On October 25, 1870, the racehorse Preakness won the inaugural running of the Dixie Stakes (now called the Dinner Party Stakes), on the opening day of Pimlico Race Course in Baltimore. Three years later, they named a new race after Preakness. The Preakness Stakes ran just the other day, it was exciting.
As for Preakness the horse?
After his retirement from racing, he was sold in England to stand at stud. He later became temperamental, as did his new owner, the Duke of Hamilton. After an altercation where Preakness refused to obey the Duke during a breeding session, he retrieved a gun and killed the colt, leading to a public outcry. As a result, there was a reform in the laws regarding the treatment of animals.
Poor Preakness. The Duke looks like a cad.
A description of Hamilton pertaining to this period in his life has this description of him to offer:“At Christchurch, he went in for boxing, as he went in later for horse-racing, yachting and other amusements… He was full bodied, of a rudely ruddy complexion, had a powerful neck, and seemed strong enough to fell an ox with his fist… He had a frankness of speech bordering on rudeness”.
Killing a champion horse seems like the most notable thing he ever did.
Loved William Finnegan’s article about horse racing (can it survive?) in the May 24, 2021 The New Yorker. Horses given Lasix can lose 20-30 pounds of urine.
Horses usually give birth in the middle of the night, which makes sense since that’s when they are less likely to be disturbed by predators. But foals need to be able to move with the herd at daybreak.
What about this scam that the Stronach Group, owners of Pimlico, pulled on Maryland’s taxpayers?
… the company wanted to move the Preakness to Laurel Park, a racino in the suburbs. Baltimore officials were aghast at losing the race, which has been running since 1873, and the state ultimately agreed to invest nearly four hundred million dollars in Pimlico and Laurel Park. Stronach committed to leaving the Preakness where it was, having offloaded the risk onto the State of Maryland.
Belinda Stronach, a fascinating character. Served in Canada’s Parliament for two different parties, “just friends” with Bill Clinton, her second husband was Norwegian speed skating legend Johan Olav Kloss, she defeated her father in a lawsuit to claim his assets.
Finnegan suggests that “sealing” the track at Santa Anita too frequently after the dump of 2019 rainfall here in southern California may have contributed to the number of horse deaths at the track, a loss we mourned at the time.
One of the attractions of Santa Anita is that it’s a time capsule, of another California:
Alexander grew up down the street, in Pasadena, and he knew the track in its heyday, in the fifties. “When I was growing up, horse racing was pretty much the only game in town,” he said. “No Dodgers, no Lakers, just the Rams. But I was already a Dodgers fan, because of Jackie Robinson. We were both from Pasadena.”
Had a chance to take in some racing at Santa Anita a couple weeks ago, and had a corned beef sandwich on rye with mustard, horseradish and pickles that I found exquisite both in taste and in antiquitude.
It’s hard to see a growing future for horse racing. Finnegan notes that “in the past two decades, the over-all national betting handle at racetracks has fallen by nearly fifty per cent.” Although at Santa Anita over 2020, even while spectators were kept out, the handle was up from the previous year.
(happened to come upon that one while reading about trial lawyers)
The Warrior of Capestrano is a tall limestone statue of a Picene warrior, dated to around the 6th century BC. The statue stands at around 2.09 m. It was discovered accidentally in 1934 by a labourer ploughing the field in the Italian town of Capestrano, along with a female statue in civilian attire, called Lady of Capestrano.
Imagine you’re just ploughing your field and you come across this thing. (Or was that a cover story for a band of tomb raiders?). 6th century BC, long before Rome. An inscription apparently found in the extinct South Picene language:
“Makupri koram opsút aninis rakinevíi pomp[úne]í” (“Aninis had this statue made most excellently for Rakinewis, the Pomp[onian]”).
Capestrano is a town in Abruzzo:
I’ve been near there, 40km away or so.
You’ll find a description of a visit to the farm of a distant relative in my book, co-authored with Vali, The Ridiculous Race.
Among those with ancestral roots in this region are myself and Madonna, whose father’s folks are said to be from Pacentro.
The claim on Madonna’s roots was told to me in Abruzzo by a distant relative with some combination of local pride and disgust for Madonna’s life and art, a very contradictory, Italian Catholic reaction to something provocative and famed.
The fortified mountain towns of that region suggest a long stretch of history when “Italy” was a crazy war of all against all, with an Appalachian geography. (And temperament? Somewhere in my notes I have a draft proof that the Italians are the original Scotch Irish).
Capestrano was home to the saint John of Capestrano, Giovanni da Capestrano:
Famous as a preacher, theologian, and inquisitor, he earned himself the nickname ‘the Soldier Saint’ when in 1456 at age 70 he led a crusade against the invading Ottoman Empire at the siege of Belgrade
Though John’s ferocity can’t be questioned, his theology and record don’t seem favorable to contemporary standards.
Like Bernardine, he strongly emphasized devotion to the Holy Name of Jesus
The section of his Wikipedia page entitled “Anti-Jewish Incitement” gives much we can’t approve of. He died of plauge.
The spirit of Giovanni da Capestrano was brought to California by Spanish Franciscan missionaries, who founded the mission of San Juan Capistrano. We had a chance to visit there recently.
The mission does deliver in the charm department in part because of the semi-ruined quality of the place. One of the first efforts at a grand stone church collapsed in an earthquake, killing forty-two people attending Mass inside. You’d think this would suggest maybe the missionaries line to God was not direct, or at the very least, instead of stacking heavy rocks, they should switch to a vernacular architecture:
But no. The California missions seem like they used to be more of a draw. The popular novel Ramona, early movies, Zorro, plein air painters, early preservationist movements, all these seem to have flowed around, drawn inspiration from and contributed to the appeal of the missions in popular imagination.
This one was a hit (?) for The Ink Spots in 1949, maybe marking the peak:
Maybe Madonna should cover it?
I don’t think this is what an airline would use to advertise SoCal today?
One incident I didn’t learn about at the site, but have now found looking at Wikipedia: in 1818 the French-born Argentine sea captain Hipólito Bouchard and his guys raided the mission. I guess it makes sense the mission doesn’t want to emphasize that, it must’ve been a sad day. Plus they don’t want to scare the current tourists.
The Lady of Capestrano:
A graphic novel, in several volumes, of In Search of Lost Time. I feel like I heard about this when it first came out in 2015, but I must’ve been preoccupied.
I was supposed to read some of this in college, in a class I really liked, Joyce and Modernism, but I could never “get into it.” Now, in this form, I’m reading it in a different way and I find some of it to be awesome and really moving.
Some of it is, look, let’s admit it can be ridiculous:
Maybe the key to unlocking it, for me anyway, is that Proust’s world, pre-WWI France, can feel as distant as 11th century Japan. We have to approach this as something very strange, but the power is in recognizing ourselves in it.
Last Proust post (prost) was about Edmund White’s short biography of Proust, recommended by Larry McMurtry to me, and now by me to you.
More or less posting this in lieu of just texting about it to MMW and Vali.
I always feel like I’m getting both nutrition and entertainment when I read the Berkshire Hathaway annual meeting transcript, found here at Rev.com
Asked about the morality of owning an oil and gas company like Chevron, Charlie Munger poses and then answers a strange hypothetical:
You can imagine two things. A young man marries into your family, he’s an English professor at, say, Swarthmore, or he works for Chevron. Which would you pick? Sight unseen? I want to admit, I’d take the guy from Chevron. Yeah.
Did not know this about the origin of the rear view mirror:
Warren Buffett: (01:35:54)
Maybe that’s why they called it Marmon. And that we’re proud of the fact that the company in 1911 named one of the first Indianapolis 500. It also was the company that invented the rear view mirror. I’m not sure whether that was a big contribution to society. And certainly around your household rear view mirror, you don’t want to emphasize too much. But they, the car that was entered in Indianapolis 500, the guy who normally sat next to the driver and looked backwards to tell what the competitors were doing, he was sick. So they invented the rear view mirror. So let’s just assume that you had decided that autos were this incredible thing. And someday there’d be an Indianapolis 500 and someday they’d have rearview mirrors on cars. And someday 290 million cars would be buzzing around the United States or autos or trucks there.
On BNSF railroad:
15% of the interstate goods move on our railroad
Competition for BNSF, and for Geico:
This question comes from Glen Greenberg, it’s on the profitability of GEICO and BNSF. He said, “Why do these companies operate at meaningfully lower profit margins than their main competitors, Progressive and Union Pacific? Can we expect current managements to at least achieve parity?
Warren Buffett: (02:33:25)
Was it GEICO and-
Warren Buffett: (02:33:28)
Oh, actually, if you look at the first quarter figures, you’ll see that the Berkshire Hathaway/Union Pacific comparisons has gotten quite better. Katie Farmer’s doing an incredible job at BNSF, and it’d be an interesting question whether five years from now or 10 years from now, BNSF or Union Pacific has the higher earnings. We’ve had higher earnings in the past, Union Pacific passed us. The first quarter, you can look at and they think they’ve got a slightly better franchise. We think we’ve got a slightly better franchise. We know we’re larger than Union Pacific, we will do more business than they do. And we should make a little more money than they do, but we haven’t in the last few years. But it’s quite a railroad, I feel very good about that.
And it’s a very interesting business, both Progressive and GEICO were started in the ’30s. I believe I’m right about Progressive on that, and we were started in ’36. We have had the better product for a long, long time, I mean, in terms of cost. And here we are 80, 85 years later, in our case, and we have about 13% or so of the market, whatever it may be, and Progressive as just a slight bit less. So the two of us have 25% of the market, roughly, in this huge market, after 80 something years of having a better product. So it’s a very slow changing, competitive situation, but Progressive has done a very, very good job recently. We’ve done a very, very good job over the years, and we’re doing a good job now, but we have made some very significant improvements.
Is Flo just more appealing than the Geico Gecko? Ajit Jain doesn’t think so:
Progressive has certainly done better, but when it comes to branding, GEICO is, I think, miles, excuse me, ahead of Progressive. And in terms of managing expenses as well, I think GEICO does a much better job than anyone else in the industry.
On interest rates:
I mean, interest rates, basically, are to the value of assets, what gravity is to matter, essentially. …
I mean, if I could reduce gravity, it’s pull by about 80%, I mean, I’d be in the Tokyo Olympics jumping. And essentially, if interest rates were 10%, valuations are much higher. So you’ve had this incredible change in the valuation of everything that produces money, because the risk-free rate produces, really short enough right now, nothing. It’s very interesting. I brought this book along, because for 25 or more years, Paul Samuelson’s book was the definitive book on economics. It was taught in every school and Paul was… he was the first Nobel a prize winner. It’s sort of a cousin to the Nobel prize, they started giving it in economics, I think, in the late ’60s, he was the first winner from the United States, Paul Samuelson. Amazingly enough, the second winner was Ken Arrow, and both of them are the uncles of Larry Summers. Larry Summers had the first two winners as uncles.
Weird, did not know that. Buffett goes on:
But if present rates were destined to be appropriate, if the 10 years should really be at the price it is, those companies that the fellow mentioned in this question, they’re a bargain. I mean, they have the ability to deliver cash at a rate that’s, if you discounted back and you’re discounting at present interest rates, stocks are very, very cheap. Now, the question is what interest rates do over time. But there’s a view of what interest rates will be based in the yield curve out to 30 years and so on.
It’s a fascinating time. We’ve never really seen what shoveling money in on the basis that we’re doing it on a fiscal basis, while following a monetary policy of something close to zero interest rates, and it is enormously pleasant. But in economics, there’s one thing always to remember, you can never do one thing, you always have to say, “And then what?”
Buffett goes on to invoke the St. Peterburg paradox.
On, basically, what’s cool about the stock market:
we’ve got the greatest markets the world could ever imagine. I mean, imagine being able to own parts of the biggest businesses in the world and putting billions of dollars in them and take it out two days later. I mean, compared to farms or apartment houses or office buildings, where it takes months to close a deal, the markets offer a chance to participate in earning assets on a basis that’s very, very low cost and instantaneous, huge, all kinds of good things, but it makes its real money if they can get the gamblers to come in because they provide more action and they’re willing to pay silly or fees and all kinds of things.
On the market as a casino:
Well, the stock market, we’ve had a lot of people in the casino in the last year. You have millions and billions of people who’ve set up accounts where they day trade, where they’re selling… Put some calls, where they, I would say that you had the greatest increase in the number of gamblers essentially. And there’s nothing wrong with gambling and they got better odds than they’ve got if they play the state lottery, but they have cash in their pocket. They’ve had action. And they actually don’t have a lot of good results. And if they just bought stocks, they do fine and held them.
But the gambling impulse is very strong in people worldwide, and occasionally it gets an enormous shove and conditions lead this place where more people are entering the casino than are leaving every day, and that creates its own reality for a while. And nobody tells you when the clock is going to strike 12:00, and it all turns to pumpkins and mice. But when the competition is playing with other people’s money, or if they’re playing foolishly with their own money, but the big stuff is done with other people’s money, they’re going to beat us. I mean, we’re not… that’s a different game and they’ve got a lot of money, so we’re not going to have much luck on acquisitions while this sort of a period continues.
Charlie Munger saying Bernie Sanders “has won,” but he didn’t mean it in a complimentary way:
MUNGER: And I think one consequence of the present situation is that Bernie Sanders has basically won. And that’s because with the, everything boomed up so high and interest rates, so low what’s going to happen is the millennial generation is going to have a hell of a time getting rich compared to our generation. And so the difference between the rich and the poor and the generation that’s rising is going to be a lot less. So Bernie has won. He did it by accident, but he won.
Charlie is asked, given high tax rates, what keeps him in California?
MUNGER: Well, that’s a very interesting question. I frequently say that I wouldn’t move across the street to save my children 500 million in taxes and stuff. So I have that, that’s my personal view of the subject, but I do think it is stupid for states to drive out their wealthiest citizens, the old people that don’t commit any crimes, they donate to the local charity. Who in the hell in their right mind would drive out the rich people? I mean, Florida and places like that are very shrewd and places like California are being very stupid. It’s contrary to the interest of the state.
I love the dodge here on a question about Bitcoin:
Yeah, I knew there’d be a question on Bitcoin. I thought to myself, “Well, I’ve watched these politicians dodge questions all the time.” I always find it kind of disgusting when they do it. But the truth is, I’m going to dodge that question because we’ve probably got hundreds of thousands of people watching this that own Bitcoin, and we’ve got two people that are short. We’ve got a choice of making 400,000 people mad at us and unhappy and/or making two people happy. That’s just a dumb equation. I thought about it. We had a governor one time in Nebraska, a long time ago. He would get a tough question, what do you think about property taxes or what should we do about schools? He’d look right at the person, and he’d say, “I’m all right on that one,” and he’d just walk off. Well, I’m all right on that one and maybe we’ll see how Charlie is.
A quality of a great business:
Well, we’ve always known that the green business is the one that takes very little capital and grows a lot, and Apple and Google and Microsoft and Facebook are terrific examples of that. I mean, Apple has $ 37 billion in property, plant, equipment. Berkshire has 170 billion or something like that, and they’re going to make a lot more money than we do. They’re in better business. It’s a much better business than we have, and Microsoft’s business is a way better business than we have. Google’s business is a way better business.
I thought this was funny. The question was re: Robinhood.
But they have attracted, maybe set out to attract, but they have attracted, I think I read where 12 or 13% of their casino participants were dealing in puts and calls. I looked up on Apple, the number of seven day calls and 14 day calls outstanding. I’m sure a lot of that is coming through Robinhood and that’s a bunch of people writing… They’re gambling on the price of Apple over the next seven days or 14 days. There’s nothing illegal about it. There’s nothing immoral. But I don’t think you would build a society around people doing it. If a group of us landed on a desert island, we knew that we’d never be rescued, and I was one of the group and I said, “Well, I’ll set up the exchange over and I’ll trade our corn futures and everything around it.” I think the degree to which a very rich society can reward people who know how to take advantage essentially of the gambling instincts of, not only American public, worldwide public, it’s not the most admirable part of the accomplishment. But I think what America has accomplished is pretty admirable overall. And I think actually, American corporations have turned out to be a wonderful place for people to put their money and save, but they also make terrific gambling chips.
Odd anecdote from Warren, Munger is talking about state lotteries (he doesn’t approve):
Charlie Munger: (04:40:03)
The states in America, replaced the mafia as the proprietor of the numbers game. That’s what happened.
Warren Buffett: (04:40:03)
Charlie Munger: (04:40:03)
They pushed the mafia aside and said, “That’s our business, not yours.” Doesn’t make me proud of my government.
Warren Buffett: (04:40:03)
When I was a kid, my dad was in Congress, they had a numbers runner in the house office building, actually.
On the potential CP/KSU railway merger, which would strengthen a rival to Berkshire’s own BNSF:
In terms of the price that’s being paid, like I say, if you can borrow all the money for nothing, it doesn’t make much difference to people. This would not be being paid under a different interest rate environment. I mean, it’s very simple. There’s no magic to the Kansas City Southern. I think their deal with Mexico ends in 2047. It’s the number of carloads carried. I mean, it’s not going to change that much, but it is kind of interesting. There’s only two major Canadian, what they call Class I railroads, and there’s five in the United States. This will result in, essentially, three of the units being Canadian, four being U.S., which is not the way you normally think of the way the development of the railroad system would work in the United States.
We looked at buying CP. Everybody looks at everything. We would not pay this price. It implies a price for BNSF that’s even higher than what the UP is selling for. But it’s kind of play money to some degree, I mean, when interest rates are this low. I’m sure from the standpoint of both CP and CN, there’s only one K.C. Southern. They’re not going to get a chance to expand. They’re not going to buy us. They’re not going to buy the UP. The juices flow, and the prices go up.
Charlie Munger: (03:37:15)
They’re buying with somebody else’s money.
Warren Buffett: (03:37:18)
Yeah. It’s somebody else’s money, and you’re going to retire in five or 10 years. People are not going to remember what you paid, but they’re going to remember whether you built a larger system. The investment bankers are cheering you on at every move. They’re just saying, “You could pay more.” They’re moving the figures around. The spreadsheets are out, and the fees are flowing.
The juices flow, indeed.
From Mike Sacks’ interview with the great John Swartzwelder in The New Yorker. The man wrote 59 Simpsons episodes, it’s an achievement difficult to comprehend, up there with Ted Williams batting .400, or, I dunno, the sumo achievements of Hakuho?
Used my complex handicapping method on the 2021 Kentucky Derby.
- Known Agenda – 81.33
- Like a King – 75
- Brooklyn Strong – 73.6
- Keepmeinmind – 78
- Sainthood – 79.66
- O Besos – 80.8
- Mandaloun – 85.6
- Medina Spirit – 91.6. Came in second to 15 at the Santa Anita Derby back in April.
- Hot Rod Charlie – 75.57. Has very been fast lately.
- Midnight Bourbon – 85.833
- Dynamic One – 74.6
- Helium – 78.3
- Hidden Stash – 75.2
- Essential Quality – 87.6 . The favorite, undefeated in five straight, has beaten 4, 9, 17 & 18.
- Rock Your World – 88. Undefeated in 3 straight.
- King Fury – 75.83
- Highly Motivated – 88.2
- Super Stock – 78.4
- Soup and Sandwich – 87.66
- Burbonic – 67.16
A couple storylines to watch. Kendrick Carmouche will be the first black jockey since 2013. In the early days of the Derby, almost every jockey was black, 15 out of the first 28 winners were black.
Luis Saez will be riding the favorite, 14, Essential Quality. Saez has a shot at redemption after being denied a victory due to disqualification in the 2019 Derby. Essential Quality’s Brad Cox would be the first Louisville born trainer to win.
I gotta cheer for Medina Spirit, a horse with the same name as the Great Debates moderator. Medina Spirit may not end up as a “value,” with six time winner Bob Baffert as trainer. Just glancing at the odds here I’d say Highly Motivated could be something at 19/1? Highly Motivated is a fast horse.
Bob Baffert named his son after Bode Miller?
The best odds as usual are being the house. If you’d bought Churchill Downs stock, $CHDN, the morning after the last Derby (Sept 7) for $169, it’s today worth $211, a 22% return (S&P 500 was up 18% same period). Even the most studious horseplayer would be pleased to gain that return from studying the form.
1 – Essential Quality
2- Rock Your World
3 – Medina Spirit.