What I Have Been Reading – July 2019


[A former cop] acquired properties for next to nothing—“Nobody wanted them,” he said—and now owns about 1.3 million square feet of buildings and another 385,000 square feet of undeveloped land in Brooklyn, mostly in Red Hook. O’Connell, 77, said he doesn’t track the value of his holdings, but Bloomberg estimates they’re worth at least $400 million.


Economic Moats

No matter how good you are, if what you’re doing is very profitable, others will copy you and will be “good enough” to impinge on your game. Which is why the best investments are those with moats – companies that are so good at something that their abilities and assets literally act as a barrier to those who would follow and imitate. These competitive advantages you build won’t necessarily keep crowds off the mountain trail, but if you can build them to be formidable enough, they should dissuade enough of the horde to follow other trails elsewhere.



Investing: Art or Science

Science is associated with consistent, independent and timeless outcomes.  Science can be studied in a textbook, applied in an experiment and deliver an expected result.  If investing were a science, in theory, you should be able to buy an investing textbook, apply the knowledge and achieve excellent returns. There would be an investment formula you could apply to achieve results. Unfortunately, there are no magic formulas or formulaic textbooks that guarantee success.




Fifty years ago, the four most valuable U.S. companies employed an average of 430,000 people with an average market cap of $180 billion.These days, the largest U.S. companies have about 2X the market cap of their 1964 counterparts with one-fourth of the employees. That’s what doing more with less looks like.




There are no asset managers who represent their strategy to clients as “We buy the most expensive assets, and add to them as they rise in price and valuation.” That’s unfortunate, because this is the only strategy that could have possibly enabled an asset manager to outperform in the modern era. It’s one of those things you could never advertise, but had you done it, you’d have beaten everyone over the ten-year period since the market’s generational low.




Best athletes don’t really have better reaction times, they can take extremely small amounts of data and make very educated guesses. Albert Pujols can predict almost exactly where the pitch is going to be as it is leaving the pitcher’s hand. However, when Jenny Finch, a gold medalist women’s softball pitcher, pitched at him he could not hit a single ball. It’s not that she was necessarily a better pitcher, he just did not have a data set to predict where her pitches were going to be. Alex Rodriguez would not step up to the plate against her for fear of being embarrassed.



Airports Are The New Malls

For the first time last year, Estée LauderCo.generated more revenue at airports globally than at U.S. department stores, which for decades had been beauty companies’ biggest sales driver … “Very few channels have almost guaranteed traffic,” said Olivier Bottrie, who heads Estée Lauder’s global travel-retail business. “When a department store goes away, it’s not a major catastrophe. But if a major airport went away, it would be a major catastrophe.”



Predicting the Future is Hard

The Wall Street Journal recently shared a graphic showing predictions from 50 economists on the direction of interest rates. The average forecast for the end of June was 3.39% on the ten-year.

Irrelevant Investor


Pessimism Sells

Admittedly, such pessimism sells. For reasons I have never understood, people like to hear that the world is going to hell, and become huffy and scornful when some idiotic optimist intrudes on their pleasure. Yet pessimism has consistently been a poor guide to the modern economic world. We are gigantically richer in body and spirit than we were two centuries ago. In the next half century—if we do not kill the goose that laid the golden eggs by implementing leftwing schemes of planning and redistribution or rightwing schemes of imperialism and warfare, as we did on all counts 1914-1989, following the advice of the the clerisy that markets and democracy are terribly faulted—we can expect the entire world to match Sweden or France.



Wealth Manager To The Stars

To retain his services, each player must agree to put aside at least 60 percent of every dollar he earns, with the rate climbing to 80 percent if he’s fortunate enough to land a long-term deal.Or they’re gone. Mr. McLean has fired two clients for ignoring the policy. 

NY Times


The End of History Illusion

We all recognize that we have changed a lot in the past, but think that we won’t change much in the future. 

We underestimate how much we change, which leads to funny scientific findings. If you ask people how much they would pay to see their current favorite band ten years from now, the average answer is $129. But if you ask how much that same person would pay to see their favorite band from 10 years ago, the answer is $80. 

This is called “the end of history illusion.”




Men judged women shown with other men as being less desirable than the same women depicted alone or with other women. Conversely, women judged men shown with other women as being more desirable than the same man depicted alone or with other men.”



Excessive material wealth does little for happiness but we must be able to meet our needs or else we won’t have the luxury of time and space to focus on ourselves and what makes us really happy.

Excessive wealth leads to so many unintended distractions that you can’t focus on what really matters to you.



The Effects of Caffeine

In the 1980s, NASA scientists exposed spiders to different drugs and observe the webs they constructed. 

The drugs included LSD, speed, marijuana, and caffeine.
Researchers noted how strikingly incapable the spiders were in constructing anything resembling a normal or logical web that would be of functional use when given caffeine, even relative to the other potent drugs tested. 

Why We Sleep