Virginia eatery served French and Russian cuisine in a richly appointed dining room thick with old world charm. It was best known for its selection of exotic meats—one of the few places in the U.S. where an adventurous diner could order up a plate of horse or kangaroo. “We used to have bear, but bear meat was abolished,” says proprietor Rene Bertagna. “You cannot import any more bear.” 

But these days, Bertagna isn’t serving so much as a whisker. It began in early 2012, when he experienced a sudden 75 percent drop off in customers on the weekend, the time he normally did most of his business. The slump continued for months, for no apparent reason. Bertagna’s profits plummeted, he was forced to lay off some of his staff, and he struggled to understand what was happening. Only later did Bertagna come to suspect that he was the victim of a gaping vulnerability that made his Google listings open to manipulation. 

He was alerted to that possibility when one of his regulars phoned the restaurant. “A customer called me and said, ‘Why are you closed on Saturday, Sunday and Monday? What’s going on?’” Bertagna says. 

It turned out that Google Places, the search giant’s vast business directory, was misreporting the Serbian Crown’s hours. Anyone Googling Serbian Crown, or plugging it into Google Maps, was told incorrectly that the restaurant was closed on the weekends, Bertagna says. For a destination restaurant with no walk-in traffic, that was a fatal problem.

..... 

Beneath its slick interface and crystal clear GPS-enabled vision of the world, Google Maps roils with local rivalries, score-settling, and deception. Maps are dotted with thousands of spam business listings for nonexistent locksmiths and plumbers. Legitimate businesses sometimes see their listings hijacked by competitors or cloned into a duplicate with a different phone number or website. In January, someone bulk-modified the Google Maps presence of thousands of hotels around the country, changing the website URLs to a commercial third-party booking site (which siphons off the commissions). 

Small businesses are the usual targets. In a typical case in 2010, Buffalo-based Barbara Oliver & Co Jewelry saw its Google Maps listing changed to “permanently closed” at the exact same time that it was flooded with fake and highly unfavorable customer reviews. 

“We narrowed it down as to who it was. It was another jeweler who had tampered with it,” says Barbara Oliver, the owner. “The bottom line was the jeweler put five-star reviews on his Google reviews, and he slammed me and three other local jewelers, all within a couple of days.”