1/ When I think about a particular decision that relates to Covid, I try hard to think like Richard Zeckhauser. Pretending that all you face is risk, rather than uncertainty and ignorance, is dangerous. Probabilities and future states are not always known.
2/ Charlie Munger: “The right way to think is the way [Harvard Professor Richard] Zeckhauser plays bridge. It’s just that simple.” “Smart people make these terrible boners. …Well maybe a great bridge player like Zeckhauser [doesn’t], but that’s a trained response." Image
3/ Risk is when probabilities are well defined. It is much less important than uncertainty.

Uncertainty, not risk, is most regularly before us: we can identify the states of the world, but not their probabilities.

Ignorance is when some potential states cannot be identified. Image
4/ If you believe all you face is Covid risk and not uncertainty and ignorance you haven't been paying much attention to what has happened over the past year. We do not know probabilities of many Covid aspects. There are many potential future states we did not and do not know.

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More from @trengriffin

12 Jan
1/ The new Howard Marks memo contains this reference: mastersinvest.com/newblog/2020/1…

"Applying the mental model of ‘mean reversion’ for a ‘fade-defying’ business model will lead to an erroneous conclusion. If the mental models are wrong, the spreadsheet model will be wrong. Period."
2/ "The onslaught of startups with readily available capital and minimal barriers to scaling means that the durability of legacy businesses has never been more vulnerable or uncertain.' Howard Marks in today's memo.

"Fight the Fade." #SanteFeInstitute

3/ “Competitive advantage period (CAP) is how long returns above the cost of capital will be earned. CAP is similar in concept to 'fade rate.'”

Michael Mauboussin, Chair of the Santa Fe Institute's Board of Trustees people.stern.nyu.edu/adamodar/pdfil… Image
Read 5 tweets
12 Jan
1/ This Howard Marks memo describes why I am a "Charlie Munger investor" and why the term "value investor" is dead for me. oaktreecapital.com/insights/howar…

"There is no such thing as value and growth investing.” Buffett

"Dividing it up into 'value' and 'growth' is twaddle." Munger
2/ "Value can be found in many forms. The fact that a company grows rapidly, relies on intangibles such as technology for its success and/or has a high p/e ratio shouldn’t mean it can’t be invested in on the basis of intrinsic value." Howard Marks
3/ If a genie asked me what meeting I would have liked to attended as a fly on the table, very high on the list would be one of the breakfasts where Charlie Munger and Howard Marks exchanged ideas. Here's some of the memo I cited in the first tweet: Image
Read 5 tweets
10 Jan
Can you guess who this is?

Clue: He worked on capital hill for a US senator who was President Pro Tem of the Senate, Chairman of the Senate Appropriations Committee and who was third in the line of succession to be US President. Image
What was Bill Gates doing in 1978 when I was doing this? He was working in New Mexico (the move to Washington state happened on January 1, 1979).

Microsoft had 1978 year end sales of $1 million and famously it had 13 employees. The third language product COBOL shipped in June.
We were both born in 1955. That was a lucky birth year since we were too young for the Vietnam draft and too old to be ruined by disco music.

Microprocessors, which arrived when we were attending high school, would create huge opportunities for our birth cohort. Big tailwind.
Read 6 tweets
10 Jan
1/ Lazaridis was on his treadmill watching TV when he first saw the iPhone in early 2007. He said inside Blackberry:: "If that thing catches on, we're competing with a Mac, not a Nokia. How did they get AT&T to allow [that]? It'll collapse the network.'' theglobeandmail.com/report-on-busi…
2/ "iPhone broke all the rules. The operating system alone took up 700 megabytes of memory and the device used two processors. The entire BlackBerry ran on one processor and used 32 MB. Unlike the BlackBerry, the iPhone had an Internet-capable browser." 25iq.com/2017/02/24/why…
3/ I've been involved in cellular since the first Seattle system was turned on in December of 1984. That system was just eleven cell sites all on tall buildings and big towers. There was A/B roaming for almost a year. I used a Motorola DynaTac 8000X, which is now in a museum. Image
Read 4 tweets
9 Jan
1/ Charlie Munger: “We have the same problem as everyone else: It's very hard to predict the future...”

"It's highly likely that the people who confidently think they know the consequences – none of whom predicted this – now they know what’s going to happen next?"
2/ Charlie Munger: “Stocks partly sell like bonds, based on expectations of future cash streams" This is investing.

Munger: "Stocks partly sell like Rembrandts, based on the fact that they’ve gone up in the past and are fashionable." This is speculation.
3/ Munger: "If stocks trade more like Rembrandts in the future then stocks will rise. But they will have no anchor. In this case, it’s hard to predict how far, how high and how long it will last.”

Munger puts speculation in the "too hard pile." Margin of safety needs an anchor.
Read 11 tweets
9 Jan
"Unsurprisingly, neither Roku nor Quibi announced the terms of this acquisition deal, but Deadline cites trusted insiders who peg the deal at a value of "less than $100M," or at best, 5.7% of Quibi's original $1.75B valuation." arstechnica.com/gaming/2021/01… $1 is one number < $100M.
"The deal revolves entirely around "content distribution rights," Roku will not be acquiring anything in Quibi's technology portfolio."

Quibi didn't own the content.
Owning the direct relationship with the customers and the data produced by those relationships is powerful. That was the core of the dispute between Roku and AT&T over HBO Max. theverge.com/2021/1/8/22220…
Read 4 tweets

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