— Mortimer Adler, How to Read a Book

Communication is an essential skill which is why so much time and energy is spent to teach children how to express themselves verbally and in writing. How else can we convey our thoughts and ideas to others?

The communication revolution of the past three decades started by making it possible for anyone to reach large audiences through writing. By the 2010s, plentiful bandwidth and mobile devices made video communication cheap and effective. Today, anyone with an internet connection can share ideas in a variety of formats. The field is crowded because there are no barriers to entry, but this also creates optionality for enterprising people. Being “discovered” is a very real possibility even in a crowded landscape.

The potential rewards of breaking through online has focused a great deal of attention on writing for public consumption. The bar for presenting ideas to the public should be high. On more than one occasion, I can recall sitting down to write about a topic and struggling to make progress. Usually, this meant that I either lacked underlying knowledge of the subject or had failed to spend enough time to come up with a defensible opinion. Having writer’s block is a signal to do more work or, perhaps more often, take a long walk to just think through an issue to the point where it can be explained to others.

But knowing what you want to express is just the starting point when it comes to writing in public, or at least it should be the starting point. The first draft of an idea usually exposes gaping holes that must be filled, and even when all the substance is there, what seems clear to the author might not be clear to the reader. Good writing, especially in the age of artificial intelligence, also has to embody a certain human style in order to be compelling. This does not come naturally to most writers. The bottom line is that writing in public involves many steps beyond knowing the topic and what you want to communicate.

I have published articles at slower cadence in 2025 than in recent years, but this only represents writing that I have shared in public. I have written far more in private than in prior years and simply made the decision to not hit the publish button as often. I cannot think of a single day this year when I have not spent at least half an hour writing, and on many days I write for several hours. Nearly all of this writing involves using a pen and a notebook. I have found that most of the benefits of writing in public extend to writing privately. I am forced to think through subjects more carefully and often discover that I do not really understand what I am writing about. This results in additional reading or contemplation.

Why have I chosen to write more in private? The main reason is that I have been spending much more time on my Great Books reading project and less time analyzing companies and investment opportunities. I find it much easier to write about investing, which is within my circle of competence, compared to the classics where I often feel like a total amateur. In 2024, I published many articles about the Great Books and each one took a great deal of time and effort, far beyond the point at which I felt like I understood the material.

Once you have built up a sizable audience, it can be intimidating to publish articles. This has become more of a psychological impediment with the increasing popularity of Substack and other platforms that automatically send emails to subscribers. In the old days of blogging, a writer could put something up on the internet and readers would have to find their way to the material. Today, publishing seems inherently more intrusive due to email distribution. When your email list represents nearly 20,000 people and you know that half of the recipients will actually open the email, the bar should be high before publishing.

Mortimer Adler emphasized that reading should not be a passive activity. At least for any book worth studying in detail, the reader needs to actively engage with the author. This can start with writing in the book itself, an act that many find objectionable but has the beneficial effect of putting the reader in direct communication with the writer. In the course of marking up a book, the reader starts to formulate his or her own ideas based on the subject the author is writing about. I find it very helpful to extend this practice to writing journal entries after a reading session. This does not need to take any specific form, but I prefer pen and paper to writing on a computer since there are zero distractions if electronics are out of the picture.

I have found time to do more meaningful writing in private by abandoning my old morning pages routine and doing more focused writing first thing in the morning. Over the past few years, I have started the day with some type of daily reading, usually from the Bible but also from notable thinkers like Leo Tolstoy, C.S. Lewis, and Timothy Keller who published material that can now be found in “daily reading” formats. Last year, I filled a two hundred page notebook based on observations from reading the ESV Study Bible. Each entry required about thirty to forty-five minutes and often revealed gaping holes in my understanding.

In addition to this morning routine, I have another notebook for writing about my Great Books reading project. I have filled several notebooks with entries covering each of the plays of Aeschylus, Sophocles, Euripides, and Aristophanes, in addition to entries about writings by Plato and Xenophon. It took about an hour or two to write a few pages about each of the plays. This helped solidify the plot in my mind and has been a useful reference. Just the other day, I read a reference to Hippolytus and only vaguely recalled reading the play by Euripides. My journal entry took a few minutes to read and fully refreshed my memory.

Writing about each of the plays of Ancient Greece for public consumption would require far more time than writing in private. I know this because I did write a few such articles in 2024, including one on The Oresteia that took a couple of days to complete. While the article may have added value for readers, and perhaps some people went on to read the trilogy for themselves, I am sure that my analysis and commentary was amateurish given that I am not a classicist or in any way specially qualified to write on the topic!

In contrast, I can write rapidly and (hopefully) provide value when it comes to topics squarely in my circle of competence. For example, I recently wrote about Berkshire Hathaway’s 2025 proxy statement. I maintain a spreadsheet that I was updating anyway for my own use and it only took a couple of hours to write the article. If it had required two days of effort rather than two hours, I would not have published the article.

The problem with writing about investments in public is that it comes with undesirable baggage. Several years ago, I wrote about the negative effects of such writing. For the most part, the problem comes down to human psychology. When you write about an investment idea in public, it becomes more difficult to change your mind when circumstances change that might invalidate your original thesis. In addition, giving away ideas in a competitive world is not exactly a brilliant idea, particularly in the small cap world.

What’s the point of publishing this article?

It is important to write whether the goal is to publish or not. The benefits of writing are so great that it is folly to fail to do so simply because you might not aspire to write for others. Reading widely is a prerequisite for wisdom, as Charlie Munger so often said, but it is important to read well which means reading actively.

Prior to 2015, when I was first exposed to Mortimer Adler’s ideas, I read passively and never marked up books except when I planned to write book reviews. When I look back at my reading log for earlier years, I recognize the books but often cannot remember much about them. From 2015 to 2019, I read more actively but did not actively write privately in journals, so I recall more of what I read but there are still many holes in my memory. Since 2020, I have a far better recollection of my reading and I think that I have been able to synthesize more ideas across books.

No technology is needed to start writing beyond a pen and paper, but few people seem to bother with this practice. In a competitive world, this is a good way to gain an advantage over your peers.

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― Heraclitus

Books that have enduring value yield additional insights when they are read multiple times.

In many cases, it is worthwhile to read a book a second time immediately, especially if the topic is very complicated or unfamiliar. But more often, it makes sense to put a great book on the shelf for a period of time before revisiting it. This gives the reader time to accumulate more life experiences and this alone will result in different insights being gained from the same words. Physical books never change, but the reader inevitably changes over years and decades.

Benjamin Graham died in 1976 and his final edition of The Intelligent Investor was published a few years before his death. This is the version that I read in the fall of 1995 shortly after I read Buffett: The Making of an American Capitalist by Roger Lowenstein. It is impossible to adequately explain how much of an impact these two books had on my personal investments over the years. I read both of them multiple times within a short period and took to heart the lessons they taught. As a result, I was able to sidestep the carnage of the dot com bubble that I would have otherwise surely succumbed to. Had I lost my early seed capital at the turn of the century, my current net worth would be much diminished.

We are fortunate to have two editions of The Intelligent Investor published long after Benjamin Graham’s death with additional commentary by Jason Zweig. The version published in 2003 featured much commentary applying Graham’s teachings to the dot com bubble which was a recent event at that time. The version published in 2024 focuses on the stock market gyrations following the pandemic bear market in early 2020. At some point, I might write up a review of the latest version, but for now I feel inspired to comment more generally on how the book’s message has impacted my thinking over nearly three decades.

When I first read The Intelligent Investor in 1995, I was twenty-two years old and a new college graduate. Despite my degree in business with a concentration in finance, I had scant practical knowledge about investing. The Intelligent Investor provided an intellectual framework that made immediate sense compared to my college textbooks. I immediately identified with Graham’s “enterprising investor” and was certain that I could compound my modest savings at high rates of return by following his methods. The 1973 version of the book had no commentary updating it to mid-1990s conditions but that was no great impediment and certainly did not curb my enthusiasm.

Two lucky real estate transactions, the accumulated savings of nearly a decade, and solid market returns put me in a far more secure financial position when I read the 2003 version with Jason Zweig’s updated commentary. If anything, I was a bit too arrogant about sidestepping the dot com bubble and ever more confident that I could beat the market as an “enterprising investor” even though I had a full time job in a field unrelated to investing. I was stepping into the same river, albeit with updated commentary, but my life experiences had not given me any humility regarding my capabilities.

I gained a good dose of life experience and humility in the 2008-09 market decline. There are pitfalls associated with early success, especially when that success was due more to luck than to skill. In early 2009, I began investing on a full time basis and my diminished net worth had to fund my living expenses in addition to serving as the base for my future wealth. To say this was a stressful period is an understatement, but I again went back to Graham and took to heart his prescriptions. Still committed to being an “enterprising investor,” I redoubled my efforts but became too risk averse in retrospect.

I learned from my mistakes and the past fifteen years have been successful, partly due to the overall rise in the market but also due to my temperament and the intellectual fortitude that came from taking Benjamin Graham’s principles seriously. Of course, Warren Buffett and Charlie Munger served as living role models and I expanded my reading far beyond Graham. While not earth shattering, the investment of time and effort as an “enterprising investor” created measurable value that provided a good degree of financial security.

Just as churchgoers hear the same Bible verses year after year and hopefully learn something new every time, I am finding new insights from The Intelligent Investor as I read through it this fall. Jason Zweig has added much value to the original text, which remains fully intact. But I’m a far different person at fifty-one than I was at twenty-two, both in terms of my financial resources and my motivation to be an “enterprising investor.” I am in more of a defensive mindset due to being older and having more to lose from mistakes.

Am I an “enterprising investor” or a “defensive investor” today? I find myself in the uncomfortable position of not being able to adequately answer this question. On one hand, there is a great deal of merit to knowing what is “enough” and turning one’s attention to other interests later in life. But on the other hand, I still enjoy certain aspects of the “game” of investing, as opposed to speculation. I like the process of understanding a business, evaluating its prospects, and trying to determine its intrinsic value. The issue is that I have no ability to do this on anything close to a full time basis, and I know that if I try to pick stocks, I am competing with fanatics who are willing and able to devote their entire lives to the process.

Benjamin Graham has been dead for nearly a half century, but he can still “speak” to me through the pages of The Intelligent Investor. However, he cannot tell me whether I should try to actively pick stocks or not, nor can he tell me what type of asset allocation to set based on my personal circumstances and level of risk aversion. He provides a menu of rational approaches and it is up to the reader to select the one that best fits. In doing so, the reader has to know himself above all else. Someone who aspires to be an “enterprising investor” who is not willing or able to put in the necessary time and effort is likely to veer unknowingly into speculation.

I doubt that my current reading of The Intelligent Investor will be my last. I will return to this book several more times in my life, especially as I get closer to old age. I might have difficulties regarding whether I should be “enterprising” or “defensive” today but there will be no confusion in twenty years.

I know that I will have no desire to pick stocks in old age and will prefer a simple, “set it and forget it” approach that can withstand whatever vicissitudes the world throws at me, especially if cognitive decline sets in. This is a real risk for people who were active in investing earlier in life since the person experiencing decline is often the last person to realize it. The possibility of building a considerable estate over a lifetime to lose it late in life with delusions of being an “enterprising investor” is not pleasant to think about.

Copyright, Disclosures, and Privacy Information

Nothing in this article constitutes investment advice and all content is subject to the copyright and disclaimer policy of The Rational Walk LLC. The Rational Walk is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

Its purpose is to clarify several formerly ambiguous points related to the issue of Presidential succession:

• Section 1 clarifies that when a President is removed from office by death or resignation, the Vice President becomes the President.

• Section 2 states that when the office of Vice President is vacant, the President will appoint a Vice President who takes office upon confirmation of a majority of both Houses of Congress.

• Section 3 clarifies the procedure that takes place to temporarily transfer power to the Vice President when the President decides to do so voluntarily for temporary reasons.

• Section 4 describes the procedure for the Vice President to take power when the President “is unable to discharge the powers and duties of his office” and refuses to transfer power voluntarily.

In recent days, there has been much talk about President Biden’s dismal debate performance on June 27 and whether it presented evidence of mental decline sufficient to derail his reelection campaign. However, the more immediate concern is whether the President has the capacity to remain in office between now and January 20, 2025. If the President lacks the mental acuity to be a viable candidate for President, it follows that he could very well lack the ability to serve out his term. At least for now, President Biden insists that he is not only staying in office but will stand for reelection.

Politics is a competitive business and the majority of politicians are focused on their self-interest. Democratic insiders have been quietly sounding alarms for days as background sources for articles. Yesterday, more than one article appeared claiming that influential Democratic Senators were pressuring the President to drop his reelection bid.

There’s a reason for the joke that people who need a friend in Washington should get a dog.

Assuming that efforts to force the President out of the election succeed, calls for his resignation will gain force on the grounds that a man unfit to run for reelection should stand down now particularly given the risks to the United States related to the war in Ukraine and heightened tensions in the Pacific.

It is almost inconceivable that the President would voluntarily resign. It is also highly unlikely that Section 4 of the 25th amendment would be invoked, or that it would succeed even if it is invoked. To understand why, let’s take a closer look at the text of Section 4:

Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.

Thereafter, when the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that no inability exists, he shall resume the powers and duties of his office unless the Vice President and a majority of either the principal officers of the executive department or of such other body as Congress may by law provide, transmit within four days to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office. Thereupon Congress shall decide the issue, assembling within forty-eight hours for that purpose if not in session. If the Congress, within twenty-one days after receipt of the latter written declaration, or, if Congress is not in session, within twenty-one days after Congress is required to assemble, determines by two-thirds vote of both Houses that the President is unable to discharge the powers and duties of his office, the Vice President shall continue to discharge the same as Acting President; otherwise, the President shall resume the powers and duties of his office.

Invoking Section 4 requires the Vice President to initiate the process or at least agree to the process. In addition, a majority of the President’s cabinet must vote to invoke Section 4. The Vice President owes her office to the fact that the President selected her as his running mate and even a cursory look at the list of cabinet officials shows that most of them either have longstanding ties to the President or are current loyalists. This is not true just for the Biden Administration, but for any administration. My view is that Vice President Harris has little loyalty to President Biden and would have no hesitation to invoke Section 4 due to her ambitions, but she would need to summon the support of many loyal supporters of the President. Attempting to invoke Section 4 and failing to succeed could destroy the Vice President’s political career within the Democratic Party if the attempt becomes public knowledge, so it is hardly a risk free proposition.

Assuming that the Vice President and a majority of the cabinet agree to invoke Section 4, the Vice President will immediately assume the powers of the Presidency as Acting President. However, the President can declare himself fit for office and reclaim power unless the Vice President and a majority of the cabinet again vote, within four days, to declare the President unable to discharge his duties. At this point, the Vice President would be Acting President and Congress would be summoned to assemble within forty-eight hours. Within twenty-one days of assembling, both Houses of Congress would need to determine, by a two-thirds supermajority, that the President is unable to discharge his duties. If Congress makes that determination, the Vice President continues as Acting President.

The bar to remove a President from power via Section 4 of the 25th Amendment is incredibly high.

The officials who must invoke Section 4 are all politicians who owe the President considerable loyalty. Even if they overcome the natural inclination to reciprocate the fact that the President placed them in their current positions, the President has the power to contest the decision. The officials in his administration must then reassert themselves and then the matter goes to Congress.

Once the matter is presented to Congress, removal of the President via the 25th Amendment must clear a higher bar than removal from office via impeachment.

A President can be impeached with a simple majority in the House of Representatives. A two-thirds supermajority is required to convict the President in the Senate, thereby removing him from office. In contrast, Section 4 of the 25th Amendment requires a super-majority in both Houses of Congress.

There are good reasons to make it quite difficult to remove a President from office against his will, either via impeachment or Section 4 of the 25th Amendment. The President, after all, has been elected by the American people and making it easy to depose a President would inevitably cause instability in the executive branch of the Federal government. The fact that it is difficult is meant to give pause to ambitious politicians in the Vice Presidency and the Cabinet who might otherwise be tempted to mount a coup. The risk of invoking Section 4 is very high and is unlikely to be used except in extreme situations. This is apparently exactly what the framers of the 25th Amendment intended.

The current situation is dangerous because President Biden is demonstrably diminished in terms of his mental capacity compared to his condition when he ran for President in 2020. As I wrote earlier this week in The Trust Deficit, his condition was covered up by his family, his administration, and compliant journalists for months, if not years. It is becoming increasingly likely that the President will be forced to withdraw his candidacy for reelection, but if this happens it will be against his will. It is nearly inconceivable that he would voluntarily resign from office even if his incapacity becomes worse over the next six months.

The 25th Amendment mirrors the original Constitution in terms of drawing general guidelines but avoiding overly prescriptive details, relying on the men and women in power at any given time to be comprised of mostly honorable people who put the interest of the country above themselves, at least in extreme situations. Unfortunately, this assumption no longer seems to be valid. Even if President Biden agrees to stand down from his reelection bid, America will be at extreme risk over the next six months given the very public humiliation of the President and the obvious fact that our enemies are quite aware of the situation.

Copyright, Disclosures, and Privacy Information

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Why? Surface-level knowledge of complicated systems can easily lead people astray. The human body is a complex adaptive system. It takes more than a decade to gain the knowledge needed to become a doctor. Much of the information available online glosses over complexity and leads people to unwarranted conclusions. It is no surprise that patients coming in with such “information” can be annoying.

The problem is that our medical system is optimized to treat disease states rather than to prevent these conditions in the first place. Doctors are not paid to gain a complete understanding of their patients while they are healthy. As a result, those of us determined to remain in good health have no choice but to educate ourselves.

I am a generally a skeptic of technology despite spending many years in the software industry. I have often seen technology applied for its own sake rather than in cases where it promises real improvements. In recent years, the overuse of technology, particularly among children, has caused massive harm to society. When it comes to health, we already know the basics regarding food consumption, exercise, smoking, avoiding excessive use of alcohol, and other obvious risk factors.

For most people, technology is not likely to improve their health because there is so much low-hanging fruit available. For a sedentary smoker eating fast food every day, the steps to vastly improve health are obvious. But for those of us who have already optimized the obvious areas, technology can be very helpful.

Running has been my primary form of cardiovascular exercise for twenty years. For most of those years, I shunned technology and opted for a simple Timex watch and fell into a routine of running the same routes again and again. I could calculate my average speed per mile and that seemed to be enough. My pacing “strategy” was always the same. I would run as fast as I could, always feeling like I was in a race against random people on the street. Competitive people like to compete.

While I gained some benefit from this practice and completed eight marathons and many other shorter races, this was a very stupid way to train. In recent years, I have read about how top endurance athletes tend to spend much of their time in “Zone 2” which is a relatively leisurely pace. Knowing your heart rate is necessary to accurately know which zone you are training in. This requires technology.

Last year, I received an Apple Watch Ultra 2 as a gift. The watch has the ability to display the user’s heart rate during exercise. Not surprisingly, my heart rate tended to be in Zones 3, 4, and 5 during most of my runs. I had to make a conscious effort to lower myself into Zone 2. At first, it was hard to keep myself in that zone and I would oscillate between Zones 1 and 3, failing to calibrate my speed to my desired heart rate.

Eventually, I figured out how to properly calibrate my speed to stay in Zone 2. I found it annoying and frustrating to run so slowly and hated being passed by other runners. But I kept at it and gradually the speed I could sustain while remaining in Zone 2 increased. I added interval training and found that I could sprint much faster than ever before. My VO2 Max, a measure of cardiovascular fitness, increased significantly.

Apple’s heart rate monitor uses optical technology known as photoplethysmography. It is sufficient for most situations but I found that it could stop reporting results during very heavy exercise, which was a bit disconcerting. It also does not report changes in heart rate very quickly. I purchased a Polar H10 heart monitor that uses a chest strap and is far more accurate, reporting the heart rate dozens of times per minute. This allowed for better insight into my heart rate during interval training.

Apple Watch Ultra 2 and Polar H10 are wearable technologies that add tremendous value for those trying to optimize their health. This optimization would be impossible without technology. And ironically, using this technology eventually provides a “feel” for the exertion associated with a particular heart rate so if I forget my devices on a particular run, I’m pretty sure I can still stay in my desired zone.

Another useful technology can be used to gain insight into metabolism. Diabetes and other metabolic disorders represent a leading cause of death as a primary factor and also greatly increase the risk of heart disease. There are studies that refer to dreaded cognitive conditions such as Alzheimer’s Disease as “Type 3 Diabetes.” Continuous Glucose Monitors (CGMs) help discover the patterns of food consumption that can lead to high variability of blood glucose levels, a risk factor for metabolic dysfunction.

I’ve occasionally used CGMs and, as a result, have a good idea of the types of food to avoid if I want to keep my blood glucose in a narrow range. Everyone knows that foods high in sugar are not healthy if consumed regularly. But the reaction to foods differs among individuals. I have found CGMs to be less accurate than heart monitors but still useful as a “biohacking” measure even though I have no signs of diabetes.

When speaking to doctors, it is important to demonstrate some real knowledge if the goal is to have an intelligent discussion. Doctors are wary of “experts” who spend five minutes online and think they can self-diagnose themselves. But I have found that saying just a few sentences that makes it obvious that one has done the work puts the doctor at ease and some even like to have more in-depth discussions. I found this to be the case during a recent cardiology appointment. Doctors who still resist speaking to informed patients as intelligent adults should simply be avoided.

Technology is not inherently good or bad. It depends on how we use it. It is obvious that addictions to social media and smartphones can be destructive, especially for children. But my opinion has changed when it comes to wearable devices.

I have discovered that my most important health risk factor is now lack of high quality sleep. I strongly suspect this because when my sleep quality is poor, my runs have to be slower the next morning in order to remain in Zone 2. For example, last night I only slept five hours and my average pace per mile, consistent with staying in Zone 2, was thirty seconds slower than earlier this week when I slept seven hours.

Sure, other factors may have been in play today but when you see a pattern over a period of time, the strength of a theory increases. None of this insight would be possible without technology. We should use it wisely.

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— Warren Buffett

The problems facing a subsistence farmer in 1500 were not very different compared to the challenges his great-great-grandfather dealt with a century earlier. In a static world that rarely changes, the problems faced by the typical individual will not vary much over a lifetime. Such individuals might still wish to expand their horizons, but doing so mostly boils down to an intellectual exercise rather than a matter of survival.

Over the past two centuries, the world has been in a nearly constant state of change. To successfully navigate such an environment requires some level of flexibility even for ordinary people. But for those who aim to rise to a high level in life, a multi-disciplinary education has become absolutely essential. Narrow specialization is often necessary, but it should always be layered on top of a broad base of knowledge.

Charlie Munger needs no introduction for the vast majority of readers. His lifetime spanned nearly a century, but longevity was not the secret to his wisdom which was already clearly evident in 1959 when he first met Warren Buffett. The two men quickly developed a relationship that can be characterized by a seamless web of deserved trust.

Warren Buffett has been an investor for over eighty years and has accumulated a tremendous understanding of a wide range of topics, but he has always been more intensely focused on business and investing. In contrast, Charlie Munger’s interests had a far wider range. This multi-disciplinary mindset is what gave him the “thirty second mind” that Mr. Buffett could turn to on nearly any topic under the sun.

How can we develop Charlie Munger’s thirty second mind?

The prescription is straight forward but it is not simple or easy. We must actively pursue a liberal multi-disciplinary education throughout life and only layer specialization on top of a sound foundation. Few might have the intellect of Charlie Munger, but we all have access to his roadmap.

We should all want to cultivate a thirty second mind that can absorb the essence of a problem and come up with insights based on deep fluency with how the world works. However, a different type of “thirty second mind” is far more common today. Nearly thirty years after the internet became mainstream, the majority of people in our society have almost completely lost the ability to concentrate for any length of time.

A typical TikTok video might be thirty seconds long. Since I have no desire to ingest the mental equivalent of crack cocaine laced with fentanyl, I have never installed TikTok on my phone, but I am inundated with these videos on my X/Twitter feed. They are vapid but sometimes entertaining. If you use TikTok, the algorithm quickly discovers your interests and will feed you an endless supply of thirty second videos that you will find interesting, amusing, or both. Before you know it, an hour flies by.

Entertainment of this sort is not benign. Those who indulge in a never-ending stream of such “content” are training their minds to expect regular dopamine hits on a very frequent basis. The feedback loop is instantaneous. The temptation to consume such content is ever-present because we carry our phones with us everywhere. We need never suffer a moment of boredom … or quiet contemplation.

Human beings crave feedback. If I broadcast some random thought on X/Twitter, within a few seconds I will have ample feedback. In contrast, I will not know whether readers found this article interesting until several hours after I hit the publish button. I admit that I will come back many times just to see how many “likes” I have earned. The situation would be even more extreme if I write a book. I would have to wait at least a couple of years between writing the first line and seeing the reviews come in. The truth is that almost no one has a purely inner scorecard.

When it comes to consuming content, worthwhile books yield their dopamine hits slowly over a very long period of time. When I read Fyodor Dostoevsky’s The Brothers Karamazov in 2022, it took several days and hundreds of pages before I really gained a sense of the value of what I was consuming. Even today, I know that I did not gain as much from that novel as I would if I choose to read it again. The same is just as true for great works of science, history, and philosophy. What at first looks like a block of stone is eventually revealed to be a beautiful statue, but only if you are able to focus.

I spend a great deal of time reading but I also waste far too much time using screens in unintelligent ways. By no means am I exempt from the “thirty second mind” of vapid consumption of meaningless content. When I indulge in this behavior, I find it much harder to think clearly and it takes a period of time of “detoxification” before I can sit down to read or write anything meaningful.

This was not the case when I was a college student in the early 1990s. We lacked connectivity, but the benefit was that it was not only possible but normal to disappear into a library for hours, completely cut off from the world. As an undergraduate, this was even more true in my case because I usually snuck into the law library where I would not even run into anyone I knew. Much of what I am able to accomplish today is the result of artificially replicating those conditions from three decades ago.

If a grown adult who fully understands the danger of this type of “thirty second mind” still falls prey to its seductions occasionally, how can we possibly expect children to cope with something like TikTok? A child has no understanding of the value of a multi-disciplinary mindset and views the world entirely through experiences he or she is having right now. A typical teenager today has been raised with electronics and has been using screens from the age of two or even younger.

I know that the cure is to disconnect because I have experienced the depth of understanding that can only come from focused, dedicated concentration for hours at a time. Most of today’s young people have never had that experience and, as a result, have no idea why it is important to seek out places for quiet study and contemplation.

The great hopes that society had for the internet in the 1990s have mostly gone unfulfilled. Rather than making society smarter and expanding our horizons in meaningful ways, most people use their devices for vapid consumption of banal “content.” In doing so, they will never develop the focus required to come anywhere close to Charlie Munger’s thirty second mind. Their children will be even worse off.

Those of us who recognize this toxic situation will accumulate an almost unfair advantage over our peers if we retain the ability to focus for long periods of time. This is not an easy process. The first step is that we have to stop deceiving ourselves.

“Above all, do not lie to yourself. A man who lies to himself and listens to his own lie comes to a point where he does not discern any truth either in himself or anywhere around him, and thus falls into disrespect towards himself and others.”

— Fyodor Dostoevsky, The Brothers Karamazov

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— Charlie Munger

Charlie Munger and Warren Buffett met in 1959 at a dinner party hosted by a mutual friend. They hit it off immediately and talked for several hours. That dinner launched one of the most famous business partnerships in history and, more importantly, a personal friendship that lasted for over six decades.

Many of us have experienced the thrill of hitting it off with someone immediately, whether in a business context, a friendship, or a romantic relationship. While that initial encounter is always exciting, such relationships often fizzle out over time. Either the individuals involved find that they do not have all that much in common after all or something happens to create an unrecoverable breach of trust.

The truth is that deep and lasting trust takes many years to build and can be destroyed very quickly. Trust is fragile at first and strengthens over time, as positive experiences build up like compound interest. At first, even with a high rate of “compounding”, the absolute level of trust remains relatively low. Slowly, it builds over time until trust is simply assumed in all contexts and you approach the idealized “seamless web of deserved trust” that Charlie Munger often spoke about.

Charlie Munger officially joined Berkshire Hathaway as Vice Chairman in 1978, almost two decades after he met Warren Buffett. However, they started participating in deals together in the 1960s. I suspect that a deep level of trust built up over time.

This line from Charlie Munger always got a big laugh:

“Warren, you’ll end up agreeing with me because you’re smart and I am right.”

— Charlie Munger

On the surface, this is an extremely arrogant statement. But if it is said by someone who you implicitly trust, and maybe if it is said with a wink, you know that the person is sincere and means well. I picture Charlie Munger pulling Warren Buffett aside during the negotiations for See’s Candies and using some variation of this line.

The purchase of See’s Candies by Blue Chip Stamps in 1972 was not the first deal Warren Buffett and Charlie Munger invested in together but it might have been the point at which the two men developed a truly seamless web of deserved trust.1 Mr. Munger is widely credited with convincing Mr. Buffett to pay more than he was comfortable paying for See’s. There is no doubt that trust played a big role in getting the See’s deal to the finish line. Of course, it has been a spectacular success story and changed the trajectory of Berkshire Hathaway over the subsequent half century.

Studying how others developed a seamless web of deserved trust is more than an intellectual exercise. Most of us would like to have such relationships in our own lives, both in a business and personal context. Unfortunately, I think that very few of us ever get to the level of trust that Warren Buffett and Charlie Munger had for each other. That level of trust is extremely rare. How can we improve our odds if this is the goal?

I am writing this article on New Year’s Eve, a day when many people are thinking of setting goals that they hope will fundamentally change their lives. Rather than adopting a resolution that will quickly be discarded, it might be better to consider how you can build a seamless web of deserved trust in your life. I’ll focus on how this might be done in a business or professional context.

It is very important to start young. Too many people in their 20s and 30s are hyper-focused on career advancement and making money. There is nothing necessarily wrong with this focus, but it is a mistake to ignore the need to start forming enduring business relationships that could last a lifetime.

Those who are working for people who have no integrity and are unworthy of respect should consider what the ultimate outcome is likely to be. If you are working for someone who is unethical with customers, suppliers, and other employees, why would you be immune to becoming their victim in the future?

One of two things is likely to happen: you will eventually find yourself on the wrong side of your employer and become a victim or, even worse, you will adopt the unethical behavior of your employer in a desperate effort to survive.

I am a firm believer that people almost invariably come to resemble those who they spend the most time with. If you spend time with toxic people, you will eventually either become a toxic person yourself or you will become a victim. There is no possibility of forming any level of trust in such a situation. There’s only a mutual sense of distrust with everyone being on guard against attacks. This is no way to reach your full human potential and it is also a very unpleasant way to live.

One of the hallmarks of toxic people is that they are manipulative and trap victims in a cycle of dependency. The pay could be somewhat above market levels or there could be perquisites, much like the many benefits that Gordon Gekko showered on the hapless Bud Fox in Wall Street. Ideally, the toxic boss wants his or her employees to become totally dependent and accustomed to the pay and benefits to the point where escaping becomes difficult or impossible. The “ideal” situation is for the employee to have an enormous mortgage, a spouse at home, and several kids in private schools.

Obviously, a seamless web of deserved trust cannot develop in such an environment. No matter how painful, it is important to extricate yourself. That does not mean that it is always prudent to do so tomorrow, but there should be a plan to somehow get out, even if doing so is painful. There will never be an ideal time to act.

Building a six decade relationship grounded in a seamless web of deserved trust means that you have to start in your twenties or early thirties, but all is not lost if you failed to recognize this as a young person. If Warren Buffett and Charlie Munger reached this level of trust by the time they partnered to buy See’s Candies thirteen years after first meeting, the same should still be possible for most of us.

Happy New Year!

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— Steve Jobs, Stanford Commencement, June 12, 2005

Why start an article with a quote that most readers have certainly read many times over the years? The truth is that I cannot think of a better encapsulation of a mindset that has become prevalent in our society. The notion of finding work that you love, no matter the economic cost, is a convenient one for what I refer to as the “education-industrial complex” because it can justify skyrocketing tuition as an “investment” in the future rather than a very real liability that can hobble young people for decades.

I do not doubt that Steve Jobs was sincere in his commencement address but we should be mindful of his audience. Stanford is one of the world’s elite universities and he was speaking to an audience of students who presumably aspired to do great things in their careers. If the goal is to do great things, you have to love what you do because such a career can be all-consuming. It is not possible to truly rise to the top of a field without a strong affinity for doing the hard work that is involved. If you are an ambitious person, you must find work that you love and you should never settle.

Do you wake up on Saturday morning thinking about diving into the latest issue of the Value Line Investment Survey, going page by page through each report, taking notes, and diving into the 10-Ks of companies that interest you? If so, that’s great, but you are in a tiny minority. If you have that level of interest and the requisite analytical skills, you might have a chance of competing with investors like Warren Buffett, Todd Combs, Ted Weschler, and others who live and breathe stocks every day of their lives.

Value Line is the modern equivalent of the Moody’s manuals that Warren Buffett went through from A to Z in his early years, no doubt with great enthusiasm. When I tried to do this with Value Line at the local library a quarter century ago, I dozed off somewhere in the public utility section. I had a decently paying job in the software industry involving long hours, and the last thing I truly wanted to do on a weekend was to dive into Value Line. I thought that the problem was the need to go to the library so I spent the money on a subscription but ended up with the same result.

The truth is that I never found my “life’s work” in the sense of finding an all-consuming career that I wanted to spend every waking moment pursuing. I entered the software industry in the 1990s because it was a hot field and seemed like a way to get rich quickly through stock options. The get rich quick part didn’t work out, but hard work in the industry over many years eventually led to financial independence through decent, yet unspectacular, cash compensation and very aggressive savings.

My plan after retiring from software was to pursue investing as Warren Buffett did in his early years. So, forgetting my less than exciting experience as a “weekend investor” years earlier, I bought a Value Line subscription and attempted to emulate Mr. Buffett, going through reports from A to Z. Again, this was a failure in the sense that I was often bored with the process. I enjoy reading about business and going through 10-Ks, but not constantly and not at anywhere near the level of intensity required to compete with people who would rather do nothing else on a Saturday morning.

Not everyone in the world is destined to make a mark on an industry, become famous, give Ted talks, and achieve billionaire status. The truth is that such things are actually quite unimportant when it comes to happiness, at least for most people.

But while money, status, and fame cannot reliably deliver happiness, lack of money can virtually guarantee misery. This is the unfortunate situation that millions of young people find themselves in who were lured into taking on large amounts of debt for a “college experience” that had little, if any, chance of producing the income necessary to service the debt and eventually pay it off.

The truth is that one should only take on debt for education if a cold blooded analysis of the economics justifies doing so. It can certainly make sense to take on a large amount of debt to earn a MBA or law degree from one of the top ten universities in the United States, assuming that a student is committed to aggressively using the degree and the connections it provides. But it makes no sense to take on massive debt to earn a degree in a field that has few, if any, prospects for earning a high salary.

I am convinced that the ultimate luxury that wealthy parents can provide for their children is the ability to do what they love without economic considerations. A wealthy family can pay for an education in any subject and financial security makes remuneration from the career itself unimportant. I can think of no greater gift and this would extend to gifts that fund “full ride” scholarships for truly exceptional young people in fields that offer limited economic prospects.

I’ll conclude by returning to this sentence from the opening quote:

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.”

For ambitious people, this is true, but I do not think it holds for the vast majority. Throughout history, people have worked in fields that they do not necessarily love. In traditional societies, a man typically worked in the same trade that his father worked in. Satisfaction in life generally came from family, faith, and a sense of community rather than ambition to rise to the top of a profession or to get rich. Unfortunately, traditional sources of life satisfaction are increasingly marginalized in a society driven by the tyranny of mimetic desire fueled by manipulative social media algorithms.

As society has advanced, many find themselves pursuing the very highest levels of Maslow’s hierarchy of needs. Steve Jobs was referring to self-actualization in his speech, assuming that lower levels of the hierarchy, such as safety and belonging, were already covered. This was a good assumption for his audience but not necessarily for the public at large.

Society should do a better job warning young people about the perils of going into debt. It is important to come up with a plan to earn a satisfactory living in professions and trades that are resilient to the vicissitudes of the modern economy. By avoiding the pain of financial duress, young people would find themselves further along on the path to happiness even if they don’t necessarily love their work.

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Warfare in the age of social media comes to our screens in real-time and what you see cannot be unseen. Unfortunately, social media is a cesspool when it comes to any discussion of such issues. After participating against my better judgment, I decided to step back and put my thoughts about these events into a brief article.

Israel is a country of nine million inhabitants with Jews accounting for approximately three-quarters of the population. It is not hyperbole to compare October 7, 2023 to September 11, 2001. Fewer civilians were killed in the recent atrocities, at least so far, but a far larger percentage of Israel’s population was taken. In both cases, the attacks were atrocious, but the September 11 hijackers killed most of their victims from afar. The butchers of October 7 did their deeds up close, no doubt looking into the eyes of the victims they raped, tortured, beheaded, and paraded in front of cameras.

The Hamas terrorists did not attempt to hide their war crimes. Indeed, they are proud of their crimes and want the entire world to see it and hope it inspires fellow travelers both inside and outside Israel to commit similar atrocities against Jews.

History did not begin on October 7, 2023. There’s a long history of war and animosity between Israelis and Palestinians dating back to Israel’s independence in 1948. Like many Americans, especially those with family ties to Israel, I have read about the country’s history and the conflicts. Reasonable people can disagree about the overall Israeli/Palestinian conflict, where the peace process went astray, and who is most to blame. However, no grievance can possibly justify what took place on October 7, at least not among those who consider themselves civilized human beings.

War is an inevitable part of the human condition. It always has been, and I believe it always will be. The price is too often paid by civilians who find themselves in harm’s way. Civilized societies make good faith attempts to minimize civilian casualties. Barbaric societies are indifferent to civilian casualties. Terrorist societies seek to maximize civilian casualties.

Hamas, and all those who support and incite it both within the Gaza Strip and elsewhere, fall squarely in the category of terrorists and should be treated as such.

In the aftermath of the attacks, various far-left political organizations in the United States felt that it was appropriate to give an unqualified endorsement to Hamas. This includes multiple student groups at Harvard, Tufts, and other prestigious universities as well as so-called “social justice” organizations. It is impossible to not see the underlying antisemitism of many of these groups. No matter what their thoughts might be on the Israeli/Palestinian situation, they had full knowledge of the atrocities committed on October 7 and freely chose to align themselves with terrorists.

Many are now trying to walk back their comments, but the internet never forgets.

I often think about how an advanced society such as Germany in the 1920s and 1930s could have supported the extermination of millions of people. The “slippery slope” analogy is overused, but the reality is that acceptance of genocide is a progression from soft bigotry to explicit bigotry to vilification to persecution to pogroms, and eventually to the “final solution” of men like Adolf Hitler. When you see your society start down such a slippery slope, it is the duty of all citizens to call it out forcefully.

I have a special responsibility to speak out on this topic given that one side of my family were victims of the Nazis. I would not be typing these words today if my mother’s family had not found a way to get the forged papers required to escape from the Nazis in 1940. After years as refugees very far from home, they eventually returned only to find the evils of communism and, finally, sought refuge in Israel. So, this is personal for me in many ways, but even if I had no such ties, as an American there is a duty to use one’s platform to speak out against outright evil.

Perhaps some readers feel that this brief article is venturing “outside my lane”, but I alone get to decide what my “lane” is.

I have typically avoided political topics except those directly related to business and investing and I have no intention of writing on foreign policy on a frequent basis. However, there are times when it is not only appropriate but necessary even if certain readers might choose to unsubscribe. The link to do so is at the bottom of this email.

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Find Your Life’s Work

Until very recently, the vast majority of people struggled to achieve the first two or three levels of Maslow’s hierarchy of needs. In traditional societies, a man’s work was heavily influenced by family and custom. His father might have been a butcher, a tailor, a blacksmith, a farmer, or a shopkeeper and chances were good that a man would follow in his father’s footsteps. Most women had their life mapped out for them from the moment of birth. Individual agency was uncommon if not unknown.

While the same is still true for billions of people today, those of us in the United States and other wealthy countries have the ability to chart our own course in life. The problem is that young people are put in a position of having to make career decisions long before they have any meaningful life experience. This has been particularly true in recent decades with children of middle and upper class families being sheltered from the world throughout adolescence and, in many cases, well into adulthood.

One pernicious trap is to select a career based mostly on earnings potential. An even worse trap is to do so thinking that you’ll only have to work for ten or twenty years before having enough money to “do something else.”

It makes no sense to spend the majority of your waking hours during your twenties and thirties on activities that you do not find inherently interesting simply to amass enough money to do “something else” in your forties and fifties. As someone who has written about personal finance for many years, I am a proponent of reaching financial independence at an early age, but with an important caveat: you should do so in a line of work that you find interesting enough to happily do indefinitely, if needed.

I make this recommendation based on personal experience. It has been close to fifteen years since I was able to give up a paycheck doing work that I did not find interesting or enjoyable. I have no regrets regarding gaining financial independence, but I do regret that I was too myopic in my twenties to grasp what now seems obvious.

Two Razors

A philosophical razor is a rule of thumb, or a mental heuristic, meant to be helpful in navigating life. A rule of thumb is a generality that cannot apply to all possible situations but can still be very useful when applied with a dose of common sense.

Hanlon’s Razor advises us to never attribute to malice that which is adequately explained by stupidity. In other words, we should give people the benefit of the doubt when they act in ways that we find objectionable. This principle is in keeping with the golden rule of treating others as we would hope to be treated ourselves. Human beings are flawed creatures and we should not automatically assume malice.

Occam’s Razor advises us to default to explanations that are simple rather than complicated when the simple explanation adequately describes a situation. This does not mean that the simplest explanation is always the correct explanation, just that our default assumption should start with the simplest explanation.

In many cases, Hanlon’s Razor and Occam’s Razor coexist in harmony. The simplest explanation for the objectionable things that humans do can often be attributed to stupidity or ignorance rather than malice. However, there are cases where we must struggle with which razor to apply, as I observed a few years ago:

There is an interesting tension between Occam’s Razor and Hanlon’s Razor that is worthy of some thought. There are many events in life where one encounters a negative situation caused by another person and, often, the simplest explanation is that this person intended to do us harm, and perhaps this explanation is what we should adopt according to Occam’s Razor. However, human beings are fallible and there are more good people than evil people in the world. Hanlon’s Razor counsels temperance and the benefit of the doubt.

How are we to choose?

Obviously, we must use common sense and life experience to view events in context. As we gain more information about a situation or an individual, we can refine our views and revoke the benefit of the doubt that we initially assumed. Much has to do with the potential cost of being wrong.

In human relationships, whether professional or personal, one should give the benefit of the doubt when initially offended. If you believe that most people are decent, as I do, then you are most likely dealing with ignorance or stupidity rather than malice.

However, when a pattern of behavior develops over time that strongly indicates malevolent intent, our views must adapt along with the behavior. If someone is a habitual offender, then Hanlon’s Razor ceases to apply and Occam’s Razor takes over. The most likely explanation for malign behavior over a period of time is malice and we should recognize it for what it is.

Most people are good and decent but a significant percentage of humanity is not. Whether such individuals were born that way or developed due to their environment and upbringing is a good theoretical question. But there is no doubt that there are people in this world devoid of normal human empathy who fall along the varied spectrum of narcissistic, sociopathic, and psychopathic tendencies.

Efforts to fix a situation should depend on the importance of the relationship but, past a certain point, the only rational action is to cut ties with people who have proven that they are operating with malice rather than ignorance or stupidity. Trying to change people with such tendencies is an exercise in futility. Unfortunately, most people must experience this for themselves at least once. It cannot be fully understood vicariously.

The Futility of Hatred

Disliking/hating tendency is one of the psychological misjudgments that Charlie Munger has warned us about. The problem is that we appear to be hardwired to hate those who commit a trespass against us. It is natural to respond to an attack with hatred, but this usually results in just flailing about in a rage and resolves nothing.

Even worse, hatred has the potential to boomerang and cause severe damage.

Consider the words of Richard Nixon as he left the White House for the final time after resigning the Presidency in disgrace:

“Always give your best, never get discouraged, never be petty; always remember, others may hate you, but those who hate you don’t win unless you hate them, and then you destroy yourself.”

— Richard Nixon’s farewell address to White House staff, August 9, 1974

Every time I post this quote, I receive responses from people who either think that the comment was insincere or that Nixon is not to be quoted under any circumstances. Obviously, I disagree. If you want lessons on a topic, it’s best to go to those who know the topic best, and Nixon was ultimately destroyed by his own flawed psychology.

It is easy to say that we should avoid hatred, but surely it is true that there are cases where people do horrendous things. Terrible crimes are committed every day. Many actions fall short of crimes but have awful effects regardless. In such cases, the first instinct might be to hate the person responsible for causing misery.

But it is possible for two things to be true at the same time: We might be “justified” if we hate someone AND it is still in our best interests to refrain from hating.

Rather than descending into hatred, we should strive to reach a state of indifference. The stoics tell us that our minds can be our refuge even in the midst of ongoing terrible suffering. But most people simply cannot achieve this sort of detached indifference while damage continues to be done. It is usually necessary to remove yourself from the immediate damage in order to move from hatred to indifference. This means disassociating from the object of hatred as quickly as possible.

While it may be possible to mold the character of young children or even adolescents, I believe that it is exceedingly rare to be able to “change” a fully formed adult, particularly those who exhibit traits on the sociopathic/narcissistic spectrum. If you find yourself in a job where you are dealing with such a person, find another job. In personal relationships, cut ties after an individual’s true colors are clear.

Remaining in toxic situations, whether personal or professional, only increases the risk of hatred and, ultimately, self-destructing. One reason financial independence is so important is that it makes it much easier to disassociate from toxic people.

The passage of time does not automatically result in wisdom but experience does count for a great deal. In 1972, Charlie Munger was forty-eight years old when he convinced Warren Buffett to buy See’s Candies at what seemed like a full price. Sam Walton was forty-four years old when he founded Wal-Mart in 1962. For both men, years of experience, including many hard knocks, preceded massive financial success.

When it comes to financial compounding, you get most of the benefits in later years as the snowball gains momentum. The same is true for life experiences. Many of these experiences cannot be understood vicariously but some can, so it is worth trying to explain the pitfalls to those who might be inclined to listen.

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The best teachers have an infectious enthusiasm for their subject and view their work as a higher calling rather than just a way to earn a paycheck. I was lucky enough to have great teachers in business which sparked my interest in finance and investing. But I was not so lucky in subjects such as history and literature. I did what was needed to scrape by in high school. In college I became an expert at acing tests, but going through the motions doesn’t result in any lasting benefit.

I still remember attending my first Berkshire Hathaway annual meeting in 2000. I kept wondering about “the other guy” up there on the stage with Warren Buffett. His wisdom was obvious from the brief comments he made. Warren Buffett and Charlie Munger are both great teachers. But Charlie Munger’s interests are broader and extend far beyond the business world. I am not sure where I first read the following quote but it made quite an impression:

“In my whole life, I have known no wise people, over a broad subject matter area, who didn’t read all the time — none, zero. You’d be amazed at how much Warren reads, and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”

— Charlie Munger

The point is pretty simple. If you want to be wise, you must read. And you must read widely. And you must read constantly.

No excuses.

Why is this the case?

It is not complicated: Human beings live a finite life and we are products of the times in which we live. If our entire view of the world is based only on what we see and observe during our life, we have failed to understand and benefit from all of the life experiences of the people who came before us.

What could be more breathtakingly stupid than to insist on relearning all of the hard lessons that prior generations had to figure out for themselves?

During my formal education, I was in a hurry and I only cared about learning subjects that were in some way related to business and investing. History, literature, and the humanities flew by in a blur as I did what was needed to ace tests and promptly erased what I learned from my memory after finals.

This experience was the polar opposite of the St. John’s College great books program. But it is never too late to begin and in recent years I have spent an increasing amount of time focused on reading.

The Decline and Fall of the Roman Empire by Edward Gibbon is, of course, one of the great books, and a few years ago I worked my way through this six volume classic. When I came across the following passage, I immediately thought of Charlie Munger:

The Germans, in the age of Tacitus, were unacquainted with the use of letters; and the use of letters is the principal circumstance that distinguishes a civilised people from a herd of savages incapable of knowledge or reflection. 

Without that artificial help, the human memory soon dissipates or corrupts the ideas intrusted to her charge; and the nobler faculties of the mind, no longer supplied with models or with materials, gradually forget their powers; the judgment becomes feeble and lethargic, the imagination languid or irregular. 

Fully to apprehend this important truth, let us attempt, in an improved society, to calculate the immense distance between the man of learning and the illiterate peasant. The former, by reading and reflection, multiplies his own experience, and lives in distant ages and remote countries; whilst the latter, rooted to a single spot, and confined to a few years of existence, surpasses, but very little, his fellow-labourer the ox in the exercise of his mental faculties. 

The same, and even a greater, difference will be found between nations than between individuals; and we may safely pronounce that, without some species of writing, no people has ever preserved the faithful annals of their history, ever made any considerable progress in the abstract sciences, or ever possessed, in any tolerable degree of perfection, the useful and agreeable arts of life.

The Decline and Fall of the Roman Empire, Volume 1, p. 242-243

Individuals who do not read leave on the table all of the lessons of human history. They insist on learning everything from themselves rather than vicariously through the experiences of others. This is what Gibbon observed when he wrote this passage in the late eighteenth century and his words ring just as true today.

But more troubling than the effect on any individual is the effect on a society where the population is oblivious of history. Such a society will fall victim to the same pitfalls that plagued people who didn’t even know how to read or write!

As Mark Twain said, a person who won’t read has no advantage over one who can’t read. And a society that fails to learn from history is doomed to repeat many of the same mistakes.

Obviously, our early twenty-first century society is mostly literate and never before has more information been available to more people than today. But the availability of information is of no value if people fail to take advantage of it. Clicking on the latest tabloid headline or clever meme on twitter does absolutely nothing other than indulge in the endorphin boosting practice of context switching. We flit from one headline to the next which fosters the illusion that we are getting more informed even as we become more blind through an ignorance of the past.

Perhaps this is too negative. Clearly, a subset of society is very much interested in learning from the past and leveraging all that the internet has to offer.

Charlie Munger jokes about the “cultists” who come to hear him speak, but the fact that the vast majority of his followers are on a real quest for wisdom is no joke at all. There are people who have seen the light when it comes to learning from the past, but I suspect the percentage of people who fall into this category is in the low to mid-single digits at best. This gives those of us who take history seriously a major competitive advantage.

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People who are highly skilled at their craft almost always make it look deceptively easy. When I lived in New Orleans, I often had the opportunity to see highly skilled musicians playing in all kinds of settings, from the street corner to small dive bars to large stages at festivals, as well as during the annual Mardi Gras parades. Even the street performers almost always played well and once you got into the smallest of clubs the music was top notch. The absence of mediocre or poor musicians created the deceptive impression that it must be easy to pick up an instrument and just play.1

Of course, in reality, most of the great musicians have been playing since childhood. They live and breathe their craft every single day and it almost seems as if the music plays through them automatically. We don’t see the much larger group of aspiring musicians who tried an instrument at some point and failed to distinguish themselves. In the highly competitive world of New Orleans music where even the most highly skilled artists have trouble eking out a modest living earning a share of bar revenue and tips, there is no room for any sort of mediocrity. The mediocre simply disappear.

What’s true in music is also true in sports. Early in one of the marathon courses I have run, there is an out-and-back segment that extends for a few miles. I am a decent runner, but not among the fastest, with a typical pace of eight minutes per mile. On that out-and-back segment, I was able to see the leaders running back toward me. As I labored along the course, runners on pace for a sub-three hour finish made it look effortless as they seemed to just sail along. Of course, they were actually putting in a huge amount of effort and perhaps some of them were also genetically gifted. Either way, they made what is impossible for 99% of runners look ridiculously easy.

Highly skilled investors often make their accomplishments look easy. There is no better example than listening to Warren Buffett talk about investing at Berkshire Hathaway annual meetings. His commonsense approach to investing makes so much intuitive sense. He came of age before the existence of computer systems to aid investors and he has never seen the need to use spreadsheets or fancier models when it comes to selecting businesses or securities to purchase.

He makes it sound like anyone can do this!

Mr. Buffett is not purposely trying to make his craft appear easier than it is and I do not think that he makes statements out of any kind of false modesty. What he does is indeed simple for him, but this is because he has had an intense interest in business for over eight decades in addition to an extreme level of intelligence. He has spent the vast majority of his waking hours for decades thinking about business and investing. Everything he says about investing must be taken with this background in mind.

The fact that Warren Buffett can make decisions without spreadsheets does not mean that I can do so. I need to organize data in a way that I can understand and I cannot conceive of doing so without using a computer. If I lost access to Microsoft Excel, I would have to use paper and pencil. I cannot rely exclusively on my mental storage and computation capabilities. I suspect that this is true for the majority of investors.

Warren Buffett actually does use a “spreadsheet” because his mind is capable of digesting large amounts of data and putting it into a usable form that he can rely on to make large and complicated decisions.

His mind IS the “spreadsheet”.

Warren Buffett can print out a 10-K on a Sunday, mark it up as he reads, and he simply retains the key figures. And then he can be ready to act on that information and on his insights on Monday morning. But that’s not the entire story. He has decades of background knowledge that the figures in the 10-K are layered upon and the combination of all of this knowledge is what makes it possible for him to act quickly.

When most of us wake up on a Sunday morning on a nice spring day, chances are that sitting quietly in a chair flipping through the latest Value Line page by page is not at the top of our wish list for how to spend the weekend. Nor would most people eagerly anticipate digging into some dense two hundred page 10-K written by lawyers.

Don’t get me wrong, I do enjoy thinking about investing and I read my fair share of financial reports. But it is not a passion in the same way that it is for Warren Buffett. I might want to have that same level of interest in investing but I simply do not.

My primary motivation when it comes to investing has always been to secure my financial independence. I have no desire to professionally manage money for others. It is not how I want to spend every waking moment, and I would not want to compete professionally with fanatics who are able to emulate Warren Buffett’s intensity.

I am convinced that the people who truly reach great heights in life are those who are fanatics when it comes to their chosen activity. Sure, these people might have genetic gifts that make their endeavors more fruitful but even the most gifted person will not succeed without both a driving passion for their activity and a great deal of hard work. Sometimes their success comes at the cost of many sacrifices elsewhere in their lives.

The runner born with perfect genetics to run a marathon in two-and-a-half hours will not achieve that objective sitting on the couch eating chips and drinking beer.

The most musically inclined artist will fail without daily practice for years. Sitting on the couch listening to John Coltrane will not make anyone a great saxophonist.

Even Warren Buffett would not have succeeded as an investor if he had not put in all the time and effort over eight decades, day after day after day, going through every page of the Moody’s manual and reading hundreds of annual reports every year.

With the cost of education reaching astronomical levels, some people roll their eyes when they hear advice urging young people to go into a line of work that they will enjoy and are passionate about regardless of remuneration. However, the core of that advice is good for anyone who really wants to reach the pinnacle of their profession or craft. You cannot reach the top if you do not have genuine interest in what you’re doing. Sure, it is possible to earn a living doing work that you find boring, just going through the motions, but I doubt that such people can ever rise to the very top.

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Your privacy is taken very seriously. No email addresses or any other subscriber information is ever sold or provided to third parties. If you choose to unsubscribe at any time, you will no longer receive any further communications of any kind.

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— Blaise Pascal

On August 24, 1814, British troops routed American forces in Bladensburg, Maryland and proceeded just a few miles into the heart of Washington D.C. where arsonists targeted public buildings including the White House and the United States Capitol. The burning of Washington was the only time that the nation’s capital has been captured by a foreign power since the Revolutionary War.

In the early nineteenth century, Washington D.C. was a nascent city with very few amenities. Today, the Supreme Court and the Library of Congress are located in grand buildings across the street from the Capitol, but during the War of 1812 these institutions shared space with Congress. When the Capitol burned, the country lost a priceless intellectual heritage in addition to a physical structure. Books were rare and very expensive, and the Library of Congress lost three thousand volumes.

In 1814, Thomas Jefferson had been retired at Monticello for over five years after completing his second term as President. Jefferson was a man of the enlightenment and he was obsessed with books throughout his life. By 1814, he had assembled the largest library in the United States, far larger than the collection of the Library of Congress prior to the fire. In 1815, Jefferson agreed to sell between nine and ten thousand volumes from his private collection to the United States for $23,950. Jefferson no doubt wanted to restore the country’s collection of books for the benefit of Congress but he also was heavily in debt and certainly needed the money.

Jefferson’s library served as the cornerstone of the new Library of Congress and the volumes were no doubt well used for decades. Today, the collection is displayed in the Thomas Jefferson Building of the Library of Congress and it is well worth a visit.

Books were rare and expensive during Jefferson’s time, but at least those with adequate wealth had access to the best information and wisdom known to mankind. This was thanks to technology — specifically, the invention of the printing press in the fifteenth century. Without the printing press, it is hard to see how the age of enlightenment could have been possible. Jefferson would have recoiled in horror at the thought of a world without printing presses and books.

One can only imagine Thomas Jefferson’s reaction if he could be resurrected to observe our world today. Attempting to project political views of the early nineteenth century to modern times is fraught with peril, but as someone who has read extensively about Jefferson’s life, I can say without reservation that he would love the internet. The ability to access all of the information and wisdom of human history for free or at low cost from the comfort of his study in Monticello, or perhaps on an iPad while sitting in the gardens would thrill and endlessly fascinate him.

In 2023, the median age of the United States population is about 38.6 years which means that over half of the people have little recollection of the world before the internet. Those of us who are a decade older than the median represent the last generation that grew up in an environment where knowledge was primarily in a physical form rather than online. Although privileged with far easier access to information than people who lived in Jefferson’s time, research in the 1980s usually involved reading words printed on paper after locating material in a library. Often, research involved microfiche, a technology that seems ridiculously archaic today.

The early internet expanded access to information mostly for those who took the trouble to look for it. Internet access involved sitting down at a computer, logging into a relatively slow internet provider, and then obtaining information with the help of primitive search engines. The rise of Google vastly improved the ability to locate information efficiently. This seemed like a paradise compared to conditions only a few years earlier. Investors were especially blessed with this development. No longer was it necessary to send out for annual reports or go to the library for most research!

Three developments in the 2000s and early 2010s fundamentally changed the internet:

• Apple’s iPhone pioneered the touch screen interface that made mobile devices far more flexible than those that featured a physical keyboard. This created endless possibilities that were soon harnessed by third party software applications, soon to be known as “apps”, that proliferated throughout Apple’s ecosystem and were quickly emulated on Google’s Android operating system.

• High speed internet access on mobile devices made it possible for developers to provide users with far more than textual information at reasonable speeds. The proliferation of wifi via home broadband coincided with the spread of wifi in public places and cell phone plans with progressively greater speeds. Video became a ubiquitous part of the internet, particularly on mobile devices.

• Social media applications spread from desktop computers to mobile devices, allowing users to be in constant contact with friends, but also facilitating the consumption of an endless stream of “news”, broadly defined. Early social media typically presented users with a reverse chronological ordering of content, creating a never ending “now” in the mentality of millions of users.

The combination of mobile devices, high speed internet, and social media arguably had a far more profound impact on society as a whole than the early internet period from 1995 to the mid 2000s.

The default state of life in 2023 is to be connected to the internet constantly, and increasingly this is expected by our families, colleagues, and friends.

Many people no longer have any time or space where they are alone with their thoughts for more than a few minutes, perhaps while in the shower every morning.

As I consider the accomplishments in my life, the common thread is that they were the result of many hours spent in a room by myself reading and thinking, often followed by discussions with others working on similar problems who also had spent much time alone seriously contemplating the subject.

Very little can be accomplished as an individual without entering a state of flow, a condition that is utterly impossible when someone attempts to multi-task on many activities at the same time. When it comes to initiatives involving collaboration with others, any serious subject requires much discussion, either in person or in writing. Serious debate subjecting one’s arguments to the criticism of other intelligent people is a necessity for anyone who hopes to get wiser over a long lifetime.

As I am writing these words in March 2023, we have just gone through two weeks of chaos in the banking system. We have witnessed runs on banks in the age of instant connectivity on handheld devices driven by narratives promoted on social media. Many of the narratives were disingenuous, but it seems like far more were simply clueless and driven by panic that spreads like wildfire on platforms like Twitter.

It takes more than 280 characters to explain what happened to Silicon Valley Bank, whether the government should provide bailouts, why bond prices decline when interest rates rise, or the role of deposit insurance in our banking system. These links are to a subset of the articles that I wrote over the past week in an attempt to shed light on what took place from my perspective. They took many hours to research and write because the subjects involved are inherently complicated. They also take ten or twenty minutes to read rather than ten or twenty seconds.

The version of the internet that we have today does not encourage any sort of introspection or consumption of content that takes more than a few seconds to read. If you are reading words this far down in an article, you are the exception rather than in the majority. Twitter and other social media platforms have algorithms designed to amplify “hot takes” and controversy, not to encourage intelligent discussions. In the ever present “now” of social media, you’re only as relevant as your last tweet.

Human beings are unlikely to give up the quick dopamine hits that come with constant connectivity and viral social media. Although this development is bad for society, it presents an opportunity for those of us who are able to harness the vast power of the internet while sidestepping the snares that appear all around us. This is easier said than done, but there are many potential solutions:

• Browse, curate, and consume. A few years ago, I wrote an article about how to stay informed amid the noise of the internet. In order to deal with recency bias, it is critical to separate consumption of information from browsing. Rather than just reading the latest interesting article you come across, save a number of articles. At a later point, rank them in order of interest and consume the articles in ranked order, preferably after disabling your internet connection.

• Think Weeks. Bill Gates is often given credit for the concept of a “think week”, but going into relative seclusion to be alone with one’s thoughts is hardly a new concept. It is very difficult to actually go off-grid for any length of time these days, and it would be agonizing to do so during a period of fast breaking news. I have occasionally taken time offline just to think. I might not be able to do so right now, being fascinated by the developments in the banking system, but a think week is definitely in my future sometime later this year.

• Avoid “debates”. When I was in high school, one of our required classes included the basic principles of speech and debate. To say that what passes for “debate” on Twitter and most message boards falls short of rigorous debating standards is a huge understatement. Whether due to nefarious intent, limited intellectual capacities, or just plain ignorance, straw man arguments and other “gotcha” tactics proliferate. A favorite tactic is for an interlocutor to distort your argument beyond recognition and then demand that you defend their distorted argument. Ignore such people and resist their bait to keep engaging. Such tactics would be laughed out of any high school debate contest. Discard this noise from your life.

Returning to Thomas Jefferson, I suspect that he would find some of my concerns to be overblown. He would focus on the positive aspects of the internet and simply ignore what doesn’t further his own purposes. He would not have written this article because he would have been too busy reading or writing letters. Then he would have had ample time to take a walk in his gardens, or survey the countryside on horseback.

Benjamin Franklin would probably be the king of memes and practical jokes on Twitter. John Adams would be likely to get into testy debates and baited into endless arguments. Alexander Hamilton would subscribe to Twitter Blue so he could write threads consisting of a dozen 4,000 character Tweets. But it is almost impossible to imagine Thomas Jefferson using Twitter at all, except as a source of information from accounts he trusts. He would use Instapaper to collect interesting articles, download and print PDFs, disconnect from the internet, and start reading.

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CGM systems are intended for individuals who need to manage diabetes but have increasingly been used by those who are just interested in optimizing their overall metabolic health. Fortunately, I am in the latter category. I have no markers of diabetes, but became concerned about maintaining good metabolic health after researching kidney failure, the dialysis industry, and DaVita last year.

Using a CGM provides instant objective feedback about lifestyle choices and makes it easy to associate cause and effect. Initially, I maintained my normal routine and just observed the patterns on the app. I then conducted experiments including eating foods that I knew would spike glucose levels to see how quickly the spike would normalize. Over the past week, I dialed in a diet and routine that minimizes spikes and variability which should theoretically reduce my risk of problems in the future.

This type of instant feedback is a good thing to the extent that it helps someone improve their health. There is no hiding your decisions from the CGM. If you eat a candy bar, drink a soda, or eat a pint of ice cream, the numbers will reflect that decision. You can lie to yourself but not to an implanted medical device.

Now that I know my reaction to various types of foods, exercise, and sleep patterns, I feel no need to use a CGM routinely. Not only would doing so not result in much additional insight but I know myself well enough to realize that I would start trying to over-optimize my life in ways that are likely to become irritating and dysfunctional.

A CGM provides useful and immediate data. But many other types of instant feedback can be highly misleading, especially with addictive substances. Alcohol is a great example. It is common to feel invincible after a few drinks even as our mental and physical faculties are eroding. Smoking cigarettes provides very positive instant feedback while eroding health over long periods of time, so slowly that the damage can hardly be perceived until it is too severe to be ignored. Drinking five Cokes per day feels great but will harm your health unless your name is Warren Buffett.

The list goes on and on.

Financial markets provide instant feedback that is far from useful except to the tiny minority of traders who have the skill to play the market and win. Stocks trade every weekday for six and a half hours. Many commodities and derivatives trade constantly. A verdict is always available after you transact if you take the feedback seriously.

If you are a long term investor, quotes provide instant feedback that is of absolutely no value and almost never has anything to do with the long term quality of your decisions. It is possible to make a terrible decision based on fundamentals that results in terrific short term results, and it is equally possible to make a great long term decision that looks awful in the short run. Value investors have the scars to prove that.

Instant feedback is ever present for managers and other employees who are granted stock based compensation. Constant quotes during market hours serves as nothing but a distraction and employees who tie their perceived financial well-being to quotes are likely to be distracted and perform poorly in their jobs when the stock goes down, especially if their job has no measurable impact on the company as a whole.

While a CEO with a pay package in the eight figures might be able to view stock quotes with detachment, the same is not true for most rank-and-file employees. When the stock rockets up, employees will be distracted with dreams of how to spend their newfound wealth. When the stock plummets, hopes and dreams plummet as well.

Instant feedback is there for anyone who wants it.

There are no great ways to combat the harm of instant information in financial markets. Value investors who have internalized the message of Benjamin Graham, Warren Buffett, Charlie Munger, and others for decades can ignore quotes but that’s tiny minority of investors.

It is obviously better to zoom out when evaluating your results and it is important to find something to anchor to psychologically other than quotes. It is far better to just slow down and realize that instant feedback in markets almost never provides useful information and can do great harm.

I suspect that I’m preaching to the choir, but these principles are not well understood in general. Human beings overweight instant feedback because doing so was a necessity not very long ago in our evolutionary history. It is up to us to understand the situations where instant feedback continues to be useful in our modern world, when instant feedback is just meaningless noise, and when it can actually be harmful.

Easier said than done!

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Copyright and Disclaimer

Nothing in this newsletter constitutes investment advice and all content is subject to the copyright and disclaimer policy of The Rational Walk LLC.  

Your privacy is taken very seriously. No email addresses or any other subscriber information is ever sold or provided to third parties. If you choose to unsubscribe at any time, you will no longer receive any further communications of any kind.

The Rational Walk is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The Rational Walk grew rapidly in 2022. Total readership, counting both free and paid subscriptions, increased by 75%, with most of the growth taking place in the second half of the year. Whether you have been reading since the inaugural issue three years ago or just signed up recently, thank you for subscribing!

In 2022, I published the following content on The Rational Walk:

• 57 Weekly Digests

• 55 Articles

• 11 Business Profiles

It has been a very busy and productive year! The following articles are all free to read and, based on my subjective opinion, represent the best content published in 2022.

Top Twenty Articles of 2022

• The Futility of Hatred, January 3, 2022

• The Anchoring Effect, January 19, 2022

• Warren Buffett’s 2021 Letter, February 26, 2022

• What Does Buffett See in Alleghany?, March 21, 2022

• Necessary Inefficiency, March 29, 2022

• Auto Insurance Competitive Dynamics, April 6, 2022

• Business Lessons from Tom Murphy, April 8, 2022

• The Trouble with FIRE, April 23, 2022

• How Berkshire Could Deploy $6 Billion, April 26, 2022

• Kidney Failure and the Dialysis Industry, May 14, 2022

• Buffett’s Philanthropic Record, June 15, 2022

• Survey of the Title Insurance Industry, June 27, 2022

• Wealth Clarifies, July 17, 2022

• Survey of the Automobile Industry, August 4, 2022

• Berkshire Hathaway’s Distorted Quarterly Results, August 7, 2022

• Dempster Mill Manufacturing Company, August 29, 2022

• Greg Abel’s Bet on Berkshire Hathaway, October 7, 2022

• Observations of a New Costco Member, October 18, 2022

• A Closer Look at Berkshire’s Q3 2022 Operating Income, November 7, 2022

• Exemplars, November 17, 2022

Plans for 2023

“On the one hand you have … is that information sort of wants to be expensive because it is so valuable — the right information in the right place just changes your life. On the other hand, information almost wants to be free because the costs of getting it out is getting lower and lower all of the time. So you have these two things fighting against each other.”

Stewart Brand, November 1, 1984

When I started Rational Reflections, my plan was to use the newsletter to send out links to content written by others while continuing to publish all of my original content on The Rational Walk, a website that I started in 2009. However, I soon learned that many readers prefer to receive all content via email, so Rational Reflections gradually evolved into the main distribution channel for all of my writing.

Stewart Brand, the founder of Whole Earth Catalog, was ahead of his times when he said that information wants to be free. The cost of distributing information is now essentially free. Authors can create a Substack publication and distribute content to thousands of subscribers at no cost other than their time. Of course, time itself is not free. Time is actually our most finite and precious resource, far more so than money.

As I began to spend most of my time on Rational Reflections, I started to think about how to create a sustainable economic model and decided to create a paid tier for the newsletter in April. Many longtime readers immediately subscribed even before it was clear precisely what they would receive in return. I am very grateful for that vote of confidence! By May, I settled on a strategy of publishing Business Profiles which would represent the main value proposition of a paid subscription. This helped to more than triple the number of paid subscribers between May and December.

There’s a balancing act when it comes to deciding what kind of content to keep free for the widest possible distribution and when to use paywalls. Almost all writers want to be read widely for various reasons, most often because they have a message that they want to send into the world to a broad audience. At the same time, it is necessary to build a sustainable economic model that can justify the time commitment.

Here is my current thinking for walking this tightrope next year.

The following types of articles will remain free for all readers in 2023:

• Weekly Digest will remain free and essentially unchanged. However, I will attempt to find sponsors for Weekly Digests in 2023. I will never accept sponsors unless I am OK with what they are selling, nor will I provide subscriber lists. It will be entirely up to subscribers whether to click on sponsor related material. If your organization is interested in becoming a sponsor, please let me know.

• Educational articles of high value to a broad audience will remain free. For example, my article on I Bonds in December 2020 alerted many readers to a safe way to earn returns above the typical 0% bank account. My article on the dialysis industry published in May opened some eyes to the terrible diabetes epidemic.

• Book reviews and quarterly “What I’ve Been Reading” recaps will remain free. The exception will be if I cover a book that is closely related to a business profile or other premium content, or is unusually specialized or detailed in nature.

The following types of content will be restricted to paid subscribers in 2023:

• Business Profiles require a significant time commitment and will be restricted to paid subscribers with the exception of occasional free samples. Free subscribers will receive introductions for profiles and have access to Twitter threads, such as this one on Progressive, where I provide introductory material. I am targeting at least ten profiles for 2023, which allows for the freedom to consider one or two profiles that might require research that cannot be completed in a single month. However, my goal remains to publish one profile per month unless I can really justify that taking more time will deliver commensurate value to subscribers.

• Articles other than those targeting educational content or book reviews will be paywalled. This will be especially true for any kind of article related to companies that I’ve discussed in the past in business profiles.

• I will paywall content on Berkshire Hathaway. I am reluctant to take this step, but as specialized content that takes considerable time to create, I feel that paywalling such material is justified. All of the Berkshire articles that appear in this year’s top twenty free listing above are the type that will be paywalled in 2023.

• Discussions using the Substack comment feature will be restricted to paid subscribers for all paid content. In addition, if there is interest, I could open up threaded discussions or chats with paid subscribers during webcasted events such as the Berkshire and Daily Journal annual meetings. I often receive emails from subscribers and while I cannot commit to in-depth discussions on a one-on-one basis, some type of community discussion forum is possible if there is interest.

Whether to pay for a subscription or not is a personal decision and hopefully the information above will help you decide. Purchasing a paid subscription provides access to additional material but also helps to support development of all free content. Of course, if a paid subscription is not for you, please stay on as a free subscriber and refer your friends and colleagues as well!

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Your privacy is taken very seriously. No email addresses or any other subscriber information is ever sold or provided to third parties. If you choose to unsubscribe at any time, you will no longer receive any further communications of any kind.

The Rational Walk is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

— Ecclesiastes 9:11-12

It is tempting to attribute success to hard work and failure to bad luck, but the reality is that luck exerts both positive and negative influences on the human experience. It is certainly possible to make very good decisions that turn out poorly due to bad luck, and it is equally possible for terrible decisions to work out well due to good luck. Arguably, the latter is far more damaging in the long run.

In the field of investing, sequence of events counts for a great deal, and I would argue that experiencing early success might turn out to be unlucky in the long run. This is because early success can fool us into thinking that the result came from skill when it really came from luck. As confidence grows, without any real justification, it is easy to make larger and larger bets using faulty logic before the eventual denouement shatters the illusion. Russian roulette can yield favorable results for a while.

The destruction of the FTX crypto exchange this weekend has dominated headlines, and has negative implications for the entire cryptocurrency “ecosystem” which is ultimately dependent on the confidence of market participants who are trading assets that have no cash flow and cannot be valued using traditional methods.

For those of us who have avoided the cryptocurrency field in recent years, it is tempting to fall into a self-congratulatory mode as we witness the wreckage, even engaging in some schadenfreude as the chaos continues. But aside from it being in poor taste to take pleasure in the pain of others, we should stop to think about the lucky influences in our lives that shaped our investment approach.

Someone on Twitter asked people to name the book that most influenced their investing approach. I responded by naming Roger Lowenstein’s Buffett: The Making of an American Capitalist and Benjamin Graham’s The Intelligent Investor. There is nothing particularly original or insightful about naming these books, but there is more to the story that I think illustrates the role of luck, at least in my case.

I graduated from college in June 1995 with a finance degree and aspirations to work in the investing field, although I had no real idea of what I wanted to do other than to make a lot of money. I was unemployed for a few months before landing a poorly paying job doing work that barely required a college education and had nothing to do with investing. During my months of unemployment, Roger Lowenstein’s book was released and I read it over a few days. I soon read Benjamin Graham’s books as well.

Although Warren Buffett was a familiar name, my investing courses in college barely mentioned him and I had no understanding of the value investing principles that had built Berkshire Hathaway over thirty years. Mr. Buffett was 65 years old and seemingly at the end of his career (little did we know …). I drew inspiration from the biography and immersed myself in value investing and Berkshire’s annual reports. I was hooked.

By 1996, I switched to much better paying work in software after reading a few books on programming and learning to write code. The Silicon Valley had a hot market for computer programmers and the dot com boom was just getting started. I was immersed in that culture for the rest of the decade as company after company went public and ordinary people started making fortunes. Speculation was rampant — the dot com boom was my generation’s version of the cryptocurrency bubble.

I don’t remember how I came across Roger Lowenstein’s biography of Warren Buffett but I suspect it was in the course of browsing my local bookstore during the summer of 1995 when I was unemployed. Why did I pick up that book rather than many others that could have led me in a different direction? I knew about Warren Buffett, but he was never covered in my finance classes in college. Picking up that book was lucky.

If Roger Lowenstein had not published his book in the summer of 1995, chances are that I would never have learned about Warren Buffett, read Benjamin Graham’s writing, or bothered to read Berkshire Hathaway’s annual reports. By default, my finance background coupled with my exposure to the dot com world would have led me to speculate. The fact that I didn’t get involved in speculating was due to luck.

I will give myself some credit for hanging out in bookstores during that summer rather than engaging in pointless activities or feeling sorry for myself. I was trying to improve myself and engage in productive activities. I was open to the message when it arrived, and I followed up by immersing myself in value investing. But that initial spark was nothing but pure luck.

When we consider the young people who engaged in speculation in cryptocurrencies, we should be aware of the fact that most of them did not receive any financial education in school and they have been constantly bombarded with marketing messages related to cryptocurrency in general and trading platforms like FTX in particular, including endorsements by numerous celebrities.

I believe in personal responsibility and, ultimately, most people probably knew that they were gambling. Still, the entire situation had the aura of respectability in much the same way as the dot com bubble over two decades ago. In the case of FTX, customers are likely to lose money due to outright fraud rather than losses on the underlying securities they owned. Regulators failed to do their jobs. The system failed.

It is easy to feel puffed up about avoiding financial debacles in particular or bad luck in general, but we should always remember that past success has an element of luck even if principally due to hard work and effort.

There are forks in the road that can have a major influence on long-term outcomes. From a financial perspective, I was lucky enough to be influenced by the right people and principles at exactly the right time in my life.

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Your privacy is taken very seriously. No email addresses or any other subscriber information is ever sold or provided to third parties. If you choose to unsubscribe at any time, you will no longer receive any further communications of any kind.

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Individuals associated with The Rational Walk own shares of Berkshire Hathaway.

It is not always possible for outside observers to get up close and personal with the operations of a business. One can attempt to apply Philip A. Fisher’s “scuttlebutt” approach to investment research, but it is rare for outsiders to be permitted to see how a business truly operates.1 Analysts trying to learn about a company with no consumer facing operations must rely on the company’s investor communications perhaps supplemented by discussions with insiders, suppliers, and competitors.  

Retail analysts at least have the opportunity to interact anonymously with a business as a potential customer, but only at the final stage of the distribution channel. If I walk into a typical department store or specialty retailer, I will see the front of the store where individual products are displayed. The back of the store is usually cordoned off and inaccessible to customers.

Costco’s retail approach is very different. When the company calls their stores “warehouses”, they mean it literally. The inside of a typical 146,000 square foot store has very few frills. The floors are concrete, displays are bare-bones, merchandise is stacked high above the shelving, and it is not unusual to see products displayed on shipping pallets. Only a small portion of a Costco warehouse is hidden from view, so we can see much more of how the store operates than in a typical retail location.

I started to analyze Costco in the same way I would look at any business. I downloaded the latest annual report and 10-K and started reading. This was followed by building spreadsheets using many years of annual reports, reading old letters to shareholders, reviewing conference call transcripts, and searching for articles and interviews online. It was only after spending nearly two weeks on the company that it occurred to me that it would be absurd to publish an article on the company without actually walking in the shoes of a member.

I arrived at Costco on a Monday afternoon hoping that it would be relatively quiet. However, I could see from the parking lot that the warehouse was busy. I purchased a basic Gold Star membership for $60 at the member services counter after declining to pay an additional $60 for the Executive membership upgrade.2

The next stop was the food court where I ordered Costco’s famous hot dog combo deal and a slice of cheese pizza for a grand total of $3.84, including tax.

$3.84?!?

Did I travel back in time to the early 1990s? No, the food court is famously cheap. While this is not the type of food I would normally choose, it was undeniably filling. In fact, the quarter pound all beef hot dog alone would have been more than sufficient.

The food court represents a microcosm of the warehouse. It fulfills a common need at extremely low prices and gains efficiencies from a limited set of choices, all of which can be prepared in advance and kept warm without risk of going stale due to the high volume of business. In the short amount of time I spent in the food court, I saw several pizzas deposited in the warmer and served to a constant stream of customers.

After eating, I walked through every aisle in the warehouse. Although my purpose was to better understand the business, I still managed to purchase $240 of merchandise. I didn’t go crazy on impulse buys. These are all products I regularly use.

Costco co-founder Jim Sinegal has often claimed that customers will quickly recover the cost of membership. This was true in my case based on just a few purchases:

With the exception of Peet’s coffee, all of the products shown above are Costco’s Kirkland private label brand and the comparable product is the house brand for Trader Joe’s and Safeway. For the coffee comparison, I used Louisiana based Community Coffee, my regular brand which I believe is on par with Peet’s.

In addition to the items shown, I purchased several additional food items including both packaged and fresh foods and various household supplies. My only impulse purchase was a pair of Puma sweatpants for $20. Obviously, my savings for the trip exceeded the $60 membership cost just on a few items that I regularly purchase.

The obvious question we must ask is how Costco manages to provide such a compelling value proposition for its customers. The short answer is that Costco operates on a gross margin that is significantly lower than its competitors.

Costco’s recent gross margin was 10.5%. The comparable gross margin figure for Wal-Mart is 24.4%. Target operates at an even higher gross margin of 28.3%.3 To take a conservative viewpoint, if Costco’s products have an average price advantage of 15% over Target and Wal-Mart, a customer only has to spend an average of $400 before recouping the $60 annual membership fee. As we can see from my example, it is often possible to recoup the membership fee with an even lower volume of spending.

Costco’s management team is fanatical about driving prices as low as possible. While most retailers might strategize about opportunities to increase gross margin, Costco does the opposite. To earn a profit, management relies on operating efficiencies gained by offering only a limited number of stock keeping units (SKUs) sold in large quantities in a no-frills environment with vendors financing the inventory. One might ask why management does not raise gross margin at least somewhat given that there is clearly a very large advantage. However, this would violate the corporate ethos of viewing Costco as a fiduciary for members as well as a profit-making enterprise.4

At a surface level, Costco’s business model is very simple, but it takes quite a bit of time and effort to come to grips with unintuitive aspects of the business, such as management’s desire to reduce gross margin as much as possible rather than optimizing for short-term profits. The end result is a very high degree of customer trust that manifests itself in membership renewal rates in excess of 90 percent in the United States and Canada.

In order to understand Costco, we must go back to Sol Price who created the concept of membership-based discount warehouses. In many ways, Costco is an intellectual descendant of Sol Price’s FedMart chain. Jim Sinegal, Costco’s co-founder, worked for FedMart from its founding in 1954 until 1977. When Costco opened its first location in 1983, it built upon the FedMart legacy. Sol Price founded Price Club in 1976 which merged with Costco in 1993. Although today’s Costco is not the actual successor of FedMart, its intellectual lineage clearly traces back to Sol Price’s FedMart.

After developing the proper historical context, we will examine Costco’s business model, competitive landscape, operating history, capital allocation, and growth opportunities in more detail. Finally, we conclude with a discussion regarding what the future might hold for Costco within the context of the lofty expectations of market participants. Costco is a remarkable business, but this is hardly a well-kept secret.

For a full analysis of Costco, read the following report published a few week after the initial observations in this article were made:

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Individuals associated with The Rational Walk LLC do not own shares of Costco Wholesale Corporation.

— Marcus Aurelius, Meditations, 9.1

“What has been is what will be, and what has been done is what will be done; and there is nothing new under the sun.” — Ecclesiastes 1:9

It is obvious that interacting with someone who lies is hazardous, whether in one’s personal life or in business. A loose attachment to the truth makes an individual untrustworthy in any context. Someone who lies about small matters is prone to lying about much more serious issues. It is almost impossible to lie “just this one time” and it becomes a vice that is increasingly difficult to break as time goes on.

Often ignored is the fact that there are two types of liars. There are liars who know that they are lying. And then there are liars who actually believe their lies. The latter are far more dangerous. As the renowned twentieth century philosopher George Costanza often said, “it’s not a lie if you believe it”.

Michel de Montaigne was a French philosopher who lived in the 16th century and left us with a treasure trove of wisdom in his essays. Covering a wide range of topics, Montaigne presented numerous quotes and excerpts from ancient philosophers along with his own observations written during his retirement years. 

In Of Liars, Montaigne observes the difficulty facing liars who know they are lying:

“It is not unreasonably said that anyone who does not feel sufficiently strong in memory should not meddle with lying. I know very well that the grammarians make this distinction between telling a lie and lying: that telling a lie means saying something false but which we have taken for true; and that lying … implies going against our conscience, and thus applies only to those who say what is contrary to what they know: those of whom I am speaking. 

Now liars either invent everything out of whole cloth, or else disguise and alter something fundamentally true. When they disguise and change a story, if you put them back onto it often enough they find it hard not to get tangled up. For since the thing as it has become lodged first in the memory and has imprinted itself there by way of consciousness and knowledge, it is difficult for it not to present itself to the imagination, dislodging the falsehood, which cannot have so firm and secure a foothold. 

Likewise, the circumstances that were learned first, slipping into the mind every moment, tend to weaken the memory of the false or corrupted parts that have been added. In what liars invent completely, inasmuch as there is no contrary impression which clashes with the falsehood, they seem to have the less reason to fear making a mistake. Nevertheless even this, since it is an empty thing without a grip, is prone to escape any but a very strong memory.” [emphasis added]

What is Montaigne trying to tell us? Liars often have trouble keeping their lies straight, but if they invent a scenario from whole cloth, the lie is more likely to hold up than if they take a fundamental truth and alter it. In other words, a constructed narrative that is entirely fictional can be easier to keep straight. The problem is that such lies might be more difficult to believe. Lies based on manipulation of some underlying truth may be easier for others to believe but harder to keep straight.

But liars who do not know that they are lying can have an easier time. Since the lies they tell are true for them, they need not remember their lies. They have internalized a false narrative as “their truth” and therefore can repeat the lie and retain consistency over time with fewer problems.

Montaigne considers lying to be among the most serious of vices:

“In truth, lying is an accursed vice. We are men, and hold together, only by our word. If we recognized the horror and the gravity of lying, we would persecute it with fire more justly than other crimes. I find that people ordinarily fool around chastising harmless faults in children very inappropriately, and torment them for thoughtless actions that leave neither imprint nor consequences. Only lying, and a little below it obstinacy, seem to me to be the actions whose birth and progress one should combat insistently. They grow with the child.”

There is a very good chance that a habitual liar has a form of antisocial personality disorder characterized by deception, lack of empathy, and aggressive behavior. It is best to quickly disassociate from such individuals. As Montaigne notes, lying becomes ingrained in a person’s mind at a young age. Chances are that if you have encountered a liar as an adult, they have had decades of practice perfecting their craft and are either resistant to or entirely incapable of change. 

I can say from very recent personal experience that individuals with deep-seated antisocial personality disorders can lie with extreme impunity and not a trace of decency or conscience. If you are willing to invent lies from whole cloth, have a high level of intelligence and no conscience, there are few limits to the evil you can do and the pain you can inflict on others, even if they were formerly close family members.

Marcus Aurelius and Michel de Montaigne would tell you to steer clear of liars at almost any cost. If you must deal with a liar, never allow their malign actions to cause you to join them in the gutter, even if doing so is your natural instinct. A stoic outlook, no matter how difficult, is the only nondestructive course to take.

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Your privacy is taken very seriously. No email addresses or any other subscriber information is ever sold or provided to third parties. If you choose to unsubscribe at any time, you will no longer receive any further communications of any kind.

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This seems like a shocking and outrageous statistic. But in order to understand what is going on, one must go to the primary source rather than blindly accepting sensationalized news reports and inane social media chatter.

Gallup categorizes workers based on their level of engagement at work:

• Engaged. Engaged workers are highly involved and enthusiastic about their work and their workplace. They drive innovation, have high performance standards, and are the people who move an organization forward. Gallup estimates that 32 percent of workers are engaged.

• Not Engaged. These workers are psychologically disengaged from work and their company. They put time into their work but not energy and passion. They basically punch the time clock, do the minimum called for by their job description and then punch out. Gallup has characterized this group as “quiet quitters.” 50 percent of workers fall into this category.

• Actively Disengaged. These workers are unhappy and resentful. They act out their unhappiness and potentially undermine the efforts of their coworkers. They often talk negatively and destroy morale. This group represents 18 percent of workers based on the Gallup poll.

It is obvious that the 18 percent of workers who are actively disengaged are toxic and could be characterized as “loud quitters”. They are not shy about their dissatisfaction, and they often spread their attitude to others. Anyone who has been in the workforce for a while has encountered such people. There is not much ambiguity here.

It is equally clear that the 32 percent of workers who are actively engaged drive forward progress for their organizations. They must be retained and further developed. Any employer with good sense will foster an environment in which such people will want to stay and remain engaged.

Where it gets murky is the 50 percent of workers who are not engaged. Can we call all of these people “quiet quitters”? Are they even quitters at all?

In Garrison Keillor’s fictional Lake Wobegon, “all the women are strong, all the men are good-looking, and all the children are above average.” Lake Wobegon is ludicrous because obviously the average person in any given society has to be average by definition.

It seems to me that most of the people in the “not engaged” group are simply average employees — they are not stars and they are not going above and beyond their job description, but neither are they toxic and dragging down the organization.

The key question is this: Are the workers who are “not engaged” performing their job descriptions in the manner that was agreed to with their employer? Are they honestly producing the work output and putting in the time that they said they would put in when they were hired? If the answer is yes, then these people are performing their jobs. They are not “quiet quitters”. In contrast, if these employees are not doing their jobs or acting in a deceptive manner, one might characterize them as “quiet quitters”.

The remote work phenomenon has increased opportunities for employees to be deceptive about the time they are devoting to work. An extreme and shocking example of this was revealed in a Wall Street Journal article published last year about people who had taken multiple full time jobs on the sly.

One could argue that workers should be paid purely on output and if someone can perform two full time jobs through part time work, the employer should not care.

But the trouble here is the deception.

No healthy organization can function in a culture of deception and honesty is an intrinsic good. Without trust, society begins to crumble. The same is true for an individual company. Distrust is like metastatic cancer. It will spread through an organization and cause dysfunction. I consider people who use deception to be “quiet quitters” even if they are technically performing the minimum requirements of their job because they are destructive elements within a corporate culture.

It is difficult to believe that even a majority of the fifty percent of employees who are “not engaged” are using deception or otherwise performing as poorly as the term “quiet quitting” would suggest. More likely, the vast majority of these people are simply unambitious. They are average employees doing an average job.

I found the following graph from the Gallup poll revealing:

One might ask: Where’s the beef?!?

Where is the substance in all of the breathless headlines about quiet quitting being a major trend of the post-pandemic era? What I see is that actively disengaged employees have hovered somewhere between fifteen and twenty percent for decades and that more employees are engaged than the average this century!

Although my initial reaction was to be upset about the idea of half of American employees being “quiet quitters”, I should have known better.

Despite all of the problems of our society, most people are still fundamentally honest. Looking at the actual survey reveals that nothing much has changed. The great majority of workers are average. There is a small minority that are clear problems for their organizations. And there are the stars who drive progress forward.

Still, there is cause for concern in terms of the reaction to this story as it has been widely misreported. At least in the dystopian world of social media, there is plenty of chatter about how it is perfectly fine for employees to not only do the bare minimum but use deception if it suits their purposes.

It has become more socially acceptable to take the attitude that one should only do the minimum justified by one’s current compensation package and not put in a minute more than required. But it is certain that ambitious people will often find themselves in jobs where they are providing value in excess of their compensation!

Why is this the case? Those who wish to advance must prove their worthiness before they are rewarded with compensation and benefits. Almost by definition, that implies being “underpaid” for a period of time. Very ambitious people will be “underpaid” for their entire career, as they are always outperforming in their current job before advancing to the next one with more responsibility and more compensation.

Of course, many people do not seek to advance in their careers, but it is still very important to foster a culture that celebrates honesty, hard work, and ambition. Ultimately, economic growth and increasing living standards for everyone depends on increasing the level that is considered average in our society. Social attitudes that pull the average down are pernicious and should not be celebrated.

To the extent that more people disdain going above and beyond the minimum, greater opportunities are created for ambitious people. The world is not a zero-sum game and delivering more value than you immediately receive in return is not something to be ashamed of. The rewards will come in due course.

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— Charlie Munger

My guess is that at least half of you have read this zinger from Charlie Munger before, and that might be a low estimate. We can laugh, but there’s an obvious underlying truth: Earning above-average returns is difficult because investing is a competitive field full of highly intelligent and extremely motivated people. Why should it be easy to earn extraordinary returns? Isn’t it stupid to think that it should be easy?

The origin of this quote is from a conversation between Charlie Munger and Howard Marks many years ago which Mr. Marks has described on several occasions, most recently in his latest memo, I Beg to Differ:

“This all leads me back to something Charlie Munger told me around the time The Most Important Thing was published: ‘It’s not supposed to be easy.  Anyone who finds it easy is stupid.’  Anyone who thinks there’s a formula for investing that guarantees success (and that they can possess it) clearly doesn’t understand the complex, dynamic, and competitive nature of the investing process.  The prize for superior investing can amount to a lot of money.  In the highly competitive investment arena, it simply can’t be easy to be the one who pockets the extra dollars.”

Whenever I receive a memo from Howard Marks, I read it immediately because he routinely delivers great insights. After reading the latest memo, I posted the above excerpt on Twitter and was surprised to receive a response from someone who wondered how many times Mr. Marks would repeat the same Charlie Munger quote.1

As I reflected on that response, it occurred to me that many of these memos are repetitive. It is not an invalid observation. The same themes are discussed again and again, often with new examples based on recent market developments, but always returning to the same timeless principles.

In 2011, I had an opportunity to listen to Howard Marks deliver a presentation at an investor conference. The presentation was a prelude to his book, The Most Important Thing, which was published a couple of months later. As I read the article that I wrote soon after the presentation, it is obvious that many of the same themes that came up in the latest memo were discussed in that presentation, as well as in Mastering the Market Cycle which I reviewed when it was released a few years later.

Howard Marks is not the only famous investor who repeats himself again and again. The same is true when we listen to Warren Buffett and Charlie Munger at Berkshire Hathaway’s annual meetings. How many times have we listened to Mr. Buffett provide similar answers on a wide range of topics? If you have been to more than a few Berkshire Hathaway annual meetings, many of the responses might seem repetitive, but I would argue that this is a feature rather than a bug: the insights are timeless, and we can always use another reminder.

Why do many religious people read the Bible on a daily basis and go to church every Sunday? If you are already familiar with the principles of your religion, it is not to get new information, but to reinforce what you already know and believe, often with sermons that relate to how to apply religious teachings to current events. In addition, there is value in being part of a community and this can strengthen the faith.

I do not mean to trivialize religion by comparing it to investing, but I do think that we can draw some lessons from the value of consistent reinforcement.

Although investing principles should always be subject to scrutiny based on evidence of long-term performance, there is value in revisiting these principles on a regular basis, especially during times when the principles might not be working so well.

For some reason, few investors today seem to recall the market downturn of mid-2011, but I remember it well. Perhaps the collective amnesia has to do with the fact that the downturn just barely avoided designation as an “official” bear market. However, I remember that quasi bear market all too vividly. It was just two years after the market crash of 2008-09. Berkshire Hathaway’s stock, my largest investment then and now, was still trading stubbornly below its levels prior to the financial crisis and was close to book value. The European debt crisis seemed intractable. There was talk of an impending recession.

I keep a log of my reading, and sure enough The Most Important Thing was one of the titles I read during those dark days of 2011. I read it again in 2016 and will probably read it again in the future. The same is true for many other investing classics. Going back to the same books is not repetitive because we bring new experiences to each reading and consequently are able to learn new lessons. I am not the same person today that I was in 2016 or 2011. I should be able to learn new things from re-reading the same book based on my new experiences.

When Howard Marks seems to repeat himself in his memos, I suspect it is by design. He is sending a message that there are basic investing principles that we should return to again and again, applying them to current circumstances in intelligent ways. At the same time, Mr. Marks is not rigid in his thinking and has been open to considering new ideas, most notably in his January 2021 memo, Something of Value, in which he described discussions about value vs. growth investing with his son, a professional investor who seems to tilt more toward the growth camp.

I would be remiss to not mention that there are risks associated with repeatedly reinforcing a specific set of beliefs. So I will conclude with Charlie Munger’s warning against extreme political ideology. What is true for politics can also be true for investing. We should not be so rigid as to discount the possibility that the world has changed, and we must always keep an open mind. There must be a balance between reinforcing beliefs and being able to adjust your beliefs as the evidence changes.

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On days that I go for a morning run, I feel healthier and more productive all day long, so that hour of exercise pays dividends far in excess of the energy expended. I enjoy the process of running, but only after a mile or two into the run. I do not like the idea of running as I drink my morning coffee and read the paper, nor do I enjoy taking those first steps particularly in the heat and humidity of summer. Sometimes, I even hate it.

My morning run reaches a junction about a mile and a half from home. At that point, I can turn around for a short three miles or I can start on a longer loop. To get started on the run, I tell myself that if I am not enjoying myself at that junction, I will just turn around. No internal recriminations — I give myself permission to quit if I want to for any reason. But by the time I have been running for ten or fifteen minutes, I’m almost always enjoying myself and want to continue. I cannot recall the last time that I turned back even on mornings when I really didn’t want to start.

Similar mental tricks work in other areas such as reading and writing.

I almost always face inertia when I begin researching a new company. This doesn’t make much sense because, like running, I actually enjoy the process of learning about a business once I get started. But for years, I hated the process of getting started which, in my case, always meant pulling the latest 10-K and starting a linear read through the document from the first page.

When I finally stopped to analyze why I faced so much inertia with company research, I realized that it was because of the sequencing of 10-Ks. The always tedious and often endless section on risk factors appears very early in a report, usually right after a brief business description. The language of this part of a 10-K is something only a lawyer could love, and includes everything under the sun along with the kitchen sink … every conceivable factor they can think of along with many that seem inconceivable.

The problem with the risk factors appearing so early in the 10-K goes beyond the mind-numbingly boring lawyer-written narrative. It is too soon to read it intelligently because you don’t know enough about the business yet. It is an exercise in frustration to go through the risk factors line by line so early in the process. I realized that I was dreading that section of the report, and this caused quite a bit of inertia.

The cure was simple: I go through the business description and then jump to the management’s discussion and analysis (MD&A). This might not be riveting reading, although it often can be for the right business, but it is rarely frustrating or boring. The next step is to read the financial statements and notes, and only after that does it make sense to read about risk factors. I’m not suggesting neglecting an important part of due diligence, only altering the sequencing.

If I don’t like the business and decide to not pursue the research further, I may never have to read what the attorneys have to say at all. Taking a part of the process you dislike and making sure that it is not at the beginning, and may not have to be done at all, can remove a source of initial inertia.

Any writer will tell you that a blank page is a dreadful thing to see, and it can be very hard to get started. There is a huge amount of inertia involved in getting past the first fifty to hundred words. For many years, I would prepare an outline for an essay or article and then attempt to write the content in a linear manner starting with the introduction. Of course, the introduction to an article is crucial because many readers will decide whether to continue based on the first couple of paragraphs. There is significant pressure to craft the perfect opening and that makes it hard to start.

The remedy for the blank page problem is to start with a section of the article that is easier to write. For articles discussing a company, I usually find it easier to start with a discussion of capital allocation or the balance sheet, so that’s often where I begin. It is easier to write an introduction after much of the content has been written.

Whether you’re running, reading, or writing, you want to get into a flow state as soon as possible where you are immersed in the activity to the point where you lose track of time and it becomes nearly effortless. I often come up with ideas while running once I get into a flow state. That was the case today. I thought about this article a few miles into my run this morning and had it written in my mind by the time I was finished.

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