Saluki

If you think the McAfee Software story was weird, just watch the first 5 minutes of this documentary about one of the founders of DHL.

Great quarter and CC. After the beating that JOE has been taking, and the nice pop today on Fairfax, FFH is now my 3rd biggest position. Like sports rankings, I hope that my other stocks see how well Fairfax did and try harder to move up the rankings in my portfolio. There is still 2 months until the end of the year, and I'd like to see them all put out their best efforts to make it to the playoffs.

I've heard Buffett say that in meetings his is careful not to telegraph his opinions because he doesn't want people tailoring their opinions to what they think his stand is. He doesn't want yes men, which is hard to avoid when you are in a position of power like that. To me it seems that Byrne (apparently he worked at a BRK subsidiary, Fechheimer), might have been normal when he had people reporting to him, but he also reported to others. Once he was running his own show at Overstock, and being successful, there might have been no one to check his ego. Ditto for Elon. In a powerful position surrounded by sycophants some people can still become Lincoln and others become Idi Amin.

Picked up a few shares of VRRM and POWWP. VRRM seems to be trading down way too much on a good quarter because of weakness in their parking business. POWWP is trading at ~$19 and it's a $25 cumulative preferred for a company with terrible management but no net debt, so I haven't been able to figure out the discount.

Sold my position in Enovix for a small profit. It's not worth the mental bandwidth to keep monitoring it, and management's surprise equity raise the day after the conference call, where it wasn't mentioned, makes me unlikely to make it a bigger position even if things start going right.

I overbought Google on the dip and have been trimming the past couple of days to keep at 20% weighting, which is probably the most I feel comfortable owning in any company that I don't personally control, no matter how good the prospects look. I also bought more OXY a month ago (right before it started really dropping), and have been selling my higher basis shares to offset gains and keep the same weighting.

I read a couple of books on JP Morgan, this is the better one, if I recall correctly. There is also an interesting book about his mentor, Drexel, called the Man Who Made Wall Street. There isn't a lot of info on Drexel (other than the university that bears his name, and the trading house tarnished by association with Milken) because he wanted his personal papers destroyed after his death. In that book, however, they mentioned some other books incorrectly describing some animosity between Morgan and Drexel. If you come across it, the author mentions that Morgan didn't along with the other Drexel (his brother?), but he liked and respected Anthony Drexel.

This is an interesting clip from the long podcast with Ackman and Lex Friedman. A few lessons can be distilled from this. The Herbalife short, like most shorting, is a bad idea. And if you saw the Herbalife documentary, he seemed to be getting his ego involved in the trade because of his grudge with Icahn. He admits that drug companies are very difficult to predict earnings and cash flows, but decided to invest in Valeant, and then stopped watching it, assuming it was in good hands. This would be disastrous. Buffett likes to talk about the one foot hurdles vs the 6 foot hurdles. It reminds me of one of the best soccer players on our team in high school. His girlfriend was in the stand and he tried one of those Pele kicks where you somersault backwards and kick the ball in. He missed what could have been an easy goal. Our coach told us "you don't get any extra points by doing it the hard way." Peter Lynch made 15x his money in Dunkin Donuts. KISS. As his fund grew, an hour here and there personally meeting with big investors, added up to hundreds of hours that he was marketing and not working on his investing. Think about WINning. WIN = What's Important Now. His very public struggles prompted Elliot to try to take advantage of the situation by exploiting the discount to NAV that his fund was trading at by shorting his concentrated book and buying his shares and trying to force him to liquidate and distribute cash. Only a loan from JPM (based on a good working relationship with them) helped save his company. He's seems much more humble in this clip, but now is on CNBC again and publicly backing Trump. It seems like his ego is the lawn that needs trimming once in a while.

Picked up some JOE. Might pick up some more and just sell the higher cost shares I have.

NEP and ENPH were both down double digits today, so after I finished crying into my coffee I bought a few shares on principle. Upon further reflection, I think I'll wait for them to stop dropping, then when I sell some stuff on Nov 1, to harvest tax losses, I'll buy some of these and sell in 30 days to adjust my cost basis before the end of the year. When life gives you lemons, after you accidentally squirt yourself in the eyes with it, go wash your eyes out and make some lemonade.

This book has been mentioned a lot but not reviewed, so I'll take a shot. Ergodicity is the concept that your expected returns will be close to the average of the population. So if the average adult male in the US is 5'9", then you are probably going to be close to that height if you are an adult male in the US. If something is non-ergodic, then you might find people who are 20' tall, or 4" tall, even if the average is 5'9". This is the problem that Howard Marks talks about when he says that a person who is six feet tall can drown in a river that is 2 feet deep, on average. What's really good about this book is that it's one of the few books that is good at explaining mathematical concepts without using a lot of math. Nassim Taleb is a terrible writer, but a good explainer when it comes to this. Peter Berstein, Benoit Mandelbrot and Michael Lewis are all good at explaining math with using formulas and math. So in thinking about non-ergodic things you come across, you must keep in mind that the average won't apply to you, and that in some things, like Russian Roulette, future gains can't make up for past losses, because you are out of the game. It's a great example because if you look at the payouts for something like the Kelly Criterion, there are sub-optimal bets, then a full Kelly Bet, then overbetting, which gives sub optimal returns just like underbetting. But underbetting won't wipe you out. Overbetting increases your odds of wiping out, then the odds don't matter because you can't make it up with future bets. So if you think about yourself in alternate universes, and you want a good outcome in as many as possiblle, then you probably won't hold Amazon since the IPO and get rich. Because in some universes, that would mean you held onto Netscape and went to zero. So trimming winners and rebalancing, is not optimal in some universes, but across all univeses, it increases your odds of a getting a return that matches the average: erodotic. It's okay to have suboptimal bets if it reduces the catastrophic risk. He uses the example of his cousin who is trying to win 10 skiing races. If he goes as fast and takes as many risks as he can, he has a 20% chance of winning each race and a 20% chance of breaking his leg. But if he breaks his leg on the first race, his chance of winning the next races are zero. So it's better to go with a 10% chance of winning, and 1% chance of wiping out because it increases the total number of races you can win. It's a short book but very readable and with good examples to explain the concepts without getting caught up in math. I would recommend it for this crowd.

I'm on the fence about jumping back into SWBI so I picked up a couple of LEAPs on it. Capex for the new factory is complete and there is no debt so unless they raise the dividend again, there is plenty of cash going forward for buybacks. Small add to ENPH to bring me back to 1% weighting.

This is largely correct, and the 50 state thing has been an underappreciated boon. People overlook that when it comes to China too. I'm too lazy to look it up, but last time I checked only 15% or so of gov spending from China was on the national level. Xi is good at tamping down local politicians who get too corrupt or too powerful, but the central government in China is not like the Federal government in the US. Despite the corruption, local governors have a lot more influence in Chinese growth and they have an interest in favoring projects that have a positive ROI, so their underlings compete for getting funding for these projects. Despite the amount that is eaten away by bureaucracy and corruption, you rarely see as many "bridges to nowhere" https://en.wikipedia.org/wiki/Gravina_Island_Bridge as you would in the US. Jingoism aside, the US has benefitted from several things that have made up for the terrible government decisions. The tech industry accounts for a huge part of global GDP, and those companies all got their start in the US. Mostly in California. The recent boon in fracking has delivered cheaper energy, and because the US isn't well set up to export natural gas, it is a cheaper feedstock for many industries, since the price is decoupled from the global price, and encourages things like specialty chemicals and fertilizer production, which might not be feasible compared to other countries without that. Moreover, a legal system that respects property rights and treats foreigners (and minority investors) the same as locals (or majority share holders) is a big benefit that is hard to replicate. Even in non-common law legal countries, the ones that have done the best (Japan, Korea, the Nordic States) are typically the ones that have such respectable legal systems and low levels of corruption. Even in Latin America, the country that is doing the best (graded on a curve) is Chile, which has low levels of corruption. All government contracts must be posted online and anyone can see who got paid what. Citizen journalists routinely expose fraud and bureaucrats are arrested when you find out that a contract was awarded to a company that is owned by another, which is owned by so-and-so who is the brother in law of a minister. And tourists from other countries like Columbia are routinely arrested because when they get pulled over by a cop, they do what they think is normal and bribe the cop. Here's someone who was arrested for trying to bribe a cop with US$50k. Given that US cops make about 10x what they make in Chile, do you think many cops in Boston or Chicago would turn down $500k? The US also has an educated workforce, and employers in one state can hire from other states and a stable currency. It's got a lot of advantages, but with enough mismanagement you can screw that up if you are not careful. California has been driving out the wealthy and it's hard to make things so bad that people don't want to live on the beach.

Sold half my position in Tsakos. I'm trying to reduce my margin before the election, and this was down so I can use the tax loss this year. I'll be trimming some other things soon.

"To update a famous calculation, if automobiles had advanced since 1960 at the same rate as computer chips, we would all be coming to work in cars that cost a penny, went 2000 miles an hour, and got great gas mileage -- about 1000 miles to the ounce." TJ Rogers (in 1992).

He's a bright guy and I enjoy the few interviews I've seen with him. By looking at his holdings, Coupang got on my radar and when it was half the IPO price I started nibbling, and when it turned cash flow positive I took a big bite and have been very happy with it. Even though the Soros alums seem to have different playbooks, it's really interesting to see the contrast between guys like him and Jim Rogers, Soros' first partner, who mentions that he was a founder of the Quantum fund, but never mentions him by name. And a couple of times he's alluded to Soros doing something unethical which made him decide to quit, because his southern pride couldn't take working with someone who do [whatever unnamed thing he did]. I do worry what would happen if we had another 2008 great financial crisis, or COVID crash, no matter who is in office. I did read a great book called The Other Side of Macro Economics by Richad Koo. [NERD ALERT!] It's the first good explanation I've seen about why Japan experienced it's lost decades of stagnation. Basically, the traditional financial models don't differentiate between developing economies (pursuing economies), fully industrialized ones, and declining ones. In an economy like ours (or Japan), if you get into a financial crisis and there is a lot of debt already in the system (from prior low interest rates), then you have a problem. Cutting rates doesn't stimulate the economy. If you bought a house (or a factory) at higher rates and it's value has fallen, cutting rates won't help you. You can't refinance a home for a lower interest rate if you are underwater on it. And a company that is losing money on past capex isn't going to borrow more money for new capex because they are trying to climb themselves out of a hole, not dig deeper. So in those instances, the government needs to be the borrower of last resort because there isn't enough private sector borrowing to re stimulate the economy. But that requires things like government spending on bridges, highways, etc, and that type of spending is not what blue candidates prefer (they prefer social spending) and it's anathema to red candidates (smaller government, except for the military). Yes, the market seems to pricing in a red victory. That might be good for companies like Google or Visa that are in the crosshairs of the DOJ. A new attorney general might be more soft handed. Great for Tesla, since Musk has been promised a role in the new government if the election goes that way. But what about a blue win (it's a dead heat now). If the banks and tech companies get hurt, which companies will benefit under a Harris administration? How would they respond to another great financial crisis? It's interesting to see that he was a holder of Nvidia. He sold out and lost that last 30-40%, but it seemed like a risky bet and he made most of the easy money and now has more cash to deploy. And a triple is nothing to sneeze at. A big change from the tech-averse version of himself that he was under Soros, and who switched and bought tech right before the 2000 crash.

I just watched Hardcore Henry and I recommend it. The plot is a little weak, but it's incredible that they can pull off a movie with this much special effects for $2 million. It's also has creative cinematography: the movie is shot with GoPro cameras and you see it from the POV of the protagonist like you are in a video game. More proof that you don't need Hollywood and $100mm budgets making mediocre scripts is Old Boy. Also $2 million budget and routinely makes it on lists by critics of best films ever made. If you watch the original, then watch the Spike Lee remake, you will see how quickly Hollywood can ruin something by taking something original and adding the standard Hollywood formula elements to pander to audiences or check some boxes.

Bought a little ENPH and KRKNF as they came down. Small tracking position in RTO and VRRM while i study them.

Bitcoin is weird because it has diseconomies of scale. Unlike factories making widgets that get more efficient over time, the more people use Bitcoin, the more expensive and energy intensive it is to do a bitcoin transaction on the main blockchain. Yes, it's more secure if more people use it, but it's also less efficient. It seems to have staying power, like Latin, then French and now English languages, because other people are willing to use it, not because it makes much sense. Since it's not Turing complete, it's difficult to hack, making it secure, but it's also of very limited utility, since you can't do other things like smart contracts with the other cryptos, most notably Ethereum. What I find ridiculous is the use cases claiming anonymity. It's not cash. There is a permanent record of every iota of it that you've received or payed out. And the methods to disguise it are basically money laundering, and the people doing that are being prosecuted. Razzlekahn hid for a while, but eventually the government can connect enough dots and figure out who you are if they try hard enough. A lot of the value in it is pure FOMO. Most of the crypto bros "investing" in it couldn't tell you the difference between two or three cryptos and they use Bitcoin and Blockchain interchangeably.

I would look at what the Robin Hood foundation gives money to. It's run by a bunch of hedge fund guys, like Greenblatt, and they use a metrics based approach to getting the most ROI on money invested. So they avoid charities like breast cancer which spread "awareness" and find stuff that is measurable, like charter schools. Some of the stuff that has the best ROI is not on most people's radar, like literacy programs for inmates. No one likes giving money to prisons, but literacy programs make it more likely that they will be able to complete other job skills programs and hold down a job when they get out. Some stuff might not be the highest ROI but it's okay if it's important to you. I used to foster dogs and I sttil give money to animal charities even if there are probably higher ROI things for society.

Picked up some ENPH on the dip to keep my position at 1%. It has run up to almost 120 and back down to double digits several times, so hopefully it will do it again and I can trim on the way up and repeat as necessary.

JOE got a direct hit from a category 5 a few years ago and it only got something like $5mm of damage if I recall. Milton went left to right from Tampa, which is pretty far south, so I'd be surprised if it got any damage this time around. As for Alico, if it weren't for the hurricane, they'd have to come up with some other excuse for why they can never make money.

Because I'm a masochist, and because I'm always looking for evidence that the trading curse has been broken, I looked at what happened to a company that I put in the "too hard" pile. According to Yahoo, it's up 200% in the past 6 months Somewhere, in a time long forgotten, I'm convinced one of my ancestors did something to get on the sh1t list of the village witch back in the old country, and this trading curse is working it's dark magic long after the offense has been forgotten.

Congrats! I'll pick up a copy. Too late for the book, but maybe for a follow up edition, I was always curious to find information on one that Alice Schroeder mentioned, but that did not make it into her book: Mid Continent Tab Company, which made those index cards for IBM machines, and he compounded at 30% a year on it. I haven't seen it mentioned in any book.

Picked up a few shares of NTDOY and put a limit order in for some more if it goes below $13.