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Sunday Briefing: On the secret to success in life, Starbucks’ monetary superpower, and the Berkshire AGM

Sunday Briefing: On the secret to success in life, Starbucks’ monetary superpower, and the Berkshire AGM

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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.

What we’ve been reading

The Common Denominator of Success by Albert E.N. Gray. A speech dated back to 1940 at a life insurance conference presents the secret behind all succeeders in life.

The common denominator of success – secret of success of every individual who has ever been successful – lies in the fact that he or she formed the habit of doing things that failures don’t like to do.

Starbucks, Monetary Superpower. Starbucks is a wonderful business which I wish was cheaper. And one of the company’s terrific competitive advantages lies in its free financing from its huge gift card liability.

Each year Starbucks recognizes that a portion of its stored value liabilities will be permanently lost. This is known as breakage. Starbucks recognizes this amount as profit. In 2018 the company recognized $155 million in breakage, around 10% of all stored value balances. Wow! Starbucks already pays just 0% on its debts to customers, but add in breakage and that equates to a roughly -10% interest rate!

[Video] Berkshire Hathaway Annual Shareholders Meeting 2021. At this year’s annual meeting, it became more apparent than ever who Buffett’s successor will be when Munger (perhaps) accidentally spilled it during a question. It’s Greg Abel.

Greg will keep the culture.

A comforting fact:

We are not getting too big to manage. We are so decentralized that we can keep doing what we do at our scale for a very long time.

One to dabble with:

Investing is harder now. The millennial generation is going to have a hell of a time getting rich.

And one a lot of people have been waiting for from Munger:

Of course I hate the bitcoin success.​

I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air.

I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization.

To those who have asked, I will not be making a full transcript of the meeting. Someone else will inevitably create one.

Quote of the week

My one favorite line from Charlie Munger at this year’s Berkshire AGM:

If you are not a little confused by what is going on now, you don’t understand what is happening.

A thought

Proper temperament will forever beat high IQ.

Have a great coming week,
Oliver Sung

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