Links

"Prices do amazing things in securities markets. And when they do something that strikes us as amazing in our direction...we will act. But we do not know today what we’re going to be doing tomorrow.... And there’s this business where somebody says, 'You should have 50 percent of your money in bonds and 35 percent in equities, and 15 —.' We don’t go through anything like that. I mean, we regard that as nonsense." --Warren Buffett (2004)

What the plow and lab-grown meat tell us about innovation - by Bill Gates (LINK)

Warren Buffett Moves the Goalposts! (LINK)

A 300-year lesson in bubble inflation - by Edward Chancellor (LINK)

Broyhill 2018 Annual Letter (LINK)

Where Joel Greenblatt sees value now (video) [H/T Linc] (LINK)

The Perils of Investing Idol Worship: The Kraft Heinz Lessons! - by Aswath Damodaran (LINK)

Status as a Service (StaaS) - by Eugene Wei (LINK)

Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth - by Bill Gurley (LINK)

Modern Monetary Theory Isn’t Helping - by Doug Henwood [H/T @cullenroche] (LINK)

What’s the Water at the Church Lab? A Conversation Between George Church and Jorge Conde (LINK)

Conversations with Tyler (podcast): Sam Altman on Loving Community, Hating Coworking, and the Hunt for Talent (LINK)

Corner Office from Marketplace (podcast): Why no Wall Street CEO went to jail after the financial crisis [H/T Linc] (LINK)

The Tim Ferriss Show: Graham Duncan — Talent Is The Best Asset Class (LINK)

Freakonomics Radio: A Good Idea Is Not Good Enough (LINK)

Trailblazers with Walter Isaacson (podcast): Sports Analytics: What’s After Moneyball? (LINK)

The 60 Minutes segment on China's electric car industry from this past Sunday (video) (LINK)

Summary and notes from Brian Arthur's The Nature of Technology: What It Is and How It Evolves (LINK)

Nanotech Injections Give Mice Infrared Vision - by Ed Yong (LINK)

A Troubling Discovery in the Deepest Ocean Trenches - by Ed Yong (LINK)

When a man's actions are just and honorable...

From Benjamin Franklin: An American Life:

Through it all, Franklin remained sanguine about the possibility of spies in his midst, even though, shortly after his arrival, he had been warned to be wary by a Philadelphia woman then living in Paris. “You are surrounded with spies who watch your every movement,” she wrote. With an eye more to extolling his virtues than addressing the problem, he sent what became a famous response: 

I have long observed one rule which prevents any inconveniences from such practices. It is simply this: to be concerned in no affairs I should blush to have made public, and to do nothing but what spies may see and welcome. When a man’s actions are just and honorable, the more they are known, the more his reputation is increased and established. If I was sure, therefore, that my valet de place was a spy, as he probably is, I think I should probably not discharge him for that, if in other respects I liked him.

Links

In case anyone missed it last week, I think this is the clear winner for the year's best investor letter (though at over 100 pages, "letter" may not be the correct description): Semper Augustus Investments Group: 2018 Annual Letter

Masters in Business Live, with Howard Marks of Oaktree Capital (video) (LINK)

An Investment Algorithm That Works (LINK)

The Value Chain Constraint - by Ben Thompson (LINK)

How a coat on Amazon took over a neighborhood — and then the internet [H/T @emilyleldridge] (LINK)

America’s Religion Is Work - by Derek Thompson (LINK)

Invest Like the Best Podcast: Michael Kitces – The Past, Present & Future of Financial Advice (LINK)

a16z Podcast: Capitalizing on an Autonomous Vehicle Future (LINK)

Acquired Podcast: Instagram Revisited (with Emily White) (LINK)

Pitchfork Economics with Nick Hanauer: Yuval Harari - Unedited Conversation (LINK)

Does Planet 9 Exist? - by Phil Plait (LINK)

Is the World’s Largest Animal Too Reliant on the Past? - by Ed Yong (LINK)

Book of the day (also added to the Business Biographies list): The Making of Harcourt General: A History of Growth Through Diversification 1922-1992

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And for those going to the Fairfax Financial Annual Meeting in April, here are some of the other events worth checking out:

Practical History of Financial Markets Course

The Ben Graham Dinner

Ben Graham Centre's 2019 Value Investing Conference

YYX Toronto Value Symposium (early bird rate available for those that just want to attend and not present)

CNBC's full interview with Warren Buffett

Link to video

Link to transcript

Warren Buffett's 2018 Letter to Shareholders

Link to: Warren Buffett's 2018 Letter to Shareholders

Semper Augustus Investments Group: 2018 Annual Letter

Chris always writes one of my favorite letters, and one of the few must-reads for me every year. And he's outdone himself this year. This is great to read in tandem with Warren Buffett's annual letter, which will be released in the morning. 

Link to 2018 SAI Letter: Addicted to Loans: A Bubble In Debt, The Trouble With Earnings, The Second Great Pivot At Berkshire Plus: The ROE You Will Not See!

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And if you want to review all of Chris' deep dives into Berkshire, I recommend his 2015 letter, followed by his 2016 interview with Kate Welling, then the 2016 letter, 2017 letter, and 2018 letter.

Links

"It is true that in the packaged goods industry, volume trends for everybody — whether they’re fat or lean in their operation — volume trends are not good. And the test will be over time — you know, three, five years — are the operations which have had their costs cut, do they do poor, in terms of volume, than the ones, that in my judgment, look very fat?" --Warren Buffett (2016)

Howard Marks on Investing In Overpriced Markets (a video excerpt from his recent Real Vision interview) [H/T Linc] (LINK)

“She Never Looks Back”: Inside Elizabeth Holmes's Chilling Final Months at Theranos (LINK)

Warren Buffett Can’t Find Anything Big to Buy ($) (LINK)

Kraft Heinz Divulges SEC Investigation, Swings to Loss ($) (LINK)

Deutsche Bank Lost $1.6 Billion on a Bond Bet ($) (LINK)

One of the banking industry’s biggest soured bets since the financial crisis involved a complex municipal-bond investment. Warren Buffett was enmeshed in the deal.

A Blinders Off View Of The Automotive Sector - by Daniel Ruiz (LINK)

Brexit: The End of the Beginning - by Peter Zeihan (LINK)

Dalio's "The Big Debt Crisis"....the FSB Report & Financial War Games (LINK)

Different Kinds of Stupid - by Morgan Housel (LINK)

Edges That Won’t Go Away - by Ben Carlson (LINK)

Cultivating the State of Flow (LINK)

American Innovations Podcast: Coca-Cola | The Cocaine Clinician | 1 (LINK)

Freakonomics Radio: 368. Where Do Good Ideas Come From? (LINK)

Check out these amazing shots of the Anak Krakatoa caldera before and after its collapse in December 2018 (LINK)

The Surprising Reason Zebras Have Stripes - by Ed Yong (LINK)

Who’s the Cutest Little Tyrannosaur? Is It You? - by Ed Yong (LINK)

"Men do not fail commonly for want of knowledge, but for want of prudence to give wisdom the preference. What we need to know in any case is very simple." --Henry David Thoreau  [H/T Brain Pickings]

Charlie Munger on cheerfulness

In the past Charlie Munger has called himself a "cheerful pessimist." And at the 2011 Berkshire Hathaway Annual Meeting, he mentioned that "you can be cheerful even if things are slightly deteriorating, and that’s a very good quality to have." Toward the end of his CNBC interview (28:19 mark) last week, he again brought up the importance of cheerfulness as one of his keys to living a happy life:

BECKY QUICK: Charlie, so many of the people who come here come because they're looking for advice not on business or investments as much as they're looking for just advice on life. There were a lot of questions today, people trying to figure out what the secret to life is, to a long and happy life. And--and I just wonder, if you were-- 

CHARLIE MUNGER: Now that is easy, because it's so simple. 

BECKY QUICK: What is it? 

CHARLIE MUNGER: You don't have a lot of envy. You don't have a lot of resentment, You don't overspend your income. You stay cheerful in spite of your troubles. You deal with reliable people and you do what you're supposed to do. And all these simple rules work so well to make your life better. And they're so trite. 

BECKY QUICK: How old were you when you figured this out? 

CHARLIE MUNGER: About seven. I could tell that some of my older people were a little bonkers. I've always been able to recognize that other people were a little bonkers. And it helped me because there's so much irrationality in the world. And I've been thinking about it for a long time, its causes and its preventions, and so forth. Sure it's helped me. 

And--staying cheerful...because it's a wise thing to do. Is that so hard? And can you be cheerful when you're absolutely mired in deep hatred and resentment? Of course you can't. So why would you take it on? 

BECKY QUICK: Is there any advice you would go back and give your 20-year-old self? 

CHARLIE MUNGER: Many of my children have worked out well. And I've had very little to do with it. I think they come into the world, to a certain extent, pre-made. And you just sit there and watch.... It's been simply amazing to me as a parent to note know much is sort of preordained. The shy baby is the shy adult. The booming, obnoxious, domineering baby is the booming, domineering, obnoxious adult. I've never found a way to fix that. I can be cheerful about it, but I can't fix it. I can change my reaction, but I can't change the outcome.

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That last line, "I can change my reaction, but I can't change the outcome," is very Stoic, and reminded me of one of summaries I have in my Stoicism overview:

Only focus on what you can control. You cannot control what others say or how they act. You can only control how you react.

Links

"Our double task is now to preserve and foster both biological evolution as Nature designed it and cultural evolution as we invented it, trying to achieve the benefits of both, and exercising a wise restraint to limit the damage when they come into conflict. With biological evolution, we should continue playing the risky game that nature taught us to play. With cultural evolution, we should use our unique gifts of language and art and science to understand each other, and finally achieve a human society that is manageable if not always peaceful, with wildlife that is endlessly creative if not always permanent." --Freeman Dyson

Biological and Cultural Evolution - An EDGE Original Essay by Freeman Dyson (LINK)

Mohnish Pabrai’s Q&A Session with JNV Kottayam Dakshana Scholars (video) (LINK)

An Evening with Ken Chenault (PBS video) [H/T Linc] (LINK)

The Greatest Investor You’ve Never Heard Of: An Optometrist Who Beat The Odds To Become A Billionaire (LINK) [Interesting article, but probably not the best title. Assuming the Forbes net worth estimate is about correct, and that losing $50 million in the early 80s margin call meant he had at least another $50 million in net worth, then the IRRs, especially considering the business income he was adding over time, are probably not worthy of the title "greatest investor" in the headline. But the lessons about buying and holding and buying what you know, especially in regards to Heico, are great.]

Graham & Doddsville: Winter 2019 (LINK)

Nobody Wants to Invest in Your Shit - by Meb Faber (LINK)

First Mover Alpha - by Ben Carlson (LINK)

The FT's articles on Wirecard are free to read online (LINK) [See also, from a year ago, Wirecard AG: The Great Indian Shareholder Robbery - by Roddy Boyd]

Your Guide to the Gold Rush of Digital Logistics (LINK)

Amazon and taxes: a simple primer (LINK)

The Distrust of Intellectual Authority (LINK)

Entrepreneurial Thought Leaders Podcast: Raj Kapoor (Lyft) and John Viera (Ford Motor Company) - Mobilizing the Future (LINK)

The Tony Robbins Podcast: Timing is everything | Daniel Pink on the best time for meetings, taking breaks and creative breakthroughs (LINK)

Related book: When: The Scientific Secrets of Perfect Timing

Dan Carlin's Hardcore History: Addendum: EP7 Hardcore History On Fire (LINK)

Is the Insect Apocalypse Really Upon Us? - by Ed Yong (LINK)

Claims that insects will disappear within a century are absurd, but the reality isn’t reassuring either.

Book of the day [H/T @paulg]: Making of Europe: Conquest, Colonization and Cultural Change 950-1350

Losing your competitive position...

From Warren Buffett, at the 2003 Berkshire Hathaway Annual Meeting: 

Generally speaking, if you lose your competitive position — the Packard Motor Company had the premier car in the mid-’30s. The Cadillac was not the premier — it was the Packard. 

And then they went downscale one year and they never came back. They jumped their sales that one year because everybody wanted to own a Packard, and now you could own one a little cheaper. But they never regained that upscale image again. 

And certain department stores have done that, too. They’ve had a upscale image. And you can always juice up your sales, particularly if you’ve got a great upscale image, by having, you know, this sale or that sale, and going downmarket.  

It’s very hard to back upmarket again, and you’ve seen some great department stores that have had that — or specialty stores — that had that problem.