Thread by @trengriffin

1/ This podcast with Modest Proposal features a useful framework for understanding Charlie Munger style value investing. Old school value investors look quantitatively at the rear view mirror. Munger style investors look qualitatively out the front window. investorfieldguide.com/modest-proposa…

2/ A forward looking qualitative Munger-style investor is looking for a margin of safety based on a competitive analysis of the specific business considering factors like competitive strategy. Circle of competence remains critical since a sound analysis requires that expertise.

3/ The number of times I have considered book value in assessing the value of a business is never. I find my margin of safety by looking for underpriced quality.

"Book value tells you what has been put in; intrinsic business value estimates what can be taken out." Warren Buffett

4/ "Mauboussin wrote the Base Rate Book and people are now very familiar with the idea that capitalism inherently pulls down and attacks excess ROIC. The frame of microeconomics is: if you earn excess ROIC then capital will pour in and it will be competed away." Modest Proposal

5/ "What you're really looking for is a businesses that can escape the base rate. Do you have the skills, tools and muscles to be able to properly identify businesses that can escape? The base rate has been very valuable and I assume it will be on a go-forward basis as well."

6/ "The scarce asset in the digital world is distribution. That's the hardest thing to build and it's the reason why people joke that 'CAC is the new rent.' Acquiring and maintaining an audience is extraordinarily difficult and expensive."

Modest Proposal

7/ "If you build and bring to market a product that consumers love and you have been able to build a big user base, being on the back of that that is going to be really valuable to other people as well. I jokingly say on a long enough time line, everywhere everyone sells ads."