1-Footers

I don’t look to jump over 7-foot bars:  I look around for 1-foot bars that I can step over.
—     Warren Buffett
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On This Day In:
2022	Try Walking
2021	Probably Why It Hurts So Bad
	5-0
2020	Unlike Faux News Viewers
2019	I Don’t Know Truth, Either
2018	An Approaching Disgrace
2017	Liberty, Collusion, History And The Republican Majority
2016	But I Have Too Many Questions
2015	A New Friend
2014	Do I Have To Fall In Love?
2013	More Democracy, Please
2012	Speaking Of Love
2011	Limits

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You Get What You Pay For

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
—     Warren Buffett
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On This Day In:
2022	Historians, Not Librarians
2021	Inshallah
	Leave No Doubt
2020	A Choice
2019	Fill It Up
2018	Can We Talk About Me?
2017	About Change
	Gordian
2016	Are Your Prayers Functioning?
2015	Expressing Love
2014	Cyclical Attitudes
2013	Footprints
2012	Broken Resolutions
	Bin It

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Widening The Moat

Every day, in countless ways, the competitive position of each of our businesses grows either weaker or stronger.  If we are delighting customers, eliminating unnecessary costs and improving our products and services, we gain strength.  But if we treat customers with indifference or tolerate bloat, our businesses will wither.  On a daily basis, the effects of our actions are imperceptible;  cumulatively, though, their consequences are enormous.
When our long-term competitive position improves as a result of these almost unnoticeable actions, we describe the phenomenon as “widening the moat.”  And doing that is essential if we are to have the kind of business we want a decade or two from now.  We always, of course, hope to earn more money in the short-term.  But when short-term and long-term conflict, widening the moat must take precedence.  If a management makes bad decisions in order to hit short-term earnings targets, and consequently gets behind the eight-ball in terms of costs, customer satisfaction or brand strength, no amount of subsequent brilliance will overcome the damage that has been inflicted.  Take a look at the dilemmas of managers in the auto and airline industries today as they struggle with the huge problems handed them by their predecessors.  Charlie [Munger] is fond of quoting Ben Franklin’s “An ounce of prevention is worth a pound of cure.”  But sometimes no amount of cure will overcome the mistakes of the past.
—     Warren Buffett
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On This Day In:
2022	Widening The Moat
2021	Core Strength
	Thinking Of You
2020	Rising Danger
	210 Day Health / Weight Update (Apr 2020)
2019	Never Let ‘Em See You Sweat
2018	Just Two?
2017	Living Without Love
	Good News!
2016	At This Moment
2015	Still Dreaming
2014	Good Wins
2013	Before
2012	Look To This Day
2011	One View Of Man

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Historians, Not Librarians

If past history was all there was to the game, the richest people would be librarians.
—    Warren Buffett
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On This Day In:
2022	Historians, Not Librarians
2021	Inshallah
	Leave No Doubt
2020	A Choice
2019	Fill It Up
2018	Can We Talk About Me?
2017	About Change
	Gordian
2016	Are Your Prayers Functioning?
2015	Expressing Love
2014	Cyclical Attitudes
2013	Footprints
2012	Broken Resolutions
	Bin It

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A Model Democrat

Whatever the future holds, I make you one promise:  I’ll keep at least 99% of my net worth in Berkshire for as long as I am around.  How long will that be?  My model is the loyal Democrat in Fort Wayne who asked to be buried in Chicago so that he could stay active in the party.  To that end, I’ve already selected a “power spot” at the office for my urn.
—    Warren Buffett
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On This Day In:
2021	A Model Democrat
	Listen Mister
2020	The Main Thing: Vote!
	No Other Reason
2019	A Big “IF”
2018	Committed To Thinking
2017	More Pictures From My (Family) Retirement Party
	A Fondness For Sins
2016	Are You Waiting?
2015	The Future Myth
2014	Hands
2013	Because You Have Lived
2012	47%
2011	Conservative Values: Low And Lax
2010	A Non-Zero Sum Game
	What If “c” Isn’t A Constant?
2009	Pictures from UCLA trip…

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The Margin Of Safety

Leaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return.  The worst business to own is one that must, or will, do the opposite – that is, consistently employ ever-greater amounts of capital at very low rates of return.  Unfortunately, the first type of business is very hard to find:  Most high-return businesses need relatively little capital.  Shareholders of such a business usually will benefit if it pays out most of its earnings in dividends or makes significant stock repurchases.
Though the mathematical calculations required to evaluate equities are not difficult, an analyst – even one who is experienced and intelligent – can easily go wrong in estimating future “coupons.”  At Berkshire, we attempt to deal with this problem in two ways.  First, we try to stick to businesses we believe we understand.  That means they must be relatively simple and stable in character.  If a business is complex or subject to constant change, we’re not smart enough to predict future cash flows.  Incidentally, that shortcoming doesn’t bother us.  What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.  An investor needs to do very few things right as long as he or she avoids big mistakes.
Second, and equally important, we insist on a margin of safety in our purchase price.  If we calculate the value of a common stock to be only slightly higher than its price, we’re not interested in buying.  We believe this margin-of-safety principle, so strongly emphasized by Ben Graham, to be the cornerstone of investment success.
—     Warren Buffett
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On This Day In:
2020	In The Path
	Hangin’ Out
	But I Won’t Do That
	Unless You Are #45
2019	Seeking Nobility
2018	My Family Calls It Hoarding
	Day 30: Done & Dusted
2017	Rogers’ Rules (Hexadecimal)
2016	But, It’s Such A Simple Mistake
2015	Crawl Towards The Light
2014	Sweet Songs
2013	The Wife Of An Ordinary Man
2012	Three Words
2011	Know Anyone Like This?
2010	Apoplexy??
	When Breaking Up Is Hard To Do…
	Sibling Awareness

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Four Buffett’s

Risk comes from not knowing what you’re doing.
—    Warren Buffett
Price is what you pay.  Value is what you get.
—    Warren Buffett
Rule No.1:  Never lose money.  Rule No.2:  Never forget rule No.1.
—    Warren Buffett
In the business world, the rearview mirror is always clearer than the windshield.
—    Warren Buffett
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On This Day In:
2018	Change Happens
	Day 13: Ginger / Mint Relief
2017	Still Removing Bricks
2016	Namaste
2015	Still Learning
2014	Dark Processes
2013	To The Last Link
2012	Slept In Again
2011	Home Again, Naturally
2009	Thoughts after a long day of OT…

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Thinking Ahead

If you are thinking a year ahead, sow a seed.  If you are thinking 10 years ahead, plant a tree.  If you are thinking 100 years ahead, educate the people.
—    Kuan Tzu
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On This Day In:
2022	Starting Over (Again)
	Another LONG Post (Guitar Review)
2021	Allowing For Compromise
	Whoa-whoa
2020	Why #LyingDonald Hurts The US
2019	Blow Between Your Ears
2018	Thinking Ahead
2017	I’d Like To Try
2016	Or Blog (And Bound)
2015	Welcome The Virtuous
2014	Closing The Gap?
2013	On Parenting
2012	What Knowledge Is
2011	The Indefinite Accumulation Of Property

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Stock Market Sets More Records Under #DumbDonald

And the records just keep on getting set this week:
1) First President to ever have the Stock Market fall 1,000+ points in one day during his administration  —  Donald Trump
2) First President to ever have the Stock Market fall 1,000+ points in one day TWICE during his administration  —  Donald Trump
3) First President to ever have the Stock Market fall 1,000+ points in one day TWICE in one week during his administration  —  Donald Trump
4) First President to ever have the Stock Market fall 1,000+ points TWICE during his first term  —  Donald Trump
As I said in a prior post, most market gains are not directly attributable to any specific action by a President, neither are most market losses.  But, when you take “personal” credit for the gains “since getting elected”, I think you should also accept the blame when there is a market loss – “correction” or otherwise – during your administration.  Oh, but not “TeflonDon”…  After all, the economy is still fundamentally sound.  Or, so we’re being told.
And, yes, Mr. President we’re tired of winning!  Please, make it stop!!
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On This Day In:
2022	MLB: End The Lockout, Sign A CBA
2021	And Keep Doing So
	I’ll Forgive You By And By
2020	Well Over!
	The Group
2019	Carrying Humanity
2018	Not Necessarily In This Order
	Stock Market Sets More Records Under #DumbDonald
2017	An Accumulation Of Acts
2016	Here’s Lookin’ At You Kid
2015	How To Be Omnipotent
2014	The Promise Of Future Love
2013	Christian, n.
2012	Praise
	Don’t Let Me Be Misunderstood
2011	A Few More Lyrics From The Past
	5 For The Price Of 1

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Two Views Of The Starting Line

The foundation of wealth is the first decision well made.
—    John Pierpont (J. P.) Morgan
It is very much easier for a rich man to invest and grow richer than for the poor man to begin investing at all.
—    Barbara Ward
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On This Day In:
2016	Never Had It, Never Will (Donald Trump)
2015	20/20
2014	All Of My Best Ideas Come While Walking…
2013	Learn To Learn
2012	I Remind You
2011	Respect And Prestige
2010	Living Legends (Willie Nelson) and the Gettysburg Address

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Knowledge Pays

An investment in knowledge always pays the best interest.
—    Benjamin Franklin
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On This Day In:
2022	Are You Confused?
2021	Working On The Ordinary
	Smoothed My Jagged Edges
2020	Republican Senators Should Vote For Conviction Of #45
2019	Carry It
2018	Simple
2017	Knowledge Pays
2016	Brief Glimpses And Full Glances
2015	Pursuing Perspective
2014	Wearing Down?
2013	Labouring Under A Curse
2012	Listen To Yourself
2011	Career Tips (Part 1)
	No Captain Dunsel

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Accepted Fraud

“The Big Short”  (2015)  —  movie review
Last night I watched “The Big Short“, which is a movie about how the banking, finance, credit bureaus  and real estate industries defrauded the American public (actually the entire world) and got away with it.  The movie stars Christian Bale, Steve Carell, Brad Pitt and Ryan Gosling and is rated “R” for language and frontal nudity (brief scenes with strippers).  The movie uses cut-aways to random famous people to provide “definitions / explanations” and (I guess) a bit of levity.  This act of having the person on camera “speak” to the audience is known as “breaking the fourth wall”.
For some time now, about forty years ago, the banking industry moved away from traditional “banking” and started trying to make money off of making money.  This began as an attempt to monetize risk into products which could be sold.  This was done via derivatives, which is a fancy way of saying “money for nothing”.  It is not really “nothing”, it’s position, options, leverage, coverage, insurance, or any number of other names for financial security – or rather, the illusion of financial security.  Some people think of it as shared risk.  I think it’s more traditional name is gambling.
Okay.  I’ll get off my soap-box and get back to the movie.  Four groups of financial players discover the housing market is being fraudulently (and criminally) propped up and, in fact, is in a giant bubble.  A “bubble” happens when greed takes over common sense in a market and prices for the items in the market are far higher than the actual value of the item and / or the ability of the buyer in the market to purchase the item.  Theoretically, when you lose the ability to pay for something, you should stop buying it.  However, in a true bubble, because “everyone” expects the price to continue to increase, the buyers continue to buy under the assumption the price will continue to go up and just before you lose the item (foreclosure for realty), you sell the item and take whatever profit you can.  IF you can time your exit correctly and get out with a profit, you win.  However, this is not true investing.  It is merely speculating.  This speculation is what is at the heart of the movie.
That is the “before” side of the movie.  The four groups know there is a bubble and one of them creates a derivative to profit (vastly) if the housing market bubble bursts.  The other three parties  get wind of the derivative and essentially go “all-in” to bet on the crash.  This is all happening in roughly 2005.  The expectation is the crash will happen in early 2007 when a percentage of mortgage loans which are variable rates with short-term fixed rate teasers have the teaser expire.
When 2007 rolls around and the housing market does crash, the derivatives don’t initially pay out because the banks / credit agencies / insurance companies  and government don’t want the national economy to collapse.  Essentially, the U.S. Taxpayer (via the government) foots the bill for the losses of the restructuring financial market.  Inevitably, a few of the large financial players “go away” (get bought up at severe discount) and the global economy is saved.   Here, the key point of the movie is that the little guy in America loses their home, but none of the fraudulent bankers and financiers goes to jail.  The irony is they (the banks and financiers) have prevented legislation which might stop this from happening again in the future, and we are back on the same roller coaster again.
Final recommendation:  highly.  This is a complicated movie about a complex subject.  The average person seeing the movie will probably not understand the financial portions of the movie.  They will (probably) understand the effects of the bubble burst because most of us have been living through the results (recession) over the last ten years (and still going).  This is not a great movie, but it is an honorable attempt to educate the working people of America.
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On This Day In:
2015	Even The Little Ones
2014	Who’s On First?
2013	No Equal Measure
2012	A Single Host
2011	No Exemptions
2010	Memories Of KSA – Inside The Fire

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Economic Engines

In addition, at least in America, science has been treated sort of cavalierly, not only by the public but also by government.  The idea that science is just some luxury that you’ll get around to if you can afford it is regressive to any future a country might dream for itself.  Innovations in science and technology are the engines of the 21st-century economy; if you care about the wealth and health of your nation tomorrow, then you’d better rethink how you allocate taxes to fund science.  The federal budget needs to recognize this.
—    Neil DeGrasse-Tyson
Quoted by Rachel Edidin in the March 2014 Wired magazine article titled:  “Neil DeGrasse Tyson on Why Cosmos Will Be Better Than Ever“
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On This Day In:
2022	5 In 6
2021	The Principal Difference
	Picture Perfect
2020	So Sad, Faux Crowd
	The Spirit Is Willing
2019	And The Same For Blogs And Posts
2018	The End Of Asgard (For Now)
	I Learn The Hard Way Every Time
2017	For Some
2016	Fragile And Explosive, Provocation And Privacy
2015	Bound Up
2014	Economic Engines
2013	Weren’t You Supposed To Be Reading?
	Absent Friends
	Where I Stand
2012	Hangin’ With His P’s
	Help Save
2011	Six Facets Of Good Leadership

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Honest Wants

Contentment consists not in great wealth, but in few wants.
—    Epictetus
The surest way to remain poor is to be an honest man.
—    Napoleon Bonaparte
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On This Day In:
2022	So Why Not Try?
2021	One Likely Consequence
	Just A Carousel
2020	Know Love
2019	Spoiler Alert
2018	Tic-Toc
2017	Explaining Working Class Support For Donald
2016	Not In My Experience
2015	Effort
2014	Honest Wants
2013	Faith, n.
2012	Surprise Me
2011	Confused With Truth

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Creating Interlocking Fragility

Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability.  In other words it creates devastating Black Swans.  We have never lived before under the threat of a global collapse.  Financial Institutions have been merging into a smaller number of very large banks.  Almost all banks are interrelated.  So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks – when one fails, they all fall.  The increased concentration among banks seems to have the effect of making financial crisis less likely, but when they happen they are more global in scale and hit us very hard.  We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another.  True, we now have fewer failures, but when they occur …. I shiver at the thought.  The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup.  But not to worry: their large staff of scientists deem these events “unlikely”.
—    Nassim Nicholas Taleb
From his book:  “The Black Swan“
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On This Day In:
2022	Until One Day…
2021	Thinking About Faux News
	Am I Ever Going To Listen?
2020	First Place
	Perseverance
2019	Insha’Allaha Bukra
	No More Tears (Or Fog)
	Too Busy Thinking About My Baby
2018	Lost Time
2017	Are You Talking To Me?
2016	Here, Desire Is Purified
2015	Hopefully Just Visiting
2014	Fond Memory?
2013	Distress, Hope, Trust
2012	Creating Interlocking Fragility
2011	Four Stories And A Gospel
	What Have You Burned Lately?

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