[The Weekend Bulletin] #78: Four Distinguished Investors and Writers,...
...and one simple formula for a more fulfilling life.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
In keeping with our agreement from Issue 75, I have shortened the length of the current issue by eliminating some sections, as few of the links are really long reads (one of the links is an entire magazine). I do hope you enjoy reading them.
Section 1: Investing Wisdom
The entirety of the latest instalment of the Graham and Doddsville Magazine makes for a very interesting read. It carries three long interviews that are totally worth reading:
Brain Bares of Bares Capital Management (whom we first met in issue 41) discusses his journey into the world of investing, his investment philosophy, and his scuttlebutt based investment process. Two things that stood out for me in this interview is how he things about diversification in terms of drivers of value, rather than industries, and how he treats management as an optionality (embedded call option) in his valuation process.
Sean Stannard-Stockton of Ensemble Capital (whose blog makes for very interesting read and has been featured in a number of our issues) also talks about his journey, philosophy, and process. His interview covers some very interesting aspects like how they size their positions using an algorithm, how they relate a businesses relevance to it's growth relative to the nominal GDP, how they differentiate between good and bad pricing power, and an interesting perspective on disguised businesses, among other things.
Lastly, Dan Rasmussen of Verdad Advisers (who very interesting research was discussed in issue 71 - section 3) talks about his journey and philosophy. His empirical research framework, (one of which was featured in the aforementioned issue), his quantitative research bent, and his portfolio construction framework are some of the highlights of this interview.
In the latest quarterly letter to investors, Mark Tollymore of Tollymore Investment Partners looks at a recent mistake that he made in allocating capital, and recounts a number of red flags that had emerged over time. This letter is an essential reading for two reasons:
We are all victims: Even the best in business are not spared from errors of judgement. Don’t fear them, for they will stop you from making good ones as well. However, be quick to identify such errors (by learning from last mistakes of self and others) and, more importantly, reacting to them.
Boiling frog syndrome: slow changes are hard to notice. That is how Mark notes that there were so many red flags but he couldn’t still react. Each red flag is small in and of itself, and therefore easy to argue against. Collectively, however, they make for big errors in judgement.
While Brain Bares has shied away from the public eye, the remaining three investors profiled above are great writers as well. Some of their past writings are well worth reading (Tollymore letters have unfortunately gone behind a firewall, but they still have some read-worthy material on their website).
Section 2: Personal Development
"Saying no saves you time in the future. Saying yes costs you time in the future.
No is like a time credit. You can spend that block of time in the future.
Yes is like a time debt. You have to repay that commitment at some point.
No is a decision. Yes is a responsibility."
- James Clear
Some of you may remember this quote from Issue 76. In a productivity obsessed world, we spend energy in trying to do more. Our to-do lists are ever expanding. However, if we want to really improve our lives, we need to think about subtracting, and not adding, claims this article.
One of the best articulations of the above, in my view, is this short note by Derek Sivers.
We had an entire issue dedicated to this subject.
Section 3: Blast From The Past
We consume a lot interesting text in our quest for knowledge. However, with each new byte of data that we feed into our memory, we lose some bit of old information that was held. Even without the addition of new information, our memory regularly cleans our information that is held deep and not often retrieved. If is for this reason that re-reading old texts (books/articles/notes) is highly recommended.
There are other advantages to re-reading. Spaced repetition for one - when we revisit some old material, it is etched better into our long term memory. More importantly, as we gain more experiences in life, re-reading an old text can provide some fresh perspectives that we may have missed while reading earlier.
It is to reap these benefits that this section revisits article/s from an earlier issue.
This article offers an interesting argument: should investor's pay a premium for investing in illiquid assets? Sounds absurd? Read on to find out why this may actually be good for investors.
"Conventional wisdom is you get an expected return premium for bearing illiquidity. Illiquidity is a bad thing, and, all else equal, you need to be paid extra for taking it on. But, what if this is backwards? What if investors will actually pay a higher price and accept a lower expected return for very illiquid assets?"
(This article was featured in the sixth issue of TWB).
Quotable Quotes
From the book, Ikigai: The Japanese secret to a long and happy life
On Better Living:
On the power of asking good questions:
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That's it for this weekend folks.
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If you have any feedback/interesting articles that you’d like to share → simply reply to this email/leave a comment below.
Have a wonderful week ahead!!
- Tejas Gutka
[Jun 05, 2021]