The Digest #211
Thucydides, Corporate life cycles, Ben Graham's first big win, Buffett's early lesson in activist investing, Perils of forecasting, Orwell's 1984, Guy Spier, Ben Thompson, Estée Lauder, and more ...
Quotes of the Week
“He who corrects a scoffer gets himself abuse, and he who reproves a wicked man incurs injury. Do not reprove a scoffer, or he will hate you; reprove a wise man, and he will love you. Give instruction to a wise man, and he will be still wiser; teach a righteous man and he will increase in learning.”
“Do not give dogs what is holy; and do not throw your pearls before swine, lest they trample them under foot and turn to attack you.”
Articles
Thucydides, August 16, 2024. Thucydides is best known for his extensive history of the Peloponnesian War which took place between 431 - 404 BC. This is not a “book review” that attempts to summarize the history. Instead, I describe a few incidents documented by Thucydides and explain why people in the 21st century might gain a better understanding of human nature by reading the book. (The Rational Walk)
The Corporate Life Cycle: Managing, Valuation and Investing Implications by
, August 20, 2024. This article is a concise summary of Aswath Damodaran’s new book. There is also a free online course that presents the contents of the book in a series of YouTube lectures along with slides. It costs thousands of dollars to attend Prof. Damodaran’s classes in person and I’ve long thought that he is incredibly generous to provide so much material free of charge. (Musing on Markets)The Berkshire Hathaway MBA, August 14, 2023. It is amazing how much free content is available for those who wish to learn about business and investing. In this article published a year ago, I provide suggestions for self-study. There is no doubt that an MBA from a top school is an important credential for certain career paths, but much of the raw knowledge is available for free. (The Rational Walk)
Ben Graham’s Shrewd Arbitrage Profit Changed His Life, August 20, 2024. This article examines an arbitrage opportunity found by Benjamin Graham early in his career. In 1915, the Guggenheim family decided to dissolve the Guggenheim Exploration Company. Graham calculated that the sum of the assets that would be distributed to shareholders exceeded the share price of the company. His investment turned out well, bolstering Graham’s finances and reputation. (Beyond Ben Graham)
The Lessons of a Lousy Business by
, August 20, 2024. This article is about one of my favorite early Warren Buffett stories — his investment in Dempster Mill Manufacturing Company. This searing experience turned out to be a financial success but at the cost of considerable peace of mind. There is no doubt that Dempster reduced the appeal of activist investing and “turnaround” situations! (Kingswell)Dempster Mill Manufacturing Company, August 29, 2022. (The Rational Walk)
Avoiding Bad Guys by Adam M. Grossman, August 18, 2024. This article presents a few useful tips on how to avoid bad actors in the investing world. “Money Managers Raj Rajaratnam and Joel Greenblatt share a number of similarities. They’re almost exactly the same age. Both received business degrees from the University of Pennsylvania, and both started well-known hedge funds. But the similarities end there.” (Humble Dollar)
A Cautionary Tale of Forecasting, August 21, 2024. “A weird thing happens when confidence and optimism get distorted. We overestimate the likelihood of a good outcome. Fisher had both in spades. He believed his forecasting approach was superior. He also believed in the New Era ideology of the time [The 1920s]. He overestimated his ability to predict the future and that future looked bright. He was also brilliant and knew it.” (Novel Investor)
Pandemic Darlings That Never Bounced Back by
, August 19, 2024. This article is a reminder that highly speculative situations rarely turn out well in the long run. The S&P 500 continues to flirt with record highs, making the pain of the bear market of early 2020 seem like a distant memory. However, many of the speculative stocks that were supposedly going to take advantage of “permanent” societal changes in 2020 and 2021 collapsed and remain far below their highs. (Investment Talk)A Number From Today and A Story About Tomorrow by Morgan Housel, August 20, 2024. “We have lots of data, but none of it means much until you attach a story to it about what you think it means and what you think people will do with it next. That seems obvious to me. But ask forecasters if they think the majority of what they do is storytelling and you’ll get blank stares. At best. It never seems like storytelling when you’re basing a forecast in data.” (Collaborative Fund)
10 Reasons Why Technological Progress Is Now Reversing by
, August 19, 2024. “Until recently, most of us welcomed innovation, but something changed. And now a huge number of people are anxious and fearful about the same tech companies they once trusted. What caused this shift? That’s a big issue. Unless we understand how things went wrong, we can’t begin to fix them.” (The Honest Broker)Coronary atherosclerosis is a silent killer, but we have tools to stop it by Peter Attia, August 17, 2024. “A new study reveals that the prevalence of atherosclerosis is alarmingly high among asymptomatic adults classified as ‘low risk’ and underscores the importance of lipid-lowering therapies for avoiding atherosclerosis progression and mortality.” (Peter Attia)
Podcasts
Track Record and Risk w/Guy Spier, August 18, 2024. 2 hours, 26 minutes. Guy Spier discusses his track record with a degree of modesty uncommon in the hedge fund world. In addition, he discusses the benefits and downsides of being famous within the value investing community and his overall approach to life. (We Study Billionaires)
The Education of a Value Investor, October 2, 2014. My review of Guy Spier’s 2014 book reflecting on his life and career. (The Rational Walk)
Estée Lauder, August 18, 2024. 58 minutes. “Warren Buffett and Charlie Munger said it was a crime that more business schools didn't study Henry Singleton. I think it's a crime that more entrepreneurs don't study Estée Lauder. She is one of the best founders to ever do it. This is the story of how she went from a childhood obsession, to a single counter in a beauty salon, to a multibillion dollar empire.” (Founders Podcast)
How Ben Thompson Built a Writing Empire, August 21, 2024. 1 hour, 33 minutes. “Ben Thompson makes millions of dollars a year with his writing. He’s the OG of subscription-based newsletter writers. Maybe that’s your dream, too, but you’re plagued by questions like: ‘What should I write about?’ ‘What’s my business model?’ ‘How do I make my first dollar online?’ … Ben has the answers. In this episode, you’ll learn his exact playbook for how to monetize your writing — not just for right now, but also for the future.” (How I Write)
Nineteen Eighty-Four, August 22, 2024. 52 minutes. It would be an overstatement to suggest that the United States in 2024 is anything like Orwell’s dystopia but there is no doubt that the surveillance of citizens by government and corporations has vastly increased due to technological advances. Orwell’s “telescreens” are a joke compared to the surveillance possible with modern technology. Central bank digital currency (CBDC) is an example of technology that would make Orwellian dystopias much more likely. This podcast discusses Orwell’s life and his famous novel. (In Our Time)
Rethinking Nutrition Science, August 19, 2024. 2 hours, 9 minutes. “David Allison, a leading expert in obesity and nutrition, quantitative genetics, clinical trials, and research methodology explores the evolving landscape of nutrition science and obesity … The conversation also delves into the rise of GLP-1 receptor agonists like Ozempic and Mounjaro, exploring their ethical and practical considerations…” (The Peter Attia Drive)
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I don’t know how you read so much! This post deserves a bookmark 😁
Matthew 7 stood out to me. A great reminder. Hope you’re well this week? Cheers, -Thalia