Sunday Briefing: On accounting books, problem solving, Saudi Aramco, and LVMH

Sunday Briefing: On accounting books, problem solving, Saudi Aramco, and LVMH

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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.

Latest on Junto

7 best accounting books for investors. To evaluate businesses and achieve success in the markets, you need to be as comfortable with the language of accounting as you are with your own native language.

What I’ve been reading

The best way to solve problems.

According to the researchers, “defaulting to searches for additive changes may be one reason that people struggle to mitigate overburdened schedules and institutional red tape.” Unless you remind yourself, and your team, to think of ways to solve a problem through subtraction and not just addition.

Saudi Aramco makes a lot of money. This article is enough to make anyone flabbergasted.

I don’t have all that much of a point here; the point is mostly that the numbers are flabbergastingly large. Or perhaps the point is that Saudi Aramco is — more even than Apple or Alphabet or Facebook Inc. or all the traditional champions — the greatest machine for the generation of money that the world has ever seen.

Company on the week

We’re back with company of the week. This week it’s LVMH Moet Hennessy Louis Vuitton SE.

I don’t see how anyone can justify paying the current price. Obviously, shareholders have been well rewarded the past couple of years. Bernard Arnault certainly has. He briefly became the world’s richest person in May as his fortune increased by over $110 billion in only 14 months from March 2020 from the rise in stock price.

It’s a great company and there are moats around a lot of the businesses in the LVMH empire. It’s just way too expensive. There’s no way the growth justifies paying over 70 times earnings. You got little business risk, but you got a lot of pricing risk.

Of course, you can justify pretty much any pricing if you just lower your discount rate. And some investors do rationalize that. Even bond holders are willing to lend money at a 0.1% yield until 2031. But that’s not our game to play.

LVMH valuation sheet

Quote of the week

Steve Jobs on thinking and living for yourself.

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking.”

A thought

Invest only in what you don’t want to sell.

Have a great coming week,
Oliver Sung

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