25iq

My views on the market, tech, and everything else

A DOZEN THINGS I’VE LEARNED ABOUT BUSINESS

1.“If you play [your competitor’s] game, you lose every time.” Allan Benton. http://www.esquire.com/features/what-ive-learned/allan-benton-interview-0909 This quotation to me is all about moats and sustainable differentiation.  If you haven’t read Warren Buffett, Michael Porter and Michael Mauboussin about “moats/sustainable competitive advantage,” well, you are missing out in a huge way. 2.“Listen, business is easy. If you’ve got a low downside and a big upside, you go do it. If you’ve got a big […]

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“Wholesale Transfer Pricing” and the “Free Parking” Business Model

As part of the discussion of my previous post on the “free parking” business model, a reader asked for a blog post on “wholesale transfer pricing.” The rise of free parking as a business model has made wholesale transfer pricing more important than ever. Wholesale transfer pricing power is a term I heard John Malone use in a conference room circa 1995.  You won’t find the term in textbooks.  Simply put: Wholesale transfer pricing =  the bargaining […]

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The “Free Parking” Business Model

This blog post is on what I call the “free parking” business model, which in my view is a different way of describing the “attach” business model.  @cdixon tweeted a suggestion that I follow up our exchange of tweets with a longer blog post. The right way to look at almost any business question is to start with the customer. Unfortunately, sorting out who the customer is may not always […]

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Asset Allocation for Muppets with a 401(k)

A few people have recently asked me to write a post on asset allocation.   I decided to focus the post on the situation facing so-called “muppets” since they have greatest need for the advice.  A term like “muppet” which can be used in a derogatory way can be argued to be a badge of honor for some people.  In other words, the sooner you “get to acceptance” if you are indeed […]

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BUSINESS CONFIDENTIAL – HEART OF DARKNESS

                                                      I had attended a very important conference the previous month during which we needed the support of a delegation of Africans. To cement that support I promised to attend another conference a few weeks later in the city of Kinshasa in a country that is now called the Democratic Republic of Congo.  The story begins in London on  December 3, 1995 when I called a friend from the hotel. He knew I was about to leave on a […]

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Investment vs. Speculation

Jason Zweig makes an interesting point about the difference between investment and speculation. http://blogs.wsj.com/totalreturn/2013/02/28/are-you-an-investor-or-a-speculator-part-one/?mod=WSJ_Business_LatestHeadlines He raises the idea that the distinction should perhaps have a time element, which in my view is not helpful. Seth Klarman has written: “The line I draw in the sand is that if an asset has cash flow or the likelihood of cash flow in the near term and is not purely dependent on what a […]

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Mauboussin

Sometimes I will be reading some dreadful business book or article and think to myself: “I could be re-reading a Mauboussin essay instead!” I suggest you at least read (free and priceless- price is what you pay and value is what you get):  Click to access How-Well-Do-You-Compare.pdf http://michaelmauboussin.com/writing.html http://michaelmauboussin.com/books.html The links at this fine page maintained by Hurricane Capital:  https://hurricanecapital.wordpress.com/2015/02/01/links-michael-j-mauboussin/

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“If you take away the skill that Buffett has Buffett has no skill” is a bullshit thesis.

Blogger cites an older (misinformed ) Economist article citing an academic study (rubbish) as support for Efficient Market Hypothesis (EMH) here:  http://www.themoneyillusion.com/?p=19209. If the blogger is trying to get nearly all people to buy index funds, well say so. But don’t use that to argue that markets are *always* efficient. Or that EMH supports deeply broken economic theories like dynamic stochastic general equilibrium (DSGE). The academic thesis in the case of the paper […]

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How thinking like Charlie Munger may have saved my life

  This is a continuation of my previous blog posts on “the Psychology of Human Misjudgment,” which is Charlie Munger’s description of dysfunctional decision making heuristics.  Munger writes: “…tendencies are probably much more good than bad. Otherwise, they wouldn’t be there, working pretty well for man, given his condition and his limited brain capacity. So the tendencies can’t be simply washed out automatically, and shouldn’t be. Nevertheless, the psychological thought […]

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Charlie Munger on The Psychology of Human Misjudgment

“…the brain should be using the simple probability mathematics of Fermat and Pascal applied to all reasonably obtainable and correctly weighted items of information that are of value in predicting outcomes…”  Charlie Munger  http://www.rbcpa.com/Mungerspeech_june_95.pdf To cope with information and computation overload, humans have developed simple “rules of thumb” called “heuristics” which  allow them to make decisions.  It would be great if people could do what Charlie describes above, but it […]

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