This Week I Learned #4

“Go to bed smarter than when you woke up”
— Charlie Munger

2018-06-25

  • Wealthy: I'm been addicted to Richard Branson's autobiography "Finding my Virginity" lately and it seems about time I mention a learning I had from it. It's a theme that resonated in investing that I see in Bransons' early successes. Virgin Records was hit hard by the recession. Instead of cutting costs like everyone else, Branson spent more money. Bargains are found in recessions and market meltdowns. Buy when others sell. Through which Virgin went from having a 900K loss year to a 5M profit year shortly afterwards. The other is gut instinct. The jury's out on this. But Branson says he knows he wants to do a venture or partner with a person within 30 seconds. Famed investor George Soros spoke of relying on his intuitions too. There are also enough studies that discuss how we all end up making a decision intuitively and just seek out facts to make it rational. In a world obsessed with data, not being led by it resonates well here. 

2018-06-26

  • Wealthy: Reading through Mohnish Pabrai's interview with SumZero on Forbes. Pabrai is among the new investors I respect for his contrarian and concentrated investment style. I've followed his letters and read his books but something new I learned.. or maybe was something I came across before but I was hit clearer this time was in his key belief of how investors do not need teams. He operates as a solo and so do many great investors. From my experience, I can definitely understand the value of being a singular investor. Another perspective was on how to look at all the public information on great investors like Buffet. Everyone studies Buffet and preaches all his public works but you don't really know what Buffet prioritizes from what he preaches. Per Pabrai, who had dinner with him, the no.1 thing is reliance on an inner scorecard. https://www.forbes.com/sites/kevinharris/2018/06/25/mohnish-pabrais-advice-for-value-investors/#247dbc5922ed

2018-06-27

  • Wealthy: Marty Whitman's Thrid Avenue funds small cap letter: Found out they use a P/B valuation methodology because they believe earnings are not accurate. I could make a similar argument for asset valuations because depending on the business the asset valuation can be intangible and not accurately measurable. https://thirdave.com/wp-content/uploads/2018/04/2018-Q1-TASCX-Letter.pdf

2018-06-28

  • Wise: Design thinking questions per Seth Godin: Who is it for, What is it for, How do you know it is working? 

2018-06-29

  • Wise: Learned some history while reading Richard Branson's autobiography. In the Gulf wars, the US pinned Iraq to be an evil force that invaded Kuwait and set out on a crusade for democracy. Turns out, Kuwait was actually a country with no free press, no free elections with the ultra-rich 400K people running the show over the poor who amassed in the millions. Not to mention Kuwait reneged on making payments to Iraq for fighting a war against Iran for Kuwait's behalf. Continues to affirm my belief the campaigns in the middle east are driven by American greed for oil. 

  • Wealthy: Read the 2017 Annual Letter by Constellation Software's Mark Leonard. His letters are among my favourite for what outstanding management is for companies. I personally think it can rival Buffet's letters in terms of enjoyment and learning value. This will be his last annual letter unfortunately and this year's spoke deeply of the value of having board members for multi-decade periods instead of getting fresh people frequently for "diversity". I agree. Board members need to build competence through practice and that needs hours of practice, which can translate to decades being a director. Schools teach students about how you need independent boards that constantly have new members. I think it's counter-intuitive. Why get someone fresh who knows nothing about the company and then just as they are getting familiar just kick them out for another inexperienced individual. Not to mention an independent director may not act in the shareholder's best interest if he is not an owner himself in the business. Most board of directors don't do shit and just sit there to get paid $200K per year saying they care about shareholders when all they really do is ask dumb questions and stop management from actually trying to go against the grain. I'd rather have internal management who know how to run the company, with large portions of their net worth tied to the company's stock be part of the board of directors. Their interests are more aligned with mine as a shareholder. http://www.csisoftware.com/wp-content/uploads/2018/04/Presidents-Letter-April-2018-Final.pdf

2018-06-30

  • Wise: Learned of a Korean company that has a CEO that leaves the office by 4:20pm and forces all employees to leave by 4:30pm. If they don't then the company doors won't lock so the CEO will know. This came upon a revelation he had where he thought the company's well being would lead to the employee's family's well being and in turn the employee's individual well-being but realized it was the opposite that was true. To prioritize the employee's well-being this movement was started along with other programs within the company to prioritize individual fulfillment. Such constraints have been discussed to be highly effective in other Western companies as well for after an adjustment period employees learn to prioritize their key tasks and learn to be effective with the 8hrs they have instead of wasting 50% on social media and taking 2hr lunches because they expect to be in the office until 10pm.  https://www.facebook.com/ebsstory/videos/1643615395707114/

  • Wise: Robert Greene doesn't read Malcolm Gladwell. He doesn't read contemporary non-fiction in fear of it taking away from his own idea generation. Though he admits 95% of what he writes about is from the books of others but it's still the 5% that makes the book his and different and valuable. He also went at length to discuss shitty books. Many are indeed bad and you can tell because after the first paragraph you understand the key message for the entire book. The book just talks of an idea. I immediately thought about "so good they can't ignore you." I thought that was a shitty book within the first chapter. 

2018-07-01

  • Canada day. My brain took a day off of learning.