Saluki

They are building up their navy and building artificial islands so that they can claim their territory extends farther into the ocean. I'm sure that based on their own statements, they plan on taking over Taiwan someday. But that timeline has probably been pushed back a little when they saw what happened to Russia. The sanctions and the poor performance of the Russian military equipment and tactics vs the western equipment and tactics probably made them rethink. China buys about 2/3 of it's foreign military equipment from Russia and they train their troops in the same top down manner vs the bottom up manner that relies more on non-commissioned officers being given an objective and using their judgment on how to achieve it. Taiwan has US weapons and they have western advisors training their military. I'm sure it's possible for China to go in tomorrow and brute force a takeover if they wanted to, but it would be really ugly and it's not a secret that companies like Taiwan Semiconductor may destroy their plants in a takeover to prevent China from taking it. Then you wont' have the technologically advanced economy that you admired, but a rock with a lot of angry residents/insurgents.

Israel-Hamas war live updates: Houthi targets in Yemen struck by US and UK (cnn.com) US/UK strike Houthis in Yemen. They are threatening to retaliate.

I find with the very small stuff it's very hard to get comfortable even after doing your due diligence. The CEO and board are probably people that you aren't familiar with and if it's, say, a $100mm company, you may not even find a lot of articles on them if you search. The answer to that may just be proper position sizing. Another check may be to see how long it's been around. Smith and Wesson is only a $600mm company, but it's been around since the 1800s. Some of these AI, legal marijuana, crypto businesses, drug patents, haven't been around long enough to know if they are looking to run a business or a ponzi scheme. I have a small position in a sub $100mm company, and it was hard to find any information about them, but it's been around since the 1950s, so if they were playing the long con, I think we would've seen it by now.

I'd say it's a business that is a melting ice cube. It's being disrupted by Lyft and Uber. You don't need to rent a car to get around town now (and worry about returning it and refilling the tank and getting it damaged and paying for insurance). Their is also a big outlay of capex/expenses every year because people don't want to rent old cars, so they have to buy them and sell them off after 3 or 4 years and buy more. If you want to see something fascinating, look at the average age of a truck in Uhaul, you will think it's a typo. They rent them for a decade, charge you insurance (which is through a company owned by them), and will charge you for "damage" to the truck, but won't fix it. They just circle the damage and if anyone buts a new ding on the same panel, they get charged again, even though they don't fix it. It's a much better business model, but I don't trust the management.

https://www.reuters.com/world/us-uk-forces-shoot-down-houthi-missile-drone-attack-red-sea-us-military-2024-01-10/ Largest attack yet. 21 drones shot down, but no ships damaged.

I'm just finishing up the audiobook on this and I highly recommend it to see a first hand account of the crypto mania during its peak. Like Michael Lewis, he was in the Bahamas and had extensive interviews SBF and the FTX people. He also spoke to a lot of the bankers, the Tether people, the doubters and the crypto bros. At one point he even got permission from his wife to buy a Bored Ape NFT so that he could get admittance to a party for NFT weirdos. The amount of money and delusion is staggering. Some of the business models appear to be less well thought out than the South Park underpants Gnomes episode where they Step 1 is steal the underpants, Step 2 is "?" and Step 3 is "Profit".

My library allows me access to the online version. For most of my holdings I print out the one pager and write my contemporaneous notes on the back and stick it in a file folder with 10-ks and other articles that I used for my research. It's been really great to prevent "thesis drift" or to pat myself one the back when the stock goes up for reasons that have nothing to do with my thesis. If I'm right for the wrong reason then I just got lucky and I want to keep track of that.

Yes, for reasons I don't completely understand, the Panama Canal uses fresh water from a nearby lake to operate the system and drought and climate change have depleted the water coming in. https://ctmirror.org/2023/08/27/the-panama-canal-is-running-out-of-water/ I've seen that they are allowing fewer ships through and charging higher rates. One beneficiary (besides shipping companies that benefit from higher charter rates if they have to sail around south america, appears to be the Canadian Pacific Railway. According to the article, they own half the railway that can be used to ship goods overland if you can't use the canal. Haven't looked at Railways, but it seems to be a good business for Berkshire. They were terrible until they consolidated and the regulations changed which allowed the RRs to charge higher rates. BRK timed it perfectly.

After the Houthi attacks in the Red Sea, some of the larger carries like Maersk announced they would sail around Africa and avoid the Suez canal. One of the reports I saw stated that insurance, at the time, on cargo ships had gone from 1% of cargo to 2% for non-israeli ships. Some people saw this as a move by Maersk, which had overbought containerships during the pandemic, to try to artificially raise rates by conjuring up a reason to avoid the Suez. After the US and others announced they were sending patrol ships, thing appeared to go back to normal, but now Maersk says they are avoiding the Suez again after the latest attack and the fact that Iran is sending what they call a destroyer (but is more likely what other people would consider a Frigate or possibly even a Corvette). https://www.cnbc.com/2024/01/02/oil-prices-rise-as-iranian-warship-enters-red-sea-.html What I find interesting is that 1% -> 2% insurance isn't a huge deal, but now that the west and the houthis and now Iran are sending ships to the region, maybe insurance companies can argue that it's a war zone and deny insurance claims altogether. Then that would dry up shipping even faster than the piracy issue. Talk about the law of unintended consequences: you send warships to make ships feel safe, but your warships are responded to by more warships and now the shippers want to avoid it because they will eat the loss if the insurers use your warships as an excuse. Anyway, thought this might deserve it's own post. Moving around Africa to Europe adds from 2 weeks to 21 days depending on the speed of the ship and since about 1/4 of ocean freight goes through this canal, it should have a big effect on shipping rates. Anyone want to chime in?

Added some CPNG and NTDOY

I started this book a few years ago and never got around to finishing it until now. It's a really interesting book because most of us, including me, know nothing about how the system works that brings power to our houses even though we are increasingly reliant on more electricity and the system delivering it is older and not well equipped for the needs of society. Even before climate change started making things worse, the grid wasn't well equipped. In the US about 30% of generation capacity (usually the oldest and least efficient power plants ) were available as stand by power for peak times when needed. Now it's about 10%. And the system was designed for large generators putting out lots of power from a central place. Wind and consumer solar putting energy into the wires at different dispersed points at unpredictable times and in unpredictable amounts is not what the system was designed for. No money for investing in the grid either because the money is made on the generating side. Utilities fight against renewables like solar because they want homeowners to buy power from them, not sell it. If they have to buy power at times they don't need it, then they become the backup power. As people leave the buying system, the remaining customers have to pay more which encourages them to install solar too, creating a death spiral. Ironically we are moving to micro grids for reliability, which is what the power system looked like in the early days of electric. People had small, local generation and the power did not travel far. An interesting book about a topic that there isn't a lot of stuff written about.

Yes, they have the opposite problem, too much cash. That Coke position was dead money for a decade but he held it and now it doesn't make sense to sell it because the basis is so low that it would be a big tax hit, and he would need to buy something else a LOT better to make up for it. Since he's got $150bln that he can't deploy, this would probably just be short term treasuries, which are paying about what the KO dividends are, but don't grow. I think the problem is also that we all have stories of trimming something and looking back later and regretting it. Bill Miller held onto Amazon and he's a billionaire. Lots of people bought it when it crashed to $1 and patted themselves on the back when they sold at $3 and missed the next $1000. When I first tried Greenblatt's spinoff strategy, I bought one that went up about 40% in a few months and sold it. It went nowhere for a couple of years then went 10x over the next couple of years. When Todd (or Ted?) bought that position in Dillards, it was a 10x, but it also went nowhere for a few years. It's hard to figure out which are the flowers and which are the weeds when you are just looking at some small green shoots coming out of the ground.

On a friend's recommendation I started listening to the Empire podcast. Season 1 is about the Brits in India, Season 2 is the Ottoman Empire etc. I'm only a few episodes in, but if you like history it's a good podcast to listen to on your commute.

Thanks. I'll add this to my queue.

I like behavioral economics books like Freakonomics, Thinking Fast and Slow, and The Undercover Economist. I was talking to a friend recently about the author of one of these books who used to write a Dear Abby type advice column called Dear Economist where people would ask life advice and he would answer from the perspective of an economist. I googled and saw that although he doesn't write the column anymore, he has the old articles on his blog. Here's a sample: Can a cheap wine be a winner at dinner? | Tim Harford Enjoy.

I'll give this a bump. I finished reading the book and it's definitely worth a look if you are the type of person who thinks about mental models. The biological processes in living organisms competing for scarce resources is a really interesting way to look at businesses and niches. Competition and cooperation amongst different species is similar to what happens in business contexts. Even the concept of parasites has parallels in the economic world (criminals, bureaucrats, people who game the welfare system etc) . The flawed early economics that you learn about, such as Marxism and the evenly rotating economy, are now taken with a grain of salt, but the concept of the rational person (homo economicus) still persists. Behavioral economics is chipping away at the traditional beliefs, but looking at it through a biological lens is a quick and easy shortcut. If you believe in a rational man, then there should be no such thing as someone who dives on a grenade to save his friends, or jumps in front of a car to save their child. But if you think of it from a biological perspective: which traits are more like to make the species survive, not the individual, then it's more logically consistent. I read quite a bit and learn a lot of facts from books, but it's rare that I read something that changes the way I look at things. This is one of those rare gems.

Yes, I agree. When Argentina's military junta was losing popular support they decided on their catastrophic invasion of the Fawkland Islands a war with the UK. They gambled that the UK would do nothing because those islands weren't worth fighting for. They were wrong. And those islands didn't even have oil. And speaking of Yemen attacking the wrong ships: https://www.reuters.com/world/middle-east/cruise-missile-yemen-strikes-tanker-ship-us-officials-2023-12-12/#:~:text=DUBAI%2FOSLO Dec 12 (Reuters,has shaken the Middle East.

I think that it's equally likely that there will disruptions in the short term that may make it more expensive. Yemen is trying to blockade Israel and Yemen isn't know for the accuracy of their intelligence agency, so if they start attacking ships that aren't going to Israel or owned by Israelis, it will either cause people to go the long way around, or escalate the conflict. It looks like Iran is trying to drag the US in by attacking ships by proxy and baiting the US to respond. There is also the Venezuela/Guyana thing. Guyana isn't a military powerhouse and Venezuela needs cash so they are claiming that they own the part of Guyana that has all the oil. It's possible that it could get sorted by the international courts or it's possible that fighting breaks out and disrupts oil shipments in both countries. Exxon is drilling in Guyana, if Venezuela takes over, and Exxon threatens to sue anybody who takes over their contract, there will be Venezuelans drilling that stuff and trying to sell it on the black market. Look at Venezuelan oil production over the past couple of decades and see if it's going up or down. Russia's shadow fleet is using some of the oldest, sketchiest tankers you've ever seen, and all it will take is one big spill in a place like Greece for people to avoid those rust buckets and the demand tightens up there too. In the long term I'm bullish oil, but weird stuff happens in the short and medium term. Like when it went negative during COVID.

Trimmed a few shares of GOOG (not that there is anything wrong with the company, but it's my largest position), and sprinkled it around in few very small purchases of BTI, SFL, KNOP, NEP, ENPH, and TAYD.

Biggest percentagewise was Pabrai's first book, which I already had a copy of. I was walking out of a used book store and I saw copy which was sitting on the clearance rack for $1. I bought it and flipped it on Amazon a few weeks later and cleared about $100 after fees and postage. Biggest win that made a difference in net worth was my first condo in 2000, right before the real estate bubble. It was a studio and it was selling for $70k, and I worked out that it was $100/month cheaper to buy in that building than to rent. The seller was a realtor who was retiring and had owned 6 units in different buildings for 20+ years and the price went nowhere, but was selling all of them. It was a few blocks from my job so the commute was perfect. I put 10% down and got a mortgage for the rest. I got a first time home owner credit from the city, and because I had only been at my firm for 4 months and had been a law student before that, my income was low enough to qualify for the credit and I got about $6k back. So I basically bought a piece of property for almost nothing down, like the old infomercials claim anyone can do. Three years later I sold it for $210 and cleared about $90k after fees and closing costs. Because I lived in it for over 2 years, the gains were tax free My only regret is not buying a bigger unit when it became available a few months later. I could have rented one and kept living in the bigger one. My law degree was also, in hindsight, a really good investment because it's still paying me every year, and grad school has gotten much more expensive over the past 20 years. There have been some terrible investments, but those were the good ones.

There was an article discussed on here recently about the strange cult like atmosphere and practices at Dalio's fund. If you want to take a deeper dive down the rabbithole, this is the book for you. Dalio's "Principles", which are ever changing and sometimes contradictory are the tenets of the faith, and there are strange show trials that are reminiscent of the communist era that occur constantly and are recorded and circulated as teaching examples in the search for what they call the truth. One manager told new recruits that the fund is truth machine that just happens to invest money, but that they could cure cancer if they wanted to . Somehow Ray ("Rainman" behind his back) takes part as judge and jury in many of these lengthy trials to get the "truth" of why someone let him down. Most are eventually fired or quit. There was the six week trial, orchestrated by Dalio, of the people in the facilities department so that he could get to the bottom of who ordered white boards that don't completely erase, but smear a little when you erase. Most offices solve this problem with a $3 bottle of something you squirt on the board, but this took a full blown trial by Dalio himself to get to the bottom of it. There was another trial about the size of the parking passes (the person responsible was fired, but they decided to keep the new parking passes anyway). And there was also the case of the person who didn't get it all in the urinal. Dalio had people monitoring the men's room and janitorial staff would go in and see if the person had peed on the floor and report back. They had the urinals looked at to see if there was something about the design that made them defective and did other things to reduce the chance of urine ending up on the floor. All this was overseen by Dalio himself. He hired former FBI director James Comey, who had five kids to put through college and was trying to justify his existence so he began bugging the offices and reading people's emails to try to get something on someone to fire them so he could look like he was doing his job. His high/low point was when he left a binder out with someone's name on it out in the open and recorded a low-level new hire opening it. He was fired. Imagine being an FBI bigshot and you have to set up traps like this or get to the bottom of who pees clumsily at the urinal. People are paid way over market, but they don't last long because you are expected to keep filing reports on your co-workers who fail to live up one of the Principles at any time. It's easier to kiss up and kick down, so the churn is constant. When Dalio realized that they weren't getting as many offers accepted, and many people were quitting, he blamed himself. Just kidding, he had a trial for the person in charge of hiring because she was obviously hiring the wrong people and her process was wrong. Yes, he did predict the 1987 crash. But he's made the same prediction numerous times before and after so he's predicted 15 of the last 1 crashes. He's kind of obsessed with Buffett and Steve Jobs and he tried to get Walter Isaacson to write his bio. Isaacson declined. A weird, strange look behind the looking glass. Highly recommend.

Sad day. I hoped he would make it an even 100, and hopefully attend the Omaha meeting one last time I loved his snarky sense of humor. In a book about him, there was a story about him driving a beat up clunker after his divorce drained him of money and he was working his way back from the bottom. His daughter was ashamed to be seem in that car and asked him why he drove such an ugly car. He said "I'm trying to discourage the gold diggers."

https://www.investopedia.com/top-25-stocks-in-the-s-and-p-500-for-november-2023-8380010 If you count GOOG and GOOGL as one company, the top 6 companies, all tech companies, in the SP500 index are currently 26.6% of the market. The next two are BRK and Tesla (also tech). Since I have a work sponsored retirement plan that invests in the index, I wonder if that means that I should just focus on much smaller stocks since I already have exposure to tech stocks via the index. Or maybe since the concentration is so high at the top, avoiding them completely means that I am betting against them, in which case why own the index at all? Or maybe the right answer is just to buy what is cheap relative to the others, whether I have exposure or not.

I think the market has rightly rewarded the tech companies that have some kind of moat. Snapchat is unprofitable and trades at 4x sales, while META is wildly profitable even after wasting tens of billions on Zuck's metaverse cartoon obsession, and META trades at 7x sales. Why? I don't use Snapchat, and while the millennials do, if something better came along (TikTok?) they wouldn't hesitate to stop using it. A good test for a moat is something that I heard Seth Godin mention: Would you miss it, if it were gone? If I woke up and Snapchat didn't exist, I wouldn't notice, but if META didn't exist, I would notice. Facebook, WhatsApp and Instagram are used by different people, but they tend to use them several times a day. Google? I would cry if Google was gone and I had to use Bing everyday. If YouTube disappeared and I had to use Vimeo, I wouldn't. There aren't enough people posting videos on there so I won't find what I'm looking for. MSFT? Your office runs on MSFT, you couldn't work without it. AMZN? The cloud stuff is invisible to me, but I do order on Amazon almost every week, and I go to WholeFoods even thought it's not the closest supermarket to me. So, I'm sure you can make a case for Nvidia or some other AI darling, but if you run it through the mental model of "would I miss it if it were gone?" then it cuts out a lot of the contenders. I'm sure Nvidia works great for AI or Crytpo, but as a person typing a search or using a service, how would I know what chips are on the backend? If someone else came along and started making chips "with more megaflops or less megaflops" then they could take market share and no one would notice besides the shareholders.