Sunday Briefing: On Alibaba, poker, and an investing chat between Li Lu and Bruce Greenwald

Sunday Briefing: On Alibaba, poker, and an investing chat between Li Lu and Bruce Greenwald

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Welcome to the Sunday Briefing newsletter where I share some of the interesting lessons in life, business, and investing that I’ve come across during the week.

What I’ve been reading

Alibaba and the Future of BusinessAlibaba has gotten great attention in the value investing community since Charlie Munger decided to load up 19% of Daily Journal’s equity portfolio with the stock. I was sent the HBR article by my good friend Rob Lee. It gives a great primer into Alibaba’s hitherto success.

Alibaba today is not just an online commerce company. It is what you get if you take all functions associated with retail and coordinate them online into a sprawling, data-driven network of sellers, marketers, service providers, logistics companies, and manufacturers. In other words, Alibaba does what Amazon, eBay, PayPal, Google, FedEx, wholesalers, and a good portion of manufacturers do in the United States, with a healthy helping of financial services for garnish.

Note that the article is written by Ming Zeng, the chairman of the Academic Council of Alibaba and the dean of Hupan School of Entrepreneurship which is founded and owned by Jack Ma. (Recently, Hupan has come under regulatory scrutiny by the Chinese government in its latest move to rein in tech Jack Ma’s influence.)

[VIDEO]: Fireside Chat – Value Investing in China. An invaluable chat between two of the greatest minds in investing: Li Lu and Bruce Greenwald. (On a side note, I find it very likely that Li Lu talked to Charlie Munger about the Alibaba purchase.)

“This is what 5% feels like.” A blog post which is really about poker gives valuable practical advice into how one can calibrate one’s mind to instinctively feel probability events. I find it one of the most important lessons for seeking rationality.

If you haven’t played poker before, you may hear that some good outcome for you is 91% likely to happen and think, “That sounds fantastic!”. Since your mind want to believe it, it may even trick you into feeling like it’s almost a sure thing. But if you play poker, you’ll know that 91% is like trying to have your hand hold against a gut-shot with one card to come. You’ll know what that feels like. So you’ll know that 91% is far less automatic than it intuitively feels.

Quote of the week

Marcus Aurelius on conviction.

It never ceases to amaze me: we all love ourselves more than other people, but care more about their opinion than our own.

A thought

If one likes the business and the people, valuation should carry less weight in the investment decision.

Have a great coming week,
Oliver Sung

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