Welcome to the Sunday Briefing newsletter where we share some of the interesting lessons in life, business, and investing that we’ve come across during the week.
Latest on Junto
Three notes were published on Junto during the week.
How to deal with an efficient market. Because the market is partly efficient, you can always know that:
- It’s hard to find value where lots of others are looking.
- When something looks too good to be true, it probably is.
- You can only expect to do well if you bet seldom.
- If you’re right, the market will agree with you at some point.
Microsoft’s 1997 toll bridge business and why Warren Buffett didn’t invest in it. An e-mail exchange between Warren Buffett and Jeff Raikes on Microsoft in 1997 is filled with valuable lessons.
The investing game has changed. Accounting standards haven’t kept up with the change in the world. Annual reports have gotten unfairly longer and valuation has gotten harder. The rise of intangibles and the integral relationship between the income statement and balance sheet have exacerbated the challenge. The thoughtful investor’s job has not changed but the analytical approach has.
What we’ve been reading
We like authority, we believe in things that good orators say, and we take part in superstitions because, evolutionarily speaking, being unpopular is much worse than being wrong. Our ancestors who believed in true things that made them unpopular got less sex than the ones who happily became part of whatever falsehood bonded the society together.
Nintedo, Disney, and cultural determinism. Matthew Ball dives into Nintendo’s culture, hardware, content, and ambition to unpack the question as to whether Nintendo is Disney circa 2014/2015, poised for substantial growth.
Quote of the week
Warren Buffett on capital allocation skills with management.
“Understanding intrinsic value is as important for managers as it is for investors. When managers are making capital allocation decisions—including decisions to repurchase shares—it’s vital that they act in ways that increase per-share intrinsic value and avoid moves that decrease it. This principle may seem obvious but we constantly see it violated. And, when misallocations occur, shareholders are hurt.”
You don’t have to be an academic, but you must be a relentless student.
Have a great coming week,