The Laws of Simplicity cover the intersection of design, technology, and business. It offers ten guiding principles for designing simpler systems.
-
Weekend Reads – 6/6/25
·
Quote for the Week
Continue Reading…All of these things are about balance. If you assume you know nothing, you can’t function. If you think you know everything, you’re going to get in trouble. You have to strike a balance. And hopefully, it’s an appropriate balance.
Think about confidence. If you’re an investor, if you don’t have confidence, then every time you buy something, if it goes down, you’re going to sell it because you’re afraid it’s going to go down more. And you’re going to be an abject failure. You have to have confidence.
If you buy something and it goes down, you have to reassess your thesis. And if it’s intact, you have to buy more or you can’t be great. But on the other hand, if you have hubris and you feel you can’t possibly be wrong and every time something goes down you blindly double down, then you’re probably going to get into trouble and maybe be asked to leave the industry. So, you have to have this balance, confidence but not overconfidence. Humility, but not over-humility. — Howard Marks (source)
-
Innovation: Lessons from the early 1900s
·
Innovation drives creation, disruption, and destruction. It drives change. The impact can be unpredictable. It breeds excitement and new investment but also concern and fear over what it displaces.
We see it in discussions around AI today. We saw it with the rise of the internet, the personal computer, TV, radio, airplanes, and more.
The early days of the auto industry is one of many examples from the turn of the 20th century of the creative destruction that underlies innovation.
Business and Wealth
New innovation breeds excitement. Investment flows into new businesses. Success leads to further investment and competition. Excess competition leads to poor investment returns. Poor returns lead to business failure, consolidation, and less competition. Less competition drives returns higher. That’s the gist of the capital cycle in new industries. Under the right conditions, market booms and busts follow along.
Hundreds of auto companies emerged in the U.S. in the first decade of the 1900s. Thirty years in, only three sat on top. Ford, GM, and Chrysler controlled 90% of sales in 1934.
The byproduct of the capital cycle in the auto industry, in a winner take all arena, is that most auto companies failed or were bought out as size and scale created a massive advantage for the remaining few. Capitalism and competition lead to unequal outcomes.
Continue Reading…
-
Weekend Reads – 5/30/25
·
Quote for the Week
Continue Reading…As human beings, particularly if we are successful in other parts of our lives, we are notoriously unable to accept the obvious reality that, on average, we are average, and that our normal experiences will usually be about average because we are, as a group, captives of the normal distribution of the bell curve. It amuses us that Lake Wobegon’s children are all above average, yet studies all the time show we think we are above-average drivers, above-average parents — and above-average investors. And we do tend to take it personally when our stocks go way up or go way down, even though, as Adam Smith admonishes, “The stock doesn’t know you own it.” — Charley Ellis (source)
-
Wise Words from Edwin Lefevre
·
Edwin Lefevre took an unusual path. He was born in what is now Colon, Panama in 1871, studied mining engineering in the states, and became the Panamian ambassador to Spain and Italy later in life. In between, he was a financial journalist.
In 1915 he wrote a scathing article against speculation called “The Unbeatable Game.” His point was clear. Speculators and gamblers in the stock market rarely died rich. It’s a loser’s game. It was his most revisited topic and a theme in his classic Reminiscences of Stock Operator.
His talent was turning Wall Street stories and anecdotes he collected over the years into lessons on human nature. He pointed out the errors that plagued investors throughout the market cycle. He covered market history, uncertainty, probability, and he even dabbled in a little value investing.
It turns out, Lefevre had a way with words.
Continue Reading…
-
Weekend Reads – 5/23/25
·
Quote for the Week
Continue Reading…As an investor, you have to deal with two risks: The risk of losing money, and the risk of missing out on opportunities. It’s the job of a good investor to balance the two: you invest, but with caution… I think it’s better to turn cautious too soon rather than too late… It’s precisely when people can’t see what it is that could make things turn down that risk is the highest. It could be an economic slowdown, rising interest rates, the effect of central bank tightening, or geopolitical events. Or it could be something else. It’s always the things we don’t know about that really bite us in the end. — Howard Marks (source)