Links

"Ben Graham always used to say you can get in more trouble in investment with a good premise than with a bad premise, because the bad premise will shout out to you immediately as being fallacious, whereas with a good premise it’ll work for awhile. Businesses are worth more money if interest rates fall and stocks rise. But then eventually the market action of the securities themselves creates its own rationale for a large crop of buyers, and people forget about the reasons and the mathematical limitations that were implied in what got them excited in the first place. And after a while, rising prices themselves alone will keep people excited and cause more people to enter the game. And therefore the good premise, after a while, is forgotten except for the fact that it produced these rising prices.... People tend to forget about the importance of the price they pay as the experience of a bull market just sort of dulls the senses generally." --Warren Buffett (1997)

What I’m thinking about this New Year’s Eve - by Bill Gates (LINK)

As the year comes to an end, I reflect on how we can make our tax system more fair.

I've posted these before, but they are once again making the rounds, so in case anyone hasn't seen them yet.... Joel Greenblatt 2005 class videos (LINK) [And related to these, there are also old Bruce Greenwald lectures online, and more recent lectures from Aswath Damodaran.]

The Market is Huge! Revisiting the Big Market Delusion - by Aswath Damodaran (LINK)

2019 Position Review - by Harris Kupperman (LINK)

As Shale Wells Age, Gap Between Forecasts and Performance Grows ($) (LINK)

The 2010s Killed the Cult of the Tech Founder. Great! - by Steven Levy (LINK)

Imagining Our Future Through Tech (video) (LINK)

Grant’s Current Yield Podcast: Home Alone (LINK)

Acquired Podcast: The Lean Startup and the Long-Term Stock Exchange (with Eric Ries) (LINK)

Books for our time: seven classics that speak to us now [H/T @jasonzweigwsj] (LINK)

10 Important Lessons We Learned from the 2010s - by Mark Manson (LINK)

Links

"There's no such thing as a value company. Price is all that matters. At some price, an asset is a buy, at another it's a hold, and at another it's a sell." --Seth Klarman

Buffett Lieutenant to Head Berkshire Hathaway’s Geico Insurance Unit ($) (LINK)

Todd Combs to succeed Bill Roberts, who will retire at the end of 2020

In his 2019 Annual Book Review [Chinese], Li Lu recommends The Other Half of Macroeconomics and the Fate of Globalization. [H/T @mastersinvest] 

Is China Beating America to AI Supremacy? - by Graham Allison (LINK)

Amazon Advertising, Explained (LINK)

Banks Own Thousands of Railcars but Don't Know What to Do With Them ($) (LINK)

A Sea Change in Fuel Prices Is Imminent ($) (LINK)

January’s deadline to use cleaner marine fuel could ripple through the global fuel market on land and sea

Martin Stopford at the 2019 Hong Kong Maritime Forum - Where We Are in the Shipping Cycle Today (video) (LINK)

Related book: Maritime Economics - by Martin Stopford

Hyman Minsky explains financial fragility in his own words (November 1987 video) [H/T Ritholtz] (LINK)

We’ve just had the best decade in human history. Seriously - by Matt Ridley (LINK)

Grant’s Current Yield Podcast: Winter reading (LINK)

Related book: Great Society: A New History - by Amity Shlaes

Wall Street Unplugged Podcast: The best value ideas for 2020 [with Jonathan Boyar] (LINK)

The Tim Ferriss Show (podcast): #403: Tony Fadell — On Building the iPod, iPhone, Nest, and a Life of Curiosity (LINK)

The Knowledge Project Podcast: #72 Neil Pasricha: Happy Habits (LINK)

How a 35,000-Year-Old Frozen Woolly Mammoth Tastes (LINK)

Why You Never Have Time - by Derek Thompson (LINK)

The Two Kinds of Moderate - by Paul Graham (LINK)

Fashionable Problems - by Paul Graham (LINK)

A good conscience is a continual Christmas...

“Let no pleasure tempt thee, no profit allure thee, no ambition corrupt thee, no example sway thee, no persuasion move thee, to do any thing which thou knowest to be evil; so shalt thou always live jollily; for a good conscience is a continual Christmas.” --Ben Franklin

Links

"Many people believe that investors must make the macro decision to be either bullish or bearish. Our preference is to be agnostic, objectively finding absolute bargains, and in their absence, holding cash. In short, we are neither bullish nor bearish. We are value-ish." --Seth Klarman

Peter Lynch: How to Find Growth Opportunities in Today’s Stock Market (LINK) ["My best stocks have been ones where I didn’t have to worry about the big picture."]

Fidelity’s Peter Lynch: Do your research, don’t ‘play’ the market (video) [H/T Linc] (LINK)

Value Investing with Legends Podcast: Bruce Greenwald - Staying on the Right Side of the Trade (LINK)

Masters of Scale with Reid Hoffman (podcast): Bill Gates — The biggest success story you haven’t heard (LINK)

Fall 2019 Exhibit | Finding the Edge: The Work and Insights of Edward O. Thorp (video) (LINK)

Druckenmiller on 2020 Outlook, Monetary Policy, U.S. Election (video) (LINK)

All Asset All Access – Insights from Research Affiliates (LINK)

Could It Be That a Minsky “Moment” Lurks in the Shadows? - by Frank K. Martin (LINK)

11 Lessons from the Success of Disney+ - by Matthew Ball (LINK)

SoftBank Vision Fund Employees Depict a Culture of Recklessness (LINK)

Key Countries Aren’t Ready for Historic Ship-Fuel Switch (LINK)

The Market Huddle Podcast: Christmas with Kuppy (LINK)

Acquired Podcast: Convoy (with CEO Dan Lewis) (LINK)

The Disruptive Voice Podcast: Choosing College: Bob Moesta and Michael Horn on Why We Hire Education (LINK)

Doctors Prescribe More of a Drug If They Receive Money from a Pharma Company Tied to It (LINK)

Farnam Street’s 2019 Annual Letter to Readers (LINK)

The Infinite Game - by Blas Moros (LINK)

I wrote an essay I wish I had been given when I graduated from college, retired from tennis, and began the transition from student-athlete to the “real world.” 

Through this essay, I hope to provide some awareness and tools, namely around self-reflection and self-awareness, how to think about how to spend your time, what to look for in a job, and the importance of coaches and mentors. 

While written through the lens of a student-athlete, hopefully some of these principles and tools apply to a broader audience.

Warren Buffett on what you need to know to make good investment decisions over time...

From the 2009 Berkshire Hathaway Annual Meeting:

You just have to stay within the circle of competence, the things that you can understand. And look for things that are selling for less than they’re worth, of the ones you can value.  

And you can start out with a fairly small circle of competence and learn more about businesses as you go along.  

But you’ll learn that there are a whole bunch of them that simply don’t lend themselves to valuations and you forget about those.  

Accounting helps you in that. You need to understand accounting to know the language of business, but accounting also has enormous limitations. And you have to learn enough to know what accounting is meaningful and when you have to ignore certain aspects of accounting.  

You have to understand when competitive advantages are durable and when they’re fleeting. 

And then have to learn the difference between a hula hoop company and Coca-Cola. But that isn’t too hard to do.  

And then you have to know how to think about market fluctuations and really learn that the market is there to serve you rather than to instruct you.  

And to a great extent, that is not a matter of IQ. If you’re in the investment business and you have a IQ of 150, sell 30 points to somebody else, ’cause you don’t need it.  

You need to be reasonably intelligent. But you do not need to be a genius—at all. In fact, it can hurt.  

But you do have to have an emotional stability. You have to have sort of an inner peace about your decisions. Because it is a game where you get subjected to minute-by-minute stimuli, where people are offering opinions all the time. 

You have to be able to think for yourself. And I don’t know how much of that’s innate and how much can be taught.  

But if you have that quality, you’ll do very well in investing if you spend some time at it. Learn something about valuing businesses.  

It’s not a complicated game. As I've said many times — it’s simple, but not easy.  

It is not a complicated game. You don’t have to understand higher math. You don’t have to understand law. There’s all kinds of things that you don’t have to be good at. There’s all kinds of jobs in this world that are much tougher.  

But you do have to have sort of an emotional stability that will take you through almost anything. And then you’ll make good investment decisions over time. 

Links

"When we own stock, we are not there to try and change people. Our luck in changing them is very low, anyway. In fact, Charlie and I have been on boards of directors where we’re the largest shareholders and we’ve had very little luck in changing behavior. So, we think that if you buy stock in a company, you better not count on the fact that you’re going to change their course of action." --Warren Buffett (2009)

The Financial Lesson of 2008-09 That Most Investors Have Forgotten - by Jason Zweig ($) (LINK)

If your memory minimizes how much you lost in the last bear market, you can easily overestimate how brave you will be in the next one

CFP Board to Tighten Oversight of Financial Advisers ($) (LINK)

Understanding Money (LINK)

The Financial Illiteracy Epidemic (LINK)

The 2019 Stratechery Year in Review – by Ben Thompson (LINK)

Jobs-to-be-Done - by Mike Dariano (Kindle ebook, PDF, Podcast)

What Does an Oil Refinery Do? (podcast) (LINK)

The Cutting Room Files, Part 6: The Future of the China - by Melissa Taylor and Peter Zeihan (LINK)

Related book: Disunited Nations: The Scramble for Power in an Ungoverned World

How to Fix Our Prisons? Let the Public Inside [H/T @RogerLowenstein] (LINK)

Across the Universe, it's the normal galaxies doing all the star-making work - by Phil Plait (LINK)

Extraordinary Routines [H/T @ChrisPavese] (LINK)

A couple of books mentioned by Marc Andreessen in his recent chat with Kevin Kelly: 1) VC: An American History; 2) More from Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources―and What Happens Next

"There is so much that’s false and nutty in modern investment practice, and in modern investment banking, and in modern academia in the business schools, even in the Economics departments, that if you just reduce the nonsense, that’s all I think you should reasonably hope for." --Charlie Munger (2009)

Links

"[I think] one of the keys to investing and one of the things I said in the book [is that] we're very good at buying, not so great at selling. But look down, not up, when making a big investment—meaning, how much can we lose?" --Joel Greenblatt (interview with Jim Grant on Real Vision)

"Why won't we do momentum investing? The reason for that really is that—let's say it didn't work for the next two years. It could be that it's just cyclically out of favor—it works over the long time, we just need to be patient and it will work. Or it could be that there's plenty of data in research papers and computers and ability to crunch numbers, and the trade now—and it's not so hard to figure out a stock used to be down here and now it's up here and it's got good momentum—and the trade's become crowded, it's degraded and that's why it doesn't work over the next two years. Two years from now, I wouldn't know the answer to that question. Is it just cyclically out of favor momentum or has the trade become crowded and degraded?... But if we're looking at cash flows and valuing businesses just like we value a house...that's what we do. It's possible that that kind of analysis doesn't work over the next two years, but I'm not going to stop doing what we're doing because it's the difference between causation and correlation. Momentum has correlated with good returns in the past.... What we look at is causation, and that's valuing businesses and the way we value businesses is looking at the cash flows." --Joel Greenblatt (interview with Jim Grant on Real Vision)

***

You Might Be Buying Trash on Amazon—Literally ($) (LINK)

Risk Management—Why Bother? - by Eric Cinnamond (LINK)

The presumed end of the Value premium [H/T @marketplunger1] (LINK)

Mormon Church has misled members on $100 billion tax-exempt investment fund, whistleblower alleges (LINK)

Where the 5G Data Storm Will Hit First (LINK)

Invest Like the Best Podcast: Ben Savage – All Things Fintech Investing (LINK)

The World According to Boyar Podcast: Episode 12: Mellody Hobson (LINK)

Links

"If you need to use a computer or a calculator to make the calculation, you shouldn’t buy it. It should be so obvious that you don’t have to carry it out to tenths of a percent or hundredths of a percent. It should scream at you. So if you really need a calculator to figure out that the discount rate is 9.6 percent instead of 9.8 percent — forget about the whole exercise. Just go onto something that shouts at you. And essentially, we look at every business that way. But you’re right, 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 (2009)

"I’d say some of the worst business decisions I’ve ever seen are those that are done with a lot of formal projections and discounts back. Shell Oil Company did that when they bought the Belridge Oil Company. And they had all these engineers make all these elaborate figures. And the trouble is you get to believe the figures. And it seems that the higher mathematics, with more false precision, should help you. But it doesn’t. The effects, averaged out, are negative when you try and formalize it to the degree you’re talking about. They do that in business schools because, well, they got to do something." --Charlie Munger (2009)

"It’s a terrible mistake to think that mathematics will take you a long place in investing. You have to understand certain aspects of mathematics. But you don’t have to understand higher mathematics. And higher mathematics may actually be dangerous and it will lead you down pathways that are better left untrod." --Warren Buffett (2009)

***

Brent Beshore's‬⁩ 2019 Annual Letter (LINK)

The Money Men Who Enabled Adam Neumann and the WeWork Debacle ($) (LINK)

Notes on a Reading Framework - by Venkatesh Jayaraman (LINK)

Hidden Forces Podcast: The Greatest Story Ever Sold: The Rise of Passive Investing & the Fall of the Free Market | Mike Green (LINK)

Starting Greatness Podcast: Marc Andreessen: “Was Netscape an Overnight Success?” (LINK)

The Acquirers Podcast: Endowment Value: Mark Yusko on the endowment model, value investing and bitcoin, crypto and digital assets (LINK)

The Investor’s Podcast Network: TIP273: Billionaire Jim Simons’ Quant Revolution w/ Gregory Zuckerman (LINK)

Related book: The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

Odd Lots Podcast: How Online Dating Is Reshaping the Entire Economy (LINK)

Related paper: The Dating Market: Thesis Overview

There’s No Such Thing as ‘Quality’ Time - by Ryan Holiday (LINK)

Jupiter is still really weird: A new monster storm has formed around its south pole - by Phil Plait (LINK)

Links

"I would argue that differing people learn in differing ways. With me, I was put together by nature to learn from reading. If some guy’s talking to me, he’s telling me something I don’t know, I don’t want to know, I already know, or he’s doing it too slow or too fast. In reading, I can learn what I want at the speed that works. So, to me, reading is what works for my nature. And to all of you who are at all like me, I say welcome. It’s a nice fraternity.... My father was the type that always did more than his share of the work and took more of his share of the risk. All that kind of example was, of course, very helpful, and you learn it better from a person close to you. But in terms of the conceptual stuff, I’d say I learned it from books. Now, those are fathers in a difference sense." --Charlie Munger (2008)

Marc Andreessen and Kevin Kelly: Why You Should Be Optimistic About the Future (video) (LINK)

How You Can Get Big Gains That Wall Street Can’t - by Jason Zweig ($) (LINK)

Acquisition Vehicle EverArc Raises $340 Million ($) (LINK)

EverArc Holdings Ltd., a British Virgin Islands-based acquisition vehicle, said it raised $340 million in an initial offering in London. 

The company said in a filing that it expects to use the proceeds to “acquire a business with a significant proportion of its activities in North America.” It didn’t offer further details. The firm said it expects its shares to begin trading on the London Stock Exchange on Dec. 17. 

EverArc’s board includes Tracy Britt Cool, one of Berkshire Hathaway Inc. Chief Executive Warren Buffett’s key lieutenants in recent years. She announced in September that she plans to leave Berkshire next year to create her own investment firm.

David Perell's Coolest Things Learned in 2019 (LINK)

David Rosenberg on the WealthTrack Podcast (Part 1, Part 2)

The Tim Ferriss Show (podcast): #401: Gary Keller — How to Focus on the One Important Thing (LINK) ["My life is better when I'm spontaneous after I've done my most important thing. Being spontaneous before that, that's where it becomes a distraction and does me harm." --Gary Keller]

Related book: The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results

So, about that 'too massive' black hole… yeah, not so much. - by Phil Plait (LINK)

The Startling Secret of an Invincible Virus - by Ed Yong (LINK)

Links

It's that time of year when Boyar Research is getting ready to publish The Forgotten Forty, which features one-page reports on the forty companies that they believe have the greatest potential to outperform the leading indices in the year ahead due to a catalyst that they see on the horizon. The report has a successful track record and, once again, they're providing a link to receive a complimentary sample from last year’s publication with free registration to their email list.... Link to: Sign-up for complimentary sample report of The Forgotten Forty. The companies included in the sample report are Acushnet Holdings, Discovery, Bank of America, Dollar Tree, Western Union, Starbucks, and Legg Mason.

***

From the archives [H/T Linc].... Benjamin Graham: The Father of Financial Analysis (PDF, Free Kindle Version)

5 books to enjoy this winter - by Bill Gates (LINK)

The books: 1) Growth by Vaclav Smil; 2) Why We Sleep by Matthew Walker; 3) These Truths by Jill Lepore; 4) An American Marriage by Tayari Jones; 5) Prepared by Diane Tavenner

Energy (r)evolutions take time - by Vaclav Smil (LINK)

The Sage of Baltimore (LINK)

Related book: T. Rowe Price: The Man, The Company, and The Investment Philosophy

Invest Like the Best Podcast: Jeff Ma – Making Decisions with Data (LINK)

Short Wave Podcast: Aluminum’s Journey From Precious Metal To Beer Can (LINK)

A galaxy with three supermassive black hole hearts - by Phil Plait (LINK)

"Considering the downside is the single most important thing an investor must do. This task must be dealt with before any consideration can be made for gains. The problem is that people nowadays think they’re pretty smart because they can do something quite rapidly. You can make the horse gallop. But are you on the right path? Can you see where you’re going?" --Irving Kahn

Links

The Lesson to Unlearn - by Paul Graham (LINK)

A Framework for Regulating Competition on the Internet - by Ben Thompson (LINK)

Josh Wolfe and Peter Thiel on a panel at the 2019 Reagan National Defense Forum (video) (LINK)

Repo Blowup Was Fueled by Big Banks and Hedge Funds, BIS Says (LINK)

‘Fake Ebitda’ to Worsen Next Slump, $33 Billion Debt Maven Warns (LINK)

Notes From Sohn London Investment Conference 2019 (LINK)

a16z Podcast: The Stories and Code of Culture Change (LINK)

Masters in Business: Ben Horowitz Discusses Culture and Success (LINK)

Related book: What You Do Is Who You Are: How to Create Your Business Culture

Venture Stories Podcast: Investing in Marketplaces with Sarah Tavel and Nabeel Hyatt (LINK)

Acquired Podcast: TikTok (LINK)

The Evolutionary Breakthrough That Gave Mammals Their Hearing (LINK)

Paul Volcker, the Carter-Reagan Fed chairman who beat inflation, dies at age 92 (LINK)

Remembering Paul Volcker: 2005 Speech at Stanford (LINK)

Book of the day: Keeping At It: The Quest for Sound Money and Good Government - by Paul Volcker

Links

Here's an example of how great of a resource Twitter can be at times.... Cliff Asness and Tren Griffin were disagreeing about the source of Berkshire Hathaway's outperformance over the years, and then Chris Bloomstran—who is probably the world expert on Berkshire Hathaway outside a handful or two of company insiders—chimes in with a 22-Tweet thread on the topic.

Conover Investment Advisory's December 2019 Newsletter: Inside the Great Wall (LINK)

Unintended Perk of the Online Mattress Boom: Never-Ending Free Trials ($) (LINK)

Superinvestors and the Art of Worldly Wisdom Podcast: #31: Rob Arnott On Engineering A Better Index (LINK)

Freakonomics Radio (podcast): 399. Honey, I Grew the Economy (LINK)

The Tim Ferriss Show (podcast): #399: Adam Grant — The Man Who Does Everything (LINK)

Conversations with Tyler (podcast): Daron Acemoglu on the Struggle Between State and Society (LINK)

A white dwarf is cooking a giant planet and slowly eating it - by Phil Plait (LINK)

Why Smallpox Is No More but Polio and Other Diseases Persist (LINK)

Book of the day: The World in a Grain: The Story of Sand and How It Transformed Civilization

Links

"I think that the most important investment you can make is in yourself. Very, very, very few people get anything like their potential horsepower translated into the actual horsepower of their output in life. Potential exceeds realization to just an enormous factor with so many people.... Your best asset is your own self. And you can become, to an enormous degree, the person you want to be." --Warren Buffett (2008)

Portability and Interoperability - by Ben Thompson (LINK)

How Spices Have Made, and Unmade, Empires [H/T @wolfejosh] (LINK)

Prime Mover: How Amazon Wove Itself Into the Life of an American City (LINK)

The One-Traffic-Light Town with Some of the Fastest Internet in the U.S. (LINK)

The Absolute Return Letter - December 2019: A Future Embedded in the Present (LINK)

Michael Lewis on CNBC (LINK)

My Decade - by Michael Batnick (LINK)

The ergodicity problem in economics - by Ole Peters (LINK) [Mostly technical. For some non-technical thoughts on ergodicity, see Nassim Taleb's Skin in the Game, Blas Moros' summary of the book, or the recent Sanjay Bakshi presentation.]

Invest Like the Best Podcast: Vaughn Tan – Quality and Innovation (LINK)

Programming Biology: Read (r), Write (w), Execute (x) (LINK)

Links

"I'm not saying there's no such thing as genius. But if you're trying to choose between two theories and one gives you an excuse for being lazy, the other one is probably right." --Paul Graham ("What You'll Wish You'd Known")

Overconfidence: An Autobiography - by Jason Zweig (LINK)

How to Read: Lots of Inputs and a Strong Filter - by Morgan Housel (LINK)

Survivorship Bias: The Tale of Forgotten Failures (LINK)

Yes, You Can Get Free Trading. But There’s Often a Catch. (LINK)

Startups and Uncertainty - by Jerry Neumann (LINK)

Blood and Soil in Narendra Modi’s India - by Dexter Filkins (LINK)

Masters in Business Podcast: Joe Ricketts Discusses Trade and Deregulation (LINK)

Starting Greatness Podcast: Sarah Leary of Nextdoor: “The Moment You Know You’ve Created Something Valuable” (LINK)

EconTalk Podcast: Gerd Gigerenzer on Gut Feelings (LINK)

COMPLEXITY Podcast: Olivia Judson on Major Energy Transitions in Evolutionary History (LINK)