The Weekend Bulletin (#38)
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Section 1: Investing Wisdom
Charlie Munger coined the expression 'intelligent fanatics'. Sean Idding and Ian Cassel in their book by the same name define them as: “Founder, CEO or management team with unconventional ideas and a fanatical drive to build a high-performance organization. A learning machine that can quickly adapt to change. Able to create a trust based culture that aligns everyone to think like owners. Focused on acquiring, training and motivate their best talent. Their time horizon in in ten-year increments, not quarterly, and they invest in their business accordingly. Regardless of the industry, they are able to create an impenetrable moat that competitors initially cannot understand and eventually fear.” In this twitter thread, an Amazon employee details his experience of working for an intelligent fanatic. Reminded me of Steve Jobs.
In his book, 'A Zebra in Lion Country' Ralph Wanger highlighted the institutional imperative (In Berkshire Hathaway's 1990 letter to shareholders, Warren Buffett defined the institutional imperative as “the tendency of executives to mindlessly imitate the behavior of their peers, no matter how foolish it may be to do so.”). Ralph also goes on to highlight his investment process, especially in small cap companies. His philosophy around finding small cap companies that have good fundamentals and buying the companies that are the ‘downstream’ beneficiaries to a major trend can be understood here.
I have seen many a 'long term' investors (disguised traders, mostly) usually look down upon traders. However, over the years I have come to appreciate the value of a system (philosophy + process + risk management) in the success of both investing and trading. For example, consider this highly sophisticated and detailed system of trading designed in 1983.
Section 2: Mental Models & Behavioral Biases
"Most of the time, the story our brains generate matches the real, physical world — but not always. Our brains also unconsciously bend our perception of reality to meet our desires or expectations. And they fill in gaps using our past experiences."
'Optical Illusions' are a window to mental delusions, claims this somewhat scary article. If you don't feel like reading it, I would strongly recommend you look at the various illusions at least (my favorite was the chess-board). In it also lies the answer to last week's trivia.
Section 3: Lessons From History
I usually share only links that I have myself read, and liked. However, given how big this is, I thought I might take some time to read it. So sharing this in advance. Michael Mauboussin's latest: "Public to Private Equity in the United States: A Long-Term Look". A multi-decade look at public equities, buyouts, and venture capital in the U.S.
Section 4: Personal Development
Often when approaching a problem, people jump straight to the conclusion without first observing the situation, gathering and analyzing facts, and finally coming to the most obvious choice. For the few that do go through the process, opportunities come knocking. What is most obvious is what gets overlooked the most. That is the theme is the book 'Obvious Adams' that was part of my give-away for the survey (you can see all the books here). That is also how one gentleman goes about finding the right candidate for the job. A short but interesting read.
Wouldn't it be great if someone wrote a playbook to achieve success? Well, someone just did. Before you go off to read it, please note that knowing how to succeed is the first step, the second and more important step is putting in the efforts to pave the way for success.
Section 5: Trivia
This is probably the most forwarded article on Whatsapp this week. In case you haven't read it yet, it’s well worth you while. For those that have read it, I have a question for you: What lessons can investors learn from this (change is inevitable is to generic; can you be more specific)? Leave your answer in the comments section. I will reveal my lesson next weekend.
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That's it for this weekend folks. I hope you that enjoyed this issue; let me know your thoughts/feedbacks by commenting below. Have a wonderful week ahead!!
- Tejas Gutka
[Aug 08, 2020]
P.S.
If you would like to contribute to a future issue of The Weekend Bulletin, please email a link to the article along with a short summary/note on why you like the article to: share2TWB[at]gmail[dot]com.