netnet
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In the annual Buffett talks about rascals, quote below.
To whom could Buffett be referring. Who is the Rascal??
QuoteIn 1863, Hugh McCulloch, the first Comptroller of the United States, sent a letter to all
national banks. His instructions included this warning: “Never deal with a rascal under the
expectation that you can prevent him from cheating you.” Many bankers who thought they could
“manage” the rascal problem have learned the wisdom of Mr. McCulloch’s advice – and I have as
well. People are not that easy to read. Sincerity and empathy can easily be faked. That is as true
now as it was in 1863 -
The probability of a margin call on the DJCO is probably 0. The company undoubtedly has access to liquidity to cover any eventuality.
This arm chair quarterbacking of one of the best investors in American economic history is a bit comical, frankly. (Note, Charlie has repeatedly lambasted the comfortably rich flirting with catastrophic risk. He has said more than once, "I have no intention of going back to 0.")
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On 1/5/2022 at 4:30 AM, Spekulatius said:
Well, if this was a boxing game, the first two rounds went clearly to the other side.
I had this thought before this BABA episode and think there is a good chance that Munger would have blown himself up, if he hadn’t met Buffett and basically let him manage the bulk of his money.
His track record in his own partnership was very volatile and he used margin as well. Roll the dices often enough and chances are high that you get a couple of sixes coming up at once and you are done.
Buffett on the other hand is far more risk averse than Munger and that’s what you need to be, if you want to survive for 7 decades. Risk management is far more important than returns in the very long run.
Not to be contentious, Spec, but there is so much wrong here.
- There is almost no chance that Munger would have 'blown himself up'. Remember it was Munger not Buffett who was into quality stocks.
- Historical note their friend Guerin on the other hand did blow up, but died a very wealthy man; he was on margin a lot.
- Buffett acknowledges Munger's affect on him, I have never heard Munger say the reverse.
- Volatility is not risk, that is Buffett and Munger teachings #2 after #1 don't lose money. They shoot fish in drained barrels.
- He only used margin on absolute locks, this was when he was younger and did not have no-recourse debt
- Both of them are risk averse, see shooting fish above!
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This is a story about a company that presented to Charlie and the board at the Daily Journal. It was a venture style investment (note: Buffett has invested in new companies)
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the link didn't work for me.
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What is the url for the transcript of the Li Lu/Greenwald talk? Thanks.
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A few questions on the asset class:
- What are the best posts on cobf on crypto? (I know, I know, I will read this whole thread)
- What are the best posts on the web?
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Other than Ethereum and Bit, what else should one invest in, (pre IPO Coinbase would have been possible a few months ago.) Dogecoin
- It seems to me that we are in the late stages of this cycle so of a total allocation to crypto, invest 20%- 40% now and wait for the pullback.
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Yes the computer generated transcript was not particularly accurate.
No real revelations and I might add given the (presumed) IQ of the audience, Cal Tech afterall, the questions where not particularly good. I suspect most of the people on this board would have had better questions. (Obviously there could be sampling bias by the person who selected the questions.) But this just goes to show that effective horsepower is the key not potential horsepower, i.e. people on this board know a lot more about Munger than the questioners!
At some point the talk should be on Cal Tech's Youtube channel.
Highlights:
- Know your circle of competence.
- Go where the competition is weak, (I was not going to be brilliant in Thermodynamics, at least by Cal Tech standards)
- Find something you enjoy and can work hard on
- Try and benefit from a tail wind. People from Harvard and Stanford don't go to work at Costco, they should think about it, it's a rising tide (or at least it was) and your competition is not going to be that strong (inside of Costco).
- My department, Meteorology, was properly tossed, it was purely empirical field (not upto Cal Tech standards).
- I did not make my money on macro forecasting, but these are quite interesting times...I can't believe the rise of China and the level of debt of developed countries.
- He said he did not learn anything (academically) at Cal Tech that he used later in life, but he did say he learned he was not going to be studying Thermodynamics professionally (Circle of competence?).
- The competition in investing business was weak in his day.
- Sequoia's record in investing has been phenomenal.
- His (early venture) record on the other hand: he nearly killed himself in an oscilloscope business, total sales 3. They did not anticipate magnetic tape, as a recording medium. He stayed away from venture after that!
- He got in his usual dig on liberal arts professors.
- Know your circle of competence.
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Munger is live now
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Think of your career.
For most people - the industry you work in - is the industry in which you got your first full-time job. For the CPA, CFA, lawyer, etc. - it is the industry you went to as soon as you got your designation. Anytime you change jobs, that will be the industry where you are the 'best fit', and where you will get paid most. PROCESS keeps you in the industry swim-lane, and luck chose the industry - it was just where the jobs were at the time. It is the same in investing.
To change careers requires ongoing flexibility, significant effort, and ability to absorb loss for an extended period (ask anyone in o/g). An individual might use a MBA/PhD as the change vehicle, an IT manager might use Agile Project Management. A PM has to rely on how often the 'phone rings - today's star value investor being tomorrow's bum. Successful investing requires ongoing mental flexibility, and continuous expansion of circle of competence.
Good point.
A great antidote is to learn how to simultaneously play chess against 4-5 other players, under distraction.
It forces one to filter, think flexibly and at speed, in terms of flow versus static positions, and always outside the box (as everyone knows the standard thrusts/parries). Sadly, the former east block players that I used to play with have all passed on now, and their games were always an 'event' - 18 minutes, to win 2 or more games, to the music of Tchaikovsky's 1812 Overture ;D
So, on a practical level, what would be the functional equivalence of this?
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Although I haven't lived there in awhile, I can try: what is it that you want to know? Where to stay , where to party, what to see, where to buy RE?
For sight seeing, the museums, when they reopen are free! As are the tours of the capital--ask your representative for tickets. Climbing the stairs to the top of George Washington monument is a good workout. Kayaking the Potomac is nice, beware of the Great falls area though. (the sunken shipwrecks is an interesting nature experience, south of DC) Remember that DC area it was a yellow fever swamp though, classified as hazard, tropical duty by the British foreign office. So it is hotter and more humid than Queens.
As for partying, I'm afraid I'm out of date on that one, but the rectangle from say 22nd to the say 12th and L to U might be a good locus. I'm told that the Ethiopianl/Eritrean food is the best to be had outside of Adis Ababa, but last time I was there there were still no good renditions of fish oriented coastal cuisine.
There are a number of brew pubs, as one would imagine, but you have Yelp for that. There are also a huge number of Salvadoran places. I have not found great Haitian food, but there has to be some there. And of course there is West African food. I think there are 2 or 3 Michelin starred restaurants, if that is your thing. a local speciality is soft-shell crabs, which I adore. You can also do hard-shell crabs, much cheaper and do a bucket with fries and beer
The bus system is okay, but the Metro is great, much cleaner and quieter than NY but obviously 1/10 as extensive.
Good luck
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"I'm not sure I understood your math very well but I'll study the industry more tomorrow."
The takeaway is do nothing for 12 months, then make your investment. Let patience work.
We're O/G. Returns are a lot bigger, and sooner.
SD
Hey SD, Munger is quoting you ;) --WSJ today.
Although I (obviously) feel more threatened personally (read health-wise) with this crisis, financially I feel much better than 2008. Yes the GNP may really dip and small businesses are going to be mowed down, but the financial system was teetering in '08, which is (currently) not the case now. As always we are in uncharted territory, but it seems as if the returns in private (VC, small scale PE) and public markets require (even more) patience than one would think. Wait for the fat pitch or as Buffett also said, shoot the fish in a drained barrel.
(Minor historical note, returns to capital tend to reduced after pandemics, both large and small.)
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I'm halfway through Think Like a Rocket Scientist. It just came out this week. Varol really was a rocket scientist who left NASA to go back to university to become a law professor.
It's is a great book. Varol is a good writer, who makes a narrative cohere to his point. The first chapter on decision making under uncertainty is worth the price of the book one year of college.
I am a great believer in building and using various thinking tools. I've read a shelf full of books on thinking. Varol's will go into my highly used reference section with Thinking Fast and Slow and Poor Charlie's Almanack
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Trump tweet:
LIBERATE VIRGINIA, and save your great 2nd Amendment. It is under siege!A sorry excuse for a leader.
So is the Governor of Virginia. You know, the guy who can't follow the Constitution, likes to dress up in blackface, and would kill babies after birth. Is he a great leader in your opinion?
I want to hold my tongue here, so instead of saying that's a pretty ignorant thing to say, I will say hmmm... you think so. That is an interesting opinion. To paraphrase the late Daniel Moynihan you are entitled to your own opinions, but not your own facts.
To wit, I don't think anything you said about the gov Northam is really true.
re Northam:
- One could argue rightfully that he doesn't have the same interpretation of the constitution that you do.
- As to the black face, there is constitutional statute of limitation for one's college stupidities, (Eighth Amendment if memory serves) ;) (sortof fact)
- And the baby killing statement is a willful misinterpretation. For the record he was talking about non-viable fetuses. Look, he's a doctor and the nuance on his statements on this was lost in the brouhaha. So no he is not a 'baby-killer'.
Trump, on the other hand, is never nuanced. He seems to be quite challenged by the constitution. He is a paragon nothing save narcissistic socio-pathy. He is a mentally ill man with no morals who is utterly out of his depth generally and this crisis is telling.
Back to the prez and coronavirus:
Sadly, people have (and will) die because of Trump, plain and simple.
- One could argue rightfully that he doesn't have the same interpretation of the constitution that you do.
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Here is a new talk from Li Lu. 5 years after a similar talk at Peking U.
https://www.longriverinv.com/blog/the-practice-of-value-investing-by-li-lu
Here it is in Chinese: https://xueqiu.com/6026781624/137223946
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If Trump said it was a 'hoax' to undermine his re-election chances... shouldn't we invert and suspect that Trump deliberately downplayed the threat to keep his re-election chances alive?
1. We know he was tipped off in Jan by US intelligence, and he now admits that he "knew it was a pandemic all along".
2. The Washington Post reported yesterday that he is focusing on his re-election chances, and that coincides with him downplaying the threat again yesterday.
It doesn't look good for our collective chances if his first priority is himself.
Of course his first priority is himself. He's a narcissistic personality disorder and likely a sociopath. He doesn't care about reopening for "the economy" in general, he knows this current path doesn't lead him to get re-elected, and it's really bad for his hotels and resorts and his debt payments, and if he's out of power it's dangerous that he'll be investigated without pardon power, so he's ready to gamble it all and put all his chips on 15 black and spin the wheel in the hope that this other approach may be better for his election and businesses. He's been incredibly lucky all his life, born to wealth, getting away with all kinds of stuff, becoming president.. He's just gambling with lots of lives and the US healthcare system in the balance that his luck will hold.
And he didn't know back then. He's not intellectually capable to have understood the implications when it was still theoretical, and he's surrounded by yes-men and he fires or drives away anyone who's independent-minded pretty quickly. Listen to him talk about any of this and it's just a bunch of word-salad "it's great, going tremendous, big effort"... No real understanding. Even now as people are dying and hospitals are being quickly turned into disaster zones, he's not listening to the people who know what they're talking about, he's driving away Fauci and contradicting his task force on TV and picking petty fights with desperate governors who need federal help. He's likely never even spoke to anyone on the front lines of this and shows zero empathy for anyone dealing with this, only worry for himself veiled in language about "the economy" (which was how he always said he measured his presidency, always talking about stock market records, etc).
"it's great, going tremendous, big effort"
More like "it's very very great, going tremendous, quite tremendously, big big effort. very big. so big you won't believe but it's there and I'm almost always right about these things."
You forgot the "...And who knew that epidemics could threaten the economy..."
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In South Korea, the medical experts at the very beginning recommended the president to close the border with China. This didn't happen. It turns out, the major outbreak occurred because of a single superspreader in the religious sect who has never visited China.
Uhh...what??
200 members of this cult were in Wuhan!
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There is a new episode for PV podcast.
For those interested in Exor this could be interesting.
As a Canadian the name is too illiquid for me.
Thanks Xerxes
Another recent and relevant podcast episode I liked: Invest like the Best (Patrick O'Shaughnessy), episode 163 "Investing through a Crisis with Dan Rasmussen"
Here is Rasmussen's paper: https://mcusercontent.com/6dc62f307511d466ff78a94fe/files/b12058f7-afbd-4078-8604-52c9cbc1b592/Crisis_Investing_Verdad_Advisers_Ebook.01.pdf
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This are the times for which Berkshire is built.
To me more importantly, about right after the Daily Journal Annual meeting, I was getting very nervous about Charlie and Warren in a wash of all those people who could potentially infect them. I was very relieved that BH's annual is now online. (There are also a fair number of elderly shareholders who would also have been at risk.)
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Hey all:
San Francisco has declared a "state of emergency" over the Corona virus. Please see:
www.businessinsider.com/san-francisco-state-of-emergency-coronavirus-covid19-outbreak-2020-2#the-outbreak-which-began-in-china-has-since-spread-in-asia-the-middle-east-and-europe-3
Kind of odd, as there are NO known Corona virus cases in the city.
Also kind of odd, as this is coming from a city that can't all the human feces off it's streets. This is also from the city that has smartphone apps showing where all the piles of sh!t are.
I am just wondering...if a city can't keep people from busting dumps everywhere, how in the world is it going to deal with Corona virus? An app maybe? Just think, they could combine the feces map with the Corona virus app.
there is evidence that COVID-19 is present in fecal matter AND even maybe in aerosols associated with fecal matter--read farts and poorly vented sewage systems (possible vector on cruise ships BTW.)
Also, I'm a bit concerned about Berkshire's Annual Meeting: Munger and Buffett are the prime age group for fatal infections, just saying
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I'm curious.
Did anyone happen to see what happened in small PE deals during SARS or MERS? i.e. were there dips in pricing?
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OK, I'm gonna go full kook on this and dial it to 11:
Coronovirus is definitely CIA weapon to destroy China, Iran, and Italy (for not leaving EU!).
I also know what happens next, but probably I should leave that for the black swamp aka Politics section.
;D
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If done properly, mobile homes are a total gold mine. 20%+ type stuff. Brother in law does a bunch of this in central Florida.
Care to elaborate?
Buffett/Berkshire - general news
in Berkshire Hathaway
Posted
That makes perfect sense.