Friday, March 8, 2019

Weekend catchup

Your weekend edge - catch up with this week's readings:

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Not caring: A unique and powerful skill (Link)
If you can remain dispassionate about what people think of you while you’re trying to get an outcome, or about the noise around you during the process, you have an advantage that 1 out of  100,000 has in the industry. 
- Not caring about looking dumb when you’re confident others are being dumber.
- Not caring about your reputation after you change your mind. 
- Not caring about not having no explanation for the majority of events.

Figure out what you can control and obsess over it. Identify what doesn’t matter and ignore it. Determine what you’re incapable of and stay away from it.Have room for error. Plan on things not going according to plan.

Advice from Charlie Munger : 2019 Daily Journal AGM (Link)
We’ve done better than average and now there’s a question why has that happened? The answer is pretty simple. We tried to do less. We never had the illusion we could just hire a bunch of bright young people and they would know more than anybody about canned soup and aerospace and utilities and so on and so on. We always realized that if we worked very hard, we could find a few things where we were right and the few things were enough and that that was a reasonable expectation. Audio recording here.

Only one constant in investing (Link)
You have to understand that there are no physical laws at work in investing. And the future is uncertain, and vague, and random. And psychology dominates. Richard Feynman said, "Physics would be much harder if electrons had feelings." You come in the room, you flip up the switch, and the lights go on. Because the electrons flow from the switch to the lights. They never flow the other way. They never go on strike. They never fall asleep. They never say, ‘Ah today I don’t feel like flowing from the switch to the light.'

You can use all the numbers, tables, and data visualizations you want, but you still won’t be able to quantify the only law in investing: everything is determined by your own behavior. Everything comes back to how you react to information.

Google vs. Amazon (Link)
Steve Yegge spent years at both Amazon and Google. His famous posting from 2011 gives an insiders look what Amazon was able to figure out early on and what hindered Google. Google did nearly everything better than Amazon, yet Amazon continued to be more successful. The difference came down to products vs. platforms and Amazon’s CEO Bezos was fierce about building platforms and Google didn't understand this. Products are always built on top of platforms. Platforms are all about long-term thinking. The power of a platform comes from the variety and sophistication of the products it enables. Bezos realized long before the vast majority of Amazonians that Amazon needs to be a platform.

What Happened When I Bought a House With Solar Panels (Link)
I’d soon learn that the system was tied to the title of the house. It appeared that if we bought Jug’s place, we’d have to assume his lease arrangement with Sunrun. On consumer review sites and in local news reports, rueful customers warn others to stay away from TPO solar offered by Sunrun and other companies. State attorneys general and politicians have fielded complaints from people who say they were sold expensive systems they can’t afford after signing contracts they didn’t understand; or are paying more now on their electricity bills, not less as promised; or are having trouble selling their homes because potential buyers are turned off, just as I was. (Customers of Sunrun and other companies must sign binding arbitration clauses, barring them from suing or joining in class actions.) Salespeople would cherry-pick data, skim over crucial details, and prioritize speed above all, he told me. A trainer from California who listened in on hundreds of sales calls for quality control estimated that 60 % of customers knew no more than half of what they were signing up for and 10 % had no clue.

Booming used car market?
The average price of a used car is now about $20,000 for the first time in history. What's driving the trend? The declining number of older used cars and the increasing number of late-model leased cars hitting the used car market are driving prices higher. These late model cars are newer which means they generally sell for a higher price which is helping to drive the profits of used cars sales higher. The increasing number of used cars is also a money maker for dealership's parts and services departments which represent about 40% of  dealership's used car department profits.

Relative sizes of world stock markets 1899 vs 2019 (Link)
At the start of the 20th century, the UK equity market was the largest in the world, accounting for a quarter of world capitalization, dominating even the US market (15%). Germany (13%). Of the US firms listed in 1900, over 80% of their value was in industries that are today small or extinct. Today the US equity market us the largest in the world, accounting for 50% of world capitalization with the UK now under 6%.

World energy consumption through 2040
Fossil fuels projected to remain the largest energy source with natural gas, renewables and petroleum liquids being the fastest growing energy sources. Asia is projected to have the largest increase in energy use of non-OECD regions.