Bezos at Code Conference 2016

https://www.youtube.com/watch?v=guVxubbQQKE

Well worth the investment of one hour or so to see how this man thinks.

The quote that struck me the most (echoing many sentiments of other greats is the following) about 55m into the video:

"I don't like tight agendas. Wandering is important. Thinking you know where you're going... prevents you from inventing"

He also talks about the brilliant "flywheel" model of Amazon.

No wonder Warren himself admires Bezos so much.

The Books that carry most of the freight

Over the past years, I have read (or listened) to hundreds of books spanning finance, investing, history, philosophy and economics.

Like Charlie Munger says, it's the big ideas that really carry most of the freight (think Pareto principle).

Of all the books, the ones I have gleaned the most from and which meaningfully impacted my thinking and actions are below.

This is not to say that the other books I have read are not worthwhile - in many cases, they often echo the same important ideas - and it is useful to have some of these ideas banged into one's head as many times as possible - but I have a preference for going straight to the horse's mouth for wisdom whenever possible.

I will be adding/editing the list as I continue to read and learn. These are the books that are worth reading, re-reading and re-re-reading. It should come as no surprise that many of these books show up on reading lists of multiple billionaires.


Investing
Benjamin Graham: Security Analysis (Warren Buffett has read this 4 times), The Interpretation of Financial Statements
Warren Buffett's partnership and Berkshire Hathaway (yes, all of them)
Peter Bevelin: Seeking Wisdom, A Few Lessons from Sherlock Holmes, Tell me where I"m going to Die so I don't go there
Poor Charlie's Almanack (Mohnish Pabrai says he has read this 7-8 times)
Joel Greenblatt: You can Be a Stock Market Genius, The Little Book that Still beats the Market, The Big Secret for the Small Investor
Warren Buffett books: The Snowball, Warren Buffett's Ground Rules, Buffett: The Making of an American Capitalist, Warren Buffett Way, Warren Buffett portfolio
Financial Shenanigans
Deep Value
What Works on Wall Street
Money Masters
Supermoney
The Most Important Thing by Howard Marks
Quality of Earnings

Philosophy
Nassim Taleb: Antifragile, The Black Swan, Fooled By Randomness
Misbehavior of Markets
Where are the Customer's Yachts?
The Dao of Capital
Surely You're Joking Mr. Feynman
The   Dhandho Investor

Business/Management
The Outsiders
Zero to One
Double Your Profits in 6 months or less
Creativity Inc
Work Rules!
Sam Walton: Made in America
Behind the cloud
So you want to start a hedge fund
Story by McKee
Ten Commandments of Business Failure
Hidden Champions
Roger Fisher - Getting To Yes, Getting it Done
Competition Demystified
Clayton Christensen - The Innovator's Dilemma, The Innovator's Prescription

Biographies/History
Walter Isaacson - Steve Jobs, The Innovator's
Becoming Steve Jobs
Elon Musk
The Everything Store
Dream Big
Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger
The Davis Dynasty
Templeton Touch
Short History of  financial Euphoria
Delivering Happiness
Michael Lewis- The Big Short

Psychology
Robert Cialdini: Influence, Yes!: 50 Scientifically Proven Ways to Be Persuasive, the Small Big
Contagious
Hooked
Predictably Irrational
Thinking Fast and Slow
Art of Thinking Clearly
Alchemy of Finance
Richard Thaler - Nudge, Misbehaving
Dan Pink - Drive, To Sell is Human
Heath Brothers - Decisive, Switch, Made to Stick
The Design of Everyday Things
Superforecasting
Charisma Myth
How to Lie with Statistics
Malcolm Gladwell - Blink, David and Goliath, Outliers

Real Estate
William Poorvu - The Real Estate Game, Creating and growing Real estate Wealth
Frank Galinelli - What Every Real Estate Investor Needs to know about cash flow,

Economics/Politics

Everything Lee Kuan Yew has written - especially Lee Kuan Yew: The Grand Master's Insights and One Man's View of the World, Hard Truths to Keep Singapore Going
Atul Gawande - Being Mortal, Checklist Manifesto
World Order by Kissinger
Eric Topol - The Creative Destruction of Medicine

Taleb on investing and insurance

Nassim Taleb's Incerto books (Fooled by Randomness, The Black Swan, Antifragility, The Bed of Procrustes) is on my list of required reading for serious investors (stay tuned for a post detailing my trip through most of the investing literature).

His books have a philosophical bent but also have several practical applications - for both investing and life in general.

Here are a few links with words straight from the man himself on how his insights can be applied to both insurance and investing.  Cheers.


http://www.carriermanagement.com/features/2015/10/08/146093.htm

http://www.moneysense.ca/invest/nassim-talebs-tips-for-embracing-risk/

Thoughts during the recent volatility

The sky is falling is what many would have you believe at the moment.
Those who have studied Mandelbrot and Taleb know that volatility tends to cluster and that events have a memory (even in the long term). So it should be no surprise that the volatility has not yet subsided.

Rather than being scared out of the market, one ought to be looking at this through a different lens. Mr. Market is having a tantrum over many of the wrong things, and he is on sale.

Seth Klarman has said that he does not outperform despite his large cash position; rather, he outperforms because of his large cash position. It is likely for times like these that the prudent, patient investor waits to climb out of his shell and put that money that is weighing in his pocket to good work.

For wisdom from the titans, check out Warren Buffett's Op-ed from 2008 in which he outlines why he continues to buy stocks amid the downturn:

http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=0

And more recently, Howard Marks' brilliant memos have been a source of solace and insight (Warren Buffett himself claims to read them with relish every time they are released):

https://www.oaktreecapital.com/insights/howard-marks-memos



And if you glean nothing else from this post, please appreciate that volatility does not equal risk. Risk is what you stand to lose. Like Warren Buffett has stated, it is far better to earn a bumpy 15% return than a smooth 10%

Charlie Munger - the Complete Investor

No discussion about Berkshire Hathaway is complete without a discussion about Charlie Munger.
Tren Griffin's book Charlie Munger: The Complete Investor is a welcome addition to the pantheon of books written about Charlie Munger and Berkshire Hathaway.  Of course if you haven't read the greatest book about Charlie, (which incidentally contains much of his works) check out Poor Charlie's Almanack.

Griffin writes a wonderful blog over at 25iq - he is adept at compressing the pearls of wisdom of the gurus into his posts. Granted, some of the material in this book may be familiar to those who have already read much of the Berkshire Hathaway literature that is out there (and the pile of books continues to grow each year it seems), this is one of the first to condense Charlie's ways of thinking (a "latticework of mental models") into one tome.

Happy reading!

Thoughts on Quantitative Screens

"Many shall be restored that are now fallen and many shall fall that are now in honor." Horace

Toward the end of his life, Benjamin Graham, the genius who essentially founded the field of security analysis with his book of the same name decided that much of security analysis was pointless. In the 1970s, he had been studying the returns of stocks bought with low P/E ratios in conjunction with low Debt/Equity ratios and found that it would be quite simple for the know-nothing investor to outperform the market using such blind stockpicking.

Much has been written about such "quantitiative" or "mechanical" investing, especially since the publication of Joel Greenblatt's Magic Formula, which in essence ranks stocks by return on capital (ROC) and EV/EBIT (enterprise value/earnings before interest and taxes). Others who have followed in this vein include Tobias Carlisle (Quantitative Value, Deep Value) and James O'Shaughnessey (What Works on Wall Street). The latter two authors have most recently endorsed the use of EV/EBITDA, or the acquirer's multiple, as the single best value criterion for buying stocks.

In fact, Carlisle suggested that the addition of ROC to the Greenblatt formula has reduced the returns of the Magic Formula due to reversion of the mean; that is companies which now exhibit high ROC are more likely to return to normal.

Greenblatt himself found that most people who used the Magic Formula still underperformed! The reason? They were tweaking the formula. It is so emotionally difficult to hold stocks which are clearly "value traps" (for instance, for-profit education stocks). But perhaps in stocks with such an obvious "ick" factor is where the gains lie.

(and for what it's worth, by this  time, he had also been turning his attention to many of his other pursuits like classic literature, but that is besides the point).

I think Nate Tobik has done a wonderful job synthesizing some of the pros and cons of quantitative investing here: http://www.oddballstocks.com/2013/01/thoughts-on-quantitative-value-investing.html

What are your thoughts?

Investable stock markets

If you are seeking greener pastures compared to wherever home currently is, here is a (subjective) list of what may be deemed "investable" countries, where otherwise there are no major macroeconomic or accounting fraud risks to consider.

A verdict on the market is not the same as a judgment on a stock, so you must come to your own conclusions on each individual company yourself.


North America
USA
Canada

Europe
Germany (Warren Buffett has recently invested here)
UK
Switzerland
France
Belgium
Netherlands
Norway
Sweden
Finland
Spain and Italy - Buffett has expressed interest in these countries (https://www.youtube.com/watch?v=ti1hjSZdEZY)

Asia/Middle East
Israel (Buffett has said this nation reminds him of the United States at its own birth)
Singapore
Hong Kong
South Korea
Taiwan
Japan
India
China

Australia
New Zealand

You may find the Economist's rankings of Business Economic Risk here: http://pages.eiu.com/rs/eiu2/images/BER_2014.pdf?mkt_tok=3RkMMJWWfF9wsRogsqrBZKXonjHpfsX67eosWKexlMI%252F0ER3fOvrPUfGjI4ES8pmI%252BSLDwEYGJlv6SgFTbjGMbht2bgMUhU%253D

Thoughts? Additions or subtractions? Please share.