Good Reading -- February 2017

Good Reading -- February 2017

Philip C. Ordway Books

• I was recently asked which books and articles I would recommend to an aspiring investor. I have a list of more than 200 that all have merit -- and the eminent financial writer Jason Zweig has a great list as well -- but I think almost everything important is in the top 10. So I'm going to try to reread all of these "best of the best" books and articles this year. First up:

• Common Stocks and Uncommon Profits -- It's no accident that Fisher was such an influence on Munger (and Buffett). This was my third time through this book and I still learned a lot.

• What Do You Care What Other People Think? -- I read "Surely You're Joking, Mr. Feynman!" a year or two ago and it was a mistake to wait so long to read this. Next up is "Six Easy Pieces."

Quoted

• "[A] plane crash or a terrorist attack is news, but slow and steady progress is not. Even 50 million people rising out of poverty in a single year is not news.But this happens to be the most important story of our time: poverty, as we know it, is disappearing from our planet." -- Johan Norberg

• The numbers are significant: "Since 1990, the proportion of world population living in extreme poverty—according to a $1.9-a-day poverty line, adjusted for local purchasing power and inflation—has been reduced from 37 per cent, to less than 10 per cent. At the United Nations Millennium Summit in 2000, the world’s countries set the goal of halving the 1990 incidence of extreme poverty by 2015. This was met five years ahead of the deadline. And even though the world population grew by more than two billion between 1990 and 2015, the number of people who live in extreme poverty was reduced by more than 1.25 billion people." By a less reliable measure, poverty has declined from 94% in 1820 to 10% today.

Facts and Figures

• These figures from ICI/BNY Mellon are at least a year or two stale, but Baby Boomers hold at least $10 trillion of assets in tax-deferred accounts. Over the next 20 years, the U.S. population over age 70 will (at least) double to more than 60 million.

• A man and woman turning 65 in 1985 had a life expectancy of 15.4 and 19.0 years, respectively. In 2015 a man and woman turning 65 had a life expectancy of 19.0 and 21.5 years, respectively.

Links

• A Portrait of the Investing Columnist as a Very Young Man -- Jason Zweig wrote a fascinating column about his youthful experience in the antiques market.

• A Chat With Daniel Kahneman -- Some quick highlights from a lecture Kahneman gave in January. “When I work I have no sunk costs. I like changing my mind. Some people really don’t like it but for me changing my mind is a thrill. It’s an indication that I’m learning something. So I have no sunk costs in the sense that I can walk away from an idea that I’ve worked on for a year if I can see a better idea. It’s a good attitude for a researcher. The main track that young researchers fall into is sunk costs. They get to work on a project that doesn’t work and that is not promising but they keep at it. I think too much persistence can be bad for you in the intellectual world.”

• The Strange Deal Two Drug Makers Had Over a Medicine with a Skyrocketing Price -- Valeant struck a controversial deal with a new company run by Sam Waksal (of ImClone and Martha Steward fame/infamy) as reported by Bethany McLean.

• A Conversation with Ed Thorp -- I haven't read his new book yet, but there are interesting comments here about markets/trading/investing, public policy, and parenting, among others. There were other profiles/interviews here and here.

• The Best Investor You've Never Heard Of -- This 2000 profile of Joe Rosenfield is a classic from the archives of Jason Zweig. (Thanks to Devin for bringing it up.)

• Is Emirates Running Out of Sky? -- This is a fascinating look at how an airline transformed a country and reshaped an industry. From two planes in 1985 to the world's largest long-haul carrier today, Emirates turned Dubai from a backwater into a global city-state and an aviation hub. It was a page from Lee Kwan Yew's Singapore playbook, and a massive bet on the growth of the "Global South" (the Middle East, Africa, South Asia, Latin America) and open borders. "The sheikhdom pioneered a model of the state as highly leveraged private equity firm, developing and owning ports, shopping malls, hotels, and, most important, a top-notch airline to bring the world to its door." And Emirates has big advantages. Unfettered state sponsorship/ownership. No shareholders. No taxes. No unions. No noise restrictions. Two-thirds of world population within an 8-hour flight, and probably >85% within the range of its fleet (capable of flying 8,000+ miles on 16+ hour non-stop flights). But the airline industry has never been kind or prone to longevity, and a U.S.- and Europe-based trade war may be gaining traction.

• When city retirement pays better than the job -- If you liked the Dallas pension story last time, you'll love its cousin in L.A.