What I Have Been Reading – August 2019

Why Buffett Is The Greatest Investor Of All Time

Before running Berkshire Hathaway, Buffett ran an investment partnership for a small group of individual investors and families. Reported returns from 1957-1968 were 25.3% annually (31.6% before fees, which were 25% of any gains above a 6% hurdle) vs. around 9% per year on the Dow.

Towards the end of this partnership, Buffett turned Berkshire Hathaway into his investment vehicle of choice.

Since then Berkshire Hathaway has more than doubled up the annual returns on the S&P 500 — 20.6% annually vs. 9.6% annually from 1965-2018.

But even those staggering annual returns don’t tell the whole story.

The total returns over this time frame were nearly 2.5 million percent for BRK vs. 14 thousand and change for the S&P 500.

Compounding capital for that long leads to some serious return numbers. The market’s returns of nearly 10% per year over 5 plus decades are great. Buffett’s returns are otherworldly.

The fact that he was able to do it for this long is perhaps the most impressive aspect of his track record. And the fact that he was able to grow the market cap of the company to almost $500 billion is what sets him apart from any other investor on the planet.

A Wealth Of Common Sense

Consumer Discretionary Industries That Do Well In A Downturn

Consumer discretionary is an economic sector that comprises items individuals may only purchase when they have excess cash. So one would assume all discretionary spending would go down in a recession. But some product categories go down faster them others.

Products in the skincare and makeup categories are likely to see the least likely drop in sales during times of economic uncertainty. On the other hand, products such as new or replacement cars, nutritional products and women handbags would see the biggest falls.


The Changing Restaurant Trade

In 2020, more than half of restaurant spending is projected to be “off premise”—not inside a restaurant. In other words, spending on deliveries, drive-throughs, and takeaway meals will soon overtake dining inside restaurants, for the first time on record. According to the investment group Cowen and Company, off-premise spending will account for as much as 80 percent of the industry’s growth in the next five years.



Knowledge Is Power

Those who were most opposed to genetically modified foods believed they were the most knowledgeable about this issue, yet scored the lowest on actual tests of scientific knowledge.

In other words, those with the least understanding of science had the most science-opposed views, but thought they knew the most.



Cost Benefit

Some people think that inequality is a big concern and we should try to share the rewards of economic growth more equally. Other people have different views — that if you earned a lot of money you should get to keep that. I think you can reasonably have a debate about that. I think what much of our work shows is, however, that there are certain programs where there really shouldn’t be a debate because they pay for themselves and reduce inequality in the process. Those tend to be programs targeted at kids.



The Social Life

The strength of a person’s social circle—as measured by inbound and outbound cell phone activity—was a better predictor of self-reported stress, happiness and well-being levels than fitness tracker data on physical activity, heart rate and sleep.


Changing Music Revenues

Historically, tours were loss-leaders used to promote albums. As revenues from recorded music have collapsed and productions have become increasingly elaborate to draw the crowds, ticket prices have risen steeply. The cost of a concert ticket in America increased by 190% between 1996 and 2018, compared with 59% for overall consumer prices. But as the continued success of scalpers demonstrates, they are still far below the market-clearing price