I spend a large chunk of my time reading, listening, or watching - taking in information in hopes of being smarter than when I woke up every day and letting time do its thing.
Regardless of how much time I spend reading, the browser tabs, print-outs, and books continue to pile up. For every piece I read, several more are ignored or pushed to “later.” Finding something to read is never the issue - knowing what to read is. As stated in the Rules section of this blog, time and attention are the only scarce resources. To maximize my return on time, I rely on trusted curators who broadcast what they find useful and interesting. And in the spirit of producing something you would want to consume, I’ll try and do just that.
Here are some recent highlights. To be updated whenever a list of good ones piles up. Could be books, blogs, essays, podcasts, videos, quotes, etc.
Neckar on Bill Miller
Miller’s evolution seems to follow a somewhat common pattern of doing things by the book until a profound insight leads you to reject conventional wisdom and apply the old rules in a creative way. In Miller’s case, this was recognizing that technology companies can create value (even by value investors’ standards) in a way that is obscured by accounting principles.
Joe Frankenfield of Saga Partners on Good Investing Talks
I have read several of Joe's letters, but this is the first long-form interview I have seen. I am finding that Joe's investment philosophy is maybe the closest to my own of anyone I have come across. Two parts of this interview really resonated with me:
He talks about managing a portfolio based on opportunity costs. If you are underwriting investment opportunities with the right degree of detail, you should have an idea about the relative expected returns of each of them. This should cause consolidation over time. Why would you put any money into your 20th best idea vs your top idea? Also, assuming you are eventually right and your top ideas start to work, they will naturally become a bigger portion of your portfolio and cause further consolidation.
Joe is later asked about how he defines high-quality. Everyone is going to have a different definition of what "quality" means in an investment. Ultimately, whatever qualitative characteristics you deem to be quality, they usually manifest quantitatively in a high ROIC. Having a ridiculously high return in any one given year (usually) doesn't make for a great investment, the real differentiator is high ROIC over a long period of time. Ultimately, what will determine a company's ability to sustain high returns (via a competitive advantage) over time will come down to qualitative factors that can be interpreted differently by every investor.
The market, especially in the near-to-medium-term, is (arguably) very good at valuing the cash flows a company is likely to generate. One area where the market isn't as good is judging duration, specifically the length of a company’s "competitive advantage period." In a DCF model, the difference between your terminal value kicking in after 20 years vs 10 years is massive, even if the free cash flow margin is higher in the 10-year model. If you have a qualitative insight about why a company is likely to sustain its competitive advantage for longer than the market is discounting, you might be dealing with a “high-quality” company.
Tom Morgan on Infinite Loops
A fascinating conversation between two eclectic and original thinkers that dives into religion, mythology, growth, and using “love” as a compass in life.
Debit cards are hidden financial infrastructure
I have been doing something of a dive down the fintech rabbit hole. I have found it difficult to fight off the urge to abandon learning about the fundamentals because it quickly becomes apparent (at least in my echo chamber) that all roads lead to DeFi. Nonetheless, I want to have a good grasp on “fin” before diving into the “tech” or anything related to “de.”
Patrick McKenzie of Stripe and general blogosphere fame is writing a new publication dedicated to financial infrastructure called Bits about Money. I have found it extremely helpful in understanding some of the foundational financial institutions like community banks, credit and debit cards, etc. Did you know every neobank is built on a strange piece of post-crisis Dodd-Frank legislation called Durbin-exempt interchange? Neither did I.
Part l: A History of Visa
In that same vein, this history of Visa shows why credit cards came about, what makes them so complicated, and why they are unlikely to be dethroned anytime soon. There is also a Part II that goes over what Visa does and how it makes money.
Money, blockchains, and social scalability
As part of understanding finance, why not go all the way back to why we need money in the first place? For this, I have found some of Nick Szabo’s legendary blog content to be really insightful. Nick is a cryptography and digital currency pioneer who coined the term smart contract and created bit gold, a precursor to Bitcoin. This essay is fantastic. It explains how money allows for cooperation, among other things, and visits the tradeoffs between security and scalability for traditional vs digital currencies.
Balaji Srinivasan brain dump on Tim Ferriss
Balaji’s mind is ridiculous. The sheer amount of knowledge he can recall and riff on in a casual conversation is unbelievable. This one is nearly five hours long and will make you feel a little unsettled about the future of America.
How Fans are Becoming Millionaires | The Power of NFTs
Could being a “full-time fan” eventually be an economically sustainable lifestyle? Web 2.0 enabled fans to be closer than ever to their favorite creators and celebrities, but fandom was more passive support, and most of the value accrued to the platforms like YouTube and Twitch. In web 3.0, fans and creators are fully aligned, and fans can certainly benefit from taking an early economic interest in a future successful creator. I think there is a compelling case that this emerging class of tastemakers and curators will make a killing by being early to popular trends. Imagine if Rick Rubin held tokens that entitled him to a cut of the future earnings of all the musicians he has worked with throughout his life.