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Good Reading -- April 2015

I'll be in Omaha as usual for the Berkshire meeting. If anyone would like to meet up just send me an email -- we've had a good group in years past and all are welcome.

- Phil

Facts and Figures

  • The value of the world's equities markets passed $70 trillion for the first time in April, up from the GFC low of less than $26 trillion. (Source: Bloomberg)

  • Since 2010, the S&P 500 has risen nearly 79%%. During that time S&P 500 dividends are up 93%. (As of April 6, 2015. Source: WSJ/Morgan Housel)

  • Switzerland recently sold 10 year bonds at a negative yield. Mexico sold 100-year bonds denominated in euros at 4.2%. Berkshire Hathaway recently completed a 3 billion euro bond deal that was priced to yield 0.8%, 1.2%, and 1.6% for eight, 12, and 20 year maturities, respectively. (Source: WSJ)


  • The One Hour China Consumer Book -- Readers may remember the author from What Would Ben Graham Do Now? or the prior version of his book on China which I sent around in February of last year. In any case, Jeffrey Towson is back with a new book consisting of "five short stories that explain the brutal fight for one billion consumers." It's obviously an interesting but multifaceted topic, and this book really helps to elucidate the situation for Westerners and non-experts. Highly recommended.


  • "Our Gambling Culture" -- Larry Fink is on the war path. He also just sent a letter, similar to one he sent last year, to the CEOs of 500 large cap companies chiding them for being too easy to give in to investor demands for buybacks and dividends. He believes executives are harming long-term value creation and are doing both the companies and their investors a disservice by underinvesting in "innovation, skilled work forces or essential capital expenditures necessary to sustain long-term growth." He also proposes that gains on investments held for less than three years be taxed as ordinary income.


  • "On Value Investing" -- A conversation with Joel Greenblatt moderated by Howard Marks. It doesn't get any better than this!

  • Global Investment Returns Yearbook 2015 -- There is always a ton of fascinating stuff in these publications. An interesting study this year tracked the value of a dollar invested in various industries in the U.S. from 1900-2010. The runaway winner was tobacco, followed by electrical equipment, chemicals and food in a distant tie for second place. The big loser was shipping followed in infamy by textiles. It's also interesting that 10 of the 15 industries underperformed the market.

  • The Extraordinary Story of America's Most Successful Industry -- Morgan Housel looks at the success of Altria and tobacco investments in light of the above-mentioned study.

  • 10,000 Hours with Reid Hoffman: What I Learned -- Some of this is fluffy and some is a little over the top, but there are also some really interesting thoughts and anecdotes.

  • "Like Being in Prison with a Salary: The Secret World of the Shipping Industry" -- Somewhat random, but this was an interesting read.

  • Wall Street Executives from the Financial Crisis of 2008: Where Are They Now? -- It seems like yesterday, but as we round the corner of the seven-year anniversary here's a look at some of the key figures.

  • Peter Thiel -- Competition is for Losers -- This lecture is worth watching/reading, even if you're not a tech investor/geek. Transcript is here.

  • "Jim Ling..." -- This is the article Buffett recommended in his annual letter.

  • This CEO May Have the Sweetest Job Around -- A Crain's article recapping a recent lecture by Larry Cunningham, author of the great book "Berkshire Beyond Buffett," and Frank Ptak, former ITW executive and current CEO of Berkshire subsidiary Marmon Group. I was able to attend, and the lecture was fascinating. The article captures most of it, but here are some of Ptak's comments, from my notes, that the article missed:

  • "I've had some great bosses in my life but this Warren guy is something special. He's in a class by himself. And he's likable -- you don't want to let him down, which drives a lot of people."

  • "I wish I had met him 20 years ago because every time we talk there is a pearl of wisdom."

  • On succession: "I guarantee you there is a plan and it is well thought out."

  • Activism "is a fad and it will pass."

  • "In the end it's cash that matters. Forget the rest."

  • On Marmon's structure in which it has four sectors, each with its own boss reporting to him: "I'm a cheerleader and cajoler, like Warren."

  • Marmon has 45 people total in the corporate office (on >$8 billion in sales) and the goal is to push that work and decision-making down to the businesses, eventually eliminating corporate. Marmon also uses some elements of zero-based budgeting, with a strong focus on low overhead and frugality.

  • "We will not sell a business. We just won't."

  • Marmon pays its executives based on a three-legged stool of salary("typical for the industry"), a bonus tied to results, and a long-term pool of stock/options/cash that tracks Marmon's value over 4-6 and 10-year programs

  • Buffett "didn't get so successful by being easy on people, but he doesn't explicitly measure us any particular way."

  • Buffett's "name value" will be the most-missed factor once Buffett is no longer running Berkshire. "He's an amazing, charismatic salesman."

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