Links

"Some problems are so complex that you have to be highly intelligent and well informed just to be undecided about them." -Laurence Peter (via All I Want To Know Is Where I'm Going To Die So I'll Never Go There)

Amazon and Walmart are in an all-out price war that is terrifying America’s biggest brands [H/T Matt] (LINK)

Sears and Its Hedge Fund Owner, in Slow Decline Together [H/T Linc] (LINK)

Hank Greenberg Doesn’t Want Buffett to Buy AIG (LINK)

Robert Cialdini on the FT Alphachat podcast (LINK)

Related book: Pre-Suasion

Five Good Questions for Sean Iddings about the book Intelligent Fanatics Project (video) (LINK)

Exponent podcast: Episode 108 — Statistics Gone Wild (LINK)

Cars and second order consequences - by Benedict Evans (LINK)

If you publish Georgia’s state laws, you’ll get sued for copyright and lose [H/T @paulg] (LINK)

The World Is Completely Unprepared for a Global Pandemic [H/T @BillGates] (LINK)

Shazam for Mosquitoes - by Ed Yong (LINK)

A Tiny Fish With Terrifying Fangs and Opioid Venom - by Ed Yong (LINK)

Links

Planet of the Cows - by Vaclav Smil [H/T The Browser] (LINK)

Why Each One Should Eat His Own Turtles: Equality in Uncertainty - by Nassim Nicholas Taleb (LINK)

Latticework Of Mental Models: Hedgehog Vs Fox (LINK)

Copying Culture – Nucor’s Fraternal Twin - by Sean Iddings (LINK)

The Obvious Value of Communication is Perhaps Not So Obvious - by Cal Newport (LINK)

Many famous scientists have something in common—they didn’t work long hours (LINK)

Related book: Rest: Why You Get More Done When You Work Less

The Game-Changing Technique That Cracked the Zika-Mosquito Genome - by Ed Yong (LINK)

Links

Bill Gates and Ed Yong Talk About Microbes (LINK)

Related book: I Contain Multitudes

Small Things that Make a Big Difference - Peace of Mind -- by Ian Cassel (LINK)

Planet MicroCap Podcast Ep. 41 - The Art of Value Investing with Sanjay Bakshi, Professor and Value Investor (LINK)

At BlackRock, Machines Are Rising Over Managers to Pick Stocks (LINK)

Building online marketplaces: a checklist for disruption (LINK)

The Arrival of Artificial Intelligence - by Ben Thompson (LINK)

Bill Browder's Real Vision TV interview is free online (video) (LINK)

Related book: Red Notice (the audiobook also received great reviews)

Today's Audible Daily Deal ($2.95) might be of interest, as I've enjoyed some of the podcast interviews Daymond John has given: The Power of Broke

Rare sighting reveals deep-sea octopus's unusual breakfast (LINK)

Links

Warren Buffett’s Brief Career as an Ad Man [H/T Linc and Vishal] (LINK)

The Full See’s Candies Story: People & Product (LINK)

Related case studies: 1) See’s Candies Case Study Prepared by John Chew; 2) Quality Without Compromise - by Max Olson

David Einhorn on CNBC (videos) (LINK)

Greenlight Capital's presentation on GM (LINK)

Arlington Value Capital’s 2016 Letter to Investors (LINK)

Invest Like the Best podcast: Ted Seides and Brent Beshore – The Future of Asset Management (LINK)

Freakonomics Radio (podcast): “Tell Me Something I Don’t Know” on the topic of Collections (LINK)

Hear live journalism wrapped in a game show package and hosted by Stephen J. Dubner. In this episode, Tim Ferriss, Eugene Mirman and Anne Pasternak are panelists. The self-help guru, the comedian and the Brooklyn Museum director talk about brainwaves, sugar, stars and — thanks to fact-checker AJ Jacobs — barf bags.

The largest dinosaur footprint ever found has been discovered in 'Australia's own Jurassic Park' [H/T Linc] (LINK)

No, We Can’t Say Whether Cancer Is Mostly Bad Luck - by Ed Yong (LINK)

Links

A Trap for a Trader: How did authorities zero in on Tom Hayes, the disheveled, socially awkward mastermind of the Libor scandal? [H/T @jasonzweigwsj] (LINK)

Related book: The Spider Network

GMO white paper: Six Impossible Things Before Breakfast - by James Montier (LINK)

In this white paper, James Montier, a member of GMO’s Asset Allocation team, explains why he believes that in order to make sense of today’s market valuations, you need to believe six impossible things.

Amazon’s Ambitions Unboxed: Stores for Furniture, Appliances and More (LINK)

Are investors too optimistic about Amazon? [H/T @HurriCap] (LINK)

Elon Musk's Billion-Dollar Crusade to Stop the AI Apocalypse (LINK)

Nassim Taleb's Keynote at the India Risk Management Awards (video) (LINK)

How I Built This podcast -- Power Rangers: Haim Saban (LINK)

Links

"People like to look for systems that have worked over the past 20 years or so. If you could make money based on what has worked the past 20 years, all of the richest people would be librarians." -Warren Buffett (via Seeking Wisdom)

RV Capital Emerging Manager Day 2017 [H/T @Wexboy_Value] (Part 1, Part 2) [There is also some specific RV Capital Annual Meeting Q&A HERE, and the entire meeting appears to be HERE, though the audio isn't all that great.] 

Why do cities live forever and companies don't? (LINK)

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

Core Product Value and Entrepreneurial Success (LINK)

An Inside Look at the Ups and Downs of Walmart's Journey [H/T @HurriCap] (LINK)

The High-Speed Trading Behind Your Amazon Purchase [H/T Linc] (LINK)

This Hedge Fund Manager Bets He Can Dull Your Sweet Tooth [H/T Linc] (LINK)

A 3 billion solar mass black hole rockets out of a galaxy at 8 million kilometers per hour. Yes, seriously. (LINK)

Q&A: Lawrence Krauss on The Greatest Story Ever Told (LINK)

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

Links

"For me, the real key to happiness is to know the truth; about yourself and about the world." -Yuval Noah Harari (source)

GMO whitepaper: The Deep Causes of Secular Stagnation and the Rise of Populism - by James Montier and Philip Pilkington (LINK) [It might be good to pair this with the recent Bridgewater report.]

A Valeant Update: Damaged Goods or Deeply Discounted Drug Company? - by Aswath Damodaran (LINK)

Carson Block Is Up All Night Watching Huishan Rout He Called (audio/video) (LINK)

The Blockchain Will Do to the Financial System What the Internet Did to Media [H/T @Wexboy_Value] (LINK)

Ravi Nagarajan reviews the book A Man for All Markets (LINK)

Exponent podcast: Episode 107 — Smiling Curves and Self-Driving Cars (LINK)

Ben and James discuss the concept of The Smiling Curve and how it applies to various industries. Then, where value might be found in self-driving cars, and why both Uber and Google are getting it wrong.

Artificial Intelligence: The Park Rangers of the Anthropocene - by Ed Yong (LINK)

Dramatic evolution within human genome may have been caused by malaria parasite (LINK)

Carl Sagan Explains How the Ancient Greeks, Using Reason and Math, Figured Out the Earth Isn’t Flat, Over 2,000 Years Ago (video) (LINK)

One book recommendation by Charlie Munger that I haven't gotten to yet is How the Scots Invented the Modern World. It was also added to Audible last year, HERE. I was reminded of the book after reading the paragraph below, from Thomas Sowell's recent interview with the WSJ: 

“One of the most miraculous advances of a people occurred in Scotland from the 18th century into the 19th,” Mr. Sowell says. “A wholly disproportionate share of the leading British thinkers was Scottish. I mean Adam Smith in economics, Hume in philosophy, Sir Walter Scott in literature, James Watt in engineering. You can run through the whole list. A people who were really far behind in one century had suddenly come out of nowhere and were on the forefront of human progress.”

Links

"Ideas change the world only when they change our behaviour." -Yuval Noah Harari (Homo Deus)

"'The world is changing faster than ever before, and we are flooded by impossible amounts of data, of ideas, of promises and of threats. Humans relinquish authority to the free market, to crowd wisdom and to external algorithms partly because they cannot deal with the deluge of data. In the past, censorship worked by blocking the flow of information. In the twenty-first century, censorship works by flooding people with irrelevant information. People just don’t know what to pay attention to, and they often spend their time investigating and debating side issues. In ancient times having power meant having access to data. Today having power means knowing what to ignore." -Yuval Noah Harari (Homo Deus)

The Art of Finding Your Focus - by Shane Parrish (LINK)

Productivity systems help you get lots of task-oriented work done. The table stakes. The busywork. The stuff you need to do to keep your job. You might move more widgets faster but this isn’t the stuff that really moves the needle for you or your employer. 

Productivity systems don’t answer the larger question, which is: What do you do that creates value in your career? And more than that, what are you doing that’s going to have a cumulative effect? What are you doing that’s really going to matter not tomorrow but years down the road?  

I see these two concepts as intertwined and incredibly important. Yet, they are ignored by overly task-oriented productivity methods. There is a simple two stage approach that will however work wonders.  

If you really want to get ahead, the first thing you need to do is figure out where you’re going to create a massive amount of value in your career. The second thing, is figuring out how you’re going to carve out the time and energy to focus on the first.

The Incredible Shrinking Universe of Stocks: The Causes and Consequences of Fewer U.S. Equities - by Michael Mauboussin, et al. (LINK)

Ian Cassel with a great post on Jeff Bezos and scale economies shared (LINK)

The Behavior of Stock Market Manias - by John Huber (LINK)

Related book: Bull - by Maggie Mahar

Bridgewater report -- Populism: The Phenomenon [H/T @M_C_Klein] (LINK)

Jason & Scot Show Episode 73: Evercore ISI Softlines Analyst Omar Saad (audio) [H/T @rtclark] (LINK)

Episode 73 is an  interview with Evercore ISI Softlines Analyst Omar Saad, about his recent report “Softline wholesale channel must evolve or die.”

Andrew Haldane at the LSE: The Productivity Puzzle (video/audio) (LINK)

How to Buy (and Appreciate) Eggs - by Mark Sisson (LINK)

A 130-Year-Old Fact About Dinosaurs Might Be Wrong - by Ed Yong (LINK)

Book of the day [H/T Jim O’Shaughnessy]: Adventures of a Bystander - by Peter F. Drucker

Links

"My laziness serves as a filter. Something has to be really good before I'll decide to work on it." -Michael Lewis (source)

Mohnish Pabrai talks with John Mihaljevic (video) (LINK)

The ‘Terminator’ of startups says he’s seeing two to four wind-downs a week [H/T @chriswmayer] (LINK)

Sears Plummets After Citing ‘Substantial Doubt’ About Its Future (LINK)

Patrick O’Shaughnessy speaks with his father Jim O’Shaughnessy on the Invest Like the Best podcast (LINK)

[From 2015] 10,000 Hours with Reid Hoffman: What I Learned - by Ben Casnocha [H/T @sarthakgh] (LINK)

4.5 years of working with Reid as co-author and Chief of Staff. Here are some lessons I learned about business and life from an amazing man.

 a16z Podcast: From Hidden Figure to Sonic BOOM (LINK)

Related book: Hidden Figures

A groundbreaking study on the dangers of 'microplastics' may be unraveling [H/T @edyong209] (LINK)

What It's Like to Watch Your Life's Work Blow Up on a Rocket  [H/T @edyong209] (LINK)

A 5-minute overview of Seneca's On the Shortness of Life (video) [H/T @Sanjay__Bakshi] (LINK)

Links

Mohnish Pabrai's Interview with The Industry Show (LINK)

Being Lazy Is the Key to Success, According to Michael Lewis [H/T @ChrisPavese] (LINK)

Markel's 2016 Letter to Shareholders [H/T The Rational Walk] (LINK)

5 Questions Every Investor Should Ask According to Howard Marks (LINK)

Accounting Change On Operating Leases To Add $3 Trillion In Debt To Corporate Balance Sheets [H/T @ChrisPavese] (LINK)

How Aristotle Created the Computer - by Chris Dixon (LINK)

a16z Podcast: The Storage Renaissance (LINK)

The Only Thing You Need to Get Good At (LINK)

A tiny article about Stoicism has had a significant influence on my life since I read it. Maybe for the first time in my adult life, I don’t feel like I’m wasting much of my time. I feel unusually prepared to do difficult things.

The speeches of Marcus Aurelius (LINK)

Related book: Delphi Complete Works of Marcus Aurelius

Economic Frontiers podcast: Platforms with Marshall Van Alstyne (LINK)

Related book: Platform Revolution

Ian Cassel reviews the book The Great Beanie Baby Bubble (LINK)

Currently on sale (Kindle version) for $1.99: Barbarians at the Gate: The Fall of RJR Nabisco

The Parrot With a Call as Infectious as Laughter - by Ed Yong (LINK)

Links

Warren Buffett on the Dan Patrick show (audio/video) [H/T Linc] (LINK)

Ricardo Semler on The Tim Ferriss Show (podcast) (LINK)

Related books: 1) Maverick; 2) The Seven-day Weekend 

Related link: Ricardo Semler's LeadWise podcast 

Related previous post: Ricardo Semler Lecture: Leading by Omission

Busy vs. Productive - by Morgan Housel (LINK)

Complacency and Cheeseburgers - by Mike Dariano (LINK)

A Dozen Ways “Virality” Can be Misused and Misunderstood - by Tren Griffin (LINK)

A few presentations are available from the recent Grant's Conference [H/T @StaleyRdCap] (LINK)

Brave Warrior's Glenn Greenberg reveals his big market bet right now in rare interview (LINK)

The Education of an American Sage (LINK)

How I Built This is a podcast -- Kendra Scott Design: Kendra Scott (LINK)

Ad Agencies and Accountability - by Ben Thompson (LINK)

Yuval Noah Harari talks with Barry Ritholtz on the Masters in Business podcast (LINK)

Related books: 1) Sapiens; 2) Homo Deus

Yuval Noah Harari talks with Sam Harris on the Waking Up podcast (LINK)

Shocking stories tell tale of London Zoo’s founding (LINK)

Related book: The Zoo: The Wild and Wonderful Tale of the Founding of London Zoo: 1826-1851

A review of the book But What If We're Wrong? (LINK)

Related video: Chuck Klosterman: "But What If We're Wrong" | Talks At Google

An ancient memorization strategy might cause lasting changes to the brain [H/T @ChrisPavese] (LINK)

Related book: Moonwalking with Einstein 

Related previous post: Memortation, or One Way to Put What You Learn to Practical Use [At the end of this post, I mentioned that I had started to create a memory palace for all of Charlie Munger’s misjudgments in his speech “The Psychology of Human Misjudgment.” For those golfers out there, the front nine of the golf course I grew up playing proved to be the perfect thing to use as a memory palace for this; moving from tee to fairway to green, etc. ]

Links

"That's how history unfolds. People weave a web of meaning, believe in it with all their heart, but sooner or later the web unravels, and when we look back we cannot understand how anybody could have taken it seriously." -Yuval Noah Harari (Homo Deus) [Related previous post: Harari on hindsight...]

Li Lu: The Prospects for Value Investing in China (2015 talk) [H/T @CataumetCap] (LINK)

Giverny Capital 2016 Annual Letter to Partners [H/T ValueWalk] (LINK)

From Bonds To Equities, Howard Marks And Joel Greenblatt Preach The Gospel Of Patience (LINK)

Howard Marks on CNBC (video) (LINK)

Joel Greenblatt on CNBC (video) (LINK)

FT Alphachat podcast: How economics has evolved since the crisis (LINK)

How a North Carolina trucker changed the transportation industry (LINK)

Links

Sharing Ideas? Beware of Negative Lollapalooza Effects (LINK)

An investment write-up on Alphabet/Google (LINK)

Trump Officials Are Learning Just How Hard It Is to Sell $1 Billion of Assets [H/T @jasonzweigwsj] (LINK)

Ackman's Investors Won't Get Their Yachts (LINK)

How Domino’s atoned for its crimes against pizza and built a $9 billion empire [H/T @FrancoOlivera] (LINK)

Four years of blogging and some golden nuggets - by Jana Vembunarayanan (LINK)

Ryan Holiday: "Understanding Your Ego" | Talks at Google (video) (LINK)

Related book: Ego Is the Enemy

How to Kill a Snake When You’re a Snake - by Ed Yong (LINK)

Links

Ben Graham Centre interview with Josh Tarasoff [H/T Ian] (LINK) [There are also some other good interviews, and other things, HERE and videos HERE.]

Martin Capital Management 2016 Annual Report (LINK)

Jim Grant on CNBC yesterday (video) (LINK)

Bethany McLean and Herb Greenberg on CNBC discussing Ackman and Valeant (video) (LINK)

2014 article that might be worth reviewing in light of recent events: Bill Ackman's Big Pharma Trade Is Making Wall Street A Very Awkward Place [H/T @Wexboy_Value] (LINK)

2014 CNBC video that might be worth reviewing in light of recent events: Ackman says Chanos wrong on Valeant [H/T @RodBoydILM] (LINK)

If you're in the mood for some macro economics... Richard Duncan's latest public presentation (PDF) (LINK)

Marty Baron: "Digital Innovation at the Washington Post" | Talks at Google (video) (LINK)

Malcolm Gladwell chats with Tyler Cowen (video) (LINK) [The audio and transcript are also available HERE.]

TED Talk -- Carrie Nugent: Adventures of an asteroid hunter (video) (LINK)

Origin Stories podcast: Is there a simple rule behind how animals make group decisions? (LINK)

Links

Thanks to everyone that has commented on the new blog logo. My wife had some free time over the weekend and decided to give it a refresh, as creating logos and marketing material is her specialty. I'm also working on a few other updates, but those will come slowly. 

Focusing is an Art, Not a Science (LINK)

Investing is an Art, Not a Science (LINK)

Why Robert Shiller Is Worried About the Trump Rally (LINK)

What Shiller will say now is that he’s refrained from adding to his own U.S. stock positions, emphasizing overseas markets instead. One factor that makes him cautious on American shares is the S&P 500’s cyclically-adjusted price-earnings ratio: While the metric is still about 30 percent below its high in 2000, it shows stocks are almost as expensive now as they were on the eve of the 1929 crash. 

“The market is way over-priced,’’ he says. “It’s not as intellectual as people would think, or as economists would have you believe.’’

Ackman Sells Valeant Stake After at Least $2.8 Billion Loss (LINK)

Intel, Mobileye, and Smiling Curves - by Ben Thompson (LINK)

Yuval Harari Works Less Than You - by Cal Newport (LINK)

Related books: 1) Sapiens; 2) Homo Deus

Gary Taubes on the Financial Sense Newshour Podcast (LINK)

Related book: The Case Against Sugar

Neanderthal Dental Plaque Shows What a Paleo Diet Really Looks Like - by Ed Yong (LINK)

Links

“The medicine for my suffering I had within me from the very beginning but I did not take it. My ailment came from within myself, but I did not observe it until this moment. Now I see I will never find the light unless, like a candle, I am my own fuel.” -Bruce Lee (source)

I Took 20 Chinese Students to Meet Warren Buffett. Here’s What Happened. - by Jeffrey Towson [H/T Tamas] (Part 1, Part 2, Part 3, Part 4, Q&A)

Prem Watsa's 2016 letter to shareholders (LINK)

Investing When No One Really Knows What to Do - by Ben Carlson (LINK)

Trusting Management and the Limitations of Research - by Mike Schellinger (LINK)

How I Built This podcast -- 5-Hour Energy: Manoj Bhargava (LINK)

The Weird Age of “Previvors” Is Coming (LINK)

Related book: The Gene

Links

I got a chance to watch and enjoy the Chuck Akre video linked to yesterday. Once again, he mentioned the book 100 to 1 in the Stock Market, as well as mentioning how he enjoys reading business biographies. I've been collecting a growing list of recommended business biographies for a while, which you can find HERE if interested.

This Book Left Me in Tears - By Bill Gates (LINK)

Related book [one of the best I've read]: When Breath Becomes Air

The Facts are True, the News is Fake – by Nassim Nicholas Taleb (LINK)

It’s Time for a Revolution in Investor Disclosures - by Jason Zweig (LINK)

You have Discovered Product/Market Fit. What about a Moat? - by Tren Griffin (LINK)

Tad Montross' old blog posts, which apparently have some great info for insurance enthusiasts [H/T Linc] (LINK)

Level 3, which started with hopes of riches but ended with big losses for most shareholders, will cease to exist [H/T Linc] (LINK)

It all started in the 1990s with the best of intentions, plus the admiration Omahans have for Peter Kiewit Sons’ Inc., the Omaha construction and mining company, along with its then-chairman and chief executive, Walter Scott. 

Along the way, Scott’s friend and business associate Warren Buffett also gave an endorsement of Level 3. His Berkshire Hathaway Inc. invested $100 million in the company for a brief time. 

In 2002 Buffett issued a statement that expressed confidence in Level 3’s management, finances and “valuable assets” and added: “Level 3 is well-equipped to seize important opportunities that are likely to develop in the communications industry.”

Warren Buffett: 'More Will Come' [site-built housing acquisitions] [H/T Linc] (LINK)

Ravi Nagarajan reviews the book There's Always Something to Do: The Peter Cundill Investment Approach (LINK)

Trump’s Mysterious Stock Boom - by James Surowiecki [Surowiecki's last Financial Page for The New Yorker] (LINK)

The Economist reviews Daniel Dennett's From Bacteria to Bach and Back: The Evolution of Minds [H/T Linc] (LINK)

Related previous link (video): Daniel Dennett: "From Bacteria to Bach and Back: The Evolution of Minds" | Talks at Google

Swapping panic for bewilderment starts us on the road to success (LINK)

“Panic is a form of hubris. It comes from a feeling that one knows exactly where the world is heading. Bewilderment is more humble and therefore more clear-sighted.”

Think like a bronze medalist, not silver (LINK)

Chuck Akre: "The Peregrinations of an English Major Trying to Solve the Investment Puzzle"

Link to video

Links

Getting caught back up after a little time away...

Disturbing New Facts About American Capitalism - by Jason Zweig (LINK)

Explaining a Paradox: Why Good (Bad) Companies can be Bad (Good) Investments! - by Aswath Damodaran (LINK)

A Dozen Lessons about Minimum Viable Products - by Tren Griffin (LINK)

Oaktree Insights: The Power of Credit (LINK)

This Special Edition Insights relays a discussion between a group of investment professionals about the state of the credit markets and the key risks facing their respective investment strategies.

Ian Schapiro, Portfolio Manager of Oaktree's Power Opportunities and Infrastructure Investing strategies, discusses the subsectors that are attracting capital at SuperReturn International (short video) (LINK)

Jim Chanos Interview With Capitalize For Kids (LINK)

Lauren Templeton: "Investing the Templeton Way" | Talks at Google (video) (LINK)

Related book: Investing the Templeton Way

John Hussman's commentary was worth the read this week, even if one may not agree with it all: The Most Broadly Overvalued Moment in Market History (LINK)

Edge #488: Closing the Loop - A Conversation With Chris Anderson (LINK)

The Uber Conflation - by Ben Thompson (LINK)

Exponent Podcast: Episode 106 — To Be an Outlaw (LINK)

Culture and Revolution - by Ben Horowitz (LINK)

We know that culture is important. We even think we know what it is. But culture isn’t perks like dogs and snacks in the workplace — nor is it a defining personality, like, say, “googleyness”. Culture is the collective behavior of an organization… and whether or not you go about creating one, you’re going to get one anyway, argues a16z cofounder Ben Horowitz. “Unless you set it, it’ll just be what it is.” 

So how should founders building companies (or leaders trying to turn their company around, address disruption, beat competition, and so on) go about creating a true winning culture? Horowitz shares key takeaways from the only successful slave revolution in the history of humanity — the Haitian revolution led by Toussaint L’Ouverture in 1791 — in this keynote first given at a16z’s inaugural summit event. How did this 18th century leader essentially “re-program” an entire culture to win?

a16z Podcast: The Business of Healthcare (LINK)

Philip Zimbardo on The Tim Ferriss Show (LINK)

Tony Robbins on the James Altucher podcast (LINK)

Related book: Unshakeable: Your Financial Freedom Playbook

Peter Attia talks with Patrick O’Shaughnessy on the Invest Like the Best podcast (LINK) [I also listened to and enjoyed Attia on the Jocko Podcast from a couple of months ago, HERE.]

Epictetus quote

Via The Daily Stoic:

“Remember to conduct yourself in life as if at a banquet. As something being passed around comes to you, reach out your hand and take a moderate helping. Does it pass you by? Don’t stop it. It hasn’t yet come? Don’t burn in desire for it, but wait until it arrives in front of you. Act this way with children, a spouse, toward position, with wealth—one day it will make you worthy of a banquet with the gods.” —Epictetus

Looking for nuggets of gold in plain sight...

The article about Warren Buffett and Herb Wolf from last week quoted some remarks from Buffett that were included in the book The Snowball: 

“Herb Wolf was one of the smartest guys I ever met. He could tell the effect on American Water Works’ earnings if somebody took a bath in Hackensack, New Jersey. He was unbelievable. One day Herb said to me, ‘Warren, if you’re looking for a gold needle in a haystack of gold, it’s not better to find the gold needle.’ I had this thing that the more obscure something was, the better I liked it. I thought it was a treasure hunt. Herb got me out of that way of thinking. I loved that guy.”

Looking in a haystack of gold reminded me of a similar thought from Charlie Munger in his "Academic Economics: Strengths and Faults after Considering Interdisciplinary Needs" speech (via Poor Charlie's Almanack):

The late, great Thomas Hunt Morgan, who was one of greatest biologists who ever lived, when he got to Caltech, had a very interesting, extreme way of avoiding some mistakes from overcounting what could be measured and undercounting what couldn't. At that time, there were no computers, and the computer substitute then available to science and engineering was the Friden calculator, and Caltech was full of Friden calculators. And Thomas Hunt Morgan banned the Friden calculator from the biology department. And when they said, "What the hell are you doing, Dr. Morgan?" he said, "Well, I am like a guy who is prospecting for gold along the banks of the Sacramento River in 1849. With a little intelligence, I can reach down and pick up big nuggets of gold. And as long as I can do that, I'm not going to let any people in my department waste scarce resources in placer mining." And that's the way Thomas Hunt Morgan got through life. 

I've adopted the same technique, and here I am in my eightieth year. I haven't had to do any placer mining yet. And it begins to look like I'm going to get all the way through, as I'd always hoped, without doing any of that damned placer mining. Of course, if I were a physician, particularly an academic physician, I'd have to do the statistics, do the placer mining. But it's amazing what you can do in life without the placer mining if you've got a few good mental cricks and just keep ragging the problems the way Thomas Hunt Morgan did.

And earlier in Poor Charlie's Almanack (in Chapter 2 on The Munger Approach to Life, Learning, and Decision Making), the idea above was expanded on a bit when it comes to Munger's Investment Evaluation Process:

As we've noted, Charlie doesn't make a lot of investments. His approach is perhaps best summarized by Thomas Watson Sr., the founder of IBM: "I'm no genius. I'm smart in spots, and I stay around those spots." If Charlie knows anything, he knows his "spots": his carefully identified circles of competence. To stay within these circles, he first applies a basic, overall screen, designed to limit his investment field to only "simple, understandable candidates." As he says, "We have three baskets for investing: yes, no, and too tough to understand." To identify potential "yes" candidates, Charlie looks for an easy to understand, dominant business franchise that can sustain itself and thrive in all market environments. Understandably, few companies survive this first cut. Many investor favorites such as pharmaceuticals and technology, for example, go straight to the "too tough to understand" basket. Heavily promoted "deals" and IPOs earn immediate "no's." Those that do survive this first winnowing are subjected to the screens and filters of Charlie's mental model approach. The process is intense and Darwinian, but also efficient. Charlie detests "placer mining," the process of sifting through piles of sand for specks of gold. Instead, he applies his "Big Ideas from the Big Disciplines" to find the large, unrecognized nuggets of gold that sometimes lie in plain sight on the ground.

Montaigne quote

From The Complete Essays of Montaigne:

Wherefore it is as foolish to lament that we shall not be alive a hundred years from now as it is to lament that we were not alive a hundred years ago. Death is the origin of another life. Just so did we weep, just so did we struggle against entering this life, just so did we strip off our former veil when we entered it. 

Nothing can be grievous that happens only once. Is it reasonable to fear so long a thing so short? Long life and short life are made all one by death. For there is no long or short for things that are no more. Aristotle says that there are little animals by the river Hypanis that live only a day. The one that dies at eight o’clock in the morning dies in its youth; the one that dies at five in the afternoon dies in its decrepitude. Which of us does not laugh to see this moment of duration considered in terms of happiness or unhappiness? The length or shortness of our duration, if we compare it with eternity, or yet with the duration of mountains, rivers, stars, trees, and even of some animals, is no less ridiculous.

No business can succeed unless it is constantly revising its product...

Here's another example of the importance of companies needing to continually innovate, and be willing to invent something that will upend a current successful product when the future is going to require something new (think Apple with the iPhone upending the iPod, Netflix with streaming upending DVD-by-mail, Amazon with Kindle and AWS to an extent, and others in more recent times). In this case, it was the tire business back in the early 20th century. From Men and Rubber: The Story of Business:

The easy course was to take for granted that, having established a fair solid-tire business, that business would expand and continue, and there would be no need to go into new fields. But the gasoline car was developing rapidly—although only Mr. Ford at that time had any notion that the automobile would be what it is today. It seemed to me inevitable that the automobile would come into wide use. That would mean an enormous tire requirement, and these tires would be pneumatics. By no means all our stockholders agreed with me, and one man holding a large block of stock disagreed in so personal a way that I had to arrange to buy out his stock. I saw clearly that, if we limited ourselves to solid tires, our business would slowly die. No business can succeed unless it is constantly revising its product, not only to meet the actual demands of today, but also the potential demands of tomorrow.  

A product can never really be standardized—that is not in the nature of things. The real point is that changes should not be made lightly or for catch-penny purposes. They should be made only to improve convenience or durability or appearance. Some changes may be made in the interests of more economical manufacturing, but this is dangerous ground, for it may lead one into thinking more of the factory than of the public.

A Platform's Three Key Functions

From Platform Revolution:

Platforms must perform three key functions in order to encourage a high volume of valuable core interactions, which we summarize as pull, facilitate, and match. The platform must pull the producers and consumers to the platform, which enables interactions among them. It must facilitate their interactions by providing them with tools and rules that make it easy for them to connect and that encourage valuable exchanges (while discouraging others). And it must match producers and consumers effectively by using information about each to connect them in ways they will find mutually rewarding.  

All three functions must be performed well if the platform is to succeed. A platform that fails to pull participants will be unable to create the network effects that make the platform valuable. A platform that fails to facilitate interactions—one with clunky technology or overly restrictive policies that make usage difficult—will eventually discourage and alienate participants. And a platform that fails to match participants accurately will waste their time and energy, soon driving participants away. 

Seneca quote

From "On the Happy Life" (audiobook):

...as long as we wander at random, not following any guide except the shouts and discordant clamours of those who invite us to proceed in different directions, our short life will be wasted in useless roamings, even if we labour both day and night to get a good understanding.  

Let us not therefore decide whither we must tend, and by what path, without the advice of some experienced person who has explored the region which we are about to enter, because this journey is not subject to the same conditions as others; for in them some distinctly understood track and inquiries made of the natives make it impossible for us to go wrong, but here the most beaten and frequented tracks are those which lead us most astray. Nothing, therefore, is more important than that we should not, like sheep, follow the flock that has gone before us, and thus proceed not whither we ought, but whither the rest are going. Now nothing gets us into greater troubles than our subservience to common rumour, and our habit of thinking that those things are best which are most generally received as such, of taking many counterfeits for truly good things, and of living not by reason but by imitation of others. This is the cause of those great heaps into which men rush till they are piled one upon another. In a great crush of people, when the crowd presses upon itself, no one can fall without drawing some one else down upon him, and those who go before cause the destruction of those who follow them. You may observe the same thing in human life: no one can merely go wrong by himself, but he must become both the cause and adviser of another's wrong doing.  

It is harmful to follow the march of those who go before us, and since every one had rather believe another than form his own opinion, we never pass a deliberate judgment upon life, but some traditional error always entangles us and brings us to ruin, and we perish because we follow other men's examples: we should be cured of this if we were to disengage ourselves from the herd; but as it is, the mob is ready to fight against reason in defence of its own mistake. 

Leo Tolstoy quote

From A Calendar of Wisdom:

"To tell the truth is the same as to be a good tailor, or to be a good farmer, or to write beautifully. To be good at any activity requires practice: no matter how hard you try, you cannot do naturally what you have not done repeatedly. In order to get accustomed to speaking the truth, you should tell only the truth, even in the smallest of things." -Leo Tolstoy

Semper Augustus Investments Group: 2016 Annual Letter

Once again, Chris has earned my vote for year-end investor letter of the year. This is a must-read not just for followers of Berkshire Hathaway—as he gives the best update to the Berkshire valuation out there—but to all investors, as his discussion on profit margins and reversion to the mean is important for philosophies of every type (previous letters, including last year's roughly 70-page missive, can be found HERE).

Link to: Semper Augustus Investments Group: 2016 Annual Letter

Links

I will be without internet for about the next week. I have some quotes and book excerpts scheduled, but this will be the last compilation of links during that time.

To Buy or Not To Buy: A Checklist for Assessing Mergers & Acquisitions - by Michael Mauboussin, et al. [H/T Hurricane Capital] (LINK)

48 Most Important Things I Learned on Investing from Howard Marks - by Vishal Khandelwal (LINK)

Buffett on Valuation (LINK)

The Story of Carl Braun (CF Braun & Company) (LINK)

How to Own Your Enemies - by Nassim Nicholas Taleb (LINK)

Surviving the Continuous Chain of Disappointments - by Morgan Housel (LINK)

Mohnish Pabrai on the PreMarket Prep podcast (LINK)

Adventures in Finance: A Real Vision Podcast -- Episode 1: India Demonetization (audio) (LINK)

The Focused Rise of Wesley So (LINK)

Yuval Noah Harari on the Think Again Podcast [H/T James] (LINK)

Related book: Homo Deus

Carl Sagan, Stephen Hawking and Arthur C. Clarke - God, The Universe and Everything Else (1988) (video) (LINK)

Related books: 1) A Brief History of Time (Hawking); 2) A Briefer History of Time (Hawking); 3) The Demon-Haunted World (Sagan); 4) 2001: A Space Odyssey (Clarke); 5) How the World Was One (Clarke)

Links

Edward R. Murrow documentary about investing in the 1950s (video) [H/T @morganhousel] (LINK)

Value Investing Podcast: Massimo Fuggetta on the Bayes Theorem in Investing (LINK)

Ian Cassel reviews the book Power Questions (LINK)

Tyler Cowen on the a16z podcast discussing his new book, The Complacent Class: The Self-Defeating Quest for the American Dream (LINK)

Yuval Noah Harari on The James Altucher Show (podcast) (LINK)

Related books: 1) Sapiens; 2) Homo Deus

Book of the day (recommended by Yuval Harari in his chat with Ezra Klein): Chimpanzee Politics: Power and Sex among Apes

Links

Warren Buffett: This Is Who I Would Have Picked to Manage My Money [H/T @jasonzweigwsj] (LINK)

Netflix Lesson on Focus (LINK)

Ed Thorp’s Advice on How to Live a Good Life (LINK)

Related book: A Man for All Markets

Mutual Fund Observer, March 2017 (LINK)

The Tim Ferriss Show (podcast): John Crowley — The Real-Life Captain America and Bruce Banner (Seriously) (LINK)

Related book: The Cure: How a Father Raised $100 Million--and Bucked the Medical Establishment--in a Quest to Save His Children

Yuval Harari on how meditation made him a better historian (LINK)

Related books: 1) Sapiens; 2) Homo Deus

Wild Elephants Sleep Just Two Hours a Night (LINK)