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.
Latest on Junto
The Loser’s Game. In any Loser’s Game, the major advantage comes from avoiding stupidity rather than seeking brilliance. Learning the mental model of the Winner’s and Loser’s Game can give you an enormous advantage in many aspects of your life.
What I’ve been reading
Li Lu on value investing in China. It’s a real gem that this talk between Li Lu and Bruce Greenwald is made public.
Great businesses are the ones who really have above average returns on invested capital. But that kind of a business traditionally attract imitators, competitors, everybody wants to have above average returns on reinvested capital. And so truly good businesses are the ones who can fend off competitors, who can really have an enduring competitive advantage and have that higher than average return on invested capital and hopefully also have a long run-rate of continuous growth.
Instead of concentrating on the metrics in financial statements, Wertheim is devoted to reading patents and spends two six-hour blocks each week poring over technical tomes. “What’s more important to me is, what is your intellectual capital to be able to grow?” Thanks to his engineering background, the technical nature of optometry and his experience as an inventor, the patent library is Wertheim’s comfort zone. Stocks he invested in based on their impressive patent portfolios include IBM, 3M and Intel.
The tyranny of time. Man’s invention of the clock created a culture of anxiety. Joe Zadeh suggests looking inward: Rather than being a slave to the mechanical clock, one should listen more often to their body clock.
Clock time is not what most people think it is. It was created, and it is frequently altered and adjusted to fit social and political purposes.
Quote of the week
Bernard Baruch on sanity.
“Whatever men attempt, they seem driven to try to overdo. When hopes are soaring I always repeat to myself ‘Two and two still make four and no-one ever invested a way of getting something for nothing’. When the outlook is steeped in pessimism I remind myself, “two and two still make four and you can’t keep mankind down for long.”
You can have cheap stock prices and you can have good news. But you rarely have both at the same time.
Have a great coming week,