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
One note was published on Junto during the week.
Pari-mutuel systems and Knightian uncertainty. Not all great companies make for great investments. Here are two mental models that explain the nature of the stock market.
What we’ve been reading
Predicting the future. Anyone who feels confident about long-term forecasting should read this letter sent to George W. Bush from Secretary of Defense Donald Rumsfeld dated April 12, 2001.
The first thing to understand is that mathematics is an art. The difference between math and the other arts, such as music and painting, is that our culture does not recognize it as such. Everyone understands that poets, painters, and musicians create works of art, and are expressing themselves in word, image, and sound. In fact, our society is rather generous when it comes to creative expression; architects, chefs, and even television directors are considered to be working artists. So why not mathematicians?
Google’s internet taxation. It’s hard to argue against the fact that many internet monopolies in some ways act as tax authorities over almost any business present on the internet.
Company of the week
Our company of the week is Fiserv Inc.
The company’s $22 billion acquisition of First Data in 2019 introduced a lot of possibility with a concomitant wider range of future outcomes. Returns on capital slumped even after netting out goodwill from invested capital. What Fiserv can make of it is yet to be seen. I haven’t dived below the surface myself but I might do so in the future and make a write-up.
For this reason, I have applied relevant accounting adjustments but made no forecast or valuation in the below fundamentals sheet. Download the model here and make your own assumptions.
Quote of the week
Richard Feynman on life.
“Nobody ever figures out what life is all about, and it doesn’t matter. Explore the world. Nearly everything is really interesting if you go into it deeply enough.”
Risk is in the probability distribution. Uncertainty is when you don’t know the probability distribution.
Have a great coming week,