McCaw Cellular Communications sold to AT&T for $12.6 billion in September 1994. And yet the business did not show an accounting profit on its income statement until the second quarter of that year (after the deal was announced on August 17, 1993). The McCaw Cellular example shows that you can create a tremendous amount of value for shareholders without showing any profit on an income statement. Or not. Here […]
1. Michael Corleone: “I have always believed helping your fellow man is profitable in every sense, personally and bottom-line.” Michael seems to be claiming that he agrees with Charlie Munger who once said: “You’ll make more money in the end with good ethics than bad. Even though there are some people who do very well, like Marc Rich–who plainly has never had any decent ethics, or seldom anyway. But […]
The economist Robert Gordon is the author of a book entitled “The Rise and Fall of American Growth.” I have yet to read a review that does not like most of Gordon’s book. For example, Bill Gates writes in his review of the book https://www.gatesnotes.com/Books/The-Rise-and-Fall-of-American-Growth: “Gordon does a phenomenal job illustrating just how different life was in 1870 than it was in 1970, through both an economic analysis and engaging narrative […]
Every business owner has customer acquisition cost (CAC). And a belly button. If that business owner does not know their CAC they are essentially the equivalent of a blindfolded poker player. Every shareholder is a partial owner of the business in which they own shares. If they want to make intelligent decisions about the value of that partial ownership interest in the business, they must understand CAC. CAC is a […]
Once upon a time I wrote a book on negotiation with my friend Russell Daggatt. The book is mostly a collection of real stories about our experiences working and living abroad. I lived in Seoul for four years and for a year in Sydney. Russell lived in Tokyo. The book was published by Harper Collins, but few years after the paperback was on the market we bought back the copyright. […]
This is my 200th blog post. I thought it would be most fitting given the milestone to write about a topic related to Munger and Buffett. One of the most important decisions in the history of Berkshire was the acquisition of See’s Candies in 1972. Buffett has called See’s Candies “the prototype of a dream business.” Berkshire’s purchase of a boxed candy business founded by the See family in California […]
Investing is about owning a partial stake in a real business. You must understand whether the actual businesses in which you own stock earns a return on capital to be a successful investor. The more different types of businesses you understand in this way, the more skill you will acquire in understanding another new business. The point I am making explains why Warren Buffett says: “I am a better investor […]
During a recent lunch meeting with a few friends I used the phrase “mo money, mo problems.” One of my friends responded by challenging me to do a Dozen Things post on Biggie Smalls similar to the one I wrote on Rza. My response to the throw down is the blog post for this week. I have made the point repeatedly on this blog that you can learn something from […]
1.Mark Cuban: “Don’t start a company unless it’s an obsession and something you love. If you have an exit strategy, it’s not an obsession.” No one should start a business if they are not obsessively committed to the mission of that business. Genuine obsession and passion are highly valuable since making the business a success will require overcoming significant obstacles. My most interesting experience with being obsessively committed to […]
Bill Gurley: “Being ‘right’ doesn’t lead to superior performance if the consensus forecast is also right.” Andy Rachleff elaborates on the point made by Gurley: “What most people don’t realize is if you’re right and consensus you don’t make money.” It is a bit strange that most people don’t realize this truth and yet it is common sense: you simply can’t be part of the crowd and at the same […]