Good to Great

The late Don Valentine, legendary founder of Sequoia and the venture ecosystem gave a speech at Stanford on the importance of targeting large markets in the context of venture capital.

Victor Haghani (part of Long-term Capital Management as it disintegrated) ran an experiment where participants got the front page of the Wall Street Journal (WSJ) one day in advance, but with stock and bond price data blacked out and were able to wager on the movement of stocks and bonds with that information. Nicely highlights the difficulty of using headlines for market decisions.

Charles Babbage, 19th-century computing pioneer, encountered the Mechanical Turk, a chess-playing automaton that was actually operated by a hidden human. This experience may have inspired Babbage's later work on mechanical computation, highlighting how AI hype and human ingenuity have long been intertwined.

Does a 15th century Italian merchant have something to teach leaders about the proper ways to conduct business? Sophus Reinert and Dante Roscini discuss the first English translation of The Book of the Art of Trade.

A profile of Chris Hohn, the manager of the hedge fund TCI. Since 2004, his firm has built an outstanding track record mainly running a concentrated portfolio of equities (fund tends to be >100% net long).

One of the all time great speeches by Charlie Munger delivered at Harvard in 1995. Full of wisdom.

Venture Investing has surprisingly many similarities in terms of return profiles with the whaling industry of the 19th century. Interesting look at how skew was like in Venture a large driver of overall returns

An early look at Ken Griffin and Citadel as he builds out the firm into one of the largest and best performing hedge funds in the world.

An interesting look by Michael Mauboussin at how people use imprecise words to describe the chance of events all the time and how not only such terms are highly subjective and can have widely different interpretations.

The late Sam Zell, who is considered to be a founder of the modern REIT era, and a very important figure in real estate investing coined this piece investing in distressed real estate assets in 1976 at the height of the inflationary period in the US.

Dr. Richard W. Hamming, a Professor at the Naval Postgraduate School in Monterey, California and a retired Bell Labs scientist gave an interesting speech on what he has learned in terms of the properties of the individual scientists, their abilities, traits, working habits, attitudes, and philosophy that allows them to do great work drawing on his thirty plus years of experience working at Bell Labs. Note that this is not only applicable to scientists.

Bill Gurley, the legendary venture capitalist at Benchmark, gave an interesting speech at the McCombs School at the University of Texas on finding a great career by finding your true passion and being obsessive about it.

This article, written by Ben Graham in 1960, focuses on stock market run throughout the decade of the 1950s and the potential for less rosy times ahead.

During the Great Depression an era that also brought profound technological and societal changes, the economist John Maynard Keynes, penned a piece outlining why there is a bright future ahead for coming generations despite the bleak current enviroment

Arthur Rock was one of the early pioneers of venture investing and at the outset of silicon valley. He helped start Fairchild Semiconductor and was an early backer of firms such as Intel, Teledyne and Apple. This piece focuses on the importance of execution rather than ideas in building companies.

As we approach the end of the dot-com boom of the late 1990s Warren Buffett wrote a great piece on why he saw storm clouds ahead. Timing proved to be spot on as the bubble burst in early 2000 high flying dot-com stocks cratered.

Captivating profile of Carlos Slim at the height of his influence in the business world. He controlled vast parts of the Mexican economy and started to gain a more international foothold by for example building a stake in the New York Times.

Famed author on disruptive technologies (e.g. the Innovator's Dilemma) Clayton M. Christensen addressed the 2010 Harvard Business School Class on how to find meaning in their life.

Richard Zeckhauser wrote a famous paper on the concept of investing in the unknown and the unknowable. Discusses central concepts in decision analysis, game theory, and behavioral decisions in the context of investing.

Sam Walton wrote a memo to the Walmart associates on the importance of exceeding customer expectations.

An email exchange between Warren Buffett and Jeff Raikes (senior Microsoft manager) on the business of Microsoft and the reasons why Buffett didn't invest in the firm at the time (and generally was reluctant to look at tech related enterprises).

The Way to Wealth is an essay written by Benjamin Franklin in 1758. It is a collection of advice presented in Poor Richard's Almanack during its first 25 years of publication.

A look at KKR and its founders, as they are in the process of deploying their third fund and are at the pinnacle of the rapidly growing buyout industry.

In February 2012, the nobel prize laureate and one of the most important Dr. Kahneman spoke with members of the Editorial Advisory Board of the Journal of Investment Consulting about his investigations into decision making in the context of a dual-process model, loss aversion and risk tolerance, adversarial collaboration, and financial advisors’ impact on investors’ well-being.

A profile of Morris Chang who built TSMC and the wider foundry industry. Chang is credited with pioneering the foundry concept, in 1987, when he founded TSMC with backing from the Taiwanese government and Netherlands-based Philips Electronics.

A profile of John Gutfreund, the widely portayed CEO of Salomon Brothers (e.g. Liars Poker), as he takes the helm of a combined Phibro Salomon after the merger with the commodity house.

The great Byron Wien shares 20 life lessons learned during the first 80 years of his life. Full of wisdom.

As he turned 30, Sam Altman wrote a blogpost on what life advice he wants to share. Interesting insights into the thinking of Altman close to a decade before he change technology and our life with ChatGPT.

Edward Chancellor wrote a great piece in the Institutional Investor Magazine shortly before the outset of the great financial crisis in 2007. Interesting look at the world back then as risks continued to grow and the world approached a Minsky moment.

Great profile on Herb Kelleher as he builds Southwest into the largest airline in the US and a role model for discount airlines around the world. Kelleher was a rebel who played by his own rules and changed aviation forever.

David Foster Wallace gave the 2005 commencement speech at his alma mater. It features interesting thoughts on topics such as empathy, the unimportance of being well-adjusted, and the lonesomeness of adult life.

Rapacious, combustible, and passionate, Charlie Bluhdorn routinely made the impossible happen as he built his Gulf & Western empire. Taking over Paramount in 1966, he hired (and battled) executives from Robert Evans to Barry Diller, turning the last-place studio into the unmatched hit factory of Love Story, Chinatown, and The Godfather.

James Simons, the late legendary founder of Renaissance Technologies, sat down for an interview with the editorial board of the Journal of Investment Consulting on his background as a mathematician and what drove the extraordinary success at RenTec.

A great look at the importance of industry in the context of firm performance. Industry trend is the single biggest factor shaping odds of outperformance. Federer couldn't be as successful playing Badminton and the same is true for companies.

Peter Kaufman, CEO of Glenair and editor of Poor Charlie's Almanack, put together a great paper on the importance of culture. Short but very profound and illuminating read. As Peter Drucker said: "Culture eats strategy for lunch"

Carol Loomis wrote a great piece on Warren Buffett's time trying to rescue Salomon Brothers from the brink of collapse in the 1990s.

John W. Gardner delivered an address at Stanford's 100th Commencement Ceremony highlighting the importance of continuous renewal as life progresses.

Ellis explores the drivers of extensive underperformance in mutual funds, pension funds, and endowments. In a pattern reminiscent of Agatha Christie’s famous novel Murder on the Orient Express, an investigation leads to a surprising, if inevitable, conclusion: The usual suspects—investment managers, fund executives, investment consultants, and investment committees—are all guilty.

A Buffett classic on the link between inflation and equity returns. Published after the great inflation in the US in the 70s.

Carol Loomis (also frequent writer on all things Buffett and close friend of his), wrote a profile of Alfred Winslow Jones who is considered to be architect of the first hedge fund.

Shawn Tully wrote an expose on Commodities Corp in Fortune Magazine in 1981. Commodities Corp is not widely known today, but was founded by amongst other Paul Samuelson and was the starting point for many legendary hedge fund managers like Bruce Kovner, Paul Tudor Jones and Louis Bacon.

Albert E.N. Gray, who worked for Prudential Insurance Company, gave a great speech on what successful people have in common. Short but full of insights.

Steve Jobs sat down for a great interview in 1985 with Playboy Magazine. Nice look at his view of the world at an early age at the outset of the computer revolution

In standard economic theory, markets show diminishing returns. W. Brian Arthur penned a groundbreaking paper on the phenomenon of increasing returns in certain parts of the economy (mainly tech) and published a very widely read article on the topic in HBR in 1996.

One of the most important investment related pieces ever written. The great Charlie Ellis outlines why investing is similar to tennis a loser's game. A must read for every investor.

Brian Klaasis an associate professor in global politics at University College London and the author of Fluke: Chance, Chaos, and Why Everything We Do Matters (2024), wrote a great piece on how Chaos Theory can improve our understanding of a non-linear world

Harrowing article on the events surrounding the tragic sinking of the Estonia in the Baltic sea in 1994. Incredibly well written and captivating.

After close to a decade of rampant inflation and terrible equity markets, BusinessWeek ran a story on the Death of Equities in August of 1979. Turned out to be close to the staring point of one of the greatest bull markets in history. Great view on how the perception of equities had changed in light of the poor performance in the decade prior.

One of the best long-form articles I have ever read. Captivating chronicle of Henry Worsley solitary journey across Antarctica.

Charlie Ellis gave a speech focused on good investment policy at the Empire Club. Thought provoking insights on how to achieve good investment returns. Especially enjoyed the idea of putting pen to paper and writing your investment policy as if you would write it for a competent stranger who is tasked with carrying out your wishes.

Rory Sutherland, vice chairman of the Ogilvy & Mather and prolific writer and thinker on human behaviour wrote an essay on how detrimental impatience is in life and business. Some thought provoking insights and great examples.

Bill Gurley, the legendary Benchmark VC, wrote an outstanding piece on what it takes for a startup to get into the 10x revenue club. Funny how speculative episodes made start up valuations exceed 10x revenues by far over the last couple of years. A must read.

Jason Zweig sat down for an interview with the great Charley Ellis in 2001. Charley Ellis is a legend of the investment industry having written some outstanding articles and books, including “The Loser’s Game” (a 1975 which spurred Jack Bogle to start Vanguard and index funds).

Michael Porter outlines his views on what drives good corporate strategy

An exceptionally interesting profile of the famed art dealer Larry Gagosian in the New Yorker. Highly recommended.

Charlie Munger delivers a mastger class study of human nature as it relates to business and investing during the 1994 lecture at the University of Southern California

The incredible article Jon Krakauer wrote for Outside Magazine on the tragic events that he witnessed on the top of Mount Everst in May of 1996. A must read.

Jack Bogle, Chairman and Founder of Vanguard gave a speech on the importance of simplicity in investing. Some great lessons for everyone.

One of the most celebrated magazine stories ever published. A great piece of journalism on the great Frank Sinatra

Peter Kaufman (who is also editor of the Poor Charlie's Almanack) gave a speech at the California Polytechnic State University Pomona Economics Club on how to live a great life: “Go positive and go first, and be constant in doing it.” Full of wisdom and highly recommended.

Great speech by Michael Crichton on the useless act of speculation in the media

William Deresiewicz gave a speech on the importance of solitude and independent thinking in leadership at the United States Military Academy at West Point in October 2009.

Jack Bogle gave a Commencement Address to the MBA Graduates of the McDonough School of Business on what it means to have ENOUGH

In “Fear of Crashing” investor, author and philanthropist Peter Lynch considers the potential of a market correction in September 1995, and, along with financial writer John Rothchild, he advises how to prepare for, react to and recover from such uncertainty.

This Sunday, August 4, is the 89th anniversary of a huge innovation with a global, lasting impact – the supermarket. On August 4, 1930, Michael Cullen opened his “huge” King Kullen store in the Jamaica section of Queens, New York City. While this date is often considered the birth of the supermarket, pinning down the exact ancestry and birth of the idea is not easy. Most inventions and innovations result from numerous experiments and ideas, recombining in new forms. While even true of “hard” inventions like airplanes, automobiles, and television, tracking origins can be even harder in social and cultural inventions – the situation comedy, movies, magazines, newspapers, fast food, the motel – or the supermarket.

It was 1912. The wiry, soft-spoken, short (five-foot five-inch) immigrant with the thick Hungarian accent waited for hours to see the powerful Jeremiah Kennedy, head of the “Edison Trust” (Motion Picture Patents Company). Adolph Zukor, like many American Originals, had come to this country 23 years earlier with nothing. Now he had a vision that was to change America, the world, and the way all of us see that world.

The British railway mania of the 1830s was a huge speculative investment that succeeded, contrary to most manias. Investors poured money into railways for years despite skepticism and economic challenges. By the 1840s, these railways were seen as financial successes, inspiring the later Railway Mania.

Struggling to pay the bills, HJ Heinz has borrowed every cent available. His home, furnishings, and his father’s longstanding brickyard are mortgaged to the hilt. Falsely accused of moving inventory out of the reach of creditors, Heinz was even arrested, making news in the local papers. Bankruptcy, the ultimate disgrace to a traditional German Lutheran family like the Heinz family, was unavoidable. His friend Clarence Noble, after whom HJ had named his firstborn son, blamed HJ for their difficulties and turned his back on him. HJ’s younger brother, Peter, who worked as a salesman for the company, turned to drink, to which the teetotalling HJ was strongly opposed. HJ’s wife, Sarah, lost ten pounds from sheer worry.

We often tell the stories of unsung business pioneers and entrepreneurs. However, a far larger number of people have been a different breed – the long-serving employees and executives of the corporate world. Both of these groups have many lessons to teach us for today. Many of these corporate people spend their lives fighting valiant battles, innovating, and serving customers and stockholders, but their stories are rarely told. This is one of them, and one of the best.

Price data for financial instruments and commodities was relatively easy to access during the eighteenth century. We know that price lists, such as Castaing’s Course of the Exchange, were regarded as valuable, that they were kept and that they were frequently enclosed or abstracted in merchants’ and other correspondence. But isolated price data is not information. Without context, it is just numbers. If we are to understand how investment decisions were made we need to know much more about how price data was contextualised and utilised. I recently came across a letter that gives us some clues. I wasn’t looking for evidence about investment behaviour, I was trying to figure out what eighteenth-century bankers did all day. I found very little to illuminate the latter but finding a letter focusing on speculation was an unexpected delight in an otherwise rather unproductive morning.

This paper answers fundamental questions that have preoccupied modern economic thought since the 18th century. What is the aggregate real rate of return in the economy? Is it higher than the growth rate of the economy and, if so, by how much? Is there a tendency for returns to fall in the long-run? Which particular assets have the highest long-run returns? We answer these questions on the basis of a new and comprehensive dataset for all major asset classes, including—for the first time—total returns to the largest, but oft ignored, component of household wealth, housing. The annual data on total returns for equity, housing, bonds, and bills cover 16 advanced economies from 1870 to 2015, and our new evidence reveals many new insights and puzzles.

Technological revolutions are often accompanied by substantial stock price reversals, but previous literature has produced competing explanations for why this is the case. This paper brings new evidence to this debate using data from the innovation-driven British Bicycle Mania of 1895-1900, in which cycle share prices rose by over 200 per cent before collapsing by more than 75 per cent. These price patterns are not fully explained by fundamentals or by changes in the nature of risk associated with cycle shares. Instead, the evidence from the Bicycle Mania supports the hypothesis of Perez (2009), who argues that new technology, high short-term profits, and loose monetary conditions increase the level of speculative investment, ‘decoupling’ share prices from fundamentals.

The British Railway Mania of the 1840s was by many measures the greatest technology mania in history, and its collapse was one of the greatest financial crashes. It has attracted surprisingly little scholarly interest. In particular, it has not been noted that it provides a convincing demonstration of market inefficiency. There were trustworthy quantitative measures to show investors (who included Charles Darwin, John Stuart Mill, and the Bronte sisters) that there would not be enough demand for railway transport to provide the expected revenues and profits. But the power of the revolutionary new technology, assisted by artful manipulation of public perception by interested parties, induced a collective hallucination that made investors ignore such considerations. They persisted in ignoring them for several years, until the lines were placed in service and the inevitable disaster struck.

What if you discovered that a foreign country had deliberately attempted to jeopardize millions of jobs in one region of the country? No, this was not an OPEC oil embargo designed to counteract American support of Israel. The target was in fact England, the instigator was the Confederacy, and the strategy involved the curtailment of cotton exports during the Civil War.

This study examines wine price dynamics and investment returns using historical Bordeaux data. High-quality young wines yield the best financial returns, while old wines offer non-pecuniary benefits. From 1900-2012, fine wine investments returned 4.1% annually after costs, outperforming bonds, art, and stamps, but underperforming equities. Wine returns correlate with stock market performance.