The Digest #176
Found Money, OpenAI drama, GLP-1 drug studies, Estée Lauder, Heart valve technology, Edwin Land, John Oliver skewers dollar stores, Apple regrets, The Great Books Journal, and more ...
No one is immune from the irrational aspects of human psychology. This is particularly true for attitudes toward money. We can study common cognitive errors for years but sometimes our deep-seated instincts will still lead to folly.
Consider my reaction on Sunday night when I glanced at my iPhone 13 mini and noticed two cracks in the display. How could this be possible! I have always used an iPhone skin with a bumper guard! I ran a Google search and discovered that I would soon have to part with $229 to get the screen repaired by Apple. Perhaps I could save a little money by having it repaired at a local shop but it would still be quite expensive.
I went to bed pissed off and thoroughly disgusted with my carelessness, annoyed that my budget for 2023 would be impacted by such a stupid expense this late in the year.
On Monday morning, I took a closer look at the phone. I realized that the crack was not in the glass of the phone itself but in a tempered glass screen protector that I had installed soon after buying the phone! The screen protector was so seamless that I forgot it was even there. I peeled off the broken screen protector to see a perfect iPhone display. I was only out $15 — the cost of a replacement screen protector.
My thoughts immediately turned to how I would spend the $200 I had just “saved.”
I had several ideas! It is in our nature to have an insatiable demand for goods and services and even those of us who are not big spenders are susceptible. I quickly realized the stupidity of thinking of the $200 as “found money” and came to my senses.
But why did I have this reaction in the first place?
It is well established that humans feel the pain of loss more acutely than pleasure of an equivalent gain. The annoyance I felt on Sunday at the apparent loss of $229 was felt much more acutely than the pleasure I felt from “recovering” the money on Monday morning. The effect of the loss and the gain created a net emotional loss. My theory is that I wanted to make some sort of impulsive purchase in order to feel an emotional gain — the fleeting euphoria from acquiring a material possession.
When I named my website The Rational Walk nearly fifteen years ago, I probably thought that it was a declarative statement about my lofty elevation above the follies of human nature when it comes to investing. In reality, The Rational Walk is only an aspiration. We can attempt to come closer to rationality but there are deep-seated elements of human psychology that constantly act to ensnare us.
The Rational Walk is a reader-supported publication.
OpenAI’s Misalignment and Microsoft’s Gain by Ben Thompson, November 20, 2023. The situation at OpenAI is evolving quickly, so this article might be outrun by events soon! However, I think that the analysis with respect to Microsoft’s involvement is excellent. I am baffled by the decisions of the OpenAI board. (Stratechery), November 20, 2023. This is another well done installment in Kingswell’s series of interview transcripts published over the past several months. Be sure to check out the footnotes which add valuable context about the discussion. (Kingswell)
Warren Buffett Interview, April 14, 2022. (Charlie Rose)
Do GLP-1 receptor agonists improve cardiovascular health independently of weight loss? by Peter Attia, November 18, 2023. Wegovy and Ozempic are being touted as miracle drugs by the pharmaceutical industry. Claims have emerged that the drugs reduce cardiovascular disease. But are the drugs themselves responsible for improved cardiovascular outcomes, or are improved outcomes the result of weight loss regardless of the method used to shed the pounds? Billions of dollars of potential sales hinge on the answer to this question. Peter Attia seems very skeptical. (Peter Attia MD)
The Estée Lauder Family Built a Beauty Empire. A Succession Rift Threatens It by Emily Glazer and Sabela Ojea, November 17, 2023. Great entrepreneurs leave legacies for their descendants that can last for generations. As decades pass, the mix of family and business dynamics can become problematic, as this long read illustrates. (WSJ)
Charlie Munger says there isn’t the slightest chance Buffett traded own account to enrich himself by Jesse Pound, November 17, 2023. “I don’t think there’s the slightest chance that Warren Buffett is doing something that is deeply evil to make money for himself. He cares more about what happens to Berkshire than he cares what happens to his own money. He gave all his own money away. He doesn’t even have it anymore.” (CNBC), November 19, 2023. This is a great article about advanced heart valve treatments such as TAVR as well as a discussion of Edwards Lifesciences. As of early 2021, over 300,000 patients, many of whom would not have been candidates for open heart surgery, have benefitted from this minimally invasive procedure. (On the Street), November 19, 2023. “Many have discovered an argument hack. They don’t need to argue that something is false. They just need to show that it’s associated with low status. The converse is also true: You don’t need to argue that something is true. You just need to show that it’s associated with high status. And when low status people express the truth, it sometimes becomes high status to lie.” (Rob Henderson’s Newsletter)
The Full Reset by Morgan Housel, November 20, 2023. “After the [first] World War practically everything was taken away from Germany in the way of materiel. So when Germany rearmed, it was necessary to produce a complete set of materiel for the troops. As a result, Germany has an army equipped with the most modern weapons that could be turned out. That is a situation that has never occurred before in the history of the world.” (Collaborative Fund)
Shrinking Timeframes and First-Order Thinking Since the Covid Crash, November 19, 2023. 55 minutes. “In this episode, co-hosts Elliot Turner, Phil Ordway, and John Mihaljevic discuss the apparently ever-shrinking timeframes of market participants and the first-order thinking in place since the covid crash.” (This Week in Intelligent Investing)
Land’s Polaroid: A Company and the Man Who Invented It, August 18, 2022. 1 hour, 12 minutes. Transcript. David Senra’s thoughts on a book written by Peter Wensberg who worked with Edwin Land for twenty-four years. (Founders Podcast)
Expiring vs. Permanent Skills, 15 minutes. “… Permanent skills compound over time, which gives them quiet importance. When several previous generations have worked on a skill that’s directly relevant to you, you have a deep well of relevant examples to study. And when you can spend a lifetime perfecting one skill whose importance never wanes, the payoffs can be ridiculous. Anything that compounds over decades usually is.” (Morgan Housel Podcast)
John Oliver on Dollar Stores
A reader sent me a video of John Oliver skewering dollar stores on his show last weekend. Much of his criticism is based on the Bloomberg article that I mentioned in The Digest #166 in September. Oliver’s skit is an attempt at dark humor but there are elements of truth in his criticism, especially on staffing. Many people claiming to be employees or former employees left scathing comments in response to the video.
While I remain on the sidelines as an investor, I believe that there are important reasons for the continued existence of the dollar store industry.
Rational Walk articles on Dollar General:
Dollar General: Value or Value Trap, September 4, 2023
There’s Always a Reason, September 21, 2023
Musical Chairs at Dollar General, October 17, 2023
Superinvestors Added to Dollar General in Q3, November 15, 2023
I Feel Your Pain …
Four years ago, I wrote My $2 Million Apple Mistake and it is good to know that I am not alone based on’s recent tweet!
The harsh reality is that predicting the future in the technology industry is extremely difficult. Those of us who sold Apple before Jobs returned for his second act, or after Jobs returned but before the iPod was released, can take some solace in the fact that no one in the late 1990s or early 2000s had any basis to predict Apple’s meteoric rise.
I am again an owner of Apple shares, albeit indirectly via Berkshire Hathaway’s enormous investment, so I am hopeful that Apple’s future is not quite as bleak as the statement at the end of the tweet indicates.
I don’t think that innovation is necessarily lacking at Apple. My main concern is the size of the market for the innovations under development. It takes enormous market potential to move the needle for a company of Apple’s size. I have been very impressed with my Apple Watch Ultra 2. And recent reviews of Apple’s forthcoming Vision Pro are cause for some optimism, although no one really knows whether the augmented reality device will eventually reach mass market potential. Time will tell …
The Great Books Journal
The Rational Walk has always included content that falls outside the scope of business and investing. Over the years, I’ve written about history and philosophy, among many other topics. However, I’ve tried to keep the primary focus on business-related topics since that is how my readership developed over many years.
Earlier this year, I decided to make a concerted effort to read what are known as the Great Books of Western Civilization. I have been exposed to many of these works in the past but my efforts were not well organized. I have kept commonplace books written in longhand but I have rarely written about these books in public. Writing in public can reveal blind spots and areas of poor understanding. There is no better way to learn a topic than to write about it in a form meant for others to read.
Since a public commonplace book and related articles on the Great Books falls well outside the historical scope of The Rational Walk, I’ve created The Great Books Journal. It is hosted on Substack at greatbooksjournal.com and readers may subscribe to receive articles and, optionally, commonplace book entries. There is no set schedule but I plan to post entries frequently. Subscriptions are free.
I will continue to publish book reviews on The Rational Walk for newer books and I will mention some articles published on The Great Books Journal in issues of The Digest.
The Library in the Palais Dumba
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