Weekend Upgrades – Improve How You Think, Invest, and Live #3

Weekend Upgrades – Improve How You Think, Invest, and Live #3

Bruce Berkowitz Has A Blog via @crowdturtle – Value investing master – and runner of the Fairholme Fund – sharing his thoughts on all things investing.  Some of the content includes him talking at the University of Miami.  Personal trips.  And his thoughts on his investments.

 

The Art of Learning: The Tool of Choice For Top Athletes, Traders, and Creatives via @TFerriss –   A book recommended by Tim Ferriss, Mark Messier, Deepak Chopra, and Cal Ripken Jr. among others.  This link includes a free chapter of the book as well.

I haven’t read this yet even though its been on my to read list for a while.  But have heard nothing but great things about it.

 

Brazil Fast Food Enters Into Definitive Agreement To Go Private at $18.30 Per Share – Big surprise here #sarcasm.  The “special committee” approved BOBS plans to go ahead.  And “unanimously agrees” that the deal is a good deal for shareholders.

As I explained in last weeks post on this exact topic, I expected this to happen since BOBS and Queijo are paying the fees for the “special and independent” committee.  The only way this deal will stop now is if just fewer than 10% of remaining outside shareholders vote the deal down.  Which is unlikely at best.

 

Master of Influence Robert Cialdini Recommends Five Books via @farnamstreet.

Peyton Manning, Buffett, and Munger via @sovagroup.

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To gain access to a free 20-page gift that will help you evaluate companies faster.  And is something I use every time I research a company.  And to make sure you get all future posted content. Go to this link.

 

Warren Buffett And Charlie Munger Are Failures

On Failure Part Two

I wrote a version of this post a few days after leaving my job almost a month ago and planned to keep it private.  But it helped me get over losing my job.  And helped me get over the anger, sadness, depression, fear, and other emotions I felt.  So I’ve decided to share it with everyone.

Rough times happen to everyone from time to time.  But destructive thoughts if left unchecked can lead to bad things.  I’m sharing this post in the hopes of helping someone else who may be going through their own rough times.

But I’m not the best resource to learn from on failure… Let us learn from a couple masters who both failed before making billions of dollars.  And helping millions of people around the world.

Warren Buffett and Charlie Munger Are Failures

Warren Buffett’s biggest failure is now his biggest triumph.  And he uses this “failure” to help millions of people throughout the world.

One of Charlie Munger’s first major investments failed.  But he used that “failure” to become rich and help the world too.

I have failed.  And I will now use this “failure” to help make the world a better place like Buffett and Munger did.

But before we talk about that we need to talk about three major failures.

Warren Buffett’s a Failure

File:Warren Buffett KU Visit.jpg

In the 1950’s and 60’s Warren Buffett started an investment partnership with $100,000 of his own money.  And money he raised from family and friends.

Over time he built the firm by buying portions of smaller companies whose prices were cheap.  He did this so well that soon after starting he was able to buy entire companies instead of just portions of them.

But he soon failed…

Berkshire Hathaway Is a Failure

The original Berkshire Hathaway was a textile company based in New England.  When Buffett took it over no matter what he did the company continued to lose money.  This was because new and cheaper foreign and non union Southern US companies made it impossible for Berkshire to compete on price.  This led to the company losing millions of dollars over the years after Buffett bought it.

As this continued for years Buffett came to realize he was fighting a losing battle.  And instead of continuing to pour money into Berkshire and letting the business fail.  He used this money to buy companies that would make money instead.

He started buying smaller insurance companies.  And used the excess funds from these insurance companies – insurance float – to buy even more profitable and undervalued companies.

In doing this he turned his original $100,000 investment funds into the $357 billion behemoth it is now.  Today Berkshire is one of the biggest companies in the world.  And it owns some of the most valuable companies and brands on Earth.

But by his own admission he wouldn’t have done as well without teaming up with another failure.

Charlie Munger Is a Failure

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Charlie Munger was first a high profile lawyer.  And then a property developer in California before becoming a full time investor in his late 30’s.

His fund did well for years as he built up the companies assets.  And one of his first major investments was in a company called Blue Chip Stamps.

It was a stamp trading company that also produced a lot of float. For example, if you gained 100 stamps you could exchange the stamps for a prize like a vacuum cleaner.

When Munger bought Blue Chip it was growing and producing a lot of excess cash.  At its peak in 1970 Blue Chip generated $126 million in sales.

But Munger recognized a problem a few years after buying Blue Chip.  Sales began to decline fast.  And nothing Munger did stemmed the tide of falling sales

Instead of letting it fail he used the excess funds from Blue Chip – which was still profitable while sales fell – and used these funds to buy other companies.  He eventually bought Wesco which is an insurance/financial company.  And used the float from this business to buy ever bigger stakes in profitable and undervalued companies.

Sound familiar?

By this time Buffett and Munger had met, exchanged ideas on a regular basis, and were friends.  But they still didn’t work together.

Munger did such a great job running Blue Chip that Buffett bought Blue Chip and merged it into Berkshire Hathaway and then a change occurred.

The Change of Mindset

Buffett has said when this happened, Munger helped change the way Berkshire invested its growing cash machine.  Instead of concentrating on just cheap companies that weren’t great businesses.  They turned their focus to companies that were cheap or fairly valued.  But now concentrated on good to great businesses.

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Side note on the book Mindset.

I first read the book Mindset after seeing Erik Spoelstra – multi time championship coach of the Miami Heat – recommend it.

It’s a phenomenal read.  And while I read this before the problems I had at my job.  The lessons I learned reading Mindset helped me cope with losing my job.

I cannot recommend Mindset enough not only for coping.  But also for teaching lesson on how to get into the proper “championship” mindset.

If these kinds of lessons interest you I also recommend The Obstacle Is The Way.

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Due to this combination of minds.  The change in mindset.  And the power of compound interest, Berkshire exploded…

But we will get back to that later…

I Failed Too

After overcoming debilitating health issues that lasted for 10 years.  After teaching myself about investing.  Writing my own full length value investing education book.  And then being hired, I failed.

I thought my knowledge about how to analyze a company’s balance sheet and investment potential was all I needed… I was wrong.

I thought I had all the tools necessary to succeed but I didn’t.  Hard work can only get you so far…

Without the proper mindset, and in my case purpose, you will still fail no matter how hard you work.  And I don’t mean fail at your job.  I mean you will fail yourself.  Your principles.  And what you are striving to become and build.

Buffett and Munger’s Failures Are Now Helping The World

Buffett and Munger grew to become two of the wealthiest, most powerful, and respected people in the world.

Mr. Buffett who has been one of top three most wealthy people in the world for years has gained 98% of his $77 billion net worth after the age of 65.

And will give 99% of this fortune to the the Bill and Melinda Gates Foundation upon his death.

Charlie Munger is worth $1.3 billion.  And has already given hundreds of millions of dollars causes he supports.

Both men not only plan to give billions of dollars to causes they care about.  But the luxury of having all the money they do enables them to also give time to these causes as well.  This is far more important.

While I can’t speak for Mr. Buffett and Munger on their motivations.  I can speak for myself…

I wasn’t making an impact on anyone else’s lives other than my families.  And I failed myself and what I’m striving to build.  That changes now…

My Purpose is Helping Others

This is what I had to learn by leaving my prior company and coming back to this blog.

Together we can make not only the lives of our families betters.  But those of the rest of the world as well.

This is my purpose…

This blog will no longer be about improving my own knowledge.  It will be about teaching and improving others lives.

I have several projects that I will announce over the coming weeks.  All related to finance and geared towards helping and educating as many people as possible.

While I can’t reveal what they are yet since they aren’t finished.  I can tell you today that part of all sales from this blog will go towards helping, educating, and feeding kids and adults who need a hand up.

5% – to start – of all sales from this blog.  My book.  And all future unannounced projects will go to charities of my choosing in the Philippines.  And also to local charities in my area.

The percentage given will grow over time as me and my family become more secure financially.  And the scope of the charities will grow as well.  But this will be a great start.

Together we can make a difference in people’s lives.   Do great things.  And improve the world.

Mr. Buffett and Mr. Munger are going to help tens of millions of people with the money and time they’re contributing.

How many people can a blog and like minded people help?

Let’s find out in the coming years.

Are there any books, articles, sayings, or lessons that you’ve learned that have helped you when you’ve failed in the past?

If so please share with everyone below so we all can learn.

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To gain access to a free 20-page gift that will help you evaluate companies faster.  And is something I use every time I research a company.  And to make sure you get all future posted content. Go to this link.

Weekend Upgrades – Improve How You Think, Invest, and Live #2

Weekend Upgrades – Improve How You Think, Invest, and Live # 2

Constant small improvement compounds and helps us become better in time. This new weekly Friday post will help us become better thinkers, investors, and people in time.

Sriracha Hot Sauce Purveyor Turns Up The Heat – “David Tran introduced Sriracha to the U.S. in the 1980s, and it quickly caught on. His company sells more than $60 million of it a year.” Entrepreneurship.  Problem solving.  Moats.  Building Businesses. Business competition.  Amazing story.

The Art Of Stillness – MUST READ.  Fascinating post about self-realization.  Taking a break.  Self awareness.  Learning.  Improving.  Information overload.  Stoicism. And more.  Post is so good I plan to buy the book to read.

MIT Engineers Beat The Complexity of Deep Parallel Processing – Efficiency.  Mental models.  Problem solving.

Rewire Your Brain to Defeat Traditional Thinking Traps - Fixing negative brain patterns.  Fixing self-defeating attitude and thoughts.

Vincent Van Gogh On Why Never Learning How To Paint Helped Him – “Probably then I would have LEARNED to ignore effects like this. Now I say, no, that’s exactly what I want — if it’s not possible then it’s not possible — I want to try it even though I don’t know how it’s supposed to be done.”  When I read this it brought to mind many of our own journeys to learn how to become investors by ourselves.  Without any formal education.

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To gain access to a free 20-page gift that will help you evaluate companies faster.  And is something I use every time I research a company.  And to make sure you get all future posted content. Go to this link.

The Potential New Brazil Fast Food Company Buyout

The Potential New Brazil Fast Food Company Buyout

A year and a half ago many bloggers. Hedge funds. Private investors. And I banded together to campaign against a horrible proposed buyout offer by Brazil Fast Food Companies (BOBS) controlling shareholders.

At the time I thought BOBS was worth a conservative $20 – $25 per share.  So the offer by company insiders of $15.50 was ridiculous.

We made enough noise. And got enough shares together that we were able to vote down the ridiculous low ball offer of $15.50 per share.

Well now there is another offer on the table. And several people have asked my thoughts on this new offer.

Queijo Holdings Offer To Buy Out Brazil Fast Food

In January I wrote my thoughts in this post – Sad To Be Losing Ownership of This Company That Gained 129% – about the offer.

I explained in that post that I expected the buyout offer to get approved. And to lose ownership of BOBS. But I didn’t explain why I thought this.

The Queijo Holdings offer of $18.30 per share for BOBS shares not owned by the controlling shareholders is still a low ball offer. In my opinion it is a certainty to get approved.

One reason is because BOBS insiders learned their lesson from the previous failed buyout offer.

A year and a half ago BOBS insiders didn’t presecure any non controlling shareholders votes on the proposed deal.  This time they have.

The way I understand it… This vote requires a simple majority of non controlling shareholders to vote yes to approve the deal. And this time BOBS controlling shareholders have already gotten 40% of the non control voters to approve this deal.

In addition, two independent stockholder groups of the Company that approached the Controlling Stockholders, which collectively represent 40.55% of the shares of common stock held by minority stockholders, have agreed with the Controlling Stockholders to support a transaction only if the Board of Directors recommends one at the price set forth in the proposal.

This means that only 9.46% more non controlling shareholders need to vote yes to approve this deal.  While I don’t know the results of the last vote.  I will bet BOBS got more than 9.5% of non controlling shareholders to vote yes for the transaction to approve it.

The above quoted area is from this site.

The above article also explains the other reasons why I am positive this transaction will get approved.

The article explains that a “special committee” must approve this deal before it can go through. But BOBS and Queijo Holdings are picking the “special committee.” So the special committees incentives are to approve the price. And approve the deal since BOBS and Queijo are paying their fees in this case.

And whoever pays the fees for something usually gets what they want.

The above reasons are why I am positive this deal will go through.

I hope I’m wrong because I don’t want to lose ownership of this company…

But these are the reasons I expect this deal to go ahead.

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To gain access to a free 20-page gift that will help you evaluate companies faster.  Is something I use every time I research a company.  And to make sure you get all future posted content. Go to this link.

Next Major Project Announced

Next Major Project Announced

Last week we talked about how I failed a bit at my last job.  And also how it wasn’t a complete failure because I was able to learn from masters.  Masters that helped me improve my writing more in the last six months than I did in the last six years.

So why is this important for this blog and you?

Not only does this mean that all content on this blog will now be easier to read.  And more entertaining – hopefully.  But improving my writing also led me to a major project that I’ve waited to announce for a while now.

Announcing The Second Edition of How To Value Invest

Coming Soon

A few months after working and learning how to improve writing. I went back to my last major project to check what its readability scores were.

Readability stats using Microsoft Word measure the amount of passive sentences the document has. The Flesch Reading Ease. And the FK score.

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Side Note: If you want to learn how to enable readability statistics in Word watch this video.

And if you want to learn the technical aspects of what goes into these scores go here.

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The higher percentage of passive sentences the doc has the higher the readability score is.  And the harder the doc is to read.  The lower the Flesch reading ease score is the harder the doc is to read.  And the higher the FK score is the harder the doc is to read.

The reverse is true for everything above as well.

Again why does this matter?

Because as I learned the harder something is to read the fewer people will read it. And fewer people will understand it. The opposite is true too.  The easier something is to read the more people will read it.  And more people will understand it.

Not many people like to read dry technical writing that is hard to understand.  This is one of the reasons I stay away from investing in banks because I hate reading their financials filled with legal terms.  And written in such a hard way that it seems like the companies trying to make it so the financials can’t be understood.

The first edition of How To Value Invest had an FK score of 13.7.  Meaning that to understand everything in the book you had to have a better than college reading level.  Not exactly what I planned for a beginner to intermediate level investors.

I was so frustrated when reading through How To Value Invest after learning about this that I decided to do a total rewrite.

While I still have work to do on it…  So far I’ve cut 20% of the book.  This was almost all redundancy.  This was one of the only criticisms I got from the first edition.

Things are now a lot easier to understand.  And the overall flow of the book a lot better. This all helped bring the FK score down from 13.7 to 8.2.  This means if you have an eighth grade reading level you can now understand How To Value Invest.

Much better.

But this isn’t all…

The New Content In The Second Edition of How To Value Invest

The first edition of the book contained everything I used when evaluating companies a year and a half ago.  But I’ve learned a lot since then.

Not only will the second edition of the book be easier to understand.  But it will also contain chapters on the new techniques I’ve implemented as well.

Some of the new content that will be in the second edition of How To Value Invest is discussion on:

  • Economic Goodwill
  • Owner’s Earnings
  • Unlevered Return on Net Tangible Equity
  • Various new relative valuation metrics.
  • And more.

I will also include at least one entire new chapter analyzing a company.  Where I will show how to use these new things in your own analysis.

So when will the book release?

Release TBD

At this point I don’t have a firm date set in mind but it will be soon.  I’ve already finished most of the rewrite on the content that was in the first edition.  Now I just have to finish the chapters on the new content.

This will be a better and easier to understand book that I hope will reach even more people now.

And the second edition of the book will involve an even bigger project that I will announce at some point as well.

But while we wait for this, I’ve got several other projects to announce.

For now the next post will include my full thoughts on the proposed Brazil Fast Food buyout.

To make sure you get all future updates about the book.  My other unannounced projects.  And a free gift.  Please go to the link below and subscribe to the blog.

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To gain access to a free 20-page gift that will help you evaluate companies faster.  Is something I use every time I research a company.  And to make sure you get all future posted content. Go to this link.

Weekend Upgrades – Improve How You Think, Invest, and Live # 1

Weekend Upgrades – Improve How You Think, Invest, and Live # 1

Constant small improvement compounds and helps us become better in time. This new weekly Friday post will help us become better thinkers, investors, and people in time.

Meet The Man Who Could Own Aviva France. And About The Greatest Customer Insurance Contract Ever – “When he was seven years old, Max-Hervé George was given a magic ticket by his father. It lets him turn back the clock, to invest with perfect hindsight week after week, steadily accumulating a fortune. And compounding at 68.8% per year since 1997″

Identify Your Strengths and Weaknesses With The Superpower Exercise - Self realization and self-improvement.

The Dark Knight Batman.jpg

Pat Dorsey’s Moats Mindmapped - A wonderful visual illustration of moats. And the companies that have he different kinds of them by Jana Vembunarayanan of Seeking Wisdom.

Cognitive Exhaustion: Resting Your Mental Muscle - How to better rest your mind to get back to full cognitive ability.

How To Blow $200 Billion: A Roadmap for Value Destruction – Mental models.  Corporate finance.  Principle of inversion.  Incentives.  Company analysis.  Case study.

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To gain access to a free 20-page gift that will help you evaluate companies faster.  And is something I use every time I research a company.  And to make sure you get all future posted content. Go to this link.

Working With Masters

Working With Masters

Or The Power of Working With People Better, Smarter, and More Experienced Than You

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http://www.shejustwrites.net/wp-content/uploads/2014/12/Screen-Shot-2014-12-15-at-2.42.17-PM.png

My thoughts every day for the last six months.  And I loved every minute of it.

In the last post I talked about how I failed at the job I got hired for six months ago.  I also talked about how I didn’t consider it a total failure because I learned a ton in that time.

How To Learn Faster

If you’ve followed this blog for any amount of time you know that I am a self-taught value investor. This is due to health issues in the previous 10 years. Issues that were finally brought under control last May.

I didn’t start getting better as an investor fast until I started this blog.  This enabled me to not only get feedback from many of you on things that I needed to work on.  But it also allowed me to see my ideas written down on paper.  And this helped me see the flaws in my analysis.

I didn’t go through the same process with my writing because I didn’t realize it was important until the last few months.

How I Improved My Writing More In The Last Six Months Than I Did In The Last Six Years By Myself

“We’re past the age of heroes and hero kings. … Most of our lives are basically mundane and dull, and it’s up to the writer to find ways to make them interesting.”
—John Updike, WD

Coming from the investment blogging world, I never thought that writing style, readability, and story were important. I thought people only cared about the numbers. And the decision on whether the company you were writing about was a good one to buy or not.

The writing masters I was privileged to work with for the last six months proved me wrong by illustrating the following point in different ways.

Or in other words: It’s easier to get people to listen to what you have to say if you tell a story and entertain.  Rather than just pounding on them with the numbers or facts.

The Masters

The company I worked for was a fast growing company of around 50 people. All super smart. Ambitious. And hard-working people who I learned an amazing amount from. But with this post I want to highlight the four writing masters I was able to work with.

My direct boss – the one who found my blog and reached out to hire me – was the best writer I worked with. Most others I talked with considered him the single best writer in the whole investment newsletter industry. And my experience with him proved this was true.

I was also able to work with two master copywriters who have helped sell $100’s of millions – if not billions – of dollars worth of products.  And one of these guys has built himself a $50 million fortune by starting businesses. Writing many best-selling books.  And selling products.

And the last guy I want to highlight wrote for The Office TV show here in the United States.

I got to work directly with all these people in the last six months.  And they helped me improve my writing more in that short time than I did in the last six years by myself.

These are just few of the amazing people I worked with.  Learned from.  And can now call friends.  And I recommend that you find your own masters to learn from to jumpstart your education.

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To gain access to a free 20-page gift that will help you evaluate companies faster.  And is something I use every time I research a company.  Go to this link.