Links

"If I go through my career, there's a lot of disappointments; there's a lot of things that didn't go right. But those aren't the things that make you. It's how you bounce back, and where you move on from there—and what you learn from those things. It's kind of 'the river flows'.... You have to make choices on where your life goes, but you never stop flowing. You never stop riding the river.... You kind of keep pushing forward, because you're going to have disappointments, you're going to have problems in your life, you're going to have different things that go wrong, but that's not what's going to define you. What's going to define you is how you recover from those things and how you move on." --David Tepper

David Tepper at Carnegie Mellon (videos) [H/T @LongShortTrader] (Part 1, Part 2, Part 3)

Inertia: The Force That Holds the Universe Together (LINK)

You Are Not Alone: The Berkshire Hathaway Annual Meeting - by Jason Zweig (LINK)

Related book: The Warren Buffett Shareholder: Stories from inside the Berkshire Hathaway Annual Meeting

Amazon: Glimpses of Shoeless Joe? - by Aswath Damodaran (LINK)

Tokenized Securities and the Future of Ownership (LINK)

Nature's Mechanical Secrets Could Help Build Faster Robots [H/T Linc] (LINK)

Exponent Podcast: Episode 149 — Zillow and Sustaining Aggregation (LINK)

How I Built This Podcast -- Panera Bread/Au Bon Pain: Ron Shaich (LINK)

The Investors Podcast: Mastermind Discussion 2nd Q 2018 w/ Jesse Felder & Tobias Carlisle (LINK)

Farewell, No. 16: scientists left 'miserable' after world's oldest spider dies aged 43 [H/T David] (LINK)

The arachnid is believed to have survived for so long by sticking to one protected burrow its entire life and expending the minimum of energy.

TED Talk: Is the world getting better or worse? A look at the numbers | Steven Pinker (LINK)

Related book: Enlightenment Now

The next epidemic is coming. Here’s how we can make sure we’re ready. - By Bill Gates (LINK)

What Bill Gates Fears Most - by Ed Yong (LINK)

"It is above all things necessary to form a true estimate of oneself, because as a rule we think that we can do more than we are able." --Seneca

Forum on Leadership: A Conversation with Jeff Bezos

Jeff Bezos, Chairman and CEO of Amazon, was the featured speaker at the April 20, 2018 Closing Conversation of the George W. Bush Presidential Center’s Forum on Leadership, in partnership with SMU. [The Bezos chat starts around the 5:30 mark.]

Link to video

Jim Chanos on primary research and peeling the onion...

The below excerpt is from a chat earlier this year between Jim Grant and Jim Chanos that was taped for Real Vision Television. Real Vision has just dropped its price from $597 a year to $180, and is also offering a 14-day free trial. I signed up for the free trial and have so far watched some great interviews with John Hempton, Marc Cohodes, and Kyle Bass, as well as some videos on the auto finance industry. At the new price point, I will probably be keeping my subscription. I get no commission of any sort from them, so my recommending one sign up for the free trial is all because I think there is valuable content on their platform. The Real Vision team was also kind enough to give me permission to post this excerpt, which I thought would be especially of interest to readers of this blog:

Jim Grant: Well, this has been pretty terrific. I think I ought to not wind this up before asking you about dear alma mater and about your not so secret other life as a professor. You teach a course both at Yale and at the University of Wisconsin, kind of a sentimental alma mater. And I'm going to ask you one thing about that. What is the single most important thing that you teach your students?   

Jim Chanos: So the single most important thing I teach my students is primary research. And although it's nominally a history course, it's a course on the history of financial market fraud, we overlay some systematic models on a historical narrative. What I stress to my students and my analysts is the importance of working the opposite way of most investors. And whether it's examining something historically or something currently, the parallels hold.  

So what I try to teach and really, really reinforce to the students is that it's shocking what you can find out when you do primary research. Because most investors, if you think of investing in an idea as sort of an onion, that whereby the kernel of the onion is primary source documents. The second layer is sort of company press releases. The third layer would be conference calls where management expounds on their business. The fourth layer would be sort of Wall Street research reports. And then the fifth layer would be stories, rumors--   

Jim Grant: The good stuff.   

Jim Chanos: --tips, the good stuff. Virtually all investors work from the outside of the onion in. They hear a story, they might read some research, they might listen to a conference call. I tell my students, start with the documents. Start with what the companies have to tell you or are mandated to disclose and work your way out.   

Often the same situation looks radically different when you start that way as opposed to when you start with the chorus and their interpretation of that kernel of truth. And it has put my analysts, I think the firm in good stead in doing that kind of research, whether it's historical or current, and its kind of amazing what you find when you read the Enron 10-K and read the footnotes as opposed to listening to what the sell side was saying. Or you see what Mike Pearson at Valeant was doing with his acquisition accounting, despite what Wall Street was saying. And that's something that we sort of reinforce with historical examples. And I hope that my students, [if they] take anything away from the class, it's that.

Time transforms risk...

From Against the Gods: The Remarkable Story of Risk:

Time is the dominant factor in gambling. Risk and time are opposite sides of the same coin, for if there were no tomorrow there would be no risk. Time transforms risk, and the nature of risk is shaped by the time horizon: the future is the playing field.

Time matters most when decisions are irreversible. And yet many irreversible decisions must be made on the basis of incomplete information. Irreversibility dominates decisions ranging all the way from taking the subway instead of a taxi, to building an automobile factory in Brazil, to changing jobs, to declaring war. 

If we buy a stock today, we can always sell it tomorrow. But what do we do after the croupier at the roulette table cries, “No more bets!” or after a poker bet is doubled? There is no going back. Should we refrain from acting in the hope that the passage of time will make luck or the probabilities turn in our favor? 

Hamlet complained that too much hesitation in the face of uncertain outcomes is bad because “the native hue of resolution is sicklied o’er with the pale cast of thought . . . and enterprises of great pith and moment . . . lose the name of action.” Yet once we act, we forfeit the option of waiting until new information comes along. As a result, not-acting has value. The more uncertain the outcome, the greater may be the value of procrastination. Hamlet had it wrong: he who hesitates is halfway home.

[H/T @williamgreen72]

Links

"We try to think about things that are both important and knowable. There are important things that are not knowable.... And there are things that are knowable, but not important - and we don't want to clutter up our minds with those. We ask ourselves: 'What's important and knowable?'... There are all kinds of important subjects that Charlie and I don't know anything about. And therefore, we don't think about 'em. Our view about what the world will look like over the next 10 years in business or the state of U.S. competitiveness - we're just no good [at that]." --Warren Buffett (1998 Berkshire Hathaway Annual Meeting, via Outstanding Investor Digest)

"We're not predicting the currents that will come just how some things will swim whatever the currents may be." --Charlie Munger (1998 Berkshire Hathaway Annual Meeting, via Outstanding Investor Digest)

What Does Culture Smell Like? (LINK)

Boyar Value Group's Q1 Letter (LINK) [There are also a bunch of other Q1 Letters HERE.]

Open, Closed, and Privacy - by Ben Thompson (LINK)

MUST SEE VIDEO: Snowstorm on a comet! (LINK)

What's Wrong With Growing Blobs of Brain Tissue? - by Ed Yong (LINK)

Fossilized Human Footprint Found Nestled in a Giant Sloth Footprint - by Ed Yong (LINK)

Links

"There's integrity, intelligence, experience and dedication. That's what human enterprises need to run well." --Charlie Munger

Brian Koppelman’s Career Capital (LINK)

An excerpt from John Doerr's new book Measure What Matters (LINK)

2018 Antitrust and Competition conference - Digital Platforms and Concentration (video) (LINK) [Ben Thompson's opening remarks with slides are available HERE.]

Happiness & the Gorilla - By Scott Galloway (LINK)

The Reinvention of America [H/T @StevenLevy] (LINK)

Book of the day [H/T @svafier]: The Go-Giver Influencer

"After crosses and losses men grow humbler and wise." --Ben Franklin [H/T CIO]

Links

"[Charlie and I] really don't worry. We just do the best we can. When we have capital to allocate, sometimes it's very easy to do and sometimes it's almost impossible. However, we’re not going to stay up at night and worry about it - because the world changes. If we were worried about something in the business, we'd correct it....if you're worried about something, the thing to do is to get it corrected and get back to sleep. " --Warren Buffett

Go Fast and Break Things: The Difference Between Reversible and Irreversible Decisions (LINK)

Research Affiliates: Yes. It's a Bubble. So What? (LINK)

With sky-high valuations in the US stock market, and what we believe is a tech bubble that has dangerous implications for other areas of the market, we suggest four actions investors can take now to avoid the inevitable bursting of the bubble, and which will likely benefit their portfolios’ long-term performance potential. 

60 Minutes' segment on MIT's Media Lab (video) (LINK)

Why Everyone Is Insecure (and Why That's Okay) [H/T @susancain] (LINK)

Uranus smells like rotten eggs (just a little) - by Phil Plait (LINK)

What Was The Ancestor Of Everything? (video) [H/T Linc] (LINK)

Links

"My definition of value is figure out what the business is worth and pay a lot less. It is not low price-to-book, low price-to-sales investing.... As Warren Buffett would say, value and growth are tied at the hip. Growth is part of value.... The reason I’m a value investor, according to our definition, is stocks are actually ownership shares of businesses that you value and try to buy at a discount, they’re not pieces of paper the bounce around that you put Sharpe ratios and Sortina ratios and use computer simulations to balance your portfolios or whatever it is. Basically, they are ownership shares of business that you value and try to buy at a discount. So it’s certainly possible that the market does not reward my valuations even if I’m right over the next two years, but that doesn’t mean we’re going to stop doing what we’re doing. That’s what stocks are: ownership shares of businesses, and that’s very fundamental to the way we look at everything." --Joel Greenblatt

Joel Greenblatt on the Masters in Business podcast (audio and transcript) (LINK)

Buffett's Edge [H/T Abnormal Returns] (LINK)

The Most Valuable Investment Skill - by Sean Iddings (LINK)

How Hedge Funds Hide [H/T Will] (LINK)

Seth Klarman’s Baupost Group buys distressed debt and goes to great lengths to hide it. Here’s why — and how — hedge funds such as his fight to keep secrets. Part 1 of a two-part series.

Mark Leonard's annual letter to Constellation Software shareholders (LINK)

Negative Equity, Veiled Value, and the Erosion of Price-to-Book - by Travis Fairchild (LINK)

Baseball & Waiting for the Fat Pitch - by Frank K. Martin (LINK)

Hugh Hendry’s Life After Hedge Funds [H/T value and opportunity] (LINK)

The Investors Podcast: The Culture Code w/ Daniel Coyle (LINK)

a16z Podcast: Principles and Algorithms for Work and Life (Ray Dalio) (LINK)

Investing and Business Lessons from Aileen Lee (Cowboy Ventures) - by Tren Griffin (LINK)

When the Twitter Mob Came for Me ($) (LINK)

Recently hired by the Atlantic and then promptly fired, the conservative writer Kevin D. Williamson discusses the social-media outrage that made the celebrated magazine retreat

Beyond Black Box Management - by Cal Newport (LINK)

Humans, Gods and Technology - VPRO documentary - 2017

Nobody knows how our world will look like in 25 years. Perhaps our work is taken over by autonomous robots and we become the slaves of the technology we have created ourselves. The big questions about the future of man and his relation to technology are presented to two important thinkers of the moment: Kevin Kelly and Yuval Noah Harari.

Link to video

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

Related books:

Homo Deus - by Yuval Noah Harari

The Inevitable - by Kevin Kelly

Links

Casualties of Your Own Success - by Morgan Housel (LINK)

Kicked in the Ass with a Golden Horseshoe - by Ian Cassel (LINK)

Home Depot was co-founded by Bernie Marcus (visionary), Arthur Blank (operations/finance), and Pat Farrah (energy), and financed by Ken Langone. Home Depot is yet another example of how great ideas are born out of frustration not greed.

Horizon Kinetics Q1 2018 Portfolio Update slides [H/T @chriswmayer] (LINK)

Alphabet Soup: Google is Alpha, but where are the Bets? - by Aswath Damodaran (LINK)

Silicon Valley has oversold the near-term potential of the technologies of the future (LINK)

"Adam Smith's View of Man" - by Ronald Coase (1976) (LINK)

In a Few Centuries, Cows Could Be the Largest Land Animals Left - by Ed Yong (LINK)

How Asia's Super Divers Evolved for a Life At Sea - by Ed Yong (LINK)

Freeman Dyson reviews Geoffrey West's book Scale (LINK)

***

"The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new-era theory [of 1927-1929] led directly to this thesis. If a public-utility stock was selling at 35 times its maximum recorded earnings, instead of 10 times its average earnings, which was the preboom standard, the conclusion to be drawn was not that the stock was now too high but merely that the standard of value had been raised. Instead of judging the market price by established standards of value, the new era based its standards of value upon the market price. Hence all upper limits disappeared, not only upon the price at which a stock could sell but even upon the price at which it would deserve to sell. This fantastic reasoning actually led to the purchase at $100 per share of common stocks earning $2.50 per share. The identical reasoning would support the purchase of these same shares at $200, at $1,000, or at any conceivable price.

An alluring corollary of this principle was that making money in the stock market was now the easiest thing in the world. It was only necessary to buy “good” stocks, regardless of price, and then to let nature take her upward course. The results of such a doctrine could not fail to be tragic."

--Benjamin Graham & David Dodd, Security Analysis