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Tren Griffin
@trengriffin
, 3 tweets, 1 min read Read on Twitter
The number of times I have factored in the flash Purchasing Managers’ Index when deciding whether to buy a partial stake in a business is the same as how many times I have consulted an online psychic. My "theme" is always be rational. reuters.com/article/us-glo…
"A Dozen Things I’ve Learned from Charlie Munger about Making Rational Decisions"

"'Charlie,’ she said, ‘What one word accounts for your remarkable success in life?’ I told her I was rational.” google.com/amp/s/25iq.com…
The right way to think is the way [Harvard Professor Richard] Zeckhauser plays bridge. It’s just that simple.” To be “rational” is to think in terms of expected value, which Michael Mauboussin describes as “the weighted average value for a distribution of possible outcomes.”
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Tren Griffin
@trengriffin
Quiz: "Qualcomm stock jumped > 23% on the settlement Tuesday and another 12% Wednesday."

Does QCOM's significant ROIC/cost of capital spread” explain the magnitude the jump in the stock price?

Is this a double edge sword in that a reduction in growth would be as impactful?
Additional Quiz Questions: Was my picking MoviePass as a case study on my 26IQ blog intended to starkly show that not all revenue growth creates value? google.com/amp/s/variety.…

Can the adverse financial impact of customer churn be nonlinear, and if so, why?
"It’s easy to grow sales and acquire subscribers with a negative variable margin." @d_mccar

"It is critical to bundle all future variable costs of supporting the customer in order to fairly estimate the future contribution." Bill Gurley
Read 3 tweets
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Tren Griffin
@trengriffin
1/ "In a business with a large spread between return on invested capital and cost of capital, rapid growth adds lots of value. For large negative spreads, growth subtracts a lot of value. Whether growth is good or bad is contingent on incremental return." d2wsh2n0xua73e.cloudfront.net/wp-content/upl…
2/ Miller:Modigliani: "The essence of ‘growth' is not expansion, but the existence of opportunities to invest significant quantities of funds at > the cost of capital."

Buffett: "Growth creates value only when a business can invest at incremental returns > its cost of capital.
3/ Mauboussin: "Growth is an amplifier, and it’s impact grows as the ROIC - cost of capital spread widens (above or below zero). At zero spread, growth has no impact.
It’s not margin that matters but ROIC (these are related, of course)."
Read 3 tweets
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Tren Griffin
@trengriffin
One of the stories Mauboussin told was about his role in the book "The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success." He started out covering businesses Ralston Purina which was run by Bill Stiritz who is one of the featured CEOs.
Tom Murphy of Capital Cities, Henry Singleton of Teledyne, Bill Anders of General Dynamics, John Malone of TCI, Katharine Graham of The Washington Post, Dick Smith of General Cinema, and Warren Buffett are the CEOs the author Thorndike decided to write about in The Outsiders.
"Managers and investors have different hurdles. Management tries to achieve returns above the cost of capital. Investors try to anticipate changes in market expectations correctly. Although their objectives are different, investors can use the same strategic tools." Mauboussin
Read 3 tweets

Related threads

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Baba97
@Baba9773
1) WOW! Germany & the Rest of the European Union Are NOW In A Recession While America Continues To Flourish....

Reality has come home to roost for Germany and the European Union. They will do everything in their power to convince us that this is just a blip and there is no
2) reason to be concerned about a recession. THEY ARE LYING! The PMI Indicator is considered to be in contraction if the overall monthly number is below 50. Germany is sitting at 44.7 and falling.



From the article linked above:

German manufacturing
3) contracted further in March, a survey showed on Friday, compounding fears that unresolved trade disputes are exacerbating a slowdown in Europe’s biggest economy.

After nine successive years of growth, the German economy is facing trade conflicts between the United States and
Read 23 tweets
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The Grey Man
@IntelOperator
“..manufacturers like Nestle, Coca-Cola and Procter & Gamble also face growing scrutiny from investors who want to know what business #risks they face from #climatechange before deciding whether to buy their stock”

nbcsandiego.com/news/business/…
"Climate change is going to be disruptive to revenues and costs,"

“What I would want to know as an investor is what kind of strategy they have going forward."
Consumer goods account for about a third of greenhouse gas emissions, meaning companies that make them play a key role in efforts to keep global warming below 2 degrees Celsius (3.6 Fahrenheit) by the end of the century.
Read 3 tweets
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Lauretta Onochie
@Laurestar
1. PRES @MBUHARI’S BROADCAST TO THE NATION
Fellow Citizens
On Feb 16, 2019 you will, once again, be called upon to choose d leaders who will pilot d affairs of our great nation for d next 4 yrs
This is a constitutional right which should be freely exercised by all eligible voters
2.     I wish therefore to start by assuring all Nigerians that this Government will do its very best to ensure that the 2019 elections take place in a secure and peaceful atmosphere.
3.     It was indeed such free, fair and peaceful elections that made it possible for our Government to emerge, despite the fact that we were contesting against a long-standing incumbent party.
Read 51 tweets
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tolu ogunlesi
@toluogunlesi
So the Q4 2018 GDP results released yesterday show the strongest economic performance since #Nigeria emerged from recession.
#Highlights
"39 out of 46 economic activities now growing. Agriculture is growing; Manufacturing is growing, and Services has recorded its best performance in 11 Quarters." - Udoma Udo Udoma
"Particularly notable is the fact that the growth is driven by the non-oil sector which has recorded its strongest growth since the fourth quarter of 2015. In short, we have turned the corner and are now firmly on the path of growth." - Udoma Udo Udoma
Read 19 tweets
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Baba97
@Baba9773
1) @unseen1_unseen @Peoples_Pundit @Barnes_Law @TheLastRefuge2 @LarrySchweikart @Varneyco @MariaBartiromo @cvpayne @LouDobbs
Reality is coming home to roost for China 🇨🇳 as well as the entire European Union 🇪🇺. Riding into work today I was listening to Bloomberg Radio and
2) couldn’t stop 🛑 laughing 😂 as they were saying that China 🇨🇳 has seen their lowest retail sales since 2003 and France 🇫🇷 and the rest of the European Union 🇪🇺 will most likely be in a recession starting in 2019. They went on to say that the markets are realizing that global
3) growth is shrinking.

The best part was the fact that they had to admit that the USA 🇺🇸 is still very strong compared to everywhere else.

MAGAnomics and America First is the reason why and we all know it.

bloomberg.com/news/articles/…

From the article linked above:

China’s
Read 17 tweets
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Baba97
@Baba9773
1) China 🇨🇳 is truly seeing their world being rocked by our Eagle 🦅! It is bad folks. The MSM is doing everything in their power not to report on it because it shines a light on our President’s Policies towards China 🇨🇳 but more importantly it shines a light on previous
2) administrations that sold our country out to China 🇨🇳.



From the article linked above:

China’s economy appears to be slowing faster than expected at the start of the fourth quarter, a bad omen for growth early next year when the full force of the
3) trade war with the United States comes to bear.

Business sentiment in both the manufacturing and non-manufacturing sectors was weaker than expected in October, led by sharp declines in export demand, according to the official purchasing managers’ index published on Wednesday
Read 5 tweets

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