Circle of Competence Issue #40

Quote of the week: "Investment markets make the same pendulum-like swing: between euphoria and depression, between celebrating positive developments and obsessing over negatives, and thus between overpriced and underpriced. This oscillation is one of the most dependable features of the investment world, and investor psychology seems to spend much more time at the extremes than it does at the 'happy medium.'" - Howard Marks, 1991

FOOD FOR THOUGHT

This week, Neil O'Donnell and I launched the Circle of Competence podcast. Bear with us the next couple of weeks as we work out the kinks, but at the same time... we appreciate any and all feedback! We are seeking to distill complex topics into nice, bite sized podcasts in the 30-45 minute range and broaden your circle of competence with each episode. As I mentioned last week, we will also be seeking to interview guests from a wide range of industries and fields to learn from the lessons of their successes, their failures, and how their mental models can be applied more generally.

For our first episode, we discuss the art of valuation from the perspectives of Warren Buffett, Seth Klarman, and Howard Marks in the episode titled 'What is an empty building worth?' Here are the four links we tie into the discussion that we recommend reading:

- Seth Klarman on investing vs. speculating

- Buffett's lessons on real estate and farmland investing

- Howard Marks' 2004 memo, 'The Happy Medium'

- Lessons from Ed Thorpe

We end the discussion with a question for the audience:

Is there a stock or industry today that looks like an 'empty building' (looks like it might be worth zilch, like American Express after the salad oil scandal) but perhaps warrants a contrarian view? Why? Give us a shout!

Have a great week!

- Benton

DEPARTMENT OF GENERAL FINANCE

- The sports betting legalization trend and investment implications (Institutional Investor)

- Persistence in private equity returns just isn't present (CFA Institute)

- Are the LA Dodgers making off balance sheet arrangements... in insurance? (CNBC)

- US pension funds reach for yield in opportunistic real estate projects (WSJ)

- Why you would not have invested with Warren Buffett (Behavioral Investor)

- Buffett & Munger on what to look for when reading an annual report (Seeking Wisdom)

- Why Berkshire Hathaway's stock might be an interesting buy (The Brooklyn Investor)

- Writing to clarify your thoughts (Morgan Housel)

DEPARTMENT OF PODCASTS