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Lyall Taylor Profile picture
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22 Dec, 5 tweets, 1 min read
I'm getting tired of the growing tendency to blame tool-makers for the misuse of their tools. It's not Robin Hood's fault if someone misuses the tool to make poor investment choices. Whatever happened to the quant notion of individual responsibility? <continued below>
Do we blame a hammer manufacturer if someone uses a hammer to bash in someone's head? Do we condemn auto manufacturers if someone drives a car into a crowd?

Human beings are imperfect and some people will misuse tools. We just have to accept that fact & stop blaming tool-makers
Many intellectuals instinct to social engineering is driven by delusions of utopia. They believe if only the right rules, regulations and policies are in place, nothing bad will ever happen. That is a fantasy. So long as humans are imperfect, some bad things will always happen.
Trying to make the world better and reduce problems/bad outcomes is fine, but in many/most cases the desire to try to regulate away bad outcomes in the pursuit of an elusive utopia simply ends up making the world worse, as the cure ends up being worse than the disease.
We have to learn to accept that in a free society, ppl have the freedom to make their own choices, and sometimes they will make the wrong ones and will have to take responsibility & suffer the consequences. And that's ok. It's a small price to pay for freedom. Utopia is a mirage.

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More from @LT3000Lyall

Lyall Taylor Profile picture
24 Dec
Many people seem to believe EVs are a fundamentally disruptive innovation to the auto industry. They aren't. They are a relatively minor evolution. The vast bulk of the parts outside the engine/propulsion system are the same. <thread below>
You still need a chassis, axel, wheels & tyres, body & exterior panels, braking systems, suspension, chairs & other interior, airbags and other safety features, lighting/indicators and on-board instrumentation. You even often have (simplified) transmissions & gears.
All you're doing is ripping out the ICE and replacing it with an electric motor & batteries. Everything else about the design and production process is very similar. Parts suppliers across ICE engine supply chain will be impacted. The automotive companies themselves, not really.
Read 11 tweets
Lyall Taylor Profile picture
23 Dec
A lot of people are confused about China's economic model. Is it socialist/communist or capitalist? The answer is that it is a hybrid that doesn't comport easily with the simplistic dichotomies we have become accustomed to using in the West. My take on it is as follows (thread):
China's model is still somewhat socialist/communist in the sense that the country has a strong belief in desirability of top-down government management/supervision/social engineering to ensure that economy achieves desirable social, economic, and geopolitical ends (strength).
However, they have changed the means by which they seek to achieve that outcome. After the failed communist experiment under Mao, which made China weak & poor, they realised that they needed markets, capitalism, private incentives etc, to drive productivity & wealth accumulation.
Read 18 tweets
Lyall Taylor Profile picture
23 Dec
Reported in today's WSJ. If these allegations are true, this is unquestionably predatory pricing and is illegal. ImageImage
Say you have proverbial lemonade stand that sells lemonade for 100c that costs 70c. I set up shop next to you and sell for 60c. U ask me how do I make money? I say I can't, but you will go broke before I do, and then I will push prices up to 110c.
That is illegal predatory pricing, and for good reason because it can allow too much monopoly power to be amassed. I have long suspected Bezos to be engaging in predatory pricing under the cover of 'providing value to customers'. If true, this is evidence he has been.
Read 4 tweets
Lyall Taylor Profile picture
15 Dec
Munger complained again today that "Almost everybody smart is sucked into finance by the money. I don't welcome it at all. I don't think we want the whole world trying to get rich outsmarting the rest of the world in marketable securities." Some thoughts below:
I wonder if Munger has contemplated whether this has occurred simply because equity valuations have historically been too low. It's been too easy to get rich just picking a bunch of half decent stocks, sitting on them and letting the money compound over time (cont).
Maybe the solution needs to be/eventually will be stocks going to 100x earnings, just like bond yields have now gone to basically zero, such that there will no longer be an opportunity to do so, and intelligent & hard working will be forced to go into other fields to make money.
Read 6 tweets
Lyall Taylor Profile picture
8 Dec
Uber is abandoning its self-driving car efforts to try to cut costs and become profitable. As Kalanick himself observed, self-driving cars are an existential threat to Uber. When tech is ready & commercialized, there is a good chance UBER's ride hailing biz is disrupted to zero.
Whoever gets there first will use/license the tech, launch an Uber-like app with autonomous cars at a fraction of current prices, and Uber's expensive, labour intensive model won't be able to compete.
At best, Uber will have to pay whatever it takes to license the tech, but Uber will be in a weak bargaining position and up against many other potential cashed-up tech bidders (or tech owner launching their own app/network). At best huge amount of value is paid away in licensing.
Read 4 tweets
Lyall Taylor Profile picture
8 Dec
Value investing seems to suddenly be back in vogue, and the old saying "good things happen to cheap stocks" starting to work again. When you trade at half of one times earnings (albeit with lots of risks, leverage etc etc..), sometimes your stock can go up 4x in a few days.
Extrapolation and momentum work until they don't. Value traps are value traps until they aren't. The outlook is bleak and dire until suddenly it isn't. Stocks lack a catalyst until one arrives.
I've talked about this many times in past - if you bought this stock you've looked wrong and underperformed virtually every day until 3-4 trading days ago. Greenblatt has talked about how best performing managers over a decade spend 3yrs in worst performance DECILE. This is why.
Read 6 tweets

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