The Digest #214

September 11, 2001, Nixon vs JFK, Apple's future, Damodaran on decline, Berkshire's book value, Founder mode, Chasing dividends, Caro on LBJ, Peter Lynch, Epicureanism, Mt Everest, and more ...

September 11, 2001

Three years ago, I wrote that, at some point, the attacks of September 11, 2001 transformed from a collective national trauma seared into the memories of all who lived through that day into a historical event that seems to have less impact every year.

To a certain extent, this is a natural part of a healthy healing process, but there is very little that is happening in the United States today that can be characterized as “healthy.” A good example of this is the Presidential debate that took place last night in which the September 11 attacks did not come up as part of any of the (mostly vapid) questions and was not brought up by either candidate in their closing statements.

I vividly recall the weeks following the attacks and the national unity that existed for a brief period of time. Older generations compared American unity in the fall of 2001 to the national mood after the Pearl Harbor attacks sixty years earlier. But unlike the 1940s, national unity soon evaporated in the midst of endless wars where American objectives shifted from fighting terrorism to regime change and nation building.

There are many legitimate questions that remain unanswered. In last week’s Digest, I included an interview of former Democratic Senator Bob Kerry who served on the 9/11 commission and spoke about the culpability of Saudi Arabia and the lapses at the CIA prior to the attacks. If, due to complacency, we fail to demand answers and learn from mistakes that led to 9/11, we could very well face an even worse attack in the future.

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1960 Presidential Debate

The first Presidential debate broadcast on television was held on September 26, 1960 between Richard Nixon and John F. Kennedy. It is worth watching this debate for many reasons. It is of historical significance, but more importantly, it highlights the decline in American political discourse over the past six decades.

In both form and substance, the 1960 debates treated the American people with a great deal of respect, as intelligent citizens worthy of a discussion of the issues facing the country. Even the vocabulary used by the candidates made it obvious that they were not trying to dumb down the discussion or patronize voters.

Recent Presidential debates treat the American people as imbeciles incapable of understanding substantive issues who are only concerned with sound bites related to issues that concern their immediate wants, needs, and desires.

Bread and Circuses

This is an insult to Americans who are concerned about the future of our country.

Is this excessive hyperbole? Watch the 1960 debate followed by either of the two wretched “debates” held this year and decide for yourself.

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Articles

Boomer Apple by Ben Thompson, September 10, 2024. This is a well thought out article regarding Apple’s overall product strategy and its stage in its corporate life-cycle. I particularly liked the discussion of the growing services business. This is not a new story, but it is increasingly important for Apple’s future prospects. (Stratechery)

Dealing with aging: The Intel, Walgreens and Starbucks Stores Updated! by

Aswath Damodaran

, September 10, 2024. How should companies handle aging and decline? This has been a frequent topic of Aswath Damodaran’s articles. The way I see it, a major problem with companies in decline is that every incentive exists to attempt turnarounds no matter how futile. Managing an orderly decline with the goal of maximizing shareholder wealth is not going to be on the table if it eliminates the CEO’s job and $250-500K annual sinecures for board members. (Musings on Markets)

Berkshire Hathaway: Book Value Keeps Losing Relevance by Eric Sprague, September 10, 2024. This article raises some good points regarding the distortion of book value per share at Berkshire Hathaway, particularly the effect of repurchases on this popular valuation metric. However, I have not totally abandoned book value per share as a very rough, yet understated indicator of intrinsic value. As long as a large percentage of Berkshire’s value is attributable to cash and marketable securities, book value will retain at least some limited relevance for shareholders. (Seeking Alpha)

Piecing Together Berkshire Hathaway's 1988 Annual Shareholders Meeting by

Kingswell

, September 10, 2024. Kingswell has been documenting several of the meetings that took place prior to the earliest meeting in the CNBC archive. I found it interesting to read Warren Buffett’s views on inflation in 1988. I’ve long been interested in Mr. Buffett’s thoughts on inflation which was the topic of a recent three-part series on The Rational Walk. (Kingswell)

Founder Mode by Paul Graham, September 2024. “In effect there are two different ways to run a company: founder mode and manager mode. Till now most people even in Silicon Valley have implicitly assumed that scaling a startup meant switching to manager mode. But we can infer the existence of another mode from the dismay of founders who've tried it, and the success of their attempts to escape from it.” (PaulGraham.com)

How Eighty-One Dollars Made Lyndon Johnson by

Frederik Gieschen

, September 8, 2024. This is an interesting anecdote from the early life of LBJ that was told in the first volume of Robert Caro’s epic biography. I’ve read all four volumes and highly recommend it. The most common pushback I get for this suggestion is that LBJ isn’t “interesting enough” to warrant so much time. My response is that LBJ is far more interesting than most people realize and that Caro really used LBJ as a vehicle for writing a great history about the twentieth century. (The Alchemy of Money)

• Sad Irons, September 12, 2023. I wrote this article about another early episode in LBJ’s life based on Robert Caro’s biography. It is impossible to understand LBJ without understanding the poverty in which he grew up. (The Rational Walk)

When Chasing More Dividends Leaves You With Less by Jason Zweig, September 6, 2024. Investors love dividends and hate the idea of selling stock to fund living expenses because doing so would be “invading principal.” Instead, investors should focus on total return. Focusing on yield alone exposes investors to many strategies and schemes that will leave them worse off in the end. (WSJ)

• Berkshire Hathaway as an Income Stock, February 17, 2023. Berkshire pays no dividend which causes some investors to eliminate it as an investment candidate. Last year, I wrote an article explaining how Berkshire shareholders can create their own “dividend” by selling shares, modeled after how Warren Buffett has given away a percentage of his shares every year to foundations while the dollar amount of his investment in Berkshire continued to increase. (The Rational Walk)

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Podcasts

Nick & Zak’s Excellent Adventure, September 10, 2024. 45 minutes. “How Nick Sleep and Qais Zakaria built their radically unconventional investment partnership. From the incredible book [Richer, Wiser, Happier] by William Green.” (Founders Podcast)

Peter Lynch’s Guide to Investing in Your Expertise, September 8, 2024. 1 hour, 7 minutes. Peter Lynch is one of the best investors of all time, but has kept a very low profile in recent decades. In this podcast, Kyle Grieve discusses lessons he’s learned from Peter Lynch’s book, One Up on Wall Street. (We Study Billionaires)

Epicureanism: Withdrawal vs. Political Action, September 6, 2024. 48 minutes.

Johnathan Bi

interviews Katharina Volk on Epicureanism. “How did a philosophy whose key doctrine is to abstain from politics become one of the dominant philosophies for politicians? This is a central question I discuss with a leading classicist Katharina Volk. My hope is that by understanding why even Epicureans decided to enter the political world, I can see if I'm overlooking any reasons to engage in politics myself.” (Johnathan Bi)

The Family that Summited Everest, September 9, 2024. 57 minutes. I have many wilderness treks on my “bucket list” but Mt. Everest is not one of them! I’d rather listen to podcasts or read about these trips. “Clay Jenkinson’s interview with adventurer Alan Mallory about his family’s ascent of Mount Everest. That’s 29,032 feet, a third of it in the Death Zone, where your body actually starts to die from lack of oxygen and other factors. Mallory walks us through the process—getting to Nepal, the cost, the outfitters, the journey to base camp, where you stay to adjust to the altitude, and then the slow, steady, and exhausting climb through four camps before attempting the summit.” (Listening to America)

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