Friday, March 5, 2021
Volume 2, Issue 17
“When I face the desolate impossibility of writing five hundred pages, a sick sense of failure falls on me, and I know I can never do it. Then gradually, I write one page and then another. One day’s work is all I can permit myself to contemplate.”
— John Steinbeck, Travels With Charley in Search of America
Lessons from Business Leader Henry Singleton by John Mihaljevic, January 27, 2019. Charlie Munger has often discussed the track record of Henry Singleton and has characterized Singleton as a “genius”. Singleton is known for his aggressive use of share repurchases. With Berkshire Hathaway embracing the benefits of repurchases, I found this audio program and transcript about Singleton particularly interesting. Unfortunately, Distant Force, the biography of Singleton discussed in the program, appears to be out of print and available only at a very high cost. (MOI Global)
Warren Buffett on Avoiding Mistakes by Max Zahn with Andy Serwer, February 26, 2021. Billionaire Thomas Tull describes a conversation with Warren Buffett: “I said, ‘What we’re trying to do is be smart about,’ Buffett stopped me and said, ‘I gotta be honest, for years, Charlie and I have always asked, ‘What’s the dumb thing we could do here?’ I kind of laughed, and he said, ‘No, I’m dead serious. We always ask. We don’t want to be in the clever pile. What could we do here that would be the dumb thing, and how do we avoid it?’ Honestly, it actually has had a fair amount of impact on the way that I assess and think about situations.” (Yahoo! Finance)
Being Honest About Your Investment Performance by Nick Maggiulli, March 2, 2021. How many investors really know their investment performance over time? This seems like a basic piece of information to track but it can be more complicated to track performance than one would think. This article describes some of the factors involved and a tool that can be used to measure portfolio performance. A few years ago, I wrote Assessing Investment Performance which covers similar issues. (Of Dollars and Data)
Bogleheads on Investing Podcast. Too many great podcasts, never enough time … My latest discovery is a podcast named in honor of John Bogle, founder of The Vanguard Group. Bogle was a tireless crusader for investment professionalism for his entire career and he never relented. Robinhood loudly touts its “free” trading app, which looks like a casino gambling platform, but it was Bogle who made financial markets accessible to small investors when he invented the index fund nearly a half century ago. The first episode is an interview of none other than Bogle himself, in one of the last interviews before his death. Bogleheads is now on its 31st episode which is an interview of financial historian Jamie Catherwood. (Bogleheads on Investing)
Your Thinking Rate Is Fixed, March 1, 2021. “If you want to make better decisions, you need to do everything you can to reduce the pressure you’re under. You need to let your brain take whatever time it needs to think through the problem at hand. You need to get out of a reactive mode, recognize when you need to pause, and spend more time looking at problems.” (Farnam Street)
The Microwave Economy by David Perell, March 1, 2021. “America has become a Microwave Economy. We’ve overwhelmingly used our wealth to make the world cheaper instead of more beautiful, more functional instead of more meaningful. We don’t value what we can’t quantify, so our intuitions are given short shrift. In the name of progress, we belittle the things we know but can’t articulate. The result is an economy that prizes function over form and calls human nature “irrational”—one that over-applies rationality and undervalues the needs of the soul.” (Perell.com)
Emily Wilson on Seneca, Stoicism and Learning How to Tell the Truth by Ryan Holiday. Emily Wilson’s new translation of The Odyssey was one of the best books that I read last year. Her work makes this classic more accessible and relevant for a new generation of readers. In this interview, Holiday and Wilson discuss the application of stoicism in daily life in the context of Wilson’s other work which includes The Greatest Empire: A Life of Seneca which I have added to my reading list. (The Daily Stoic)
Meditations: Interview with Gregory Hays by Ryan Holiday, November 14, 2007. As I work through the history of the Roman Empire, my admiration for Marcus Aurelius has increased. The majority of emperors were seriously flawed individuals. Marcus no doubt had his flaws, but he ran his government based on a solid philosophy, best expressed in his Meditations. The Hays translation is clear and accessible to the modern reader. Holiday and Hays discuss Marcus in this brief interview. For more on Marcus Aurelius, read Marcus Aurelius on Business, Investing, and Modern Life and The Appeal of 21st Century Stoicism on The Rational Walk. (RyanHoliday.net)
Berkshire Hathaway Repurchase History
Warren Buffett’s letter to shareholders was released last weekend and, as usual, received a great deal of attention. The letter is a quick read at only fifteen pages. I spent most of the weekend reviewing the letter as well as Berkshire’s annual report.
For many reasons, I no longer write about specific investments at length but I shared some information regarding Berkshire’s repurchase activity on Twitter and replicate the same table below. It shows the full history of Berkshire’s repurchase activity since 2011 when Warren Buffett put in place a repurchase policy allowing buybacks at 1.1x book value or lower. This limit was raised to 1.2x book value a few years later and in 2018, the explicit book value limit was removed entirely.
The following numbers tie to the Treasury Stock account on Berkshire’s balance sheet. The purchases are reported in date ranges but we can still infer some information regarding the valuation that Berkshire has paid over time. As of Thursday afternoon, Berkshire’s Class A shares are trading around $376,000 which is 1.31x book value.
The Use of Letters
Edward Gibbon comments on the importance of writing, both in the context of individuals seeking worldly wisdom extending beyond their own experiences and the aggregate effect on a society where written history is nonexistent:
The Germans, in the age of Tacitus, were unacquainted with the use of letters; and the use of letters is the principal circumstance that distinguishes a civilised people from a herd of savages incapable of knowledge or reflection.
Without that artificial help, the human memory soon dissipates or corrupts the ideas intrusted to her charge; and the nobler faculties of the mind, no longer supplied with models or with materials, gradually forget their powers; the judgment becomes feeble and lethargic, the imagination languid or irregular.
Fully to apprehend this important truth, let us attempt, in an improved society, to calculate the immense distance between the man of learning and the illiterate peasant. The former, by reading and reflection, multiplies his own experience, and lives in distant ages and remote countries; whilst the latter, rooted to a single spot, and confined to a few years of existence, surpasses, but very little, his fellow-labourer the ox in the exercise of his mental faculties.
The same, and even a greater, difference will be found between nations than between individuals; and we may safely pronounce that, without some species of writing, no people has ever preserved the faithful annals of their history, ever made any considerable progress in the abstract sciences, or ever possessed, in any tolerable degree of perfection, the useful and agreeable arts of life.The Decline and Fall of the Roman Empire, Volume 1, p. 242-243
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