Wednesday, October 21, 2020
Volume 1, Issue 46


My new MacBook Air would not leave me alone. It seemed like notifications were popping up for all kinds of things constantly. Emails, software updates, text messages, and much more. Every notification is an invitation for the user to switch contexts and, as a result, lose the elusive state of flow that is so essential for deep work and productivity. 

Why do modern electronic devices insist on bothering us with so many messages and notifications? Do we really need to be immediately notified in all of these cases?

The fact is that computers, phones, and other devices can be set up to leave us alone but that is not the default setting. By default, a large number of notifications are turned on and most people never bother to change them. If Apple and other providers of technology changed the default setting to not notify users of everything under the sun, chances are that most users would turn on very few notifications and suffer fewer pointless interruptions.

The defaults that we are presented with are usually not accidental or random.

Electronic devices, especially phones, are designed to be addictive. The more interactions we have with our phones, the more a part of us they become. An alien observing humans on the street for the first time would probably think that we are born with a phone permanently attached to our hands. The more notifications, the more times we interact with our phones and the more likely these devices literally become a part of who we are.

Along these lines, I found a video of Dan Ariely’s Ted talk in 2009 fascinating. In this short presentation, Ariely examines how default choices can influence our decisions in highly personal ways such as organ donation.

Ariely also looks at how options are presented to people more generally. His findings regarding a weird set of subscription choices from The Economist show that presenting people with a choice that makes no sense, on the surface, can actually make sense in the context of “nudging” people toward a desired selection.


Black Monday

The stock market crash of October 19, 1987 has receded into the mists of history. With most of the big decision makers on Wall Street in the late 1980s either in retirement or quickly approaching it, few capital allocators operating today have a direct memory of losing large amounts of money on that breathtaking day over three decades ago.

As a fourteen-year-old high school freshman, my paper route savings were in ultra-safe CDs which offered positive real returns in those days. However, I was already following the stock market and regularly watched Wall Street Week with Louis Rukeyser every Friday night. I still remember Lou’s words of wisdom when he opened the program that Friday night: “It’s just your money, not your life…”

As the 33rd anniversary of the crash arrived, many on Twitter reminisced about their personal experiences on that day. Ed Borgato’s 28-part tweet storm from a few years ago, which he retweeted, recalls his arrival on Wall Street on that Monday as an eighteen-year-old who didn’t really know what was happening. It’s a fascinating read:


Interesting Links

J.P. “Rick” Guerin Jr., 1929-2020 by David Houston, October 15, 2020. Rick Guerin, a longtime business partner of Charlie Munger at Daily Journal Corporation, passed away last week at the age of 90. Readers might recall that Warren Buffett wrote about Rick Guerin’s track record in The Superinvestors of Graham and Doddsville. From 1965 to 1983, Guerin achieved a return of 22,200 percent vs 316 percent for the S&P 500. Buffett, Munger, and Guerin partnered on several business deals during the 1960s and 1970s. As the obituary says, Rick Guerin was a self-made man who succeeded with grit and intelligence. RIP. (Daily Journal)

Letter to The Walt Disney Company by Christopher P. Bloomstran, October 15, 2020. The COVID pandemic arrived just as Robert Chapek was named Chief Executive Officer of The Walt Disney Company in late February. In a letter to Disney in early October, activist investor Dan Loeb urged management to permanently suspend its dividend and use the $3 billion in annual savings to invest heavily in its Disney+ service which launched in November 2019. Chris Bloomstran’s letter offers a counterpoint to Dan Loeb’s advice. Bloomstran agrees with Loeb’s praise of Disney’s decision to focus on the direct-to-consumer content distribution channel but suggests that management should reflect on all available uses of capital before making any permanent changes to dividend policy. 

Coming into Focus by Howard Marks, October 13, 2020. In his first memo in two months, Howard Marks revisits many of the themes covered in his last memo, Time for ThinkingMarks leans toward a defensive posture in the current environment: “In my view, when uncertainty is high, asset prices should be low, creating high prospective returns that are compensatory. But because the Fed has set rates so low, returns are just the opposite. Thus the odds aren’t on the investor’s side, and the market is vulnerable to negative surprises. This is how I described the prior years, and I’m back to saying it again.” I suggest that all investors should read the memo in its entirety. For those who prefer audio to text, Marks has published a new podcast episode as well. (Oaktree Capital)

“Our return sucks over the past few years…and we’ve just run out of time.” by Mark DeCambre, October 17, 2020. The past few years have been hard on many investors who feel out of step in a technology-driven stock market. However, few professional investors are as candid as Ted Aronson who plans to close his $10 billion fund at the end of the year. Aronson is pretty hard on himself: “It makes it look like we’re morons. Like, we’ve been buying our selling list and selling our buy list.” Aronson is retiring from active management but hasn’t given up on value investing: “I am not giving up on value investing…whatever rises from the ashes of this will be value in nature.” (Market Watch)

Berkshire Hathaway Archives This archive is a collection of historical material for many of Berkshire Hathaway’s subsidiaries. In cases where Berkshire purchased a publicly traded company, the archive has copies of annual reports that pre-date the SEC Edgar system. For example, if you are interested in the history of Flight Safety, which Berkshire acquired in 1996, annual reports dating back to 1984 are available. You can also read Diversified Retailing’s 1968 annual report including a letter from Warren Buffett. Or check out GEICO’s 1965 annual report(The Oracle’s Classroom)

San Francisco Apartment Rents Crater Up to 31%, Most in U.S. by Noah Buhayar, October 13, 2020. You can now rent a studio apartment in San Francisco for a bargain basement cost of just $2,285 per month! Doesn’t seem like a bargain? Well, this is 31 percent cheaper than it was a year ago. COVID is having widespread impacts on real estate with many city-dwellers decamping for the suburbs or moving to cheaper metropolitan areas while hoping to continue telecommuting in the long run. While home prices are on the rise in suburbs, rents are falling in many cities. Obviously, home prices and rents cannot move in opposite directions indefinitely. (Bloomberg)

What Happens to the Musicians When the Orchestra Music Stops? by Betsy Morris, October 14, 2020. With performance venues shut down indefinitely, musicians of all genres are suffering from a lack of work. This article profiles classical musicians who have been severely impacted by the pandemic. Michael Seman, a professor at Colorado State University, estimates that half of the 630,000 jobs for musicians, DJs, conductors, and composers have vanished this year. It seems obvious why small venues that rely on packing as many patrons as possible into a bar cannot safely resume operations but it is less clear why large classical music venues cannot open at reduced capacity. (WSJ)

Here today, gone tomorrow by Peter H. Raven and Scott E. Miller, October 9, 2020. Most of the concern regarding climate change in the media centers on what a warmer climate could mean for severe weather and rising sea levels. However, rapid changes in climate can also have devastating impacts on biodiversity. The United Nations Summit on Biodiversity reports that about 1 million of the estimated 8.5 million species of plants, animals, and other organisms are in imminent danger of extinction. The world has already seen biodiversity greatly reduced in recent decades. The authors believe that the world has “clearly entered the world’s sixth major extinction event”. (Science)


A Walk in the Woods

Fall in Shenandoah National Park is a spectacular time of year. The photos below were taken eleven years ago on October 21, 2009.


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