Note to Readers: In Stream, we suggest worthwhile reading material on a variety of topics, not all of which are directly related to investing. Some of the articles require you to be paid subscriber of those sites. However, it is often possible to read such articles by going to Google News and searching for the article’s title.
Some nice stuff we are reading, watching, and observing at the start of this weekend…
Life/Learning
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The American chess player and martial arts champion Josh Waitzkin’s
The Art of Learning
is one of the best books I have read on, well, the art of learning and the entire process of going about doing it. This book reveals Waitzkin’s unique systems of thematic learning, idea generation, building resilience, and mastering the art of performance psychology. Here is one of the many passages from the book that have inspired me…
If I have learned anything over my first twenty-nine years, it is that we cannot calculate our important contests, adventures, and great loves to the end. The only thing we can really count on is getting surprised. No matter how much preparation we do, in the real tests of our lives, we’ll be in unfamiliar terrain. Conditions might not be calm or reasonable. It may feel as though the whole world is stacked against us. This is when we have to perform better than we ever conceived of performing. I believe the key is to have prepared in a manner that allows for inspiration, to have laid the foundation for us to create under the wildest pressures we ever imagined.
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It’s understandable that we respond to the ratcheting demands of modern life by trying to make ourselves more efficient by managing our time better. But what if
all this efficiency just makes things worse
?
Given that the average lifespan consists of only about 4,000 weeks, a certain amount of anxiety about using them well is presumably inevitable: we’ve been granted the mental capacities to make infinitely ambitious plans, yet almost no time at all to put them into practice. The problem of how to manage time, accordingly, goes back at least to the first century AD, when the Roman philosopher Seneca wrote On The Shortness of Life. “This space that has been granted to us rushes by so speedily, and so swiftly that all save a very few find life at an end just when they are getting ready to live,” he said, chiding his fellow citizens for wasting their days on pointless busyness, and “baking their bodies in the sun”.
Business
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Steve Jobs saved Apple – and Nike
– with the same piece of advice. And what was that?
When Nike named Mark Parker their CEO in 2006, one of the first things Parker did was call Apple CEO Steve Jobs for business advice. It might not have seemed it, but at the time Nike was struggling.
Yes, they had a successful brand. But they were failing to fit their digital strategy into their line of literally hundreds of thousands of products. During their call, Steve Jobs gave one piece of advice that stuck with Parker:
Nike makes some of the best products in the world. Products that you lust after. But you also make a lot of crap. Just get rid of the crappy stuff and focus on the good stuff.
“He was absolutely right,” said Parker. “We had to edit.”
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Here’s an old but insightful interview with Amazon’s Jeff Bezos, where he discussed his thinking behind Amazon and how he got it started. Some invaluable wisdom given by Jeff was his idea that you should view big decisions as your eighty-year-old self. By doing this you will see if that fear at present time is really warranted. Worth a watch!
If you cannot see the video above, click here .
Investing/Stock Market
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One of the most important decisions in the history of Berkshire was the acquisition of See’s Candies in 1972. Buffett has called See’s Candies “the prototype of a dream business.” Berkshire’s purchase of a boxed candy business founded by the See family in California fundamentally changed the investing world because it changed the way Buffett and Munger thought about investing. While you may never have the chance to own a business like See’s Candies, by better understanding the nature of a dream business you can more easily find a business to invest in that shares some of its positive attributes. Here is just one of the dozen
things Warren Buffett and Charlie Munger learned from See’s Candies
…
Buffett: “It’s one thing to own stock in a Coca-Cola or something, but when you’re actually in the business of making determinations about opening stores and pricing decisions, you learn from it. We have made a lot more money out of See’s than shows from the earnings of See’s, just by the fact that it’s educated me.” “If we hadn’t bought See’s, we wouldn’t have bought Coke. So thank See’s for the $12 billion. We had the luck to buy the whole business and that taught us a whole lot.” Munger: “We’ve learned that the ways you think and operate must involve time-tested values. Those lessons have made us buy more wisely elsewhere and make many decisions a lot better. So we’ve gained enormously from our relationship with See’s.”
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Nobody, dead or alive, has ever been able to predict how much companies will earn and how much investors will pay for those earnings. Investors should instead
worry about getting the big things right
. Read this post to find out what those big things are…
People spend a lot of time thinking about the future, it’s part of what makes us human. The problem is we’re not very good at dealing with uncertainty. We assume too many constants and not enough change. We underestimate progress and we overestimate failure. The way that this manifests itself in many investors is thinking about how much companies will earn and how much the market will pay for them.
In general (hedging my words), earnings are what drive stocks. But knowing them ahead of time would not necessarily help us make money, at least not in the short-term.
Reading/Thinking
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During his eight years in the White House — in a noisy era of information overload, extreme partisanship and kneejerk reactions —
books were a sustaining source of ideas and inspiration
for the outgoing US President Obama, and gave him a renewed appreciation for the complexities and ambiguities of the human condition…
“At a time when events move so quickly and so much information is transmitted,” he said, reading gave him the ability to occasionally “slow down and get perspective” and “the ability to get in somebody else’s shoes.” These two things, he added, “have been invaluable to me. Whether they’ve made me a better president I can’t say. But what I can say is that they have allowed me to sort of maintain my balance during the course of eight years, because this is a place that comes at you hard and fast and doesn’t let up.”
Combine this with the transcript of an interview of Obama on what books mean to him .
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Want to make better decisions and feel better about the decisions you make? First study the
laws of unintended consequences
…
Innocent evil is…moral philosophy’s hardest problem. People with the moral intentions yielding immoral consequences.
A friend asks, isn’t innocent evil just another name for unintended consequences? That got me thinking that the innocent evil that interests me is typically the result of people not paying attention to the potential for unintended consequences, which got me thinking about compiling a list of laws of unintended consequences.
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