The Digest #151
Limited Control, Down Rounds, The Hero's Journey, Unhappy Retirees, Lincoln on Idleness, The Future of Software
“The chief task in life is simply this: to identify and separate matters so that I can say clearly to myself which are externals not under my control, and which have to do with the choices I actually control. Where then do I look for good and evil? Not to uncontrollable externals, but within myself to the choices that are my own.”
— Epictetus, Discourses, Book 2, Chapter 5
Ryan Holiday has spent much of his career writing about how the principles of stoicism are applicable to people living in the twenty-first century. Stoicism is often caricatured as having a “stiff upper lip” but is a far more intricately formulated guide for living a good life. In addition to articles on his website, Holiday is the author of several books including The Daily Stoic which contains daily entries intended to serve as prompts for reflection. I purchased the book last month and found the quote from Epictetus shown above when I started reading the first entry on New Year’s Day.
Much human misery originates from trying in vain to do something that is not within our power. No one can do anything about a flight delay or a traffic jam. To get upset about such matters and resort to yelling and screaming will do no good. Similarly, the number of people who actually have the ability to affect the macroeconomy or matters of war and peace is tiny. All ordinary people can do is vote for politicians, and most politicians usually lack the control they claim to have. Control can be elusive.
Indeed, much is out of our control and it is liberating to recognize this and to stop making futile attempts to control the uncontrollable. At the same time, I think that it is important to realize that some things that are out of our control today need not be out of our control in the future if we take small daily steps to improve our position.
Why do many people feel like they have limited control? Sometimes it is because they have no control over their time. Someone with a large family to support and limited financial resources must accept that going to a job that she dislikes is out of her control today. But that does not mean that it is out of her control to be in a better position in the future. Perhaps new skills can be attained or funds saved to provide greater independence and control five or ten years from now.
There should be a balance between accepting what we cannot change in the short run and the impact we can have in the long run through sustained efforts to change our current position. Just as those who know nothing about stoicism might reduce it to the “stiff upper lip” caricature, those with only a cursory understanding could misconstrue admonitions to accept what we cannot change.
More is in our control than we might think, but perhaps not in our immediate control. We have agency over our future condition. I don’t think that the ancient Stoics would argue with this observation.
Related articles on Stoicism:
The Limits of Our Power, October 28, 2020
The Illusion of Control, August 31, 2020
Meditations by Marcus Aurelius, October 2, 2022
Book Review: How to Think Like a Roman Emperor, June 20, 2019
Book Review: Soul in the Game, June 20, 2022
Berkshire Hathaway Had a Strong 2022. What to Watch in 2023 by Andrew Bary, January 3, 2023. In this article, a reporter who has covered Berkshire for decades provides a recap of some of the major events of 2022, including the Alleghany purchase and a likely decline in Berkshire’s book value due to declines in the equity portfolio. Succession is discussed toward the end of the article. I agree that giving Greg Abel and Ajit Jain more of the spotlight at this year’s annual meeting would bolster confidence among shareholders. (Barron’s)
Note: Although Barrons.com is mostly paywalled, there is an arrangement in place where Barron’s stories are available to users of Apple’s MacOS and iOS “Stocks” app when you enter a ticker symbol. No payment is required. h/t @WEBspired on the Shrewd'm.com Berkshire Hathaway message board.
Private Markets Don’t Like to Go Down by Matt Levine, January 4, 2023. Private tech companies dislike “down rounds” — that is, raising money at a valuation that is lower than prior rounds. A down round forces venture capital firms to write down earlier investments. But sometimes a down round is inevitable, either for company specific reasons or because public markets have corrected sharply, as was the case in 2022. Matt Levine discusses how “structure” can be used in deals to maintain the same headline valuation while providing concessions to investors. While this practice fools no one, it allows venture firms to avoid writing down prior investments. (Money Stuff)
Note: Although Bloomberg is mostly paywalled, Matt Levine’s articles are also sent out to subscribers of Money Stuff free of charge. You can subscribe here.
Rookie Traders Are Calling It Quits, and Their Families Are Thrilled by Rachel Louise Ensign, January 1, 2023. We can debate whether extended pandemic lockdowns were necessary or not, but it is hard to argue that social isolation and idleness did not take a massive toll on society. The rise of online gambling in securities and crypto was one of many dysfunctions that emerged over the past three years. After a difficult 2022, it appears that at least some of these traders are throwing in the towel. (WSJ), January 1, 2023. A timeless formula for stories is that a character faces a situation that disrupts his established life and requires skills above and beyond his current abilities. By struggling through adversity, the character develops the ability to deal with new challenges and is transformed. Eventually, the character prevails over adversity and returns home as a hero. Rob Henderson discusses how the familiar story of Aladdin fits this pattern known as the "Hero's Journey" and illustrates important principles of evolutionary psychology. (Rob Henderson's Newsletter)
Why So Many People Are Unhappy in Retirement by Arthur Brooks, May 7, 2020. Rob Henderson’s article led me to this essay about psychological risks facing retirees. Often, a retiree goes through life in a pattern similar to the hero’s journey. This is particularly true for very successful people who find themselves with ample financial resources to give up work. However, retirees can end up aimless and unhappy. If you’re in the midst of your personal “hero’s journey”, you should plan for what Brooks calls “the personal crucible” that awaits at the journey’s end. (The Atlantic)
It’s Time to Work by Nick Maggiulli, January 3, 2023. For those who start with no initial capital, the amount saved from wages is far more important than the returns on early investments. Rather than dwelling too much on optimizing returns, Nick Maggiulli suggests that most people should focus on working and saving early in their careers. Toward mid-career, investment returns will begin to become more of a factor than annual savings. This is sensible advice although I think that the small minority of investors who truly enjoy the research process should begin as early as possible since investing skills are cumulative and compound over time. (Of Dollars and Data), January 2, 2023. After repeatedly helping his stepbrother, Abraham Lincoln concludes that doling out additional money is counterproductive because it facilitates idleness which is simply a bad way to live. "This habit of uselessly wasting time, is the whole difficulty; and it is vastly important to you, and still more so to your children that you should break this habit. It is more important to them, because they have longer to live, and can keep out of an idle habit before they are in it; easier than they can get out after they are in." (Letters of Note)
A Timeless New Year by Lawrence Yeo, January 4, 2023. Useful advice for those who made New Year’s resolutions: “Hope isn’t enough to create lasting change, especially if it’s contingent upon a social construct like celebrating the turning of a clock’s hands. What’s more important is that you’ve reframed your identity as a whole, and that you truly believe in this fresh approach to viewing yourself. Ideally you do this irrespective of what date is on the calendar, and instead focus on the story you want to tell about your own life.” (More to That)
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Behind the Memo: Sea Change, January 5, 2023. 20 minutes. Howard Marks briefly explains the backstory and thought process that went into his latest memo, Sea Change, which was published on December 13. I provided a link to this memo in the Weekly Digest published on December 16. (Behind the Memo)
How to Pick Stocks Like Peter Lynch, January 2, 2023. 51 minutes. Clay Finck shares his thoughts on Peter Lynch’s book, One Up on Wall Street, which was published in 1989 toward the end of the legendary investor’s career. In 1990, Lynch retired as manager of Fidelity Magellan after posting an annual rate of return of 29.2% over thirteen years. Lynch was only 46 years old when he retired. (We Study Billionaires)
The Future of Software Creation, January 3, 2023. 1 hour. I’ve been thinking more about software recently, especially after I wrote an article on Journal Technologies last week. While much has changed since I left the industry in 2009, many of the needs remain unchanged, especially when it comes to making software more configurable and flexible without resorting to writing code. This is a good discussion that also touches on how artificial intelligence opens up new possibilities. (Invest Like the Best)
Andrew Carnegie, Henry Clay Frick, and the Bitter Partnership That Changed America, January 2, 2023. 1 hour, 15 minutes. If you think business disputes are nasty today and the past was always more genteel, this podcast provides some historical perspective. Henry Clay Frick was once the man who Andrew Carnegie trusted more than any other to handle the business of Carnegie Steel. But the two had a major falling out that lasted to the end of their lives, and perhaps into the hereafter. "Yes, you can tell Carnegie I'll meet him," Frick said finally, wadding the letter and tossing it back at Bridge. "Tell him I'll see him in Hell, where we both are going." (Founders Podcast)
J. Edgar Hoover’s 50-Year Career of Blackmail, Entrapment, and Taking Down Communist Spies, January 3, 2023. 53 minutes. J. Edgar Hoover was one of the most important men of the twentieth century. He enjoyed extremely high levels of public approval in the 1950s but his popularity eroded steadily through the upheaval of the 1960s up to the end of Hoover’s life in 1972. Hoover’s reputation has only suffered more in the decades following his death. This is an interesting discussion of Hoover’s life and the dynamics that led to his reputational downfall. (History Unplugged)
Jonathan Bi explores the changing rules of war in this thread:
The Magpie by Claude Monet
From Musée d'Orsay:
In the late 1860s, Monet started to extend the need to capture sensations and render ‘the effect’ to all transitory, even fleeting states of nature. Taking Pissarro, Renoir and Sisley with him, Monet tackled the great challenge of a snow-covered landscape, which Courbet had grandly explored with great success not long before. Toning down Courbet's lyricism, Monet preferred a frail magpie perched on a gate, like a note on a staff of music, to the world of the forest and hunting …
According to Wikipedia, “The Magpie is one of approximately 140 snowscapes produced by Monet”, some of which I browsed before deciding on this painting.
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