Weekend Reading Links: NBA, Less Wrong, Reservations, EV/EBIT, Becoming a Polymath, and More.

The Atlantic – The Four Horsemen May Charge Over The Earth — But Coca Cola Will Remain.

Farnam Street – Thomas Bayes and Bayes’s Theorem.

Aeon – Anyone Can Learn To Be A Polymath.

Safal Niveshak – Life & Money Lessons From Kantilal.

Oddball Stocks – Completebankdata.com.  This is Nate from Oddballs Stocks new site that helps you to research banks with its great software instead of having to do all the searching yourself.

Greg Speicher – EV/EBIT Ratio Trumps P/E Ratio.

The New York Times – Treasure Hunters of the Financial Crisis.

Mises – Native American Reservations: Socialist Archipalego.  I found this article very interesting myself living within a few hours drive of some reservations and some of the poorest ones in the country at that.

Less Wrong – On Learning Difficult Things.  This site was recommended to me by Valueprax and is a site I have learned from since then.  I like to consider myself a pretty bright guy but the people who post on this site are at a completely higher level of smart.  Some of the topics and discussions (called sequences) on the main site include: Reductionism, ethics of artificial intelligence and the singularity, evolution, the philosophy of zombies (not the zombies you are thinking about), self-deception, rationality, quantum physics, etc.  If you like to think, read, learn, and you have an open mind this site is absolutely amazing.

Forbes – Revisiting The Greatest Sports Deal Of All Time.  An update to this article is below.

Bleacher Report – NBA Negotiating With The Silna Brothers To Remedy Their Egregious $300 million mistake.

Only The Paranoid Survive Giveaway Update

A couple days ago I wrote a mini review of Only The Paranoid Survive and announced that I was giving away the book.  The book is still available to anyone in the US that wants it but apparently I wasn’t clear about which version of the book it was and for that I apologize.  The book is the paperback version, and not the ebook/Kindle version.  I will send the book for free to anyone in the US and all you still have to do is email me that you want the book, your name, and address and I will send it to you for free.  I have gotten several emails from people overseas asking for me to send the book to them.  I will if you want me too but if you do want it and live overseas you will have to pay for shipping that could range anywhere from $20-$70+ depending on which country you live in.  Frankly it would be a lot cheaper to buy a Kindle version of the book if you live overseas.

Sorry for any confusion I may have caused with my poor description of the book in my previous posting.

Mini Review of Only The Paranoid Survive And Free Book Giveaway!

Mini Review of Only The Paranoid Survive

I read Only The Paranoid Survive after it was recommended by Charlie Munger in Poor Charlie’s Almanack and I am glad that I did.  This book is mainly about the decisions Mr. Grove (Former COO, CEO, and chairman of Intel) made, and helped make, to completely reform Intel from a memory company that was suffering a slow death against Japanese competitors to helping it become the worlds biggest semiconductor company.  He walks you step by step on how and why the decisions were made within Intel which in and of itself is fascinating to me.  He also goes through some case studies on decisions that other companies made (and still make) that lead to companies losing market share or possibly even dying altogether.  The case studies and examples specifically from Intel do a great job of showing you examples of how you can spot these trends or potential trends in companies that you are managing or looking to invest in.

Is it as good as Competition Demystified?  In my opinion no, but it is not specifically a book about strategy like CD is.  It is one mans advice, stories, and case studies about decisions he made and helped make that helped start to turn Intel into the powerhouse it is today.  Along with Mr. Munger, I also highly recommend reading this book.

Free Book Giveaway

If you live in the US and would like to win my copy of this book above please send me an email saying in the subject line and text of the email that you want it.  Also in that email send me your name and mailing address and I will pay to ship the book to you. The first person to email me the above information will get the book completely FREE with no strings attached.

Weekend Reading Links: Building Wordly Wisdom Put Into Practice

As I talked about in this post I have been building my wordly wisdom and mental models for a while now since nearly every company I want to buy I estimate to be overvalued currently.  I have expanded my reading to my other interests which are all over the map.  I will be sharing some of my favorite articles with you over the coming weeks and hope you learn something from them like I have.  Don’t worry, a lot of them will still be investing related or the thinking can be applied to investing.  For the rest I just find them either interesting or intellectually stimulating.

The New York Reviews of Books – Physics: What We Do And Don’t Know.

Project Syndicate – Measure for Mismeasure.

Microcap Club – The Value Of Net Operating Losses.  EXTREMELY IMPORTANT as it pertains to valuations.

Farnam Street – Evolution is Blind But We’re Not.

Farnam Street – Marcus Aurelius on How To Act and Four Habits of Thought To Eliminate.

Motherboard – Is Robert Zubrin America’s Best Hope For Colonizing The Red Planet?

Greg Speicher – Henry Singleton: A Master of Capital Allocation.

The Washington Post – Studying Chinese To Reach His Parents.

Youtube Video – America is the Microsoft of Nations.

Bruce Kasanoff – Huge Decisions Require The Rocking Chair Test.

Building Wordly Wisdom, What I’ve Been Doing, And What I Am Doing

What I’ve Been Doing

As you may have noticed over the past several weeks/months I haven’t posted any company analysis articles.  Since finishing up and publishing the book in September I have been back searching for companies to write articles about and potentially to invest in.  Up to this point I have only been able to add companies to my watch list because everything I have found has been either crap or if it has been a company I want to invest in (some even with some substantial competitive advantages) have all been overvalued.  I have searched in countries around the world, on the OTC markets, at higher market caps than I usually look at, spin offs, ADR’s, etc and here are my observations thus far.  The following does not mean that I think the market will crash anytime soon.

  1. Every single company I have found that I want to invest in is overvalued.  Most just marginally but I did find a company in Japan that I estimated to be worth AT BEST $20 a share and it was selling for more than $100 a share.  Companies with some kind of competitve advantages that I have found and want to invest in are overvalued in comparison to the other cigar butt type companies that I will mention next
  2. The cigar butt type companies with high cash, low debt, marginal to poor profitability, no moats that I would invest in if they were undervalued enough have been up to this point generally fairly valued in my opinion.
  3. The companies that I have found to be undervalued enough for me to invest in have all been terrible companies with very low to no cash, high debt, severely declining businesses, unprofitable, Chinese companies, etc that I will likely never touch.
  4. Markets, or at least individual companies, around the world are in my estimation fairly valued or overvalued at least at the micro level.  I have searched in the US, Europe, Asia, and South America for companies to invest in and the companies around the world have all fit into one of the three above categories.  Most in the fairly valued to slightly overvalued range.

As you know if you have read this blog for any amount of time I like to put my money where my mouth is, buy the companies I find to be good investments, and write analysis pieces about them.  I haven’t even found any particularly egregious or interesting companies to write negative articles about either like I did with Wendy’s in 2012, and Koss last year.  The Japanese company I found and alluded to above was a very well run company that I would possibly invest in if it weren’t so overvalued so I didn’t feel a need to write negatively about them.

The reasons above are why I have not been writing more on this blog which I frankly hate to not be able to do but I will not write half-hearted, vague, non quality company analysis articles just to keep the flow of content going.  I also will not write my thoughts on other general investing, the process of investing, and other value investing topics because people like Oddball Stocks, Wexboy, CSInvesting, The Red Corner Blog, and others write much better than I can about those kinds of things.

Building Wordly Wisdom and What I Am Doing

In December I decided that I needed to stop banging my head against the proverbial valuation wall since I have now built up a watch list of around 25 companies.  Far more than I ever would invest in at one time and already far more than I want to keep track of at one time.  For the past two years I have spent nearly 100% of my time either learning about investing or writing the book.  Since December I have decided to spend about 50% of my time searching for companies, adding and discarding companies from my current watch list, so that only the best companies are on there when valuations do become better.  The other 50% of the time I have caught up on some much needed reading that I severely neglected over the last two years while I was building my value investing knowledge, investment processes, and writing the book.

The below has been done in the last three weeks and is an example of what I will continue to do while awaiting a market crash and investment opportunities.

4 books read:

  1. Poor Charlie’s Almanack
  2. Guns, Germs, and Steel
  3. Only The Paranoid Survive
  4. Tulipomania

~500 companies evaluated at at least a minor level, vast majority discarded as only 2% of companies I decided to do further research into.

10 company annual reports and financials read

5 companies valued.

4 companies added to watch list

The above list does not contain anything like articles that I have read on the internet.

In addition to this blog being about company analysis, teaching, and learning about value investing, it is also a bit of a journal so that I can keep track of things that I have done, learned from, and to look back to see where I could have improved.  In that vein I periodically plan to update the list above of things I have done to keep track of where I have been.

Until the market crashes I will be doing the above, as Mr. Munger puts its, building my wordly wisdom, among other things like posting links that I have learned from, and depending on how long it takes for the market to crash go back to learning Mandarin again.   I have a couple ideas in mind of things that I can do to learn and practice in the meantime and will share any of those if they come to fruition. I will also be giving away some of the books I have read and will announce the first giveaway soon.

For now though I am going to get back to my current research list of OTC’s and ADR’s.