Cigarbutt

Recent article by Mr. Micheal Moubassin. https://www.bluemountaincapital.com/wp-content/uploads/2017/12/How-Well-Do-You-Compare.pdf "Allocating capital is nothing other than an exercise in comparison". Everything is relative, they say. A quote from the well known capitalist Trotsky: "Everything is relative in this world, where change alone endures." Happy 2018 to all.

I submit that many fingers are needed if looking for the "fault". The excess opioid prescribed/consumed is based on inadequate supply/demand issues. At some point, it was felt that acute and chronic pain were under-treated. The pendulum does swing. The first step is to recognize that there is a problem. Pain is not only a symptom or a sensation, it is an experience. Pain can be relieved but cannot be eliminated. Simple but not easy. But the downward spiral may start at the pharmacy.

You are probably referring to his "art of investing" talk. Liked it too. Refreshing and full of candor. Have you looked at the latest 13-F? https://whalewisdom.com/filer/giverny-capital-inc Often see common targets on the radar.

"Let's think about this logically. Suddenly these companies have a lot more money, paying less tax. But this could have been done ages ago. Seems to me there is too much money swirling around chasing assets or returned to shareholders via dividends and buybacks. What's it called when too much money is chasing fewer assets or money is indirectly helicoptered to people who own stocks?" Quote from above. "I have just one question - where is the money coming from?" Quote borrowed from the past. I don't know or I don't want to know? The nice thing about BRK is that the hurdle rate will stay the same even if there is more money in the wallet.

2017 has been quite unusual in terms of catastrophe activity. It looks like rates will go up some in "localized" markets. Doesn't smell like a hard market. http://www.swissre.com/media/news_releases/nr20171220_sigma_estimates.html https://www.insurancejournal.com/news/national/2017/12/20/474855.htm

As I get older, it seems that there are more and more things I don't understand. Maybe, all that is needed is a "different mental model"? https://www.bloomberg.com/news/videos/2017-12-18/blockchain-capital-sees-bitcoin-on-nasdaq-in-2018-video So, Bitcoin would be a Veblen-type good? With reflexivity, doesn't it apply both ways in terms of price action?

You are right to think that your posts are worth reading. But I see that the Pentagon has finally acknowledged their program after the thread that you initiated on UFOs . Perhaps, somebody is watching you. Here's a link from an unbiased source? https://www.nytimes.com/2017/12/16/us/politics/pentagon-program-ufo-harry-reid.html

Cameron, Why do you feel so strongly against incremental problem-solving? The working paper referenced by dowfin1 does a good job at describing how we may need both type of problem solving: insight ("real problem") and incremental. Insight problem solving is more the Eureka sudden 0 to 1 realization that Mr. Thiel describes. Outside the box, breakthrough and genius-type. I submit that a case can be made for entrepreneurs who combine known innovations and put the result in application. Analytical and motivated type. Think Ray Kroc. He did not invent anything specific (hamburgers and fries existed before) but he combined concepts and used scale in a very innovative way. I would tend to put Micheal Dell in the same category. I may see your point when creating more of the same is labeled as incremental.

Trying to bridge the macro with the micro. Technology can certainly be fun and exciting but I think that the net effect, on the kind of productivity improvements over financial engineering concept that Druckenmiller refers to, has been, so far, relatively marginal. Think of the following versus productivity -e-mails -people texting while driving -last time you went to the doctor/dentist/accountant/lawyer -last time you were involved in the deployment/maintenance of a "new" IT system So, a lot of potential but also a lot of time-consuming distraction. And let’s not talk about social media. It may be fair to say that the introduction of the washing machine had a more significant impact on down to earth real productivity than the iPhone(s). :) For those who say that the GDP number simply does not pick up the IT intangible input, I submit that when goodwill shows up on the asset side, the implicit earning power should be expected to manifest in a very tangible way down the road in a time value decay dependent way. I suggest that significant real productivity gains have not come to life in a big way so far. But they will. Despite the swamp, the central bank, the inequality, the demographic decline or whatever you think is hindering “progress”. Inevitably. 2 opposing views Techno-pessimist: www.nber.org/papers/w18315.pdf Techno-optimist: https://www.amazon.ca/Race-Against-Machine-Accelerating-Productivity-ebook/dp/B005WTR4ZI The latter is available, in its entirety, on the internet with minimal work. That’s what I call productivity. :)

In terms of new technology: "Nothing short of miraculous" For some reason: "It would be in productivity gains which don't reflect it." Some say the gains are not there yet. Some say the gains are there but not measured. Will someone explain? https://www.bls.gov/opub/btn/volume-6/below-trend-the-us-productivity-slowdown-since-the-great-recession.htm Looking at the official productivity numbers, one can feel it but we just don't see it. In the early 60's, the wage gap (chart 6) showed that the real earner was lagging to some degree. In the period from 2007-2016, the difference (gap) is comparable in absolute value and is still harvested by the capital providers. Productivity gains are below trend however. In the early 60's, an archbishop of Wales wrote to the London Times: "To a simple fellow like myself it seems that the lower prices which increased production makes possible would benefit everybody, but I recognize there must be a flaw in my thinking, for increased productivity has not brought—and does not seem likely to bring— lower prices. Presumably there is some good reason for this. Will someone explain?" Where are the common men's yachts? Will someone explain? Maybe the answer for the central bank is to start managing directly the rate of productivity gains. ???

From a Fast Company interview (few months back), the formal Dylan tour manager is quoted as saying: "There is hope. There are little signs of resistance everywhere." The outcome may depend on the institutions and in our capacity for self-renewal. Place your bets.

Thought experiment: For reference only look at page 6 of the pdf document: http://www.hydroquebec.com/publications/en/docs/comparaison-electricity-prices/comparison-electricity-prices-2017.pdf Let's say the Federal Reserve of Energy becomes a critical input for the supply of energy in North America and, in order to stimulate aggregate demand, decides to fix the price of electricity everywhere at 7,07. What happens to supply? I submit that there would be no shortage. What happens to private players in the industry? I submit that there would be a risk of capital misallocation What about unintended consequences for ignoring markets signals? I submit there are a few, including slowing of innovation and waste. I enjoy the low electricity bills but still, I wish that rates would reflect the true cost. The above Federal Reserve of Energy scenario would assume that the lunch is free.

Speaking of auto insurance and "surveillance", insurance contracts rebates tend to be given if you accept to use a smart app on your phone or have a tracking device installed on your car. The sales pitch now is that the info gathered by the insurer will remain private and protected ( ::)) and the process is put in place only to "encourage" good behavior. More or less like the social trust score concept put forward by the Chinese Politburo. My understanding is that these devices work quite well at first because you can improve your "score" almost instantaneously (Pavlovian response). But people tend to forget about it after a while. People may forget about the potential unintended consequences: the insurer may change the rules of the game along the way, the info may eventually be sold to ?, the info could be used against you in an accident fault discovery process, privacy matters, etc. The smart app is particularly insidious as studies have shown that many carry the "intelligent" device everywhere they go. The correlation between the location of cell phones and their owners is likely similar to the pattern that may be shown if you had the device implanted under your skin. Some say it's really clever. Perhaps too clever. Some insurers say it's good for society... My understanding is that Facebook used to have a privacy terms of service that said: 'We are not going to give your information to anybody." Now they make a significant portion of their income by entering into deals where your private information is used to market things to you. The story of Progressive is interesting as it was one of the first players in this field. At first, the program was used as an incentive to reward good habits. Eventually, the data collected was used to penalize "bad drivers". Of course, that shouldn't disturb you if you believe (like many surveys show) that you are part of the 90% who are better than the average. So, in China, the dang'an will be taken to the digital level. Disquieting. Gamified obedience? Apparently, from official documents, the social credit system will "allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step". Still trying to bring a powerful idea into one paragraph.

Not sure if this is terribly relevant but the General was a fascinating character and the following link helps to bridge with another thread that DooDiligence started on the circle of competence. http://theirrelevantinvestor.com/2017/12/12/lessons-from-the-general/ Ulysses Grant was clearly a superior mind in the military. Despite this unusual competence, he seemed to have a hard time assessing the value of certain men in his political life and with business endeavors. Know thy limits?

I seem to remember that Mr. Buffett said (or is reported to have said) that it would eventually be hard to justify to shareholders having something like 150 billion at the holding company. So, it is reasonable to expect a dividend if current circumstances are maintained. Also, I would say that, subjective elements aside, over time, the return of what BRK has become (huge) will have to eventually gravitate to the level of the overall market. Long term, one would expect also that the "culture" and the "system" will eventually wear off. So a dividend is likely to make more sense going forward. Of course, given the values built over decades, the reversion to the mean is not for tomorrow.

"I'd say it's more analogous to removing some of the weights that have been previously applied to the ankles of a healthy runner." From the posts, you may not appreciate how much I would like the taxes to go down. I have always admired people running bare-feet. It's called natural running.

Interesting character. The book is short and easy to read. I would say useful if the case studies described are relevant for your universe. He's with Greenhaven Associates. They report 19% average return since 1991. They seemed to hurt in 2008-9 but it's just a blip in the chart now. You may find the following relevant if you want more "color": http://www.valueinvestorinsight.com/pdfs/IssueTrialDE2012VII.PDF "Above the fray"

2017 was a year of missed opportunities. These days, navigating to understand more about cryptocurrencies. (for fun) Found this: http://rbadvisors.com/images/pdfs/Some_thoughts_on_2018.pdf I have not checked the validity of the arguments or the credentials of the author. So, the section on Bitcoin has unknown value to me. However, the author, referring to the 2018 outlook and the effect of corporate tax cuts, mentions: "Cutting corporate taxes is like giving a shot of adrenalin to a healthy patient." Why would one want to do that and what kind of positive effect would one expect? Now, I'm really confused. Will review fundamentals. Have always been against performance enhancing drugs.

More data points slowly emerging from catastrophe activity in 2017. Interesting reinsurance perspective from industry players. https://www.canadianunderwriter.ca/wp-content/uploads/2017/11/CU-20171101-Digital.pdf Relevant pages are 13-14 and 24-30. As bsilly mentioned: "surprise will come later when the actual claims get settled" and there seems to be some appetite for reinsurance price increases with the coming renewal process but the "tipping point" may be further in the distance because of the continued apparent abundance of alternative/non-traditional capital.

Appreciate what LC alluded to before concerning stuff you know from work, education or experience. But my (limited) experience has been different. Most good ideas have been found in the haystack (start with the letter A concept). As one builds knowledge in order to understand a firm, its industry and its prospects, it eventually becomes possible to define a threshold for competence. In the vast majority of cases however, the perimeter is reached before the threshold. I go along vinod1’s take on spotting the pearl first and then trying to figure out why it’s authentic. And this recognition (border of competence) has a lot to do with the “intellectual honesty” and “mental game” that Gregmal describes and that is likely not correlated with IQ and inversely correlated with greed (and pride). In some cases, the comfort zone may be reached when I would feel confident discussing the industry dynamics directly with management. So, looking for 1-foot hurdles. Opportunistic or simplistic? On mistakes To make mistakes is part of the game. When trying to gauge management, evaluating how mistakes are dealt with is determinant. Aiming to find the balance between confidence and humility.

MCO's are based on the notion of a network and that certainly appears to be part of the answer going forward. Concept: from recent verified testimonials showing that a simple visit to the emergency room meant a 629$ bill for a band-aid or a 2445$ bill for a prescription to relieve a back pain episode. (all within the deductible part of the "insured") The potential for improvement (value extraction for the capitalist) is lying in wait. I think Mr. Munger said that cognition, misled by tiny changes involving low contrast, will often miss a trend that is destiny. Industry insiders sometimes fail to feel the wind of disruption. Maybe more obvious when looking at a shiny red car but very real nonetheless. For those about to think outside the box, I salute you.

Reviving this thread. Realize that health insurers, pharma industry dynamics and workers compensation insurance may not the most popular topics here. “To get something you never had, you have to do something you never did.” So, planting a seed. For some reason, find these topics fascinating. Here's a link discussing some specific dynamic aspects of certain corners of the market, including the "managed" parts. https://www.insurancejournal.com/news/national/2017/11/27/472190.htm So what? Am reading "Grinding it out" describing how the business model of fast food met the American Dream. Looking for the new generation Ray Kroc to come around. They are at the gates.

I thought the picture was funny but that's nothing compared to comments (and calculations) found below. rkbabang, As a preventative move: the reply is not intended to be a challenge. It's just a joke.

Don't want to make a big deal out of this. But, in a parallel to investing, delineating facts from beliefs has value. Let's say: -The Lancet has published an article saying that vaccines cause autism. -On a widely followed Twitter feed, this "finding" is confirmed. So, vaccines should be banned? Respectfully submitted, there exist guidelines now (that may eventually change with new confirmed evidence) that are helpful if one wonders about the indications related to vitamin D supplementation.

With all due respect, "been writing about this for a long time" What do you mean by "this"? ?Skeletal health or extra-skeletal outcomes, including cancer, cardiovascular disease, diabetes (type 1 or 2), and autoimmune disorders? Do you base your "recommendation" on a review of the literature and do you account for appraisal of info using evidence-based guidelines? The questions are meant to be constructive.