The Digest #164
Howard Marks on intelligent risks, Li Lu's amazing life story, Damodaran on streaming, Thompson on Charter vs. Disney, Taleb's favorite literary works, Buffett's Japanese investments, and more ...
Dear Readers,
The purpose of The Digest is to provide a selection of articles and podcasts that will not waste your time. Obviously, not all selections will be of interest to all readers but hopefully at least a few will spark your interest. The Digest is free for all readers.
In addition to The Digest, I send out articles several times per month. Some of the articles are free for all readers while others are for paid subscribers. When I send out an article for paid subscribers, my practice has been to send a preview of the article to free subscribers. My intent has been to provide enough content in the preview to justify your time on a stand-alone basis even if you don’t jump over the paywall.
I have never been entirely comfortable with sending out previews even if I think they have stand-alone value. Obviously, one purpose of a preview is to encourage readers on the free plan to purchase a subscription. I find it mildly distasteful to show up in your inbox in this manner so I plan to stop sending out previews via email.
Going forward, articles with a paywall will only be emailed to paid subscribers. In each issue of The Digest, I will mention any paywalled articles so free subscribers will be aware that they exist. Paywalled articles will continue to have previews, and free subscribers can read these previews by clicking on the article links in The Digest.
While I would like to increase my paid readership in the long run, I don’t want to engage in anything that might be seen as aggressive promotion. This change of policy is not a criticism of other writers who send out free previews via email. It is simply a matter of aligning my policies with the quirks of my personality.
Thanks for reading!
Articles
Fewer Losers, or More Winners? by Howard Marks, September 12, 2023. “Warren Buffett – arguably the investor with the best long-term record (and certainly the longest long-term record) – is widely described as having had only twelve great winners in his career. His partner Charlie Munger told me the vast majority of his own wealth came not from twelve winners, but only four. I believe the ingredients of Warren’s and Charlie’s great performance are simple: (a) a lot of investments in which they did decently, (b) a relatively small number of big winners that they invested in heavily and held for decades, and (c) relatively few big losers. No one should expect to have – or expect their money managers to have – all big winners and no losers.” The article is also available as a PDF file and as a podcast. (Oaktree Capital)
No other investor has a life story quite as unbelievable as Li Lu by Eleanor Olcott, September 7, 2023. This is a long profile of Li Lu going back to his days as a student activist during the Tiananmen Square protests in 1989. Li Lu’s life story is amazing and seems worthy of a full biography. Li Lu is the only investor who Charlie Munger has ever entrusted capital to, providing $88 million in 2004. Apparently the capital has compounded to “four or five times” since 2004. What’s interesting is that this implies compound annual returns of 7.6% to 8.8% over nineteen years. It’s hard to reconcile such numbers with Charlie Munger’s characterization of the investment as having earned “unholy good returns for a long, long time.” (Financial Times)
A Business Upended: The Streaming Disruption of the Movie & Broadcasting Business by Aswath Damodaran, September 13, 2023. This is a long article but worth your time. It is one of the best discussions of the music and movie businesses that I’ve read recently, drawing potential parallels between the disruption to the music business in the 1990s and 2000s due to Napster and the iPod and the more recent disruption to the movie and broadcasting business due to streaming. The article concludes with an assessment of the likely winners and losers. (Musing on Markets)
Charter-Disney Winners and Losers by Ben Thompson, September 12, 2023. With just hours to spare before the start of Monday Night Football, Disney and Charter finally came to an agreement resolving their long-running dispute. Ben Thompson provides his assessment of the likely winners and losers of this deal, both in the short run and the long run, and what it means for the overall industry. (Stratechery)
Ben Graham to Warren Buffett: The Postcard That Taught Me How To Value A Child, September 12, 2023. This is another installment in a series of articles written by Ben Graham’s granddaughter recalling family interactions. A postcard from Ben Graham to Warren and Susie Buffett written in 1967 sparked memories for the author since she went on the trip with her grandfather and was mentioned in the letter. All of the articles on this website are worth reading! (Beyond Ben Graham)
Warren Buffett's 1969 Annual Letter — Yes, It Actually Exists by
, September 12, 2023. Warren Buffett’s character shined through in the early 1970s when he wound down the Buffett Partnership in a manner that clearly demonstrated his interest in the long-run financial success of his partners. This article contains excerpts and commentary from the final partnership letter which is included in the 50th anniversary book that was published by Berkshire Hathaway in 2015. (Kingswell)Berkshire Hathaway Inc.: Celebrating 50 Years of a Profitable Partnership, published in 2015, is still available on eBay. This is the official link to the book provided on Berkshire’s website. I own the book and highly recommend it.
Gallery of my Favorite Modern Literary Books by Nassim Taleb. “I am often asked by journalists for a list of my ‘favorite books’ --I don't know what ‘favorite’ means for a journalist. I treat books as friends; you miss them when you don't see them for a while. Perhaps the best test of one's appreciation for a novel is whether one craves it at times, enough to reread it. Rereading a novel is far more enjoyable than reading it for the first time. Many I have read more than twice, some (like Il deserto dei tartari, un taxi mauve, Paulina 1881,...), more than five times.”
Earlier this summer, I read The Tartar Steppe, the English translation of Il deserto dei tartari mentioned by Nassim Taleb, and I can see why he has read it several times. I plan to read other recommendations from his list in the future.
Scientific sleuths spot dishonest ChatGPT use in papers by Gemma Conroy, September 8, 2023. It is not surprising to learn that ChatGPT is being used in scientific papers but I was surprised to learn that researchers submitting papers are failing to even remove telltale signs that the work is generated. For example, one paper included the following incriminating text: “‘Please note that as an AI language model, I am unable to generate specific tables or conduct tests …’” (Nature)
Why Is Music Getting Sadder? by
, September 10, 2023. I do not listen to many new releases, but somehow I am not at all surprised that music has been getting sadder and angrier given the current state of our society. (The Honest Broker)Wheelie Bags and Related Petty Gripes by
, September 11, 2023. If you believe in traveling light and wonder what everyone else seems compelled to drag along in huge wheeled suitcases, this essay is for you! (The Commonplace)Podcasts
Nassim Nicholas Taleb and Scott Patterson, September 7, 2023. 2 hours, 8 minutes. Tim Ferriss interviews Nassim Taleb, author of the Incerto, and Scott Patterson, author of Chaos Kings, which profiles “black swan traders” including Nassim Taleb and Mark Spitznagel. Patterson and Taleb have known each other for several years. Apparently Patterson is a journalist who earned Taleb’s respect and cooperation as one of the subjects of his book. Transcript. (Tim Ferriss Show)
David Senra - In Service of Founders, September 12, 2023. 1 hour, 24 minutes. “David Senra is the creator and host of Founders Podcast. We cover his passion for podcasting, why the best entrepreneurs are also great storytellers, and the insights gained by studying diverse historical figures like athletes and generals.” Transcript. (Invest Like the Best)
Uncovering Warren Buffett’s Investments in Japan, September 11, 2023. 35 minutes. Geoff Gannon and Andrew Kuhn discuss Japan. Geoff mentioned that the Japan Company Handbook that Warren Buffett reads is available on the Amazon Japan website. There are some preview pages included in the Summer 2023 edition. It looks like a Japanese version of the Value Line Investment Survey. (Focused Compounding)
Teledyne - 1968 Annual Report, September 9, 2023. 46 minutes. I included a link to Jacob McDonough’s coverage of the 1967 Teledyne annual report in Digest #162. This episode continues the discussion of the early days of Henry Singleton’s conglomerate and his entry into the insurance business. (The 10-K Podcast)
Kevin Kelly: On Fame, Structuring Ideas, Writing Books, and Founding Wired Magazine, September 13, 2023. 1 hour, 18 minutes. “Kevin Kelly is one of the most important tech writers of the last half century. Kevin started as the publisher and editor of the Whole Earth Catalog, which was one of Steve Jobs’ favorite publications. After being mentored by Stewart Brand, he started writing books and magazine pieces before cofounding Wired Magazine. He has since become a prolific author - writing one feature article for Wired Magazine every year, and writing numerous bestselling books.” (How I Write)
Tahitian Landscape
“Paul Gauguin went to Tahiti in 1891 in search of new, exotic motifs, but also to escape European civilization, which he felt was artificial and spiritually bankrupt. This picture, one of the first he painted in the South Seas, exhibits the artist's characteristic post-Impressionist style. In it, Gauguin used sinuous contours and intense colors to express the joy and serenity inspired by the lush tropical site.
Tahiti would become Gauguin's home for most of the last twelve years of his life. He once said of his Tahitian paintings that he had been ‘eager to suggest a luxurious and untamed nature, a tropical sun that sets aglow everything around it...the equivalent of the grandeur, depth, and mystery of Tahiti when it must be expressed in one square meter of canvas.’”
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Consistently one of the best items in my inbox each week. A must read.
Thank you! 🙏