LongHaul

Anyone else want to start a thread on WSB and show a contrary view? Might be fun make a bunch of value investing commentary and see the reactions. Like the Mr. Market story, great fool theory, etc.

Great article thanks for posting. Fascinating how the WSB crowd seemed to take advantage of the delta hedging aspect - although how to separate this from pure crowd buying seems tough. And I don't detect the slightest amount of arrogance, overconfidence, delusion or impatience on WSB.

Ultimately, the only thing that matters in the long run is price to value. The rest is noise.

"The Complete Financial History of Berkshire Hathaway: A Chronological Analysis of Warren Buffett and Charlie Munger's Conglomerate Masterpiece " Hardcover Available – April 13, 2021 An Excellent book that I would highly recommend if one is interested in the financial history of Berkshire Hathaway. The author does a wonderful job of financial analysis of Berkshire starting with the early textile mills up to the present day. The acquisition prices are shown of businesses, decade by decade financial statements and much more. I learned much from reading the book and it allowed me to have a better understanding of what Buffett and Munger did to create Berkshire. In summary - I would highly recommend reading to it to learn. FYI: I received a free early version of this book. https://www.amazon.com/gp/product/0857199129/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0857199129&linkCode=as2&tag=theoraclescla-20&linkId=7d65cfc92d673e3f5aee8e1483b3564e

Glad you guys liked it! I have subsequently confirmed with a police officer who read it 20 years ago that much of what Gavin wrote is likely true and we can all pick up danger signs if we pay attention to our radars.

This is a great question. They are already rich so it is sometimes a bit of a mystery to me. The above responses I thought were excellent. Sometimes the family may have internal issues and instead of lawsuits the cash out may make sense. I do like how many of the German and Japanese families have kept ownership over the long term in the family and quite often to very well. Sometimes they have professional mgmt sometimes the family members run it.

I thought this was a really excellent book and have given it to a number of young people.

At the end of the day I think the big picture point is to not be so sure that one is right that one cannot even listen or consider evidence that is different. I think Munger said something about putting it in percentages - For example - I think I am 80% sure of this vs acting like one is 100% sure.

While I agree with most of you just said. I think you picked the wrong example at the end with communism. While communism is certainly an ideology, there were very few communist ideologues during communism. I am not sure of the percentage of people in favor of communism prior to countries becoming communists. But I suspect it was quite high as it was sold and seemed to offer the masses something and that is why so many fought for it. I think it is a great example of the danger of an extreme ideology. I think it was a disaster for a host of reasons resulting in millions of deaths, poverty, loss of freedom, etc. I agree it was a bad system but you suspicion is incorrect. Communism's spread in Europe for example was done through military conquest. The United States gave (gifted?) half of Europe to the USSR. At that point the countries had two choices: they could become communist or Russian tanks would roll into their countries and become communists. The second choice is actually a bit dramatic as at the point these countries became communist the USSR actually had armies stationed in these countries and the controlled the governments. They merely appointed the communist party as the ruling party. It's pretty obvious that when you have to use a gun to get people to do something it is because they're not convinced by your ideas. You are right that many countries in Europe became communist through military conquest. Good point. But then there was Russia, China, Vietnam, North Korea and Cuba. Likely a bigger percent of the population believed Communism would be better in those countries. Would have been better for the populations if the leaders just threw out the Communist ideology and picked the system that worked the best.

While I agree with most of you just said. I think you picked the wrong example at the end with communism. While communism is certainly an ideology, there were very few communist ideologues during communism. I am not sure of the percentage of people in favor of communism prior to countries becoming communists. But I suspect it was quite high as it was sold and seemed to offer the masses something and that is why so many fought for it. I think it is a great example of the danger of an extreme ideology. I think it was a disaster for a host of reasons resulting in millions of deaths, poverty, loss of freedom, etc.

i·de·ol·o·gy noun 1. a system of ideas and ideals, especially one which forms the basis of economic or political theory and policy. I suppose Value investing is an ideology. More time please....

This will be the last Bias I am posting. I appreciate everyone's comments and input I think we have all had an additive learning effect. Steel sharpens steel. Psychology of Misjudgment Bonus Bias: The Dangers of Ideology "Charlie Munger on the Dangers of Ideology and How to Form Intelligent Opinions" “Another thing I think should be avoided is extremely intense ideology, because it cabbages up one’s mind. You’ve seen that. You see a lot of it on TV, you know preachers for instance, they’ve all got different ideas about theology and a lot of them have minds that are made of cabbage. But that can happen with political ideology. And if you’re young it’s easy to drift into loyalties and when you announce that you’re a loyal member and you start shouting the orthodox ideology out what you’re doing is pounding it in, pounding it in, and you’re gradually ruining your mind. So you want to be very careful with this ideology. It’s a big danger. In my mind I have a little example I use whenever I think about ideology, and it’s these Scandinavian canoeists who succeeded in taming all the rapids of Scandinavia and they thought they would tackle the whirlpools in the Grand Rapids here in the United States. The death rate was 100%. A big whirlpool is not something you want to go into and I think the same is true about a really deep ideology. I have what I call an iron prescription that helps me keep sane when I naturally drift toward preferring one ideology over another. And that is I say “I’m not entitled to have an opinion on this subject unless I can state the arguments against my position better than the people do who are supporting it. I think that only when I reach that stage am I qualified to speak.” Now you can say that’s too much of an iron discipline… it’s not too much of an iron discipline. It’s not even that hard to do.” — Charlie Munger ============================================================================== 2020 has been an amazing year of learning. The Ideology bias was very apparent this year where people's extreme ideologies prevented them from seeing the truth on many issues. I personally think these ideologies turn people's brains into BOILED CABBAGE. All one has to do is look at the history of collective ideologies and see the extreme damage that can result. Communism comes to mind.

25. Lollapalooza Tendency "The tendency to get extreme consequences from confluences of psychological tendencies acting in favor of a particular outcome." You may have noticed that few 0f Munger’s biases work in a vacuum. Most work in concert to produce bad decisions. Going through Munger’s tendencies like a checklist is one way to unravel the biases potentially leading you to irrational mistakes. ==================================================================================== These biases when combined are almost like mind control exhibiting a very powerful influence on a person. Helps to at least be aware of many of the biases so one can minimize the effect. Easier said than done. In some sense, one almost has to be constantly striving for independent and rational thoughts, understanding and then rational action in this insane world.

A lot of interesting posts - to bad the media doesn't report on the benefits. I agree that a lot of talented and ambitious people come to the US. Great opportunities and lower taxes. I think on a relative basis it should ideally remain a better deal to attract the entrepreneurs/skilled labor. I know a bunch that have moved here from around the world. Ross812 - a few comments: Interesting that from the mid 1940's to the early 80's the Top 1% share of total U.S. Income was lower than today. My theory is that the Big 3 auto companies, steel companies and others overpaid their union labor and then with an oligopoly pushed up prices. Labor did really well, consumers footed the bill but it made many of the big companies badly uncompetitive (2/3 autos went BK, steel BK, etc). The point being it was unsustainable labor payment. I have no idea how big of an effect this had (if any). Real average household income is worthless to me because 1. It does not take account household size 2. I don't believe it takes into account medical benefits, etc that are really compensation. Per capita GDP is a better measure. Pet peeve on this issue as liberals often quote this data to say how bad things are but the data is bad. I would be curious to see income breakouts looked back much further but perhaps there isn't great data. Gilded age was likely more extreme.

Seems like all the news and commentary is against wealth/income inequality and how it is certainly bad. There is certainly envy with it. This has been an issue since at least the late 1800's and the US economy has done great. What are some of the benefits of wealth/income inequality that are not commonly discussed? A few I thought of: - It is a goal for people to be motivated and try to become wealthy (hopefully by taking the high road) - Often the wealthy have created a business with big benefits to society - Incentives to work for the rich if they don't have super high tax rates on their income - Incentives for the poor to work if they don't get big redistribution payments. Working isn't just about money though - there is often a sense of accomplishment, meaning and learning. - More money for charities Side note: Everyone was roughly equally as wealthy in the old communist countries.

24. Reason-Respecting Tendency "This tendency has an obvious implication. It makes man especially prone to learn well when a would-be teacher gives correct reasons for what is taught, instead of simply laying out the desired belief ex-cathedra with no reasons given… In general, learning is most easily assimilated and used when, life long, people consistently hang their experience, actual and vicarious, on a latticework of theory answering the question: Why? Indeed, the question “Why?” is a sort of Rosetta stone opening up the major potentiality of mental life. Unfortunately, Reason-Respecting Tendency is so strong that even a person’s giving a meaningless or incorrect reason will increase compliance with his orders and requests. Explaining “Why?” can open the door to learning, better work results, or manipulation. "The power of Why becomes obvious in Munger’s example of another of Robert Cialdini’s social experiments. People were more willing to allow someone else to cut in front of them to use the copy machine when the person cutting gave a reason why. It worked even when the reason was: “I have to make some copies.”" Ex cathedra is a Latin phrase, meaning not "from the cathedral," but "from the chair." The phrase does have religious origins though: it was originally applied to decisions made by Popes from their thrones. According to Roman Catholic doctrine, a Pope speaking ex cathedra on issues of faith or morals is infallible. In general use, the phrase has come to be used with regard to statements made by people in positions of authority, and it is often used ironically to describe someone speaking with overbearing or unwarranted self-certainty. =================================================================================== I think it is great to give reasons explaining why to people in your life as it aids in understanding. Also, it is interesting that one must consciously shake off total nonsense reasons. This takes some mental effort.

"In fact, here too, the US Treasury issued debt to help out the Fed but in a different way. In a one-off, double-secret probation letter kind of deal, the US Treasury sold ~$560b of short-term bills directly to the Fed (Fed is only supposed to buy in the open market)." Was that legal? More importantly is that why it is super unlikely the US Treasury should not default because the Fed can just payoff their debt? Seems like this could be highly inflationary if done routinely. https://www.federalreserve.gov/faqs/money_12851.htm "Why doesn't the Federal Reserve just buy Treasury securities directly from the U.S. Treasury? The Federal Reserve Act specifies that the Federal Reserve may buy and sell Treasury securities only in the "open market." The Federal Reserve meets this statutory requirement by conducting its purchases and sales of securities chiefly through transactions with a group of major financial firms--so-called primary dealers--that have an established trading relationship with the Federal Reserve Bank of New York (FRBNY). These transactions are commonly referred to as open market operations and are the main tool through which the Federal Reserve adjusts its holdings of securities. Conducting transactions in the open market, rather than directly with the Treasury, supports the independence of the central bank in the conduct of monetary policy. Most of the Treasury securities that the Federal Reserve has purchased have been "old" securities that were issued by the Treasury some time ago. The prices for new Treasury securities are set by private market demand and supply conditions through Treasury auctions."

23. Twaddle Tendency: "Man, as a social animal who has the gift of language, is born to prattle and to pour out twaddle that does much damage when serious work is being attempted. Some people produce copious amounts of twaddle and others very little." "It’s called BS. Sometimes we talk, just to talk. Other times it’s because we think we know something, we actually don’t. So we try to fake it. The solution: Understand your circle of competence and when you’re outside it, don’t be afraid to say, “I don’t know.”" CNBC comes to mind. I guess we humans can all get confused when tons of bad or irrelevant information comes in and one has to sort through it all and make sense of it. Can be a waste of energy too.

Obviously 15 is safer but its not like as a guideline the CDC can teach people about probability distributions/geometry/fluid dynamics/viral loads so you just pick a number that's pretty safe but still allows society to function and hope for the best. 6 feet is better than nothing but I think the CDC should be giving advice based on evidence and not politics, etc. If 15 feet is safer then they should clearly say that because I see tons of people (>95%) believing in the 6 feet, when in reality the more distance the lower the rate of transmission. Same with masks. N95 is the way to go.

Great Video of Feynman. I agree that laymen should be not be prescribing medicine but we should be challenging doctors and other experts when they might be wrong after we have done thinking and research. In the last year my Dad has had a cardiologist give very bad advice and another doc wanted to remove part of his Colon. The Colon removal was highly unethical, bad advice and unnecessary and the doc was ashamed and backed down after my Dad confronted him. (Incentives are powerful). If you are not challenging you doctors at times then you are not optimizing you health. I have seen this too many times where the doctor puts money over the health of the patient. I have also heard stories of Orthopedic surgeons getting drunk at weddings and then laughing at all the unnecessary back surgery they do. Caveat Emptor.

22. Authority-Misinfluence Tendency: "Living in dominance hierarchies as he does, like all his ancestors before him, man was born mostly to follow leaders, with only a few people doing the leading. And so, human society is formally organized into dominance hierarchies, with their culture augmenting the natural follow-the-leader tendency of man. But automatic as most human reactions are, with the tendency to follow leaders being no exception, man is often destined to suffer greatly when the leader is wrong or when his leader’s ideas don’t get through properly in the bustle of life and are misunderstood. And so, we find much miscognition from man’s Authority-Misinfluence Tendency. History is filled with examples of people who put their faith in someone and things turned out well enough. And there are countless other examples where they ended up worse off. The obvious implication: be careful whom you appoint to power because a dominant authority figure will often be hard to remove…" And a funny story from the book Influence: "There’s a funny story about a doctor who ordered ear drops to be administered in the right ear of a patient who was suffering from an ear infection. Doctors are notorious for poor handwriting skills and using shorthand notations. In this case, instead of completely writing out “right ear” on the prescription pad, the doctor abbreviated and instead wrote “R ear.” The nurse on duty received the prescription with the instructions from the doctor and promptly put the ear drops on the patient’s anus. She knew it was an ear infection so putting the ear drops on the patient’s rear end made absolutely no sense, but she never questioned the instructions because they came from a doctor. The patient went right along as well. No one bothered to question the misinterpreted instructions because they came from someone in a position of influence." Doctors are 3rd leading cause of death in the US. https://www.cnbc.com/2018/02/22/medical-errors-third-leading-cause-of-death-in-america.html Authority bias is huge. Frankly I underestimate it sometimes. The pandemic has been fascinating as it is a psychology lab in real time. Trump doesn't like or wear masks and Republicans follow and don't like them. The CDC says stay 6 ft away and everyone just follows, except the virus doesn't always bring along it tape measure. (6 ft is better than 2 feet but I think 15 feet outside is safer.) The amount of unquestioning and freethinking in society is glaring to me at times and I have yet to fully understand it. Other great examples appreciated.

The Gift of Fear by Gavin De Becker Great book that I would recommend to everyone, especially all women. 10/2020 Basic premise of the book is that we should listen to our very powerful subconscious brain when it picks up and gives us signals of danger and fear. It is there from evolution and is often correct. If you deny those danger signals you could be in serious danger. Women are much more intuitive than men - evolutionary reasons Charm and niceness are abilities. Charm is a directed instrument that has motive. Niceness is a social strategy that doesn’t mean a person is good. Pedophiles, etc. Too many details - People who want to deceive you often use a simple technique that has a simple name - too many details. Loan sharking (reciprocity) - Predatory criminals use generosity as a tool to put someone in debt. (Psychopaths can appear nice and help, etc) The intuitive signal of the highest order that should be listened to is Fear. No, is a complete sentence. If you are suspicious of someone and cannot avoid them you should look them directly in the eye to show no fear. Ok to hurt people's feelings and not be nice when you are picking up fear signals. Safety is more important than niceness.

Very Impressive DooDiligence. Congrats on finishing your 4th semester. Is the learning experience different at 58 vs 18? Why do you recommend taking a graded class vs just reading about subjects?

19. Use-It-or-Lose-It Tendency "All skills attenuate with disuse. I was a whiz at calculus until age twenty, after which the skill was soon obliterated by total nonuse." "I can relate to Munger’s lost calculus skill (among others). Daily practice improves skills like math, sports, musical instruments, writing, and others. Likewise, practice helps maintain it. Stop practicing and your skill suffers." ================================================================================================= 20. Drug-Misinfluence Tendency "This tendency’s destructive power is so widely known to be intense, with frequent tragic consequences for cognition and the outcome of life, that it needs no discussion here to supplement that previously given under “Simple, Pain-Avoiding Psychology Denial.” "In chemical dependency, wherein morals usually break down horribly, addicted persons tend to believe that they remain in respectable condition, with respectable prospects. They thus display an extremely unrealistic denial of reality as they go deeper and deeper into deterioration… One should stay far away from any conduct at all likely to drift into chemical dependency. Even a small chance of suffering so great a damage should be avoided. Addiction is destructive." An interesting really bad effect of drugs is an increased risk of Schizophrenia that generally occurs when people are fairly young (18-30), but actually can come out at ANY age. https://www.webmd.com/schizophrenia/qa/what-drugs-can-cause-schizophrenia ======================================================================================== 21. Senescence-Misinfluence Tendency "With advanced age, there comes a natural cognitive decay, differing among individuals in the earliness of its arrival and the speed of its progression. Practically no one is good at learning complex news skills when very old. But some people remain pretty good in maintaining intensely practiced old skills until late in life, as one can notice in many a bridge tournament. This follows with use-it-or-lose-it. Curiosity, continuous learning, and practice are great ways to delay the natural side-effect of aging."

I think Jurgis brings up some good points that the documentary was one sided and until the end PERSONAL RESPONSIBILITY was not really mentioned. Still - the points remains that: 1. You are likely to learn a lot from the documentary about Social Media, human psychology, etc. Social Media was much more manipulative than I realized. 2. It is a great exploration into the negative effects (likely suicide, waste of your life, high cost (not $), worse REAL relationships, of Social Media and will make some people have the Question: "Why the Fuck am I on this thing?" 3. Public policy concerns Watch is for your self to decide. The reality is that we can all be addicted to anything and it is a human vulnerability and there are a lot of people that get sucked into this and it's mostly not good in many ways IMO. Personally I hate Facebook, etc. I view it as a bunch of crap and barely look at it. All notifications are off on my phone and if someone really wants me they can call. The old timers with wisdom of many years say "They can wait." "Deep Work" by Cal Newport was great FYI. https://www.amazon.com/Deep-Work-Focused-Success-Distracted/dp/1455586692