weekly wrap 01/09/17

“The most common mistake investors make is not thinking about everybody else. Look at the Internet stocks. Everybody thought they alone discovered the Internet. They failed to realize that lots of people had the same insight yesterday and had already bid prices up to ridiculous levels”

 – Richard Thaler


book of the week

Zero to One, Peter Thiel

  • There is always political uncertainty but it hasn’t stopped markets delivering acceptable returns over time
    • The 90’s are often remembered for prosperity but the decade included a US recession, the Asian Financial Crisis, the Ruble crisis and the implosion of Long Term Capital Management
  • Running initial losses to build up a customer base only makes sense if they’re sticky and have a high enough ARPU to generate a sufficient return on the initial investment
  • Creating value is not enough, you also have to capture some of it. This means you need to focus on creating a monopoly
  • Monopoly’s are incentivised to hide their dominance while the rest try to understate the competition
  • The importance of sales and structuring efficient distribution channels
  • Proprietary technology must be 10x better than the nearest substitute to ensure improvement for a skeptical customer
  • A start-up should begin by focusing on a niche that it can dominate. It’s a red flag when companies tout the size of their total addressable markets


this weeks links

A tough, but worthwhile read from Nassim Taleb on the logic of risk taking

A rare interview with one of the greatest athletes of all time Roger Federer on how he structured his amazing return to form

Smead Capital on discerning between a bargain and a value trap

A discussion from Frank K Martin on the mental model Gresham’s Law

The always interesting Tren Griffin discussing attributes of scalable businesses

Something that has been concerning me in markets of late is the excess returns being generated investors in:

Charlie Munger on knowing your edge

An old article about a lesser known fund manager that I believe fits aptly with current markets contrarian

My good friend Andrew White on the importance of consistency & how a morning routine can help

Q2 letter from Long Cast Advisers

The acquirer’s multiple with 25 lessons from Seth Klarman

Stoic’s key to peace of mind

Richard Thaler on overcoming behavioural biases

Farnam Street on how he manages to read so much

Pabrai discussing the importance of thinking differently

How Buffett made 50% p.a.

Q2 from Sapient Capital

A great article on the rise of zero management fee hedge funds

Forager on the value of cash


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