The Weekend Bulletin (Vol. 1 | Iss. 25)
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Volume 1 | Issue 25 | May 09, 2020
This weekend calls for some celebrations as this marks the twenty-fifth installment of this bulletin - a Silver Jubilee!!
Over the past six months, I have sifted through hundreds of articles (my estimate is close to 500 articles @ 20 articles/week) to bring you the best reading material. I hope you have enjoyed reading these articles as much as I have enjoyed putting them together. If you have, can you please click on the like (<3) button above to let me know?
I sincerely thank you for being a part of this journey and hope that you have gained some value along the way. I also hope that the road ahead is far more longer and knowledgeable than the one that we have left behind.
Section 1: Investing Wisdom
In order to celebrate the silver jubilee, I have included only those articles that profile investors. Some of these articles are new, while some are from the archive. Similarly, some of these investors are well-known, while some are not so well known. New or old, known or unknown, all of these will offer tons of wisdom.
I want to start the series with Philip Fisher, for his was the first book that I read on investing ever (and recently re-read). Fisher and Graham were at two opposite end of the investing spectrum, with Warren Buffet somewhere in between (he called has called himself "85% Graham and 15% Fisher"). While both Warren and Graham are highly talked about, Fisher isn't. However, I consider his work to be seminal, almost the bible of growth investing. It therefore only serves right that I share a summary of Fisher's most famous work: Common Stocks and Uncommon Profits, and Conservative investors sleep well.
While the above was a bible to me, what the world considers the most seminal work on growth investing is Peter Lynch's One Up on Wall Street. It also happens to be the second book that I read about investing. Lynch was probably one of the great fund managers of all time, and was famous from introducing many concepts like 'PEG' and 'Diworsification'. Here are some of Peter Lynch's best thoughts summarised.
More than 25 years ago, a research analyst at Goldman Sachs, Dan Benton (who later founded Andor Capital Management), wrote 20 rules for technology stock investing, a paper that was widely circulated in the 1990's. While dated and specific to technology stocks, these rules apply even today and not just specifically to tech sector but more broadly. Below is a scan of the paper:
This short profile of Thomas Kaplan (an American billionaire businessman, investor, philanthropist and art collector) is very interesting. For I haven't come across many profiles of investors that specialise in natural resource investing. And if you sniff a 'trading' trait in commodity investing, then you are in for a surprise. The patience and conviction of Mr. Kaplan is what make the short profile worthy of a read.
A classmate of John F. Kennedy at Harvard, intelligence officer during World War II, researcher at the Federal Reserve Bank, economics professor, money manager, pioneer in investment analysis, historian, expert on risk and author. No I am not referring to a group of investors, but a single investor whose thoughts are as interesting as his profile. A long and dated interview of Peter Bernstein by Jason Zweig - I have read this piece numerous times and even tweeted some interesting tidbits. If I had to pick only one nugget of wisdom from this interview, it would be this:
Section 2: Mental Models & Behavioral Biases
Two contrasting ideas from investing: momentum vs mean reversion. While momentum says that what is working currently will continue to work in the future, mean reversion claims that everything that goes up must come down, and vice versa. Over different time horizons, both these theories work. However, betting excessively on one or the other can lead to ruin. That is what the thousands of people in Italy learnt in 2005, and in that story lies our mental model of the week: Gambler's Fallacy.
Section 3: Lessons From History
What’s happening now has happened many times before for essentially the same reasons, say Ray Dalio. In a series titled 'The Changing World Order', Ray is passing along research that he conducts to understand whats happening now. In his latest installment, he looks at how the current Government response is a textbook crisis response, and what implications has it had in the past. Its a long and tough read, but will be worth your time.
This was the most hard hitting: In fact it [printing money] seems good rather than bad to most people because it helps to relieve debt squeezes, it’s tough to identify any harmed parties that the wealth was taken away from to provide this financial wealth (though they are the holders of money and debt assets), and in most cases it causes assets to go up in the depreciating currency that people use to measure their wealth in so that it appears that people are getting richer.
Section 4: Personal Development
One of Warren Buffet's many famous quotes is: 'Predicting rain doesn't count, building an arc does'. My own version of that quote is 'predicting rain doesn't count, carrying an umbrella does'. What they mean is that ideas are worthless without execution. And I thought that these quotes captured the idea so beautifully, until I read this article. While not as short as the quotes above, but in less than ten sentences it is the most impactful explanation ever. Don't skip reading this.
I am going to ask you to not skip again - this time a small Ted talk. In about six minutes, you will witness one of the most foundational triumph of human beings - overcoming hurdles. It is also a window in to the future, a future that brings with it unlimited possibilities as we learn to harness the power of technology. For the sake of humanity, please watch this.
Section 5: Trivia
No, this is not a game of Tetris. In fact, the image above is a message - a string of 1's and 0's - broadcast from Earth towards the globular star cluster M13 in 1974.
The featured message gives a few simple facts about humanity and its knowledge (from left to right are):
numbers from one to ten,
atoms including hydrogen and carbon,
some interesting molecules,
a human with description,
basics of our Solar System, and
basics of the sending telescope.
This attempt at extraterrestrial communication was mostly ceremonial - humanity regularly broadcasts radio and television signals out into space accidentally.
Even were this message received, M13 is so far away we would have to wait almost 50,000 years to hear an answer.
Several searches for extraterrestrial intelligence are currently underway, including one where you can use your own home computer.
Here is the source of the image and text.
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Have a safe & secluded weekend!!
- Tejas Gutka.