Thursday Links - January 13, 2022
Apple's iMessage moat, Living to 150, Lords of Easy Money, Buffett's Reading
“The Company did not purchase equities with an ambition to be an investment company or a tiny version of Berkshire Hathaway Inc. Instead, the Company is using its enhanced net worth to further its ambition of ending up with a very big software business this is much trusted by wise justice agencies.”
— Charlie Munger, 2022 letter to Daily Journal shareholders
Why Apple’s iMessage Is Winning: Teens Dread the Green Text Bubble by Tim Higgins, January 8, 2022. With a market valuation hovering close to $3 trillion, investor expectations for Apple’s future have never been higher. A major part of any bullish investment thesis rests on the powerful iOS operating system which has many elements likely to keep users within Apple’s ecosystem for years to come. Although it might seem trivial, the fact that iPhone users can identify other iPhone users by the color of their text messages is a big deal for many users. “Jocelyn Maher, a 24-year-old master’s student in upstate New York, said her friends and younger sister have mocked her for exchanging texts with potential paramours using Android phones. “I was like, `Oh my gosh, his texts are green,’ and my sister literally went, `Ew that’s gross,’” Ms. Maher said.” (WSJ)
Interest-First Friendships by Lawrence Yeo, January 2022. Ever since the days of AOL, Prodigy, and CompuServe, people have been able to connect easily based on shared interests. The internet accelerated this trend in the 1990s and social media took it even further in recent years. “The internet has massively widened the scope of career opportunities, but it has also done so for interest-first friendships. These are friendships that take shape because you published or created something that signifies your curiosities, which then act as a beacon for people to find and connect with you.” (More to That)
Larry Fink Wants to Save the World (and Make Money Doing It) by Dawn Lim, January 6, 2022. Massive asset managers in charge of trillions of dollars of investor capital are using their voting power to influence public corporations like never before. Should giant asset management firms also be in a position to effectively set public policy objectives in this manner? Some people within the finance industry appear untroubled by the implications: “Treasury Secretaries and finance ministers come and go,” said David Rubenstein, the co-founder of the private-equity firm Carlyle Group Inc. “They work for someone else who can fire them tomorrow and have to build what others want them to. When you are the CEO of the biggest asset manager, you don’t have to do that.” (WSJ)
If investors really want companies fighting climate change, they should put their mouths where their money is by Lawrence Cunningham, January 12, 2022. “Consider this modest, if radical, proposal: At annual shareholder meetings this spring, a board could sponsor a publicly disclosed poll regarding whether and to what extent the company should invest its pretax profit in environmental and social initiatives. The poll would be simple and non-binding to provide a cheap, clear way to gauge preferences.” (MarketWatch)
Are You Sure You’d Want to Live to 150? by Joe Pinsker, January 7, 2022. We already know a great deal about what type of behavior increases the odds of a long and healthy life, but a century is typically close to the upper limit today. The quest for eternal life has always been met with disappointment, so we should take predictions of large increases in life expectancy with a grain of salt. However, breathtaking scientific advances in our understanding of the human body make incremental progress more likely. What would we do with the additional years or decades of life, assuming those years can come with good mental and physical health? (The Atlantic)
The Notecard System: The Key for Remembering, Organizing and Using Everything You Read by Ryan Holiday, April 1, 2014. There are a lot of technological solutions for note taking, and I use some of them to prepare this newsletter. However, when I read serious books, I like to read physical volumes free from electronic distractions. I don’t even allow electronic devices in the dedicated room that I use for serious reading. I take notes within books and often make entries in a physical notebook, but not often enough. Holiday’s method of using simple and inexpensive 4x6 notecards lowers the barrier for taking notes and allows for mixing and matching of material by subject area. I plan to try this system. (RyanHoliday.net)
‘The Lords of Easy Money’ Review: An Inflated Sense of Ability by Joseph C. Sternberg, January 12, 2022. “Rather than learn from its errors, the Fed continues to repeat them. Monetary interventions since the start of the pandemic dwarf those during the Great Recession. We already have the consumer-price inflation to show for it. History suggests that we should brace for another financial crisis when we least expect it. Just don’t let the Fed’s policy makers tell you they weren’t warned.” (WSJ)
Disparity of Large-Cap vs. Small-/Mid-Cap Valuations | Peter Bernstein on Bubbles and Survival, January 9, 2022. I particularly liked the discussion regarding the massive opportunity cost that young speculators suffer when they lose money on “YOLO” (you only live once) trading strategies. “In this episode, co-hosts Elliot Turner, Phil Ordway, and John Mihaljevic discuss (i) the historically high disparity between large-cap vs. small-/mid-cap valuation; and (ii) Peter Bernstein on survival and the avoidance of disaster, as well as managing through bubbles.” (This Week in Intelligent Investing)
An Inside Look at Managing Investor Capital, January 6, 2022. Geoff Gannon and Andrew Kuhn are back with a number of new episodes. They often show charts and websites on their YouTube recording of each episode. I like this podcast due to the relatively short format of episodes, mix of macro and specific company discussions which are always grounded in a value-based framework. (Focused Compounding)
Patrick O'Shaughnessy - Lessons from Two Years of the Podcast, September 18, 2018. The lessons learned from the first hundred episodes of Invest Like the Best are interesting, but what made me smile were the references to backpacking culture and how a hiker term like “yellow blazing” can apply to life and business. Long distance hikers refer to “yellow blazers”, meaning hikers who skip entire sections of the trail by hitchhiking on roads, with derision because they took a shortcut. Just as yellow blazing causes hikers to potentially miss out on what the trail has to offer, yellow blazing in life can lead to blind spots and missed opportunities. (Invest Like the Best)
How Warren Buffett Decides What to Read
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