The simple formula for a mass movement: appeal to the frustrated by providing near term hope, while uniting them against a common devil. The discarded and rejected are often the raw material of a nation’s future.
There is in us a tendency to locate the shaping forces of our existence outside ourselves. Success and failure are unavoidably related in our minds with the state of things around us.
Since the dawn of humanity there have been objects, symbols and lifestyles specific to leading groups. Luxury is part and parcel of life in society.
Marketing of modern luxury goods runs counter to most marketing—and is rich with the use of scarcity as a principle of influence.
The ultimate in luxury is to be able to live vitally and to live on. Two aspects of this luxury are ever-present: great pomp and splendor during life and a highly ritualistic approach to the afterlife.
Luxury products tend to have extremely high margins.
New series of "Behind the Curtain" books that explain how stuff works, with highlights in each book's thread. I'll add more as I find new ones and revisit old. Quoted thread below explains why all of this is worthwhile.
In an era where systems and technology are so primary, the lesson of this book is jarring:
*Do not build a system unless you absolutely need to*
If you do, make it as simple as possible.
Systems are like babies: once you get one, you have it. They don’t go away. On the contrary, they display the most remarkable persistence. They not only persist; they grow. And as they grow, they encroach.
I just spent a week learning to track animals on foot in the South Africa. The most intense aspect of the experience was sleeping outside on the ground with no tent, taking turns on night watch to ensure leopards, hyenas, and other animals left us alone...
A bull elephant stared us down before deciding to push down a 70-year-old tree instead of mauling us, a nearby leopard’s saw-like growl kept us nervous, and I had to chase a hyena out of camp on my watch.
The most striking thing about these animals is that they just do what they know how to do. They act in accordance with their needs, do almost nothing that doesn’t have value, and don’t fret about the past or future.
1/ Alpha in the value factor is the result of a convergent process, where alpha itself is the market re-setting multiples upwards in anticipation of real future fundamental recovery. Momentum is a divergent process. Both explained here:
2/ If you build an index out of the value stocks, you can track trailing an FUTURE fundamentals. Here is *forward* 10-year EPS for value stocks.
3/ The market is directionally right: value stocks do suck...at first. After point of purchase you can see the future decline in EPS, relative to the market. But the EPS of value stocks then begins to recover, eventually converging back on the market’s growth rate.
1/ I was a twitter and social media skeptic, joining late and feeling awkward about the whole thing. I am a complete convert now. This little story is an example of why.
13 days ago I got this email:
2/ I grew up obsessed with Everest ever since reading Into Thin Air. I think people that climb it are the biggest badasses alive. I saw the Instagram handle in her email, looked it up, and saw pictures like these.
3/ Then, a few days later, I saw this one. She did it. I was so pumped up about her accomplishment, even though I’d never met her. I sent it to my family and work colleagues and they all were too. It made my day.
1/ Book value is an increasingly flawed accounting metric which is creating issues for passive and active investors. This thread highlights research by my colleague @tbfairchild on 1) the problems with using book value and 2) potential solutions which correct the largest issues
2/ Two unusual categories of stocks have emerged.
Stocks with negative book values, and “veiled value” stocks, which are in the most expensive third of the market on p/book, but cheapest third on other metrics.
3/ In 1988, there were only 13 companies with negative equity with a combined market cap of $15B (infl adjusted); now there are 118 worth $843B. There also 258 veiled value stocks representing over $3.9 trillion of market value.
A week ago, I had a thoroughly bizarre experience that not many people do: For 20 minutes, I thought I was going to die. As evidence: I wrote my wife Lauren a goodbye note. Here’s what I was thinking about in that space of time.
I thought about my family.
I missed my wife even though she was right next to me. I was so sad for my kids. I thought so much about them laughing.
I fixated on two specific details:
My son sitting at the top of the stairs, waiting patiently every morning for me.
The nape of my daughters neck—always visible because her hair is so short and curly, and impossible not to kiss.
1/ Some observations on valuations and value investing, specifically the distributions and spreads of valuations, relative to history.
To start, here is the distribution of EBITDA yields (higher = cheaper) through time (shaded=overall average, red=each year)
2/ There is a common narrative I'm seeing is that because value has gotten its teeth kicked in for years, its going to bounce back hard, like 2000. But the distribution of valuations is VERY different now vs. then.
Here's just those two periods, side by side
3/ If you dig into the differences between 2000 and 2017, you see a very different sector profile.
in 2000, you see tech an telecom are super expensive (low yields), but others more reasonable.
in 2017 (today), valuations are far more homogeneous