[The Weekend Bulletin] #75: Idea Generation, Gardening, Golden Age of Frauds,
+ David Swensen, Bryan Lawrence, Personal Purpose, Virtue.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Hola!!
Thank you to everyone who voted on last week's poll (should we reduce the number of links or should we continue as is). While we have a decision on hand, it was a pretty close call in the end - a 60:40 in favour of continuing as is.
Given this narrow margin, here's what I am thinking I'll do:
In issues that have long material - like a transcript/podcast/video, I'll share lesser links (you'll notice it this week itself). In other issues, I'll be indiscriminate. The idea is to control the time that you spend on the material rather than the material itself.
I hope you find this system useful. In case you have a different opinion, please feel free to reply to this email, or post a comment below.
Let's get on to business now.
Section 1: Investing Wisdom
The investing world lost a great mind last week - David Swensen (head of investing for the Yale University). David gave the world its modern endowment model (also called the "Yale Model"), and in effect provided a big fillip to the alternative investment world (hedge funds, private equity, venture capital).
Here are four investing lessons drawn from this giant figure's principles
If, like me, you enjoy learning about the investment philosophy and research process of different investors, then you are going to enjoy the following two links:
In a conversation with MoI Global, Bryan Lawrence lays down the investment philosophy as well as the investment framework of Oakcliff Capital - an investment management outfit that started as his family office. Here's an an interesting snippet from the conversation:
At VALUEx in 2019, one of the presenters estimated that of the $80 trillion of assets out there – equity assets across the stock markets of the world – maybe 1% would fit the category of actively-managed, concentrated value investing. He defined actively managed, concentrated value investing as having even a single 5% position and annual turnover less than 30%. So, of the $80 trillion, maybe $800 billion was managed in this way. More than one-third of that was Berkshire Hathaway. It remains puzzling to me after sixteen years of doing this that you can have these results that are much better than the market if you do this type of work and yet, the number of people doing the work is small and appears to be shrinking.
This article is a great collection of the idea generation process of a large number of investors. What struck me the most while sifting through the list was the fact that how little was quantitative screening/filtering mentioned by these investors.
Section 2: Mental Models & Behavioral Biases
I have, for long, had an interest in gardening. Thanks to a year of working from home, I got first-hand experience of this activity and realised that it is not as difficult as I thought it would be - so long as you follow some basic principles. It is exactly for these principles, that this article argues that most investors would make for awful gardeners (fear not, the article is about an important mental model and not about gardening).
Section 3: Lessons From History
"...innovation, new financial products, a booming economy, rising markets, new and exciting technologies, loose lending standards, new communication tools and people getting rich all over the place." Sounds a lot like today, doesn't it? Well, the period being spoken about is actually the 1920s!! In a true 'history doesn't repeat, but it rhymes' style, this post explains why the golden age of fraud is upon us.
Section 4: Personal Development
For long, we've all looked at our own lives through the lens of goals (health, personal finance, career, etc) and new year resolutions. However, when it comes to organisations, we take a different approach, starting from a higher altitude. This article argues that adopting a similar approach in our own lives as we do with corporations would be more beneficial. It also provides five reasons for why it would be more beneficial.
Section 5: Blast From The Past
Here is a good lesson in humility. We are all gifted with some talent that makes us better than average. Over time, we take these gifts for granted, showing them off at every possible occasion. In a talk delivered in 2010, Jeff Bezos reminisces a lesson that his grandfather taught him: "It's hard to be kind than clever." Remember that you didn't choose your gifts, they chose you. However, you can chose your actions and let them define who you are.
(This article was featured in the third issue of TWB. You can read the whole issue here).
Quotable Quotes
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That's it for this weekend folks.
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Have a wonderful week ahead!!
- Tejas Gutka
[May 15, 2021]