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The Digest #140
It's Never Too Late, Executive Compensation, Traveling like a Local, Alien Truths, Pursuing Happiness, Silence, Vannevar Bush
Quote of the Week
“It is not that we have a short time to live, but that we waste a lot of it. Life is long enough, and a sufficiently generous amount has been given to us for the highest achievements if it were all well invested.”
— Seneca, On the Shortness of Life
It’s Never Too Late
In 1985, Steve Jobs was forced out of Apple, the company he had co-founded a decade earlier. Although this setback was a searing experience for Jobs at the time, he later reflected that it was “the best thing that could have ever happened” because it forced him to be a beginner again and start anew. Of course, Steve Jobs was only thirty years old at the time and it was obvious that there would be a second act.
In contrast, Sol Price was nearly sixty years old when he was forced out of FedMart in 1975. As I described in an article last week, Price founded FedMart in 1954 and put all of his energy into the business for two decades. Nearing retirement age, he was cast out with a million dollars to his name, which is equivalent to $5.3 million in today’s dollars. He was not super-rich, but could have easily afforded to call it quits and retire.
But calling it quits wasn’t in Sol Price’s DNA. He started a new company within weeks.
Robert Price’s biography of his father, Sol Price: Retail Revolutionary & Social Innovator, describes Sol Price’s second and third acts — the founding of Price Club and his later charitable initiatives that were funded by the enormous wealth he accumulated as a senior citizen. All of Sol Price’s experience over six decades of life combined to make Price Club a smashing success and made him super-rich.
There are plenty of other examples of individuals who achieved the bulk of their success later in life. Jim Sinegal was 47 years old when he co-founded Costco in 1983. Sam Walton was 44 years old when the first Wal-Mart opened in 1962. Charlie Munger was 54 years old when he became Berkshire Hathaway’s Vice Chairman in 1978, formalizing his longstanding business relationship with Warren Buffett.
Athletes inevitably peak relatively early in life, but the same is not true in fields where experience and intellect compound for decades. In business, some of the greatest achievements have been made by individuals who are already well into middle age.
Older investors often have accumulated both capital and wisdom which can result in what Charlie Munger might call lollapalooza results. On Warren Buffett’s 65th birthday in 1995, Berkshire Hathaway’s Class A shares closed at $25,400. The shares have compounded at 10.9% in the 27 years he has run the company as a senior citizen, multiplying the share price by over sixteen times.
As Seneca observed two thousand years ago, life is sufficiently long to achieve great things if the time is used well. It’s never too late to start something new.
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As Home Prices and Mortgage Rates Stay High, Prospective Buyers Put Down Payments on Ice by Veronica Dagher, October 18, 2022. This article includes a profile of a couple that has $250,000 earmarked for a down payment and is keeping the funds in a savings account paying 0.03%. One month treasury bills, a very prudent place to keep cash for a down payment, yield 3.3%! By leaving a quarter million dollars in this bank account, the couple is doing the equivalent of setting $700/month on fire! (WSJ)
Why You Might Want to Retire Soon If You Have a Pension by Nick Maggiulli, October 18, 2022. This is a must-read article for anyone nearing retirement who has a defined benefit pension plan. As interest rates increase, the lump-sum option offered to pensioners is likely to decline when benefits are recalculated at the beginning of 2023. Workers who are planning to retire in 2023 might want to accelerate their plans given the significant increase in interest rates over the past year. (Of Dollars and Data)
Should Berkshire Pay Warren Buffett's Successor Nothing? by Adam Mead, October 13, 2022. Adam Mead raises interesting questions about executive compensation at Berkshire once Warren Buffett is no longer CEO. Greg Abel is Mr. Buffett’s designated successor and has recently purchased a significant amount of stock. Adam Mead does not argue that Mr. Abel is not worth a great deal of compensation but that he would be setting an example if he emulates Mr. Buffett by taking a very low salary. I suspect that Mr. Abel will receive market-based compensation and will elect to maintain a large investment in the company. (Watchlist Investing)
A Rare Interview with Phil Fisher Following the 1987 Crash by Conor MacNeil, October 18, 2022. “A man who rarely granted interviews, Fisher once sat down with Forbes in 1987 to engage in the interview that I will now share with you. At the time, concerns of hyperinflation and fear with the S&P 500 down ~30% penetrated the market, but Fisher’s anecdotes are sound and reasoned, even humorous and witty.” (Investment Talk)
If You Want Success, Pursue Happiness by Arthur C. Brooks, October 13, 2022. Sometimes, we confuse the order in which things are likely to occur. Many people think that the pursuit of success will bring about happiness, but the opposite is more likely to be true. If you pursue happiness, success is more likely to follow. This raises the question of how to pursue happiness Viktor Frankl believed that happiness ensues from achievement of one’s purpose in life. Happiness cannot be pursued directly, but must ensue from progress toward a life of meaning. (The Atlantic)
As We May Think by Vannevar Bush, July 1945. I found out about this essay while listening to a recent episode of The Founders Podcast. Vannevar Bush was one of the leading technologists of the 20th century and in this essay he contemplates how a post-war America will harness technology for peacetime use. This is a long essay but worth reading in full. The focus is on how information will be organized and disseminated, clearly foreseeing technologies we take for granted today. (The Atlantic)
Alien Truth by Paul Graham, October 2022. Are there universal truths beyond mathematics and physics which could form common ground with alien life forms? If artificial intelligence advances sufficiently, it could be equivalent to an “alien” life form, so this topic might be relevant in the not-too-distant future. “If there were intelligent beings elsewhere in the universe, they'd share certain truths in common with us. The truths of mathematics would be the same, because they're true by definition. Ditto for the truths of physics; the mass of a carbon atom would be the same on their planet. But I think we'd share other truths with aliens besides the truths of math and physics, and that it would be worthwhile to think about what these might be.” (PaulGraham.com)
How to Travel by Chris Arnade, October 13, 2022. Over the past couple of years, I have enjoyed traveling vicariously as I read about Chris Arnade’s walking adventures all over the world. Arnade’s travel style is similar to how I prefer to travel. He chooses to avoid the increasingly homogenous tourist districts that are disturbingly similar all over the world and instead experiences cities as the locals do. If you’re looking for guidebooks that embrace this philosophy of travel, the Rick Steves European travel guides probably come closest. (Chris Arnade Walks the World)
The Case for Silence by Luke Burgis, October 18, 2022. “The most important moments of our lives happen in silence: in the development of life inside the womb; on the quiet walks when we have a flash of self-awareness and come to know something essential about ourselves for the first time; at the mysterious moment we fall in love with someone; even in the precious moments before death. These things happen in the space between the noise—in the silence of our own hearts.” (Anti-Mimetic)
On Silence and the Inner Voice by Thomas J. Bevan, October 15, 2022. “To sit in silence and to simply think (or not think) is a pretty radical and subversive act. It quickly takes you off the pre-laid tracks of habit and consumption- whether that be consumption of products or consumption of endless information and content. The silence makes demands of you- spiritual demands- but it is only through this, as far as I can see, that any kind of peace can be found or any kind of life path that is not merely rote and pre-packaged can be discerned and pursued. The silence is also where all non-derivative, nonreactive creative ideas come from, at least in my experience.” (The Commonplace)
Betting Better in Markets and Life with Annie Duke, October 15, 2022. 1 hour, 47 minutes. “William Green chats with Annie Duke, the best-selling author of “Thinking in Bets,” “How to Decide,” and “Quit.” After winning over $4 million as a poker player, Annie quit the game, became a leading expert on decision-making, and now advises portfolio managers & venture capitalists. Here, she draws on unique personal experience & deep research to share practical lessons on how to counter our cognitive biases & make better investment decisions.” (Richer, Wiser, Happier)
Paul Orfalea - It’s About the Money, October 18, 2022. 46 minutes. “Paul founded Kinko's, the popular copy chain, in 1970. He started with a single photocopy shop in California and grew the business into a $2 billion multinational operation over the course of his 30 years in charge. Paul is a nontraditional leader in the best sense, and we discussed his philosophy of business building, from why your subordinate should frustrate you, why you shouldn't love your business and tips he learned on hiring well.” (Invest Like the Best)
Why Does Fighting Inflation Have to Hurt So Much, October 19, 2022. 47 minutes. Jon Stewart interviews Steve Hanke, a professor of applied economics at the Johns Hopkins University and a proponent of monetarism. This isn’t the first time I have linked to a podcast covering an economic topic which is hosted by a … comedian. I’ve done so because I think that Jon Stewart makes an effort to understand these issues and presents them in a way that ordinary people might understand. Although Jon has a political perspective, it seems to me that he is actually interested in understanding the issues and hearing more than one point of view. (The Problem with Jon Stewart)
Tweet of the Week
I never get tired of listening to these old clips from Berkshire Hathaway annual meetings. CNBC has an extensive collection of annual meeting videos and other material that is worth checking out.
Photo of the Week
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