Buy the Book: This book is a compilation of Will Durant’s essays and lectures. His personal lists of the greatest thinkers, poets, books, peaks of human progress, and dates offer a journey through world history.
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Weekend Reads – 5/17/24
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Quote for the Week
Stevenson, you remember, had a coward in his “Suicide Club” who threw dice with Death to enjoy the delights of fear, because when he escaped he tasted the intense joys of living. But he played once too often, did old Mr. Malthus. It is the same in stock gambling — the delightful uncertainty; the grim “now you see and now you don’t” of luck; the little chills of pleasure and the leaden sinking of disappointment; the exquisite expectancy — all this fires the blood of the young, as does love, and of the old, as love no longer can. The stock market “lambs” are like Mr. Malthus — when prices fluctuate they keenly enjoy the delight of riches because they have just jumped from the sorrow of nonpossession. But they too play once too often!
It may be accepted as axiomatically true that a man must possess a high degree of intelligence to be successful in commercial or professional pursuits. So must a Wall Street man, to win a fortune in the stock market and to keep it. But for an “outside” businessman to make a fortune in his vocation, and then to make another in the stock market, and keep both, requires positively the most extraordinary ability. Always on the wave of a general boom, outsiders come to Wall Street — and fail to display ordinary ability. They are ignorant of the basic principles of stock speculation. They are too late in going in and they overstay. They take unduly great risks. — Edwin Lefevre (source)
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Wise Words from Jim Simons
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Jim Simons had a natural curiosity for math. Once, he couldn’t understand why his dad needed to stop the car for gas.
“You don’t have to run out of gas,” he told his father, “You can use half of what you have, and then you can use half of that and then half of that, and you’ll never run out of gas.”
Even at an early age, he knew slicing something in half multiple times over never quite gets you to zero. Of course, the car never gets you anywhere but there’s always some gas left.
Simons’s math abilities led him to MIT, graduating in three years. He stayed for graduate studies. He crossed the country to Berkley for a doctorate, which led to the Veblen Prize in Geometry in 1976. Yet, despite the math awards, he’s most recognized for his success on Wall Street.
Simons caught the investing bug in college. A trip to Bogota with two college friends led to an investment in a company that made vinyl floor tiles. His share was 10%. The outlook was promising. The results: less so. Until the company pivoted to making pipes. Sales took off. The group sold half the business and Simons was sitting on a small fortune.
The question was what to do with money? He reached out to an old math friend, now a commodity trader, who put the money to work. Nine months later, thanks to a spike in sugar prices, he had made ten times their money. Simons called it a fluke. Continue Reading…
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Weekend Reads – 5/10/24
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Quote for the Week
If you can get into a great company, stay in for a long time. That’s the easiest and biggest money you’ll possibly make. But it’s so hard to do, because they bid the great companies, or things that look like great companies, up so high that it makes that strategy not work… So that’s the trouble, is that they sell so high priced that they make it hard for you to get. But wouldn’t you expect that? Why would you expect that something everybody can see is a great company, of course they’re going to bid the price up so high that maybe it’s not such a good investment. — Charlie Munger (Source)
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Lessons from the 2024 Berkshire Meeting
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The Berkshire annual meeting was this past weekend. It was not quite the same without Charlie Munger. His one-liners were absent. No “I have nothing to add.”
Warren Buffett, with the help of Greg Abel, and Ajit Jain, answered questions for five hours. His answers seem to get longer every year. But the lessons were still there. The broader takeaway is that investing is still simple, but not easy. Let’s dive in.
Stocks are Businesses
We always look at every stock as a business. We have no attempt made to predict markets… It’s such a simple approach that it’s almost deceptive. Most things if you keep working harder and harder at it, you know, you learn a little more math or you learn a little more physics. But investments, you don’t really have to do that. You really have to have your mind set properly. — Warren Buffett
There’s a business behind every stock. It’s one of the first lessons Buffett learned from Ben Graham’s The Intelligent Investor. That simple idea can get lost in the daily noise when markets and media combine to misrepresent what’s important. Continue Reading…
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Weekend Reads – 5/3/24
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Quote for the Week
You have all these smart people out there. The money doesn’t go to the people with the highest I.Q. There would be a very poor correlation between I.Q. and investing and results. And you say to yourself why does somebody with a 500-horsepower motor only get 100-horsepower out of it? And I would say that if you look at the intellect as being the horsepower that’s available, but you look at the output as reflecting the efficiency of that motor, it is rationality that causes the capacity to be translated in output.
Now what interferes with rationality? It’s ego. It’s greed. It’s envy. It’s fear. It’s mindless imitation of other people. I mean, there are a variety of factors that cause that horsepower of the mind to get diminished dramatically before the output turns out. And I would say if Charlie and I have any advantage it’s not because we’re so smart, it is because we’re rational and we very seldom let extraneous factors interfere with our thoughts. We don’t let other people’s opinion interfere with it. We don’t get– we try to get fearful when others are greedy. We try to get greedy when others are fearful. We try to avoid any kind of imitation of other people’s behavior. And those are the factors that cause smart people to get bad results. — Warren Buffett (source)