[The Weekend Bulletin] #160: Sol Price, Brunello Cucinelli, Position Sizing,...
... Pleasure vs Joy, Getting Out of a Rut, and more.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Investing Wisdom
Two business operator stories that I thoroughly enjoyed this week:
A deep dive in to the life, values, and principles of Brunello Cucinelli
Brunello Cucinelli was born into very humble beginnings in Castel Rigone growing up with no running water or electricity. But through dreams, hard work and determination Brunello has gone on to found and create the fashion empire brand, Brunello Cucinelli. The “king of cashmere,” Cucinelli dropped out of engineering school and used a $550 loan to launch a fashion line in 1978. He donates 20% of his profits through the Brunello Cucinelli Foundation. He has been described as a “philosopher-designer” for his approach to humanistic capital and as of today the market cap of Brunello Cucinelli is $5.2 billion euro.
Sol Price - Retail Revolutionary
Sol was a poster child for the American dream. His immigrant parents were born in a small Russian village. Sol was the first in his family to graduate college. He earned a law degree. He became an exceptionally successful businessman and philanthropist, celebrated 70 years of marriage, was a good father who instilled high values in his sons, and he never walked away from responsibility. Sol Price is the most influential retailer of all time. If you factor in how many people are on record saying that they took Sol's ideas and applied it to their own life and work: Jim Sinegal’s Costco, Sam Walton of Walmart, Jeff Bezos of Amazon, Bernie Marcus of Home Depot, the founder of Trader Joe's. It's pretty incredible to think that Sol's ideas have created literally trillions of dollars of value.
An article took me back to this slightly dated series of post on a subject that is not often spoken about: Position Sizing. Through a series of seven short articles, the authors distill their process of arriving at and managing the weights of their holdings in the portfolio. I have seldom come across a better quantification of such a qualitative subject.
Mental Models & Behavioral Biases
Much like how we can measure money in terms of wealth or richness (which we read about in #157 recently, and in #85 as highlighted below), we can qualify happiness into joy or pleasure. This two minute speech is the ultimate simplification of the difference between pleasure and joy. Understanding this framework can help you aim for the right metric.
Personal Development
Everyone experiences ruts: periods of time where they feel like they're not getting enough done, they don't feel like what they're doing is meaningful, they don't like who they are and they're living the same day, day in and day out. But since everyone gets into ruts, what differentiates people is how quickly they recognize they're in one, and take action to get out of it. Here is a three-step method to get out of a rut.
Blast From The Past
Revisiting articles from a past issue for the benefits of refreshing memory and spaced repetition, as well as for a fresh perspective. Below are articles from #85:
We all know and understand moats. There is a lot of literature on identifying and analysing moats. There's also some literature on the durability of moat (we've looked at it in issues #8, #23, and #50). However, even as we focus on the business and it's moat, we shouldn't forget about the durability of demand for it's products. This article explains further.
Pair the above with the following from Issue 15:
Most things about the future are uncertain, except for one thing - change. Change is unforeseeable, but inevitable. And from this universal truth rises a risk in investing that may lead to the creation of a value trap. Often, business managers and investors fail to notice a change in consumer trends, thereby both continuing to invest in well known brands that are well on their way to obscurity. One way to avoid this trap is to understand the difference between recognizability and relevance. This article explains how.
"Now, ya'll would guess that more often than not, the highest paid player on an NFL team is the quarterback. And you'd be right. But what you probably don't know is that more often than not, the second highest paid player is, thanks to Lawrence Taylor, a left tackle. Because, as every housewife knows, the first check you write is for the mortgage, but the second is for the insurance. The left tackle's job is to protect the quarterback from what he can't see comin'. To protect his blind side."
The above quote is from the movie The Blind Side (highly recommended) which is based on a 2006 book by the same name by Michael Lewis ( of The Big Short, The Undoing Project, and Moneyball fame). The blind side applies as much to sports, as it applies to life, and investing. Interestingly, the field of magic is based upon exploiting this blind side. This is an interesting mental model called Inattentional Bias, which is explained here.
Similar to the change in perspective about corporate value creation, there is a changing perspective about wealth. Traditionally, wealth has been equated with money (or vice versa). More recently, however, a much wider perspective is being adopted. The modern view of wealth encompasses a broad spectrum of things, some of which are highlighted in this article.
“Wealth is easy to measure but hard to value.”
"Money buys happiness in the same way drugs bring pleasure: Incredible if done right, dangerous if used to mask a weakness, and disastrous when no amount is enough."
Readworthy Passage
Let's read together a random, but read-worthy, passage from a randomly picked book.
And a woman who held a babe against her bosom said, Speak to us of Children.
And he said:
Your children are not your children.
They are the sons and daughters of Life’s longing for itself.
They come through you but not from you,
And though they are with you yet they belong not to you.
You may give them your love but not your thoughts,
For they have their own thoughts.
You may house their bodies but not their souls,
For their souls dwell in the house of tomorrow, which you cannot visit, not even in your dreams.
You may strive to be like them, but seek not to make them like you.
For life goes not backward nor tarries with yesterday.
You are the bows from which your children as living arrows are sent forth.
The archer sees the mark upon the path of the infinite, and He bends you with His might that His arrows may go swift and far.
Let your bending in the archer’s hand be for gladness;
For even as He loves the arrow that flies, so He loves also the bow that is stable.
- From The Prophet by Khalil Gibran
Quotable Quotes
"Feelings succeed in obtaining results that mathematics would deem impossible."
- Brunello Cucinelli
"To hear the whisper of inspiration you have to learn to quiet your mind."
- Frederik Gieschen
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That's it for this weekend folks.
Have a wonderful week ahead!!
- Tejas Gutka
[Jun 03, 2023]