Related book: Built from Scratch: How a Couple of Regular Guys Grew The Home Depot from Nothing to $30 BillionHow the Animal Kingdom Sleeps - by Ed Yong (video) (LINK)
It is a mistake to think that the past is dead. Nothing that has ever happened is quite without influence at this moment. The present is merely the past rolled up and concentrated in this second of time. You, too, are your past; often your face is your autobiography; you are what you are because of what you have been; because of your heredity stretching back into forgotten generations; because of every element of environment that has affected you, every man or woman that has met you, every book that you have read, every experience that you have had; all these are accumulated in your memory, your body, your character, your soul. So with a city, a country, a race; it is its past, and cannot be understood without it. It is the present, not the past, that dies; this present moment, to which we give so much attention, is forever flitting from our eyes and fingers into that pedestal and matrix of our lives which we call the past. It is only the past that lives.
Therefore I feel that we of this generation give too much time to news about the transient present, too little to the living past. We are choked with news, and starved of history. We know a thousand items about the day or yesterday, we learn the events and troubles and heartbreaks of a hundred peoples, the policies and pretensions of a dozen capitals, the victories and defeats of causes, armies, athletic teams. But how, without history, can we understand these events, discriminate their significance, sift out the large from the small, see the basic currents underlying surface movements and changes, and foresee the result sufficiently to guard against fatal error or the souring of unreasonable hopes?
The conglomerate controlled and run by Warren Buffett could get a 13% boost to its shareholder equity, or book value, in the quarter as a result of a lower corporate tax rate, gains in its equity portfolio, and operating earnings. Our analysis is based in part on calculations by Barclays insurance analyst Jay Gelb.
...Last week, Berkshire shares briefly topped $300,000, and are now valued at $489 billion -- sixth in market value behind tech leaders Apple, Google, Microsoft, Amazon.com, and Facebook.
We estimate that Berkshire’s book value could end the current quarter around $211,000 per class A share. This suggests that Berkshire shares, now trading for nearly 1.6 times its Sept. 30 book value of $187,435 – the high end of its price/book value range dating back several years – are cheaper than they appear. If our estimate of Dec. 31 book value proves accurate, Berkshire shares trade closer to 1.4 times year-end book.
Its government is virtual, borderless, blockchained, and secure. Has this tiny post-Soviet nation found the way of the future?Sean Iddings on the Planet MicroCap podcast discussing Intelligent Fanatics: Standing on the Shoulders of Giants (LINK)
Related book (I've linked to this before. And now that I'm nearly finished with it, I think it gives great context to viewing things like the article above. See THIS article for more about the book.): The China FantasyThe Ezra Klein Show (podcast): What life is like in North Korea (LINK)
Related book: Nothing to Envy: Ordinary Lives in North KoreaConversations with Tyler (podcast): Andy Weir on the Economics of Sci-Fi and Space (LINK)
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Related book: When: The Scientific Secrets of Perfect TimingInvesting book of the day: The Bank Investor's Handbook
So far, I’ve spent no time in the podcast discussing real estate, so I was excited to get the chance to talk to the team at Sorin Capital, a billion dollar hedge fund which specializes in commercial real estate, REITs, and commercial mortgage backed securities.Potash Corp: A Study in Patience (LINK)
Related book: Augustine's LawsTim Ferriss talks with Mike Maples, Jr. (podcast) (LINK)
The 3Q2017 GMO Quarterly Letter features Ben Inker’s “What Happened to Inflation? And What Happens If It Comes Back?” and Jeremy Grantham’s “Career Risk and Stalin’s Pension Fund: Investing in a World of Overpriced Assets”Bitcoin: Currency of the Future or Investment Mania? Bill Miller’s Transformative Innovation Case (video) (LINK)
Related book: Management Challenges for the 21st Century - by Peter F. Drucker40 Years Later, Some Survivors of the First Ebola Outbreak Are Still Immune - by Ed Yong (LINK)
Algorithms made him a Wall Street billionaire. His new research center helps scientists mine data for the common good.Disney and Fox - by Ben Thompson (LINK)
Related book: Discipline Equals FreedomThe drip - Seth Godin (LINK)
Change, real change, is the result of focused persistence.
It's easy to get a bunch of people sort of excited for a little while.
The challenging part, and the reason that change doesn't happen as often as it should is that we get distracted. Today's urgent is more urgent than yesterday's important.
The concept of breaking news and the crisis of the day proves my point. If the world ended every time Wolf Blitzer implied it would, we would have been toast a long time ago. The organizations that actually change things are the ones that have a time horizon that's longer than 36 hours.
There are very few overnight successes. Very few entrepreneurs, freelancers, non-profits, candidates, spiritual leaders, activists or people in a successful relationship that got there with thunder and lighting. It happens with a drip.
Related book: The Misbehavior of MarketsThe Motley Fool Interviews Trupanion Founder and CEO Darryl Rawlings [H/T @Connor_Leonard] (LINK)
Related book: Discipline Equals FreedomRecent a16z videos: 1) Decrypting Crypto: From Bitcoin and Blockchain to ICOs; 2) AI: What’s Working, What’s Not
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Related book: Principles
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Related book: Can We Avoid Another Financial Crisis? [For my thoughts on the book, see the bottom of THIS post.]StarTalk Radio (podcast) -- Cosmic Queries: Mysterious Cosmology, with Sean Carroll (LINK)
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CURIOSITY AND OBSERVATION
In addition to his instinct for discerning patterns across disciplines, Leonardo honed two other traits that aided his scientific pursuits: an omnivorous curiosity, which bordered on the fanatical, and an acute power of observation, which was eerily intense. Like much with Leonardo, these were interconnected. Any person who puts “Describe the tongue of the woodpecker” on his to-do list is overendowed with the combination of curiosity and acuity.
His curiosity, like that of Einstein, often was about phenomena that most people over the age of ten no longer puzzle about: Why is the sky blue? How are clouds formed? Why can our eyes see only in a straight line? What is yawning? Einstein said he marveled about questions others found mundane because he was slow in learning to talk as a child. For Leonardo, this talent may have been connected to growing up with a love of nature while not being overly schooled in received wisdom.
...His curiosity was aided by the sharpness of his eye, which focused on things that the rest of us glance over.... The acuteness of his observational skill was not some superpower he possessed. Instead, it was a product of his own effort. That’s important, because it means that we can, if we wish, not just marvel at him but try to learn from him by pushing ourselves to look at things more curiously and intensely.
In his notebook, he described his method—almost like a trick—for closely observing a scene or object: look carefully and separately at each detail. He compared it to looking at the page of a book, which is meaningless when taken in as a whole and instead needs to be looked at word by word. Deep observation must be done in steps: “If you wish to have a sound knowledge of the forms of objects, begin with the details of them, and do not go on to the second step until you have the first well fixed in memory.”
The books: 1) Evicted: Poverty and Profit in the American City; 2) The Sympathizer; 3) The Best We Could Do; 4) Energy and Civilization: A History; 5) Believe Me: A Memoir of Love, Death, and Jazz ChickensHoward Marks at the Goldman Sachs US Financial Services Conference (LINK)
Everybody who manages money has to end up somewhere on the spectrum between cautious and aggressive, and I don't see any encouragement for aggressiveness today. I'm not worried about missing opportunities today. I'm worried about losing money. And so in my opinion, that calls for caution. Not out of the market. Oaktree's mantra is and has been for a while move forward but with caution. Move forward means make investments. We're not terrified. We're not hesitant to make investments. We are, in most of our accounts, we are fully invested, but with caution. And we are a cautious firm, so that means more caution than usual. And fully invested with caution has actually been a good posture for the last several years. You look at last year, you look at this year, I think that in both years, the returns have come as a surprise. So the point is, we would've had a somewhat higher return if we hadn't been cautious, but our caution gave us the courage to be fully invested, which was the right thing.Howard Marks says tax cut won't trickle down 'too much' to regular worker (LINK)
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This autumn I gave the keynote at Andreessen Horowitz's annual 'Tech Summit' conference, talking about the state of tech today and what's likely to happen in the next decade: mobile, Google / Apple / Facebook / Amazon, innovation, machine learning, autonomous cars, mixed reality and crypto-currencies.
Related book: America's Bank: The Epic Struggle to Create the Federal ReserveTax Cuts, Debt, & The Pretense of Knowledge - by Frank Martin (LINK)
Related book: The Bourgeois ManifestoTyler Cowen chats with Douglas Irwin whose book, Clashing over Commerce: A History of US Trade Policy, Cowen thinks is the best history of American trade policy ever written (podcast) (LINK)
Economists have a hard time explaining why productivity growth has been shrinking. One theory: true innovation has gotten much harder – and much more expensive. So what should we do next?“Light Touch”, Cable, and DSL; The Broadband Tradeoff; The Importance of Antitrust - by Ben Thompson (LINK)
Related book: The Case Against SugarHummingbirds Are Where Intuition Goes to Die - by Ed Yong (LINK)
Bitcoin isn’t exactly your classic value investment. It’s one of the most volatile assets in the world, and it doesn’t have much of a “book” value – unlike a company that owns physical assets, Bitcoin can’t sell its headquarters if things get rough. There is, of course, no Bitcoin headquarters.
Note.... Howard Marks' comments about Bitcoin in his last memo ("Yet Again?"), which he wrote after chatting with the Horizon Kinetics team and others, are also worth revisiting (starting on page 4).But Murray Stahl, a longtime value investor who now manages $5.5 billion at his New York-based investment firm Horizon Kinetics, considers Bitcoin “the ultimate value investment.” His original $7 million investment from two years ago has ballooned as Bitcoin’s price has soared, and he now holds about $100 million worth. As of Monday, each Bitcoin is worth about $9,500.
Related book: The Undoing ProjectPro-Neutrality, Anti-Title II - by Ben Thompson (LINK)
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Related book: The Startup Way - by Eric RiesKim Jong Un’s North Korea: Life inside the totalitarian state (LINK)
Related article: Yale's Swensen Sees Low Volatility as `Profoundly Troubling'Lessons Learned from The Outsiders & How Intelligent Fanatics are Different (LINK)
The smaller the company and the more illiquid its currency, the more the investment process becomes an art and less of a science. Just like with any art form, whether it’s music, acting, painting, etc it just takes a lot of time and experience to do it well. The art of investing in small companies is evaluating management teams. If you don’t believe that management is important when investing in small companies like microcaps, just wait a little longer. You will.The Generalized Specialist: How Shakespeare, Da Vinci, and Kepler Excelled (LINK)
Related article: "Inside Trump's Cruel Campaign Against the U.S.D.A.'s Scientists"The 1990s Telecom Bubble. What Can We Learn? - by Tren Griffin (LINK)
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On phone addiction and multi-tasking: Mark says his brother Jeff is surprisingly present, and rarely distracted by his phone. Jeff explains that “When I have dinner with friends or family, I like to be doing whatever I’m doing. I don’t like to multi-task. If I’m reading my email I want to be reading my email” with his full attention and energy. Jeff exhibited this resistance to multi-tasking early in life. At Montessori school, he’d refuse to move on to the next task as the day progressed, so the teacher would literally pick up him and his chair and move him to the next project. Instead of constantly switching back and forth, Jeff says he sequentially focuses. “I multi-task serially.”
Related book: WTF?: What's the Future and Why It's Up to UsReview of “The Square and The Tower” by Niall Ferguson (LINK)
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“Likewise, dictatorships that do not appear volatile, like, say, Syria or Saudi Arabia, face a larger risk of chaos than, say, Italy, as the latter has been in a state of continual political turmoil since the second war. I learned about this problem from the finance industry, in which we see “conservative” bankers sitting on a pile of dynamite but fooling themselves because their operations seem dull and lacking in volatility.” –Nassim Taleb, The Black Swan
In his 1Q16 shareholder letter, Warren Buffett issued a stern warning about the proliferation of non-Generally Accepted Accounting Principles (GAAP) metrics in corporate earnings reports: “It has become common for managers to tell their owners to ignore certain expense items that are all too real.” According to FactSet, more than 90% of S&P 500 companies now use non-GAAP numbers, up from 58% 20 years ago. Meanwhile, the difference between GAAP earnings per share (EPS) and non-GAAP EPS has skyrocketed — non-GAAP EPS exceeded GAAP EPS by an average of 25% in 2015, compared with just 6% in 2013.
Two Sides of the Same Coin - by Frank Martin (LINK)Used judiciously, non-GAAP numbers — from EBIT and EBITDA to free cash flow and operating income — can provide valuable insight into a company’s present health and future prospects. However, as the practice snowballs, systemic risks become increasingly apparent. More and more, non-GAAP numbers are being cherry-picked to obscure weaknesses and exaggerate strengths. This not only compromises the ability of investors to diagnose winners and losers, but threatens to distort the U.S. equity market as a whole.
Related previous post: Josh Waitzkin with Adam Robinson (video)Exponent Podcast: Episode 130 — The 50,000 Foot View (LINK)