Links

“Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain. That is what we’re trying to do. It’s imperfect, but that’s what it’s all about.” -Warren Buffett

A U.S. Shoe Town Tries to Rebuild From Warren Buffett’s ‘Worst Deal’ Ever (LINK)

The Seduction of Pessimism - by Morgan Housel (LINK)

The 2017 Behavioral Economics Guide (LINK)

How a Philly Ob-gyn Ended Up Delivering a Baby Gorilla - by Ed Yong (LINK)

***

It looks like Amazon will be phasing out its aStore progam throughout the year. I've used it as a way to store book recommendations by category, so I'll have to find another solution as a way to organize things. But if there's anyone that wants to explore the lists before they are gone, you can find this blog's aStore HERE. 

Links

"Black Swan logic makes what you don’t know far more relevant than what you do know." -Nassim Taleb, The Black Swan

2011 Video: GEICO Chief Tony Nicely - Scott Symposium Bridgewater College [H/T Linc] (LINK) ["Most people are where they are in life because they reach their comfort level way too soon. Don't allow yourself to reach your comfort level way too soon. Do as my grandfather said: 'Be your own best critic.' Because you will find others to criticize you...but the best critic you'll ever have is yourself."]

Canadian non-standard mortgages: a state of play (LINK)

There Is No New Chinese “Sharing Economy” - by  Jeffrey Towson (Part 1, Part 2)

Bill Gross' June 2017 Investment Outlook (LINK)

Could Amazon deliver your next prescription? (LINK)

Tim Cook Says Apple Is Focusing on an Autonomous Car System (LINK)

Podcasts, Analytics, and Centralization - by Ben Thompson (LINK)

Tulips and Token Mania (LINK)

The Strange Brain of the World’s Greatest Solo Climber [From last year, and worth reviewing given Honnold's recent feat.] [H/T Linc] (LINK)

Links

Berkshire Hathaway Annual Meeting 2017 Transcript [H/T Hurricane Capital] (LINK)

TED Talk -- Tim Ferriss: Why you should define your fears instead of your goals (LINK)

Latticework of Mental Models: Risk Aversion Vs Loss Aversion (LINK)

A Dozen Lessons about Business and Investing I’ve Learned from Mike Maples Jr. - by Tren Griffin (LINK)

Harry Markopolos – Who Exposed Madoff – Has Uncovered a New Fraud [H/T ValueWalk] (LINK)

Does Anyone Remember How to Make a Subprime Mortgage? [H/T Matt Levine] (LINK)

How I Built This podcast -- Carol's Daughter: Lisa Price (LINK)

Daron Acemoglu on the Masters in Business podcast (LINK)

Related book:  Why Nations Fail

Hunt, O'Hanley, Greenblatt on the Future of Actives (video) [H/T Linc] (LINK)

PGIM President and CEO David Hunt, State Street Global Advisors President and CEO Ron O'Hanley, and Gotham Asset Management Co-Chief Investment Officer Joel Greenblatt speak with Bloomberg's Peggy Collins at Bloomberg Invest New York about the threat from passives and where they see the biggest areas for growth for active managers. (Source: Bloomberg)

92nd Street Y -- The Stripe Approach to Building a Better Business (video) (LINK)

The Stripe Approach to Building a Better Business with Patrick Collison, Timothy Geithner and Andrew Ross Sorkin. Recorded on May 11, 2017 at 92nd Street Y.

92nd Street Y -- Science and Communication: Alan Alda in Conversation with Neil deGrasse Tyson (video) (LINK)

Related book: If I Understood You, Would I Have This Look on My Face?: My Adventures in the Art and Science of Relating and Communicating 

The greatest sports achievement in my lifetime? - by Eugene Wei [H/T The Browser] (LINK)

A week ago, Alex Honnold free climbed El Capitan. With no ropes or climbing gear besides his shoes and chalk, Honnold became the first person to free climb what is universally acknowledged, among the climbing world, as the most daunting challenge in what most people consider to be less sport than a perverse game of Russian roulette with fate.

Book of the day [H/T @BaseHitInvestor]: The JD.com Story: An E-commerce Phenomenon

Links

"If you need to use a computer or calculator to make the calculation, you shouldn't buy it...It should scream at you...we do not sit down with spreadsheets and do all that sort of thing. We just see something that obviously is better than anything else around that we understand — and then we act." -Warren Buffett (source)

Don’t Touch My Money, Just Hold My Hand - by Jason Zweig (LINK)

Geoffrey West on the FT Alphaville podcast (LINK)

Related book: Scale

Mark Spitznagel on Bloomberg TV (video) [H/T Jim] (LINK)

Mark Spitznagel at the Bloomberg Invest conference (video) (LINK)

Exponent podcast: Episode 117 — Fruitful Clapping (LINK)

TED Talk -- Anne Lamott: 12 truths I learned from life and writing (LINK)

Related book: Bird by Bird

The School of Life: An Interview With Alain de Botton (LINK)

Fetuses Prefer Face-Like Images Even in the Womb - by Ed Yong (LINK)

Did life here begin ... out there? Maybe its precursors did. - by Phil Plait (LINK)

Links

"In a world in which most investors appear interested in figuring out how to make money every second and chase the idea du jour, there's also something validating about the message that it's okay to do nothing and wait for opportunities to present themselves or to pay off. That's lonely and contrary a lot of the time, but reminding yourself that that's what it takes is quite helpful." -Seth Klarman

Seminars About Long-term Thinking -- Geoffrey B. West: The Universal Laws of Growth and Pace (audio) (LINK)

Related book: Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies 

How to Generate Stock Ideas: An Unusual Lesson from a 1939 Book (LINK)

Peer-to-Peer Live: David Rubenstein and Paul Singer (video) (LINK)

Elon Musk: The Man, the Myth, the Risk [WSJ $] (LINK)

Mike Rowe on Efficiency versus Effectiveness - by Cal Newport (LINK)

Tiny Jumping Spiders Can See the Moon - by Ed Yong (LINK)

Microbiologist and NASA astronaut Kate Rubins at the ASM Microbe 2017 keynote session. Moderated by Ed Yong. (video) (LINK)

Links

Testing Mattresses with Warren Buffett - By Bill Gates (LINK)

Habits vs Goals: A Look at the Benefits of a Systematic Approach to Life (LINK)

Murray Stahl’s Presentation on Value Creation from Value Destruction (video) (LINK)

Greatest Hits From Michael Mauboussin & Meir Statman - by Ben Carlson (LINK)

The Unsung Heroes of Investing - by Phil Huber [H/T @jasonzweigwsj] (LINK)

An In Depth Look At The Greatest Minds Of Investing (podcast) (LINK)

Related book: The Great Minds of Investing - by William Green

Legendary short seller Jim Chanos tells us what he sees for the markets this year (video) [H/T Barry Ritholtz] (LINK)

Bill Gross talks about investing (video) (LINK)

Eric Schmidt chats with Reid Hoffman (podcast) (LINK)

a16z Podcast: Modernizing Government Services, from Food Stamps to Foster Care (LINK)

Cialdini Asks: Dan Ariely (video) (LINK)

Mark Sisson's Definitive Guide to the Ketogenic Diet (LINK)

Related book (to be released in October): The Keto Reset Diet

Scientists Have Found the Oldest Known Human Fossils - by Ed Yong (LINK)

Lawrence M. Krauss: "The Greatest Story Ever Told...So Far" | Talks at Google (LINK)

Related book: The Greatest Story Ever Told--So Far: Why Are We Here?

Links

An Enterprising Thought: Cash as an Option - by Frank Martin [H/T Eric] (LINK)

Podcast: Steven Bregman On ‘The Greatest Bubble Ever’ (Passive ETF Investing) (LINK)

Ray Dalio’s updated thoughts on Donald Trump's policies and China's latest economic moves (LINK)

Apple's Strengths and Weaknesses  - by Ben Thompson (LINK)

From Startup to Scaleup | Sam Altman and Reid Hoffman (video) (LINK)

Roundup of lots of recent posts on crypto tokens (LINK)

Accelerating the Future: The Economic Impact of the Emerging Passenger Economy [H/T @AlexRubalcava] (LINK)

Nassim Taleb talks with Ron Paul (video) (LINK)

Beethoven and the Crucial Difference Between Genius and Talent (LINK)

Richard Dawkins on time [H/T The Browser] (LINK)

Related book (released in August): Science in the Soul: Selected Writings of a Passionate Rationalist - by Richard Dawkins

Book of the day (from a few years ago): Catastrophic Care: Why Everything We Think We Know about Health Care Is Wrong

Links

"There's no such thing as analysis of what's coming. We don't know anything about the future, and you can't prove anything about the future. But if you've been in business and you've seen some cycles, and you've gained some experience and you've gone through those cycles with your eyes open saying 'What are the implications of cycles for our behavior?', then I think you can reach a point where you say, 'You know what, it just feels like the power is in the hands of the issuers, not the buyers. It feels like there aren't many sellers, just a lot of buyers. And the market is not acting in a disciplined way.' We want to buy when the market in panicked, not when the market is sanguine. Buffett says that 'The less prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own affairs.' When other people are optimistic, we should be worried. When other people are panicked, we should turn aggressive." -Howard Marks (source)

Two Decades of Winning by Not Losing - by Steven Romick [H/T @Wexboy_Value] (LINK)

How I Built This podcast -- Five Guys: Jerry Murrell (LINK)

Grant’s Podcast: Taxi! Taxi! (LINK)

Uber comes under the Grant's lens.

Grant's Podcast [previous]: The biggest pyramid scheme the world has yet seen (LINK)

Grant’s talks to China authority Anne-Stevenson-Yang.  

China’s Debt Crackdown Is Driving Borrowers Into Riskier Territory [H/T Matt] (LINK)

China’s crackdown on debt is driving some companies to a murkier form of financing as it gets harder to secure bank loans or tap the bond market. 

New loans from so-called trusts, firms that raise money from individuals and corporations to plow into riskier areas of the economy, reached 882.3 billion yuan ($129.5 billion) in the first four months of this year, according to data from the People’s Bank of China, nearly five times as much as the same period in 2016. 

Trust firms, which often charge borrowers higher rates than banks, occupy a middle ground between banking and asset management. They are licensed and loosely regulated by China’s banking watchdog, but they lack some of banks’ protections, such as government deposit insurance, and they have more flexibility to invest in risky areas than banks do.

Chinese Banks Face Up to Funding Squeeze[H/T Matt] (LINK)

Beijing is squeezing its financial system. Its banks may soon find themselves gasping for breath. 

Household deposits—long the backbone of China’s economy, funding inexorable loan growth—are fleeing: Around 1.2 trillion yuan ($176 billion) left the banking system last month. Meanwhile, growth in corporate deposits has slowed, reducing the rise in deposits overall to a crawl. 

The exodus is proving a double whammy for China’s banks. Not only are they losing a stable source of funding, they are also bearing the brunt of higher costs to raise cash as financial conditions tighten.

92nd Street Y: Destined for war with China? Graham Allison and Gen. David Petraeus (Ret) (video) (LINK)

Related book: Destined for War: Can America and China Escape Thucydides’s Trap? [There's also another recent video on the book and topic, with a panel that includes Niall Ferguson as well, HERE.]

Steve Keen on the Hidden Forces podcast (LINK)

Related book: Can We Avoid Another Financial Crisis?

The Quiet Master of Cryptocurrency — Nick Szabo (The Tim Ferriss Show) (LINK)

Getting Hacked, Lessons Learned - by Fred Wilson (LINK)

The Thoughts of a Spiderweb - by Joshua Sokol [H/T @BenedictEvans] (LINK)

Spiders appear to offload cognitive tasks to their webs, making them one of a number of species with a mind that isn’t fully confined within the head.

The energy expansions of evolution - by Olivia P. Judson [H/T @AlexRubalcava] (LINK)

The history of the life–Earth system can be divided into five ‘energetic’ epochs, each featuring the evolution of life forms that can exploit a new source of energy. These sources are: geochemical energy, sunlight, oxygen, flesh and fire. The first two were present at the start, but oxygen, flesh and fire are all consequences of evolutionary events. Since no category of energy source has disappeared, this has, over time, resulted in an expanding realm of the sources of energy available to living organisms and a concomitant increase in the diversity and complexity of ecosystems. These energy expansions have also mediated the transformation of key aspects of the planetary environment, which have in turn mediated the future course of evolutionary change. Using energy as a lens thus illuminates patterns in the entwined histories of life and Earth, and may also provide a framework for considering the potential trajectories of life–planet systems elsewhere.

Links

A Dozen Thoughts from Charlie Munger from the 2017 Berkshire Annual Meeting - by Tren Griffin (LINK)

David Einhorn on GM Value, Tesla Profit, Apple (video) (LINK)

How Wells Fargo’s Cutthroat Corporate Culture Allegedly Drove Bankers to Fraud - by Bethany McLean [H/T @pcordway] (LINK)

Competitive Advantage & Capital Allocation - by Pat Dorsey (LINK)

Differentiating Business Performance from Stock Performance - by Ian Cassel (LINK)

Expiring vs. Long-Term Knowledge - by Morgan Housel (LINK)

Eric Cinnamond On The Value Of Absolute Return Investing (podcast) [H/T @Jesse_Livermore] (LINK)

Meet the People’s Quant, a Former Marine Who Champions Value Investing (LINK)

Ed Easterling talks to Meb Faber (podcast) (LINK)

The Absolute Return Letter - June 2017 (LINK)

Mutual Fund Observer, June 2017 (LINK)

Watch Mary Meeker give her 2017 internet trends report (VIDEO, SLIDES, PODCAST)

Marc Andreessen and Reid Hoffman at the Recode conference (video) (LINK)

Reed Hastings at the Recode conference (video) (LINK)

[More videos from the Recode conference can be found HERE, including Walt Mossberg's interview at his final conference.]

Crypto Tokens: A Breakthrough in Open Network Design - by Chris Dixon (LINK)

Transcript: A16z’s Marc Andreessen with Barry Ritholtz on Masters in Business [H/T Hurricane Capital] (LINK) [The audio is available HERE, in case you missed it earlier.]

The rise of the QR code and how it has forever changed China’s social habits [H/T @BaseHitInvestor] (LINK)

Mayo Clinic’s Unusual Challenge: Overhaul a Business That’s Working [H/T Matt] (LINK)

Thinking clearly about quality - by Seth Godin (LINK)

Edge #493: Curtains For Us All? - A Conversation With Martin Rees (LINK)

Astronomers may have seen a star collapse directly to a black hole - by Phil Plait (LINK)

How an Icon of Evolution Lost Its Flight - by Ed Yong (LINK)

Silence. Go within. Go forward.

A simple reminder I use whenever I start to feel the natural human ego arise from within: Silence. Go within. Go forward. 

There are two examples that I currently use to best illustrate what I mean by silence, and when it may be best to practice it. The first is from the 2007 commencement address given by Charlie Munger when—after talking about the importance of continuous learning and practicing his multi-disciplinary approach—he goes on to say (via Poor Charlie's Almanack): 

My mental routine, properly practiced, really helps. Now, there are dangers in it, because it works so well. If you use it you will frequently find when you're with some expert from another discipline—maybe even an expert who is your employer with a vast ability to harm you—that you know more than he does about fitting his specialty to the problem at hand. You'll sometimes see the correct answer when he's missed it. That is a very dangerous position to be in. You can cause enormous offense by being right in a way that causes somebody else to lose face in his own discipline or hierarchy. I never found the perfect way to avoid harm from this serious problem. 

Even though I was a good poker player when I was young, I wasn't good enough at pretending when I thought I knew more than my supervisors did. And I didn't try as hard at pretending as would have been prudent. So I gave a lot of offense. Now, I'm generally tolerated as a harmless eccentric who will soon be gone. But coming up, I had a difficult period to go through. My advice to you is to be better than I was at keeping insights hidden. [Or as he said when giving the talk in person, "My advice to you is to learn sometimes to keep your light under a bushel."]

The second example comes from a podcast with Patrick O’Shaughnessy and Brent Beshore. Beshore mentions some advice he took away from a group meeting he attended with Charlie Munger:

One of the biggest pieces of advice that I took out of it was that he said, "Don't feel like you need to be impressive to people." He said that for the longest time, [it was] the single biggest thing that affected his life negatively.... He said that his need to show people that he was right, and that he was smarter than them, and that they were doing something stupid...he said he would have been much more successful than he was if he had just been able to, I think he said "disguise your judgment."

The reminder to 'go within' has to do with focusing on self-improvement and on keeping an inner scorecard, as opposed to worrying about what other people are doing or what other people think of you. There's a good quote from Warren Buffett that illustrates this (via All I Want To Know Is Where I'm Going To Die So I'll Never Go There): 

You always want to consider your inner scorecard – how you feel about your own performance and success. You should worry more about how well you perform rather than how well the rest of the world perceives your performance. 

And in the same section of the book I took that quote from, Peter Bevelin writes (through the character of the Librarian):

Don't live a life based on the approval from others. Be authentic – be and act in accordance with who you are, what you like and are good at, or one day your mask may fall off. As Seneca said, "No one can persevere long in a fictitious character; for nature will soon reassert itself."

And the reminder to 'go forward' has to do with not worrying too much about the past. As Warren Buffett said in his appearance with Bill Gates on Charlie Rose earlier this year: 

Don't fear failure.... Don't let it eat at you. Don't look back. Just keep going. You're going to have some things, but forget them. Go forward.