I don’t think my pictures do justice to the Wild Rose Pass. In fact, I know they don’t.
I was distracted listening to Bruce Springsteen’s Nebraska, which I’d never listened to:
I would say “Atlantic City” is my favorite song on this album. I was never super-into Bruce Springsteen. But: respect:
Initially, Springsteen recorded demos for the album at his home with a 4-trackcassette recorder. The demos were sparse…
Springsteen then recorded the album in a studio with the E Street Band. However, he and the producers and engineers working with him felt that a raw, haunted folk essence present on the home tapes was lacking in the band treatments, and so they ultimately decided to release the demo version as the final album.
Complications with mastering of the tapes ensued because of low recording volume, but the problem was overcome with sophisticated noise reduction techniques.
“Nebraska” itself is an interesting song, about Charlie Starkweather:
The song begins with Starkweather meeting Fugate:
- I saw her standin’ on her front lawn just a-twirlin’ her baton
- Me and her went for a ride, sir…and 10 innocent people died
Springsteen was inspired to write the song after seeing Terrence Malick’s movie Badlands on television. The portrait in the opening lines of the girl standing on her front lawn twirling her baton was taken from the movie.
Starkweather himself was [supposedly] influenced by James Dean:
After viewing the film Rebel Without a Cause, Starkweather developed a James Dean fixation and began to groom his hairstyle and dress himself to look like Dean. Starkweather related to Dean’s rebellious screen persona, believing that he had found a kindred spirit of sorts, someone who had suffered torment similar to his own whom he could admire.
Charlie Starweather killed eleven people. Ban movies, I guess.
From 1854 to 1891, Fort Davis was strategically located to protect emigrants, mail coaches, and freight wagons on the Trans-Pecos portion of the San Antonio-El Paso Road and the Chihuahua Trail …
During the Civil War,Confederate States Army troops manned the fort which was attacked on August 9, 1861 by MescaleroApaches. The native warriors attacked the garrison’s livestock herd, killed two guards and made off with about 100 horses and or cattle.
At Fort Davis they have an audio program, where they play announcements of the sort that would’ve been heard on the parade ground, years ago. The day I was there the audio program was a list of ceremonies and salutes to acknowledge the death of former president Andrew Johnson. Gun salutes every hour, and then at sundown.
In the reconstructed barracks, I came upon some National Park Service Personnel discussing the site, and the reproductions they’d used of guns and quilts and so forth. They got quiet and respectful when I came in, and said if I had any questions they would answer them. Then they got back to joking about how someday someone would sell the reproduced guns on eBay as “authentic! from Fort Davis!”
A poignant obituary:
At lunch a guy came up to me and mistook me for Dave. “You look just like Dave – in profile!”
A house I saw in Balmorhea. I sat right down in the middle of the road to take a picture of it.
In Balmorhea there’s a spring:
Between 20 million and 28 million US gallons (90,850 cubic meters) of water a day flow from the springs.
There was a sign nearby offering snorkel rental:
The cienega now serves as a habitat for endangered fish such as the Comanche Springs pupfish and Pecos gambusia as well as other aquatic life, birds and other animals.
I did not take a picture, because you can’t take a picture of everything. But here’s one from the Texas Parks Department:
Later a friend of mine described the drive from Marfa to Austin, seven hours away.
“The first time I did it,” he said, “I was bored because I thought it was nothing. But then, as I got used to it, I realized everything is something.”
In Fort Davis I wanted to visit the rattlesnake and reptile museum. I walked in, and there was no one there. So I walked around. A Spanish language radio station was playing. Then, as I was leaving, I realized it cost $4. I only had two singles or a twenty. I debated what to do. I left the two dollars, and figured that was good enough since no one had been there to explain the various lizards and scorpions anyway.
But then, driving out of town, I thought, “Steve, you know better. This man went to all the trouble of collecting these snakes. All he asks is four dollars.” In my heart I knew it was right. So I got change and went back. The snake man was there this time, and he thanked me for my honesty. He’d been watching my car the whole time, he said.
Helytimes began in 2012. Our idea was
- become good at writing for the Internet
- a writer should have a website
- have a space to collect, digest and share items of interest.
We’ve tried to come up with a mission statement or guiding purpose, but the truth is, this is stuff we had to get out of our head.
The healthiest thing to do was share it.
The best way to put it might be a place to share crazy interesting things we’ve come across.
Since then we’ve published over 1,050 posts. We’re just now starting to get good at it, in our opinion.
Here are the twenty-one most popular posts:
The moral here is probably that we should start a local LA news-and-takes site written by other people.
One lesson here might be to have more local LA journalism written by other people. Keep meaning to start a whole site for that but I do have a full-time job plus several other projects.
In our opinion the most successful post on Helytimes was
although it didn’t crack the top 21, just felt like a time where we added something of value to the Internet and readers responded.
It’s about the work of the Naval Aviation Photographic Unit, also known as the Training Literature Field Unit No. 1, assembled by the great photographer Edward Steichen.
One thread of Helytimes is attempts to reach into the past and find the sources that give us understanding of the past.
Two personal favorites:
This has been the annual performance review and address to the Helytimes readership:
That photo taken by one of Steichen’s guys, Wayne Miller:
Wait! You can’t be shut down for summer! I need my Helytimes!
writes reader Melanie in Nashville. Aw, thanks! Don’t worry, there’s tons to read… in the archive!
There have been over 560 posts on Helytimes. Here are the ten most popular:
Off the charts most popular post, because of people googling supposed inspiration/John Belushi partyfriend Cathy Smith
Those’ll keep coming over the summer!
Disney + Nazis will bring ’em in.
A personal passion
Feel like this is my wheelhouse, summarizing dense history of the general reader, but it’s a lot of work to write posts like this.
6) Ships’ Cats
I mean, for Convoy alone.
The “it man” of Norwegian literature!
Just a real great story.
This blew my mind, some of the best writing I’ve ever read on WWII.
About Pete Carroll, Nick Saban, and Bill Belichick
Now, here are just some personal favorites:
Here’s stuff related to a current project:
Here is some backstory on Donald Trump, lately in the news:
You can also browse yourself by category. Probably the deepest holes are
See you later!
Martin Anderson talking to Stephen Knott about Ronald Reagan for The Miller Center.
Were you a smart little kid too?
I guess so. Yes, the feedback was mostly positive, so I should assume.
Did that make you popular with the other little kids?
Everybody says the same thing. I think it’s a fascinating—I’ve only done about 20 people so far, but everybody says the same thing. First of all, (A) they were really smart. I remember when I went to school, I knew all the alphabet, I knew everything and I used to raise my hand, I knew all the stuff and it was just terrific. The next thing you know, they were calling me Smarty Marty and I discovered this was not good.
Then, I don’t know about you, but the next step they all go to is that they all learn ways to cope with that. And one of the things they learned was that it’s not good to be smart and show other people how smart you are, at least if you want any friends. And that may be the key to Reagan, that he was incredibly smart and quick and he was also tall and he was handsome, he was good-looking. That’s a very powerful combination to drive on people and he laid back. That’s a pure guess.
the dimensions to this man. from an interview with Ken Adelman:
The next day we got there to the chateau in Geneva. We’d spent a long time setting up the meeting. It was in a neutral place in a neutral city and a neutral country. This chateau was owned by the Aga Khan, and Reagan was told he could take it if he fed the goldfish; he was very attentive about feeding the goldfish
The goldfish appears to have been a news item at the time.
Here’s more from Anderson (a loyalist and enthusiast) on Reagan’s nature:
I once described him as warmly ruthless. He had this appearance of being friendly and jovial and nice, never argued with anyone, never complained. But if you shook your head and thought about it a little bit, he always did it his way. It was like there was a steel bar right down the middle of him and everything you touched was soft and fuzzy except the steel bar in the middle. He always did it his way. No matter how many people talked to him, no matter what happened, he always did it his way. If you were in the way, you were gone, you were fired. He never took any pleasure out of it, just gone.
I think if you really want to look at Reagan, one of the things we show with this new book we have, is something that I knew from dealing with him. He was incredibly smart. I know this doesn’t sound reasonable, but he was incredibly smart. I’ve dealt with professors at Columbia and professors at Stanford, but he could look at something and understand it and grasp it and turn it around and work with it and play with it. He was incredibly quick. I’d say he had a brain that was comparable to—and I’d talk to Milton Friedman or Ed Teller and Arthur, all those guys, he could stay with them.
Now, he hid that. He just backed off. He never argued with staff. You could have ten different people tell him the same thing and he’d just listen. He never said to them, Look, you dumb bunny, ten years ago I wrote an article on this, a long article. He’d just say, That’s an interesting idea. So many of the policy issues that were proposed to Reagan over time, by different people, he listened, That’s very interesting. Then when he did it, even though it was something he’d decided many, many years previously he would do, all these people were delighted. He was doing what they had told him. He was happy with that, he didn’t care.
He used to say privately, There’s no limit to what a person can get done if you don’t care who gets the credit. And he was just very smart. The second thing is, there was this feeling that he was lazy, that he took naps. Well, I traveled with him for almost four years. He never took a nap. It was total nonsense. In fact, he worked all the time. We have uncovered evidence with this book in terms of the handwritten documents and so on, he was writing all the time. He was studying, he was writing, he was working all the time, in private. As soon as he came out in public, put on the public persona, he was friendly and jovial and talking.
So I think people made the mistake of saying, Gee, this guy is an easy-going—obviously, we never see him working, so therefore the staff must be telling him what to say. Not true. And when they ran up against him, they assumed he could be persuaded and pushed around. Big mistake. And the woods are full of people that tried to do that, like Al Haig, Don Regan, a whole bunch of them.
It’s so high! How can people do anything? Yet shouldn’t we want the price of gas to be high, so we don’t cook up the planet quite as fast? Though, won’t the high prices cause estimates and spreadsheets and algorithms across the oil and gas companies to be adjusted? When the calculations are revised, it suddenly makes sense to drill more and deeper and in crazier ways in more chaotic countries? They’ll capitalize new and more projects, dredging up our oil faster than ever.
Is this merely the boom and bust cycle we all must toil under, written many times over in the history of every boomtown and oil craze? From Nantucket to Houston to the Bakken to Bakersfield to Alaska we are told this story. Above LA looms the Getty, named for a man whose father left Minnesota for a boom in Bartlesville, Oklahoma. The son took the lesson and was early in on Saudi Arabia. To get to the Getty from here you’d have to cross Doheny, he of Teapot Dome. But look, you saw the oil wells when you came in from the airport (in a car), and if you looked out the window of your plane as you landed at LAX you saw the diesel tankers and maybe even an oil tanker filling up at the offshore spigot. You get the idea.
Not so long ago I watched the documentary version of The Prize in small chunks, just before bed. Though the content can be bracing it is soothingly narrated by Donald Sutherland, and there is something relaxing about seeing how the pieces fit together. Finding the doc compelling I read Daniel Yergin’s original book, which is full of great characters and strange scenes:
In early March 1983 the oil ministers and their retinues hurriedly convened, ironically in London, the home court of their leading non-OPEC competitor, Great Britain. They met at the Intercontinental Hotel at Hyde Park Corner, for what turned out to be twelve interminable, frustrating days – an experience that would leave some of them with an allergic reaction whenever, in future years, they set foot inside the hotel.
Later in the day, Silva Herzog was glumly eating a hamburger at the Mexican embassy, preparing to leave, when a call came from the United States Treasury saying that the $100 million fee had been rescinded. The Americans could not risk a collapse. Who knew what the effects would be on Monday? And with that, the Mexican Weekend concluded, with the first part of the emergency package now in place.
Some takeaways of value:
- it’s not just the getting of the oil. It’s the refining. Rockefeller controlled the refining, and the shipping, and eventually everything
- one of Rockefeller’s killer qualities: he was a visionary accountant. Can there be such a thing? Yes. Rockefeller.
- The Great War, later World War One, was a gamechange for oil. Railroads had been key in the US Civil War, but in World War One, the tank and the truck, oil powered vehicles, proved to be the crucial transport. Churchill, head of the Admiralty at the time, switched the Royal Navy to oil from coal. At the end of the war, the destruction of the Ottoman Empire left the British and French in control of oil fields in Mesopotamia.
- both on the Eastern Front and in the Pacific in World War Two, oil was the key strategic factor. Really everywhere, but those offer clear examples. Decisions on how to invade the Soviet Union were based on gaining control of oil fields before the German forces ran out of oil. The Japanese navy’s decisions were bounded by limits on oil. The fleet had to be stationed near Singapore. The “Marianas turkey shoot” was a result of decisions made based on saving oil. There was not enough oil not only for active operations, but for pilot training.
How about this?:
When [J. Paul] Getty died in 1976, age eighty-three, the eulogy at his funeral was delivered by the Duke of Bedford. “When I think of Paul,” said the Duke, “I think of money.”
Many people and groups of people have attempted to control oil, but it’s unpredictable. Sometimes the board gets reshuffled: North Sea oil fields, Saudi, Alaska. The North Sea oil fields saved the UK economy. Or did it ruin the UK economy? It saved Margaret Thatcher. You can’t send ships and helicopters to the coast of Argentina if you don’t have oil.
Look how rich Norway is. It doesn’t have to be this way, Norway used to be poor, that’s why Rose on Golden Girls is from St. Olaf.
Obama’s presidency coincided with a huge boom in US oil extraction. Is “coincided” the right word? Was it a coincidence? What’s at work here?
A character worth some study: Marcus Samuel. (Shell, the first oil tanker, Lord Mayor of London).
It was called Shell because his Iraqi Jewish family used to import and sell seashells. (That’s the story, anyway.)
Here’s a solid summary of The Prize.
Recall that Moby-Dick is about the oil business, and Ahab like Daniel Plainview is an oilman.
Over his career Hunter Harrison ran four railroads: Illinois Central, Canadian National, Canadian Pacific, and CSX. His gospel was Precision Scheduled Railroading. He’s usually credited with the PSR idea, although we can’t overlook the role of “Pisser Bill” Thompson in formulating the concept. “Pisser Bill” was called that because wherever he was on the railyard, if he had to piss, he would take his dick out and piss all over the place. That’s what railroading was like when Hunter Harrison began his career oiling traincars.
Harrison kept score by one main metric: operating ratio. Operating expenses divided by revenue. He cared about other numbers of course, but only as to how they’d affect operating ratio. You want a lower operating ratio: less dollars spent for every dollar earned.
Harrison focused on the numerator: expenses. He was obsessed with smart use and purchase of assets. One of his sayings was that an unused asset is a liability. When he found unused assets he shed them. On the Illinois Central, which runs from Chicago to New Orleans, there were two parallel tracks. Hunter got rid of one of them. He wanted to save the cost of maintaining it. (Sidings were kept so two trains didn’t run into each other). He knew pricing would take care of itself because the railroad is almost a monopoly. He didn’t care much about customers. He saw some stickers once at a BNSF yard that said “the customer is always right.” He had them torn down. Ignoring customers caused him some problems politically, especially in Canada, but it didn’t stop him from getting the operating ratio down.
Harrison was a fanatic about trainyard efficiency. He rose up as a trainmaster in the Frisco yard in Memphis. Although he never went to college, Harrison had a pure mind for railroad management. When Sue Rathe introduced him to a new world of computerized data at Illinois Central, he immediately understood the potential and how to use it. (Although no one would argue Harrison could not be gruff, Rathe tells us not to miss the gentlemanly side. Harrison encouraged people with potential. His bookshelf was full of memoirs of great coaches, he viewed himself as a coach, he used coaching metaphors.)
As CEO, Harrison got the Illinois Central’s OR down from like 90% to mid 60s. The employees didn’t always like him for it. But they came to respect him. The alternative might’ve been bankruptcy.
What produced results was the approach he would preach for the next two and a half decades – what train velocity does for efficiency, what longer trains mean for efficiency, and on and one. He saw better processes for everything, base hit after base hit.
There’s not much about this point in the book, but I wonder if Harrison had one key world historical insight. Railroading had changed. The Staggers Act of 1980 deregulated railroads. After that there was some nominal oversight but really the railroads could charge whatever they wanted. (The Staggers Act was meant to be anti-inflationary, it was signed by President Carter).
The news that railroads were now, like, businesses hadn’t caught on. Railroads still acted like federal bureaucracies. Everything was inefficient. The labor force was notoriously lazy, naps and “leave earlys” were common, drunkenness not unknown.
That was in the US. Up in Canada mind, CN at this time was still nationalized! In fact not even nationalized, it was a “Crown corporation,” legally speaking it was more or less Queen Elizabeth’s personal plaything.
Harrison realized (if I understand the book right) that pricing would take care of itself. Don’t even think about it, charge whatever. Focus on cutting costs and moving cars (cars, not trains, a key point). You’d make huge gains in operating ratio. That would get reflected in the stock price, and ultimately in Harrison’s personal compensation. By the time he was done he’d personally made something like $500 million, which he used on estates for show horses in Connecticut and Florida, filling trophy rooms.
It wasn’t just having the insight though. Harrison had the combo of skills to execute. No easy job. There was a lot of what he called mud to scrape away. He was not shy about confrontation. During some lost years as a young man he once woke up in a pool of his own blood after a bar fight. He took that attitude into his railroads.
Activist investor Bill Ackman saw the possibilities. He took a big position in Canadian Pacific and fought to get Harrison appointed CEO. After some board room battling, Ackman succeeded.
When Harrison took over CP in 2012, he went up the offices in Calgary. It was the week of the Calgary Stampede. Hardly anyone was at work.
“It’s Stampede,” said one of the secretaries.
“Who gives a shit it’s Stampede? This company hasn’t made a penny and we’re worried about Stampede, having a few shooters at noon?”
Harrison turned CP around, starting with the mailroom, where he was disgusted to find a box being FedExed to a destination eight miles away. By then he’d run two railroads. He had a playbook. It was almost too easy for him. In eighteen months he brought the OR down from 81% to 65.9%. Two and a half years later, CP’s OR was 59.8%. He had the railroad using 40% fewer locomatives, he’d closed yars, he was increasing velocity and train length without sacrificing safety (although absolutely sacrificing love from the work force, which he reduced by about four thousand).
For this reader, the least engaging part of Railroader: The Unfiltered Genius and Controversy of Four-Time CEO Hunter Harrison by Howard Green came as Harrison was exiting CP to run CSX for a final act of his career. The details about board politics and compensation packages just weren’t as thrilling as turning around a railroad. I can see why Green devoted so much time to this period, however. He’s an anchor on Canada’s Business News Network, and he had access to Harrison during this time. There was some resentment of Harrison’s manner at CP. Harrison himself acknowledged to Green that he’d mistakenly assumed Canada was just like the USA, and Canadians just like Americans, but the business culture there was smaller, closer, and more sensitive, less blunt.
By the time Harrison left CP and went to fix up the “spaghetti-like” CSX*, his health was in rough shape. He took over CSX in March, 2017, and died that December. His ashes were scattered in the Memphis railyard.
Green sums up Harrison’s worldview on page one:
He reshaped an industry by literally making the trains run on time. While Sir Richard Branson advised executives to focus on employees first, customers second, and investors third, Harrison reversed the priorities: investors came first. For him the game was capitalism, pure and simple. You either played it or you didn’t.
Harrison’s legacy lives on. His protege Keith Creel is now CEO at Canadian Pacific. Bill Ackman is taking another bite of that apple. The question is: has Harrison’s Insight is already played out? The operating ratios for all the major railroads now are in the high 50s and 60%s. Some of those numbers include real estate sales. The railroads were given a great deal of land to induce them and help them build, much of it indigenous land, a continued resentment.
Are these railroads just now juicing their numbers by scrapping off their parts? Is that the ultimate end of capitalism, for a corporation to achieve ultimate efficiency and then begin consuming itself, or rather allowing the shareholders to consume it in a cannibalistic ritual?
I should confess/disclose I myself am long CP and UNP and (through Berkshire) BSNF. Good luck building another transcontinental railroad. Canadian Pacific was built in five years. California will take longer than that to go from Bakersfield to Merced, although in fairness we’re not importing 15,000 Chinese laborers nor will the deaths of 600 people be acceptable. Both CP and the UNP were built with the aid of corrupt schemes. Corrupt schemes may still be rampant but they’re less effective, at least in North American railroad building.
Throughout this book are accounts of high stakes dinners and meetings at places like the Mount Royal Club in Montreal or The Breakers in Palm Beach. I know I’m not cut out to be a railroad CEO because I was reading and thinking, sure, sure this is a faceoff over control of the board but: what’s the food like? What’re people eating? I wanted the flavor! One meal that got my attention was a hasty conference at a Chick-Fil-A near Atlanta. That was the kind of food Hunter Harrison liked.
Cheers to Alex Morris, @TSOH_investing on Twitter, I think that’s how I heard about this book. I read it because I wanted to learn a bit about running a railroad, and I did!
* an example of Harrison’s mind: he could look at the map for CSX railroad and see that “stripped down, CSX wasn’t spaghetti; to Harrison it was more or less a square” with the corners being Selkirk, NY near Albany, Willard Ohio (60 miles south of Toledo), Nashville Tennessee, and Waycross, Georgia.
What if our purpose, humanity’s purpose, is to burn up the Earth? To take all the burnable materials and burn them up, fast as we can, and reduce the planet to ash, or to a hot burning volcanic rock with a carbon-filled atmosphere, like Venus?
If you took a step back, looked at all the species on Earth, and tried to conclude what the function of our species, in particular, could be, you might conclude we are the burners. We’re the only species that uses fire. We’ve been using it for let’s say 1.5 mill – 100,000 years. A blip in geological time. We’ve gotten amazing at it, astonishingly advanced, to the point that we can bend fire to our will, dredge up ancient organic matter and refine it and put it to light. We can even invert the heating power of fire. When we want to cool ourselves, we turn a dial that sends signals that leads to the burning of coal, oil, gas. In our dim conscious minds we may be thinking “we’re making ourselves comfortable,” but perhaps on a deeper level we’re fulfilling our galactic mission to burn up planet Earth. Most of us only rarely deal with fire fire, outside of the occasional campfire or fireplace fire (which by the way we are drawn to and love). We don’t even need to. We’ve gotten so good at fire that every house has a refrigerator in it that works from something, somewhere, down the wires and at the end of the pipelines, burning.
Maybe burning is our function, the way the carrying away of dead matter is a function of ants.
What if the use and control of fire goes together with consciousness? As soon as a species becomes conscious, anywhere in the universe, they turn to the passion of burning. Quickly (within a few million years or so) they extinguish themselves and their planet and return it to glowing gas, rock, and dust? From a consciousness perspective, this seems sad, because everything we care about, our history, our arts, it’ll all be “extinguished” (to use a word that resonates with our burner culture, signifying loss). But we already know on a long enough scale it’s all temporary.
What if the light of consciousness is meant to burn hot and then extinguish itself, as stars do in their own time?
Couldn’t that be kind of beautiful? Sure, in the late stages of speciatic consciousness maybe we’d come to contemplate this end, even worry about it or attempt to wish it away. But perhaps after that stage, then we’ll reach a kind of smiling acceptance. In this scenario, all the fuss about climate change and so on is just the panic of an anxious toddler learning about death for the first time. It’s natural to be upset, but we need to progress through it and get back to burning up the Earth as quickly as possible.
Perhaps then Exxon executives, wildcatting frackers, really all of us as consumers and burners, are spiritually whole, leading purpose-driven lives that will lead soon to our ultimate fulfillment, if we can just accept that’s what we’re doing. The more we’re burning and consuming, the better. That’s why we keep doing it, even if neurotically we scream to ourselves that we have to do something about it.
Maybe traveling some rotten stretch of interstate you spy blackened stacks, raveling smoke, and wonder, What’s burning? We ought to ask the same each time we step into a comfortably warmed or cooled room, each time we click on a reading lamp or plug in a phone.
writes Joe Wilkins in a thoughtful essay in High Country News. More or less every article in that publication these days is about burning: natural gas drilling, abandoned oil wells, literal fires, or the first, second, third order effects of burning: changing rivers, drying forests, altered farming patterns. But maybe the fire we fear as demonic is calling to us for a reason.
I forget if I found this story on my own in Powell’s memoir My American Life, or if it was called to my attention:
in any case it stuck with me. How about this, from an Atlantic interview, 2004, with PJ O’Rourke:
SECRETARY POWELL: I knew Elvis.
P. J. O’ROURKE: Really?
SECRETARY POWELL: I met him when he was in the Army. I was a lieutenant; he was a sergeant.He was in the neighboring regiment—or combat command, as we called it—in the Third Armored Division in Germany.We were in the training area one day and I was driving my jeep around and suddenly came upon this unit from the other outfit and there he was. And so I went over and shook hands.He was a good soldier. You never would have thought he was anything but a soldier. He had a pimple on his face and everything else. He was not a big star. He was just another soldier.
P. J. O’ROURKE: I’ll be darned. Well, good for him.To change the subject completely, is there symbolic or psychological significance to your fondness for Volvos?
SECRETARY POWELL: No. They just came into my life when my kids needed a car in college and they refused to drive their grandfather’s Chevy Belair. They wanted something sporty; I wanted something safe. They wanted something distinctive; I wanted something safe.I came upon this ’77 Volvo and gave it to my son who took it to college. It was a pretty interesting car. I bought another one, an older one. I play with sophisticated non-zero-sum things all week long. On weekends, if I really want to relax—and I don’t anymore, I can’t relax because I’m too busy here—but there was nothing that was greater fun for me or more relaxing than a zero-sum problem with the car. It’s not running? You put on a new distributor cap and it either runs or it doesn’t. And so the joy for me was to take—drag—home a car. I mean literally drag it home. My driver and I would do it. We’ve been known to go through Alexandria with a Volvo on a rope dragging it home. People started calling and giving them to me. They heard about me. I was Chairman of the Joint Chiefs of Staff. “I’ll give you a Volvo on a rope.” The rope broke one day coming through the gate at Ft. Myer, with the MPs waving the Chairman through. We coasted until we could get another rope.We used to do this all the time. Bring them to the house and Sergeant Pearson, now Mr. Pearson, and I would take them apart. We had extra engines, we had extra radiators, had extra transmissions.
Born in Vienna to a very wealthy family, his father was a friend of Andrew Carnegie and had a near monopoly on steel in the Austro-Hungarian empire. Three of his four brothers would commit suicide, the fourth would lose an arm in World War I but still manage to become a concert pianist using only his left hand. His sister Margaret was a patient of Sigmund Freud’s and would later be painted by Klimt.
Ludwig went to the same elementary school as Adolf Hitler. There’s no clear evidence they met, although they were only two grades apart and it is possible but by no means agreed upon that the two as boys appear in the same school picture.
After studying in Berlin Ludwig worked on designing plane propellers with jet engines, he got a patent on one, but became frustrated. He spent some time “experimenting with kites at the Kite-Flying Upper Atmosphere Station near Glossop in Derbyshire.” He went to Cambridge in the UK where he pestered Bertrand Russell. John Maynard Keynes invited him to the join the Apostles, the gay-skewing secret society. Ludwig wasn’t that into it.
In 1913 his father died and Ludwig became one of the richest men in Europe. He moved to a remote village in Norway.
Eventually he found this place too busy.
When the Great War broke out, Ludwig volunteered for the Austro-Hungarian army, though he probably could’ve gotten out of it for health reasons. He served on a ship, was wounded in an explosion, became an officer directing artillery from no-man’s land, won several medals for bravery. He was there during the Brusilov offensive, where somewhere between 200,000 and 567,000 of his comrades were killed. He kept notes during the war:
The meaning of life, i.e. the meaning of the world, we can call God.
And connect with this the comparison of God to a father.
To pray is to think about the meaning of life.
In summer 1918 he took leave and went back to Vienna where his family had many house.
It was there in August 1918 that he completed the Tractatus, which he submitted with the title Der Satz (German: proposition, sentence, phrase, set, but also “leap”) to the publishers Jahoda and Siegel.
He went back to the front, this time to Italy, where he was captured and spent nine months in an Italian prison camp. After the war he gave away his huge inheritance to his siblings, and went to train to become an elementary school teacher. He became a teacher in a mountain village in Austria.
In 1921 the Tractatus was published. Here is the first sentence:
Die Welt ist alles, was der Fall ist.
Plug that into Google Translate, or use the standard translation, and you will get:
The world is everything that is the case.
Does that comma matter? Should it be:
The world is everything, that is the case
Or, in the Ogden translation, the first English version, approved by LW? Although he didn’t really speak English at the time?:
The world is all that is the case.
What about “case”? I have no background in German but looking up the word Fall it seems to also have connotations of drop, fall, instance.
That’s as far as I’ve gotten in the Tractatus. It doesn’t get easier from there:
The world is everything that is the case.
1.1 The world is the totality of facts, not of things.
1.11 The world is determined by the facts, and by these being all the facts.
1.12 For the totality of facts determines both what is the case, and also all that is not the case.
1.13 The facts in logical space are the world.
1.2 The world divides into facts.
1.21 Any one can either be the case or not be the case, and everything else remain the same.
The decimal figures as numbers of the separate propositions indicate the logical importance of the propositions, the emphasis laid upon them in my exposition. The propositions n.1, n.2, n.3, etc., are comments on proposition No. n; the propositions n.m1, n.m2, etc., are comments on the proposition
Here’s my source. I have not decompressed all 75 pages.
This book will perhaps only be understood by those who have themselves already thought the thoughts which are expressed in it—or similar thoughts. It is therefore not a text-book. Its object would be attained if there were one person who read it with understanding and to whom it afforded pleasure.
As LW himself says.
After several years as an apparently terrifying rural elementary school teacher Ludwig hit a slow-witted kid on the head so hard he collapsed. In trouble, Ludwig resigned his position. He worked for a while as a gardener at a monastery. He designed a house in Vienna:
It took him a year to design the door handles, and another to design the radiators
He made some long confessions to friends, about things like white lies. He went back to Cambridge for awhile. He would relax by watching Westerns in the front row of the movie theater. Invited by the President of Ireland, Eamon De Valera, himself a former math teacher, to come over there, he did. He went back to the UK and during World War II he worked in a hospital.
He started working at Guy’s shortly afterwards as a dispensary porter, delivering drugs from the pharmacy to the wards where he apparently advised the patients not to take them.
After the war there was another Irish period, along Killary:
The nearest shop/post office was 10 miles away. He had to do his own housework and saw nobody except Tom Mulkerrins, who brought him his milk and kept him supplied with turf and conversation. He used the kitchen table mostly to work on, writing his aphoristic sentences on slips of paper and taking great pains to arrange them in the correct order. He did little cooking and almost all his food came out of tins. He spent hours watching seabirds and talking to them in German. The Mortimers, who were his next nearest neighbours, thought he was mad, perhaps because he wanted them to shoot their dog, whose barking disturbed him.
(source on that).
Realizing in 2012 I took a walk along Killary Harbour (it’s a fjord) not far from where he was holed up, it looks like this:
You can walk seven miles without seeing a person, easy. It’s along Killary Harbour too that Martin McDonough set The Beauty Queen of Leenane, a masterpiece of comic cruelty. I’d be curious what Wittgenstein thought of that play.
Ludwig took a trip to the USA, he went back to the UK, he was diagnosed with prostrate cancer, he died in 1951.
Just trying to wrap my head around the basic facts of this guy’s deal, prompted by this New Statesman article on the 100th of the Tractatus.
Say what you will, this guy was something!
Like Communist China, California is a one party state. The party is the Democratic party. The Democratic party has 60 out of the 79 Assembly seats, 30 out of the 39 Senate seats. Both our senators are in the Democratic party. The last time a Senate seat opened up, with the retirement of Barbara Boxer (D), the Democratic Party more or less met and decided Kamala Harris, the state attorney general and former San Francisco DA, would get that, and Gavin Newsom, the mayor of San Francisco, would get to be governor after Jerry Brown (D), who had been governor off and on, and whose father Pat (D) was also governor, finally retired. This corrupt bargain angered other state Democratic wannabe stars, like former LA Mayor Antonio Villaraigosa, but that’s the breaks.
Why does San Francisco hold such a disproportionate weight vs Los Angeles in our state’s politics? I’m not sure, maybe because the fundraisers up there are particularly influential, or because every LA politician gets caught in some kind of scandal, or maybe because who would want to leave Los Angeles to go to Sacramento? It’s not exactly an upgrade.
We did have Governor Arnold Schwarzenegger (R), who won in a recall election. He was a Republican, but with an admirable pragmatism he established a working relationship with the Democratic leaders in the legislatures and governed more or less as a centrist. Some Hayes or Matt Stoller types may quibble with that interpretation of recent California history, but that’s how it felt.
When a case like Schwarzenegger emerges, a popular independentish candidate not developed in a party machine, it can create some of the more effective governance in the country. Jesse Ventura in Minnesota another example, the electorate more or less content with the outcomes which reflect something like the average opinions rather than any cobbled together set of party priorities. Although I guess Trump would also be an example of this, and I don’t think anyone can claim his presidency was especially effective, nor did it bring about widespread contentment. The leading insurgent candidate this time seems to be Larry Elder, is a Republican-aligned radio host. I had not heard of him until the election, so I do not think he is quite famous enough to prevail, but we’ll see.
Gavin Newsom, our current governor, is a pretty boy wine seller and restauranteur from the San Francisco area who hung around with the Getty boys and apparently pleased the rich people of San Francisco enough that they made him mayor. Now he is the governor. During the tough statewide shutdown triggered by the pandemic, a shutdown that caused many businesses to suffer and many to die, Gavin Newsom could not resist going to a dinner at French Laundry, which is one of the most expensive and indulgent restaurants in the world. The dinner at French Laundry was also, it turned out, the birthday party of a lobbyist. His behavior is so preposterous and embarrassing Gavin Newsom is lucky he isn’t getting tarred and feathered and run out of California on a rail.
But, instead of tar and feather and a rail, we are having a recall election.
I just voted in the recall. I voted NO, not because I like Gavin Newsom, but because the alternatives are horrible, and because I think recalls are a huge waste of time and money. If Newsom just barely survives, escaping by the skin of his teeth, that would be a pleasing outcome for me.
No one can really gin up much passion for Gavin Newsom at the moment without sounding ridiculous. The arguments on behalf of the anti recall campaign are so deflating as to be comical.
Catastrophic? There are multiple fires bigger than cities burning in our state, and in our biggest cities there are many enormous tent encampments of unhoused people. How much worse can it get?
How many elections are going to be existential? All of them, from now on? That is too stressful!
One of our senators here in California, Diane Feinstein, is 88 years old (you read that right). An age where she shouldn’t be allowed to drive a car let alone be a senator. It’s not openly discussed, but it is closedly discussed, that she is demented and can’t remember who is who, let alone details about complex legislation. So, an argument for Newsom has emerged that’s like, “you must keep our terrible governor so that he can appoint the replacement for our demented senator!”
For me, this argument is not merely uninspiring, it’s so depressing a concept that you have to laugh that here’s what we’ve come to. If that’s why the election is important, then it’s difficult to believe that your participation is important. This is in California, a state that’s gifted at producing world class talent! How did we end up with this?
It’s important not to just be a cynic here. I have spoken with people who have encountered Gavin Newsom and came to like him, the gist being that it seemed like he was listening to them. The job of governing California is not easy, under the conditions of the pandemic choices had to be made that would make people very unhappy. If you don’t like your options in public life, you have no one to blame but yourself. Let’s give some credit to the man in the arena, even if he appears to be a shiny faced self-dealing psychopath.
The ballot is kind of weird. You vote yes or no on whether Newsom should be recalled, and then you also can vote on one of 46 candidates to replace Newsom if he is recalled.
The recall ballot will ask two questions: 1) do you want to recall Governor Newsom? and 2) If the governor is recalled, who do you want to replace him
The candidates include actress / Corvette driver Angelyne and trans woman/ vehicular manslaughterer Caitlyn Jenner.
The Truth Squad Palm Card the California Democratic Party makes available tells you to vote NO, but then doesn’t tell you which of the other candidates to vote for. There’s been some online discussion of what to do about that, with some fanatics arguing you shouldn’t bother voting for a possible replacement candidate, because it might be confusing (to your own mind?)
In the last recall election, the Democrats had a backstop candidate, Cruz Bustamante, and the possibility of replacing Gray Davis with that guy apparently lured some Democratically inclined voters to vote for the recall. Thus, the Democratic Party doesn’t even want you considering the possibility Newsom would be recalled.
Since it is very possible Newsom will be recalled, and since some of the possible replacements are terrible, I felt I should vote for one of the replacement candidates. After sparse research, I chose Brandon Ross. Here is an interview with him where he says nothing I really object to:
Q: Why should Gov. Gavin Newsom be recalled?
A: I don’t necessarily think Gov. Newsome should be recalled. He was elected by a more than 3-2 margin over his challenger in the last election and he hasn’t done enough wrong to warrant being recalled. He has made some mistakes, but this is essentially a Republican effort to overturn the results of the last election because the party did not like the outcome.
His life story is interesting:
Dr. Ross attended the University of California, Davis, and graduated summa cum laude with a degree in Genetics. He would go on to medical school and become a doctor while simultaneously attaining his Masters in Public Health and his Masters in Business Administration.
Following graduation, he established a thriving cosmetic surgery center; everything seemed as though it was falling into place.
But after a serious back injury, Ross grew dependent on narcotics to manage his pain. The need for relief would soon devolve into opiate addiction, which led him to some of the darkest moments in his life.
As a result of his addiction, he lost a successful marriage, his family, and a thriving career.
But that wasn’t the end of the story. In 2014, Dr. Ross entered a recovery program that helped him turn his life around.
After getting clean, Dr. Ross graduated from law school and rebuilt his medical practice better than it was before. He also regained custody of his children, rebuilt his family, and is leading a fulfilling life. He now runs a charity that offers free cosmetic surgery to children dealing with trauma and radiation treatments for brain tumors.
I think the chance of Newsom being recalled and Dr. Brandon Ross being elected is close to 0%.
People telling me how to vote on one thing after another and how important it all is has gotten to be grating. I won’t be doing that here, I am merely telling my own ballot journey.
Good luck to everyone involved!
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.
Reader Chris P writes:
I just got back into reading your blog and spent all day on it
today. Good stuff.
Yes. Sounds like a good day, Chris.
This is something that’s been in my mind the last few weeks and
seems relevant to your stuff.
I was back in Long Island for the first time in a while and since
we’re only doing outdoor things we went on a bunch of hikes that
have elevated plank walkways through marshes. I was reflecting that
I just love those things and it’s always a good hike when some part
of it is on a marsh walkway. You look out on a well made elevated
marsh walkway and everything feels great. You don’t see them as much
in California but there are a few.
Then I found this:
Some of the oldest structures ever found in the British Isles are
elevated marsh walkways. Built in 3800 BC. Older than Stonehenge.
Lots of good stuff in the wiki piece.
“The track was constructed from about 200,000 kilograms (440,000 lb)
of timber, but Coles estimates that once the materials were
transported to the site, ten men could have assembled it in one day”
So it seems like the elevated marsh walkway is one of those human
-constructed landscape elements that people have a deep almost
“genetic memory” affinity before. At least people with ancestry in
the British Isles.
(Similar to the “open” woodlands where natural brush has been
repeatedly burned out by controlled fires to facilitate hunting.)
Anyway… thought you might be intrigued. If nothing else I feel
better having told someone.
Lol truly the motivation over here at Helytimes: To feel better having told someone. The Sweet Track design, illustrated here, seems beautifully efficient.
Breaking the Breton Woods agreements, the American president said that the dollar would have no reference to reality, and that its value would henceforth be decided by an act of language, not by correspondence to a standard or to an economic referent.
Everywhere I turn these days, from the new Adam Curtis documentary to the Bitcoin-heads on Twitter, I hear about Sunday, August 15, 1971. On that evening, Richard Nixon, after conferring with his advisors in a weird weekend at Camp David, went on TV and announced he was taking the US dollar off the gold standard, ending the “Bretton Woods system.”
I’ve always had an interest in the Bretton Woods system, because it was worked out at the Mount Washington Hotel in Bretton Woods*, New Hampshire. My dad and I used to go cross-country skiing up there.
The hotel shut up for winter had a grand, imposing, and spooky quality.
President Franklin Roosevelt proposed the conference site, the Mount Washington Hotel, as a ploy (successful, as it turned out) to win over a likely opponent of the pact, New Hampshire senator Charles Tobey.
That’s from Michael A. Martorelli’s review of Benn Steil’s book about the conference, The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order.
The conference happened in July 1944. The Allied forces were still stalled in the bocage of Normandy, but the leadership was already planning for the postwar order. The famed economist John Maynard Keynes, who’d studied the disaster of the last postwar peace, was trying to avoid some of the same mistakes while also attempting to save the status and dignity of the UK Keynes suggested the world switch to a new global currency called Bancor. The US, represented by Harry Dexter White, militarily and financially dominant, had the strongest position. The US proposed a system that would ultimately leave the US dollar, pegged to gold, as the world’s reserve currency.
Deeply indebted to the United States after the long, costly ordeal of World War II, the United Kingdom inevitably lost the battle. To secure one key victory, however, White had to resort to stealth. In the waning hours of the conference, he and his assistants replaced the phrase “gold” with “gold and US dollars” in the agreement, thereby enshrining the US currency as the international medium of exchange. Keynes confessed that he did not read the final version of the document he signed.
You think there aren’t thrills in a book about a 1944 economic conference whose results have mostly been overturned? Guess again:
In one noteworthy coup, [Steil] disproves Keynes biographer Robert Skidelsky’s claim that Keynes was assigned Room 129 in the Mount Washington Hotel.
The summit does sound kind of exciting. The Soviets brought a bunch of beautiful female “typists” to seduce everyone.
One committee of delegates took a 15-minute recess in the bar each night at 1:30 to watch the “titillating gyrations of Conchita the Peruvian Bombshell.” Afterward, reinvigorated, they would negotiate for another hour or so. The long arguments left White increasingly short-tempered on less than five hours of sleep a night. Keynes, already weakened by the heart disease that would kill him within two years, was soon holding court from his bed, tended (and guarded) by Lydia, his eccentric Russian ballerina wife. At one point, a rumor spread that he was near death; when he then appeared at dinner, the delegates spontaneously stood and sang “For He’s a Jolly Good Fellow.”
from a different review of a different book about the conference:
I’ve now taken a look at both Steil and Conway’s books. The Summit by Conway is a lot more fun and easy to read, and focuses more on the wild details – what he calls the “noises off” stuff – from the conference. The drunken songs, the parody newspaper about the “International Ballyhoo Fun,” the pleasure the delegates from wartorn countries took in huge plates of “chicken Maryland” and enormous bowls of ice cream, the South Africans chilling and playing golf once it was clear gold wouldn’t be replaced by silver, the results of the Soviet vs USA volleyball game (USSR won), that’s in Conway.
The details of the conference are interesting, but in a way the outcome was inevitable. The US was more or less the last power standing as World War II wound down. The UK was tremendously in our debt (literally). What we ended up with was the system we more or less devised, that left the dollar as the default world currency.
The true significance of the conference was noted by Keynes in a speech at the farewell dinner:
We have shown that a concourse of 44 nations are actually able to work together at a constructive task in amity and unbroken concord. Few believed it possible. If we can continue in a larger task as we have begun in this limited task, there is hope for the world.
If you read one review of one book about the conference, I recommend James Grant’s review of Steil in the Wall Street J (behind a paywall I suspect, they’re no fools about money at the WSJ):
Gold figures largely in these pages. The ancient metal was deeply rooted in the psyche of Keynes’s contemporaries, including that of Lt. Col. Sir Thomas Moore, a British Conservative member of Parliament. In parliamentary debate, Sir Thomas said that he had “the impression, not being an economist, that currency had to be tied to or based on something; whether it was gold, or marbles, or shrimps, did not seem to matter very much, except that as marbles are easy to make, and shrimps are easy to catch, gold for many reasons possessed a more stable quality.” For the soundest doctrine expressed in the fewest words, Sir Thomas was hard to beat.
Grant, if you can’t read it, isn’t too boosterish on the Bretton Woods system:
Rare among nations, America pays its overseas debts in money that it alone may lawfully print. Naturally, being human, we Americans have printed to excess. Not since 1975 has the United States exported more goods and services than it has imported. There is no institutional check to square up accounts. We buy Chinese merchandise with dollars. The Chinese, in turn, invest those dollars in U.S. government securities (the better to suppress the value of the Chinese currency). It’s as if the money never left the 50 states. In possession of the “reserve currency” franchise—White’s dream fulfilled—America has become the world’s leading debtor nation. At Bretton Woods, it was the world’s top creditor.
I mentioned the Nixon Shock to a bud who works at a hedge fund, and he put me on to WTF Happened in 1971, which takes a darker view. I love the idea that this is the moment everything went wrong and reality broke, but I’m not totally convinced. What about the Triffin dilemma? Was Nixon changing reality, or acknowledging it?
Consider how things worked before Bretton Woods. Both Conway and Stiel note that FDR would sometimes dictate the dollar price of gold from bed in the morning, once suggesting raising the price by twenty-one cents because that was a lucky number. This was hardly more “real.”
A crazy element of the conference is that the leader of the US delegation, Harry Dexter White, was secretly communicating with the Soviets. To what extent he was a traitor, a spy, vs kind of backchannel communicating with our wartime ally is unclear. But declassified transcripts make clear he was a Soviet asset known at “Jurist” or “Richard.” That’s if you trust our own NSA. Who knows?
White testified in front of HUAC that he was not a Communist, then had a heart attack. He went up to his home in New Hampshire and died four days later.
Is it possible White sabotaged the US team in the Bretton Woods volleyball game? Perhaps to provide a propaganda win for his Soviet masters? The Russians got a lot of concessions at Bretton Woods to induce them to sign on to the agreements, but I don’t see in Steil or Conway any strong case that White’s possible connection helped them unduly. Conway is more of a skeptic on the spy stuff, suggesting that yes, it looks pretty fishy, but it’s impossible to prove White “betrayed his country.”
One person who would’ve known White had been a spy? President Richard Nixon.
Following Alger Hiss’s perjury conviction in 1950, Representative Richard M. Nixon revealed a handwritten memo of White’s given to him by Chambers, apparently showing that White had passed classified information for transmission to the Soviets. Yet his guilt would only be firmly established after publication of Soviet intelligence cables in the late 1990s.
The IMF and World Bank still linger as Bretton Woods legacies. Conway in his epilogue notes how even after the demise of the Bretton Woods system, the IMF is still imposing the “Washington Consensus” on the developing world in return for loans, with mixed results. Maybe someone should activate the Coconut Clause:
Conway also notes that after the demise of the system, US and British banks became vastly more profitable.
In the United States, by the turn of the millennium banks now accounted for around 8 per cent of the country’s total economic output – more than double their zie when the Bretton Woods system ended… Until 1970, an investor in a UK bank could expect to make about 7 per cent a year on his investment. After 1970, the return on equity roughly trebled to 20 per cent, a figure maintained without a break until the financial crisis of 2008.
There is no single, simple explanation for this astonishing rise of the financial sector; however, there is no doubt that one important element is the sudden change in the international monetary architecture following the collapse of Bretton Woods. Almost immediately after the demise of Keynes and White’s system in the early 1970s, every single measure of the size, profitability, and leverage of the banking industry has begun to increase at unprecedented rates.
The big banks in the USA tried to stop Bretton Woods at the time,
After the Bretton Woods conference, the countries involved still had to sell it to a confused public. One method the USA used was to produce a pamphlet called Bretton Woods Is No Mystery, illustrated by the New Yorker cartoonist Syd Hoff. I’m on the trail of a copy, I can only find a few images online.
It’s heartbreaking to hear the names bandied about for the world currency, and think what might’ve been. From Conway:
among the suggestions were Fint, Proudof, Unibanks, Bit, Pondol, and Keynes’ favorite, Orb. Months later, Keynes sent round a note to his Treasury colleagues asking: “Do you think it is any use to try unicorn on Harry?”
What do you guys think will be the world’s reserve currency in 2031? Dogecoin?
*an archaic name for what’s now part of Carroll, New Hampshire.
First, there’s mathematics. Obviously, you’ve got to be able to handle numbers and quantities—basic arithmetic. And the great useful model, after compound interest, is the elementary math of permutations and combinations. And that was taught in my day in the sophomore year in high school. I suppose by now in great private schools, it’s probably down to the eighth grade or so.
It’s very simple algebra. It was all worked out in the course of about one year between Pascal and Fermat. They worked it out casually in a series of letters.
so says Charlie Munger in his 1994 speech, “A Lesson on Elementary Worldly Wisdom as it Relates To Investment Management & Business.”
These letters between Pascal and Fermat sounded worth a read, so I went to check them out. The year in question was 1654. Up until that time, no one* had really worked out and set down the math of probability. You can’t blame them, if you think about it. Even in 1654 it was probably pretty hard to even get your hands on enough paper for working out math problems.
Struggling to really wrap my head around the contents of the letters (on top of everything, the first letter is now lost), I picked up The Unfinished Game: Pascal, Fermat, and the Seventeenth-Century Letter that Made the World Modern: A Tale of How Mathematics is Really Done by Keith Devlin. An interesting book and a great introduction to the mental blocks that had kept people from working out probability before these two weirdos started corresponding.
An even clearer articulation of the problem of points that set Pascal and Fermat to work can be found in Peter Bernstein’s Against The Gods: The Remarkable Story of Risk:
In 1654, a time when the Renaissance was in full flower, the Chevalier de Méré, a French nobleman with a taste for both gambling and mathematics, challenged the famed French mathematician Blaise Pascal to solve a puzzle. The question was how to divide the stakes of an unfinished game of chance between two players when one of them is ahead. The puzzle had confounded mathematicians since it was posed some two hundred years earlier by the monk Luca Paccioli. This was the man who brought double-entry bookkeeping to the attention of the business managers of the day, and tutored Leonardo da Vinci in the multiplication tables. Pascal turned for help to Pierre de Fermat, a lawyer who was also a brilliant mathematician. The outcome of their collaboration was intellectual dynamite. What might appear to have been a seventeenth century game of Trivial Pursuit led to the discovery of the theory of probability, the mathematical heart of the concept of risk.
Their solution to Paccioli’s puzzle meant that people could for the first time make decisions and forecast the future with the help of numbers.
Bernstein helpfully restates the problem of points in the form of a World Series situation. What is the probability your team will win the best of seven series after it has lost the first game? (assume the teams are, as in a game of chance, evenly matched)
Well, Pascal pointed out that we just need to list all the possible outcomes of the remaining six games, and calculate from there. There are 22 combinations in which your team would come out on top after losing the first game, and 42 combinations in which the opposing team would win. As the result, the probability is 22/64 = .34375
As Bernstein points out, there’s something here that trips a lot of people up, even Fermat. There aren’t really 64 possible outcomes, because why would we include possibilities like your team goes win-win-win-win-win-win for the remaining six games? The World Series would’ve been over after that fourth win. W-W-W-W-W-W is not a possible outcome of the remaining six games.
As Pascal remarked in the correspondence with Fermat, the mathematical laws must dominate the wishes of the players themselves, who are only abstractions of a general principle. He declares that “it is absolutely equal and immaterial to them both whether they let the [game] take its natural course.
So there you go. Win-win-win-win-win-win-win is one of the forked paths off win-win-win-win. It must be accounted for, or we won’t count the potential possibilities correctly.
Naturally enough I got bored with the math part and wanted to know more about the Chevalier de Méré. Who was this fun loving gambling nobleman who put two all-time math geniuses to work helping him win at dice?
Turns out he was a guy, named Antoine Gombaud, who dubbed himself Chevalier de Méré in his writing. Much of his writing was obsessed with the idea of honnête, and how to be l’homme honnête, which included honesty but also modesty, elegance, appropriateness, excellence, sociability. You can read all about it here in what appears to be an excerpt of Manning The Margins: Masculinity and Writing in Seventeenth-Century France by Lewis Seifert, a professor at Brown.
But still, how did this cool guy hook up with Pascal? Devlin says that the Chevalier and Pascal met at a gambling table. Pascal would go back and forth between somewhat extreme religious periods. During an early one of these, when he was getting pretty hard core, a doctor warned him off:
His doctor advised him that for the sake of his health, he should abandon the Jansenist ways and lead a life more normal for a young man. Although he would remain strongly religious for the remainder of his all-too-short life, Pascal resumed normal activities. Indeed, he did so with vigor, adding regular visits to the gaming rooms to his earlier academic pursuits. It was at the gambling table that Pascal met the Chevalier de Méré
Looking into this question of how, exactly, the Chevalier and Pascal met, I found a different, more detailed, and funnier, version. Here is the Chevalier de Méré himself describing how he met Pascal:
“I once made a trip with the Duke of Roannez, who used to express himself with good and just sense and whom I found good company. Monsieur Mitton, whom you know and who is liked by all at court was also with us, and because that trip was supposed to be a promenade rather than a voyage, we only thought of entertaining ourselves and we discussed everything. The duke was interested in mathematics, and in order to relieve tedium on the way he had provided a middle-aged man, who was then very little known, but who later certainly has made people talk about him. He was a great mathematician who knew little but that. These sciences gave little sociable pleasure, and this man, who had neither taste nor sentiment, could not refrain from mingling into all we said, but he almost always surprised us and made us laugh.” De Méré goes on to tell that Pascal carried strips of paper which he brought forth from time to time to write down some observations. After a few days Pascal came to enjoy the company and talked no more of mathematics.
so reports Oystein Ore, writing in the May 1960 issue of The American Mathematical Monthly (vol 67, No. 5, “Pascal and the Invention of Probability Theory”). Oystein Ore says:
Pascal and Fermat never met in person, which is kind of sad. In 1660 Fermat proposed that they meet, but at the time they were both too sick and miserable to travel very far. Within a few years they were both dead.
Pascal invented a kind of calculator, the Pascaline, but it was too expensive to produce them:
Late in life, in another religious phase, Pascal reflected on gamblers:
And that’s the story of Pascal and Fermat!
* it wouldn’t blow my mind if one of the great mathematicians of the Arab world had worked some of this out, written it down, and put a copy in the House of Wisdom in Baghdad, but most of those books were destroyed when Hulagu, Genghis Khan’s grandson, destroyed that city in 1258. Bummer!
The US unemployment rate is 14.7%, the worst since the Depression. Here in LA County it’s 24%. We’re not supposed to leave our houses for non-essential purposes or go to the beach. Every bar is closed, almost every store is closed.
And yet the “stock market” is not really down that much. Here is a one year chart of the S&P 500, which The Wall Street Journal often uses as a standard benchmark for “the stock market.”
Actually a little higher than it was same time last year.
How can this be?
Both point out:
- the belief in a v-shaped or “Nike swoosh”* recovery
- the Federal Reserve keeping interest rates at close to zero
- the Federal Reserve buying $2.4 trillion in government debt, and indicating it would buy more, making it clear that the government can inject essentially infinite money into the economy, “backstopping” everything.
As an amateur enthusiast on this topic, I’d like to offer some additional explanations.
- The stock market is rigged to go up. This is just a sort of understood but rarely stated fact. The stock market is one of the few measures the President cares about. Every tool at the disposal of the administration and at the supposedly independent Fed is used to keep the stock market up.
- The stock market by definition is big, public companies. These are the S&P 500 companies. Big companies are benefitting from the demise of their various small competitors. Big companies can survive by taking on debt in ways small businesses can’t. They did a great job getting a chunk of the federal money made available. Consider if I have Steve’s Burger Stand. I just don’t have the bureaucratic ability, relationships, time, to get a loan the way Shake Shack did. If anything, are huge companies are seeing their small scale competitors destroyed?
- Kind of an addendum to the last one: the federal government gave out the free money via big banks like Wells Fargo, Bank of America, BlackRock which themselves are part of the S&P 500! Big boys feed first!
- Money has nowhere else to go. The Fed’s actions reduce the benefits of alternative investments like bonds or just putting your money in the bank.
- Trading has become free! I feel crazy that this never gets mentioned. Starting with Schwab (I think?) last fall, and then flowing on to competitors, trading stocks became free. Instead of $8 or $4 to trade stocks, it’s free! You might think this might’ve just created more volatility, maybe it did, but once the barrier to entry for the retail investor is zero, it’s as easy to flow your extra money into the stock market as it is into the bank. This is, in my opinion, a dangerous or at least explosive change that hasn’t really been reckoned with. See what Robin Hood is up to. It might be as easy to bet your money on Tesla or Amazon as it is to tuck it away in the bank. It’s frictionless, it can be done on your phone. That might be dangerous!
- There’s nowhere else to gamble. Again, I feel crazy that this is never acknowledged as a factor. Consider that Americans spend something like $100 billion on gambling a year. At the moment, there’s nowhere to do that! Casinos are closed. Sports are stopped. I do not think it’s unreasonable to imagine there are billions of dollars in gambling money going into the stock market as simply a place to gamble and trade. See Dave Portnoy of Barstool Sports, who personally injected half a million dollars.
I’m not here to make predictions. It’s probably a cognitive bias to believe the stock market “deserves” to go down, but that’s what I believe. Then again, when you think about the stock market, it’s not just rich assholes, it’s like the pensions of firefighters and teachers.
Is it possible that the stock market is not calculating the biggest risk, some kind of massive social upheaval coming from disgust at this system? The stock market is not built to calculate “what if we ruin society, make things so unequal and so unfair and grotesque that this system no longer functions?”
Maybe that’s “baked in” as they say.
So said Warren Buffett at the annual meeting. Happened to be reading this speech by Stanley Druckenmiller from 2015 which I found on Valuewalk:
Remember your competition:
This chart is illuminating:
It’s good for me to write about the stock market, because I’m guaranteed to get an email saying something like you stupid clown you don’t understand anything. But the more I study the stock market, the more convinced I am that sometimes the experts, overwhelmed by information, become blind to the obvious. Consider this case reported by Bloomberg as a representative example. Do you really need to use a machine-reading program to determine that things are looking a bit grim?
There’s the famous story about Joe Kennedy knowing it was time to sell when the shoeshine boy gave him stock tips (bullshit, he was insider trading). What if you’re the shoeshine boy?
* I don’t understand the Nike swoosh recovery idea. Isn’t the long part of the swoosh roughly equal to the short part? So in a swoosh recovery, wouldn’t we just take a very long time to get back to where we were? and that’s the optimistic take!
There’s a big stack of books over here I’ve been meaning to write up.
This book is super good. Full of vivid detail.
Drums were banned everywhere in North America except French Louisian by the middle of the eighteenth century, and so were horns, which are made from wood or animal horns and played in hocketing ensembles in the slave coast and Congo-Angola regions.
There are excerpts from a long interview with Jim Dockery, of Dockery Farms. Stories retold and remembered. Sonny Payne tells of the Helena, Arkansas based radio show King Biscuit Time:
These are well-to-do white women listening. I listen, every day when I’m doing the show, for the simple reason that there’s something there. They’re trying to tell you something, and if you think hard enough and listen hard enough, you will understand what it’s all about.
The story this book tells is really about how blues music went from its origin point, where the Southern cross the Dog in the Mississippi Delta, to Chicago and then by record to the UK, where Eric Clapton and Jimmy Page and the Rolling Stones heard it and picked up on it. Along the way there’s so much juicy richness about race and America and music and history and everything. Palmer takes us to a meeting in Chicago where they tried to encourage black migrants to come back to Mississippi.
This book is almost like a response to the fetishizing or the legend-building surrounding the Mississippi Delta and blues music. Says Wald:
If someone had suggested to the major blues stars that they were old-fashioned folk musicians carrying on a culture handed down from slavery times, most would probably have been insulted.
I didn’t know that Mississippi was dry until 1966.
It is startling to thank that all of the evolution from the first Bessie Smith record to the first Rolling Stones record took only forty years. When Skip James and John Hurt appeared at the Newport Folk Festival, they were greeted as emissaries from an ancient, vanished world, but it was only three decades since they had first entered a recording studio – that is, they were about as ancient as disco is to us today.
One point both these books make is that the Mississippi Delta at this time was actually kind of a dynamic region, crisscrossed with railroads, you could quit your job and move and get another one.
Wald tells of an anthropological team from Fisk University and the Library of Congress that visited the Delta in 1941 and 1942. They reported:
There are no memories of slavery in the delta. This section of the delta has little history prior to the revolution of 1861
The research team asked people what their favorite song was. What a question! (My Country Tis of Thee and The Star-Spangled Banner among the answers).
Gotta love a book where this is a footnote.
When I was a kid you couldn’t go to a library book sale or a book store without seeing some paperback Tony Hillerman mysteries, about the Navajo Tribal Police. I never got into books like that, not sure why. But when it comes to New Mexico writers, Tony Hillerman is a name to reckon with. (And there are a lot of New Mexico writers, just see The Spell of New Mexico, edited by Tony Hillerman).
So, as I was gonna be in New Mexico, I got Tony Hillerman’s memoir.
Man. Tony Hillerman was a combat infantryman in World War II. Before he was twenty or so he’d fought his way through the Vosges, killed German boys yards away from him, gone on night raids and been shelled in the dead of winter. Finally he stepped on a landmine, and his war ended in a military hospital. There was a guy in the hospital, a tank gunner, who was called “Jug” because of the way his injuries had mangled his face. Jug considered himself lucky compared to what happened to Colonel Delaney.
All this happened to Tony Hillerman when he was a teenager, before he’d ever really had a girlfriend.
When he got back home, he got a job driving a truck in the New Mexico oil fields. In the Chaco Canyon country, he happened to come across some Navajos on horseback. They were going to an “Enemy Way” ceremony, a ritual for those returned from war.
The healing power and religious idea of this ceremony impressed Tony Hillerman. It was just what he needed. (It sounds like the kind of ceremony Karl Marlantes describes the need for in his book).
Hillerman became a newspaperman in New Mexico, and the rest of the book is mostly funny and interesting stories about that life, and his family, and his decision to attempt some mystery books. On a writing class he taught at UNM:
my premise was that power to persuade lies in the ability to make people see – sometimes literally – the situation as the writer sees it. Instead of telling readers the city should improve its maintenance programs, walk them down the street with you and show them those same details that drew you to that conclusion – the roaches around the drains, the trash collecting on the fences, and so forth. Based on that argument, I’d send them forth.
A good book by a man who seems tough and tender, humble and wise, I read most of it on an overnight train ride.
Speaking of trains, how about Hunter Harrison? A first ballot Hall of Famer for sure if the Hall of Fame is “railroad CEOs.” Hell they’ll probably name the hall after him. Hunter Harrison from the time he was a teenager only ever worked for one kind of company: railroad company.
Harrison’s thing was “Precision Scheduled Railroading,” which apparently revolutionized a kind of sleepy industry.
Harrison created approximately $50 billion in shareholder value in his time as a CEO.
says the book jacket, telling you something about how we’re keeping score. Harrison was an absolute fanatic about railroading. He ran Canadian National, Canadian Pacific, and died on the job running CSX.
I’m not sure if I’ll finish this book, it’s interesting and I’m learning a lot, but I’m just not sure I’m that interested in this guy. So far the part that sticks out in my mind is Harrison’s semi-mentor, Thompson.
Thompson was William F. Thompson – a.k.a. “Pisser Bill”
says the book. I thought the nickname might be kind of a metaphor or something, but no, a few pages later Pisser Bill was at the trainyard and saw something he didn’t like so he pissed all over the place.
This book was worth the price for that alone.
The people in the psychedelic world had been religious but had always covered it up. There was such a bad odor about being frankly religious. I mean Kesey would refer to Cosmo, meaning God; someone in the group used the word manager. Hugh Romney [a.k.a. Wavy Gravy] used to say, “I’m in the pudding and I’ve met the manager.”
On unusual style / carrying yourself as a reporter:
When I first started at Esquire, I made the mistake of trying to fit in. And given the kind of things I was sent to cover – stock car racing, the Peppermint Lounge, topless restaurants in San Francisco – not only did I not fit in no matter how hard I tried, but I would deprive myself of the opportunity to ask very basic questions that the outsider can ask. You just discover after awhile that people like to be asked questions they know the answers to.
be an odd, eccentric character… people will volunteer information to you
On American literature:
In France they discovered Faulkner – not as we would, as a very complex and somewhat arty writer, but as a primitive who had barely emerged from the ooze, somehow, to write.
At the same time they were admiring the energetic, classless and low-rent, rude, animal side of American art, our artists were striving like mad to shed all of that and to stop being hicks and rustics.
re: The Painted Word and From Bauhaus to Our House
I want people to pay attention to what I think is my sole contribution in these areas – showing how certain fashions, certain styles, certain trends come about. They’re not like the weather. Most of our critics and historians seem to think that styles are like Bermuda highs. That it’s the spirit of the age and so cosmic in nature that you don’t have to think about how it happened. You just note that it happened, and if the weather is serious enough, you bow down. What I keep saying is that styles are created by people. And the task of a historian – which is all I picture myself as in these books – is to find out who these people are and what the competitions were that brought the styles out.
On advice to young journalists:
You should get up your courage and approach the biggest magazine you can think of that might be interested in the subject. Approach a junior editor rather than the man at the top, because the junior editors are in competition with one another to discover new writers. Even if you’ve already written it, present the story idea to the editor, because editors like to feel that they’re part of the creative process. Wait a decent interval of about two weeks and then send them a manuscript. Magazines will be in a receptive mood if you have approached them ahead of time. They’ll want it to be good, they’ll want to buy it, and they’ll want it to be a success. There’s a continual shortage of good writers and good journalists. It’s really not an overcrowded field because there’s not that much talent to go around. A lot of it is having the determination and perseverance to do the reporting.
There are several references to an article I’m not sure I’d read before, about carrier pilots operating off the USS Coral Sea, dodging missiles over North Vietnam, “The Truest Sport: Jousting with Sam and Charlie,” which you can read here on Esquire’s website.
Status competition, that’s what interests Wolfe.
Making writing appear spontaneous:
I wanted the writing to appear buoyant, free and easy, spontaneous. Creating the effect of spontaneity in writing is one of the most difficult and artificial things you can do. I was much relieved to learn that Celine used to spend four or five years rewriting his novels in order to achieve the effect of someone just sitting down across the table from you, spouting up the story of his life. Writing is an extremely artificial business: it’s artificial by its very nature – you’re taking sounds and converting them into symbols on a page. To make that transference from one sense to another and reinvest the words with vigor and rhythm and spontaneity is quite a feat.
my intention, my hope, was always to get inside of these people, inside their central nervous systems, and present their experience in print from the inside.
[after he wrote an attack on The New Yorker, and everybody came after him]
I suddenly found myself denounced by the likes of Joseph Alsop, Walter Lippman (he called me an ass in print), Murray Kempton, a distinguished columnist for the New York Post. Richard Goodwin called up from the White House to denounce me; E. B. White; even J. D. Salinger, whom the press hadn’t heard from for years, sent in a telegram denouncing me as a yellow journalist. I really felt that perhaps the world was coming to an end. All these eminent people descended upon me, and I felt the sky was falling in. Then a few days later I woke up, and nothing had happened. It dawned on m that it’s very difficult to get hurt in a literary fight. In a strange way, all the shouting and shooting and the explosion were part of the literary excitement.
(funny that one of the criticisms, J.D. Salinger’s term, was that Wolfe’s attack was “gleeful.”
The next two are from an interview with Ron Reagan in “GEO, 1983. The prompt here is about Pol Pot and the then rampant Khmer Rouge:
So much of the political thought and fashion among writers and other commentators in the United States is based on the idea that liberty has always existed in a kind of mist over the left. In this country there have been very few ideologues, but there has often been a Marxist mist, the idea that there is something wonderful about socialism that if pursued correctly will lead to liberty, peace, harmony and the betterment of man in a way that nothing going on in modern industrial nation can. In the past ten years it’s been discovered that socialism, when put into effect by experts, leads only to extermination camps. This has been a terrible blow to a very fashionable idea. That’s why it’s embarrassing to dwell on Pol Pot. Pol Pot is not a maniac. He’s a man who studied the future for his country for years starting in France, and the whole Khmer Rouge movement was probably as rational an undertaking under a Marxist ruler as has ever occurred. Everywhere the experts have put socialism into effect, the result has been the gulag. Now to point this out is to be regarded as right wing. I regard it only as obvious – so obvious, in fact, that you have to be crazy to avert your eyes from it.
On why writers like Hemingway and Mailer are interested in fighters and “people who got their hands dirty”:
For this analysis, I go to Sigmund Freud. He said that writers and artists are people who discovered as youngsters that they lost out in the hurly-burly of the playground. They discovered, however, that they had the power to fantasize about such things, about the fruits of power, such as money, glory and beautiful lovers. In a way, that resonated with the fantasies and dreams of other people who were not so talented. When they are successful in presenting these fantasies to the public, they end up achieving through fantasy that which they were previously able to achieve only in fantasy. But somehow it’s not enough to be known as someone who is a skilled fantasist. That is second best; it would have been much better to have ruled the playground. So they constantly try to prove to themselves that they can rule the playground if they really try. But only rarely do you run into an obsession like that.
Wolfe later mentions he things handguns should be banned:
I think if manufacture and sale stopped, the price of the ones remaining would go up on the black market. If it became a felony nationally to possess a handgun and there was a public call to turn them in , I think you’d be surprised at how many would be turned in.
Wolfe had really done his homework to develop his styles.
I really made a concentrated effort to get in the game. I adapted a lot of things I had run across in graduate school. For example, there were these early experimental Soviet writers like Aleksei Remizov, Boris Pilniak, Andrei Sobel and the Serapion Brothers. One of them, Yevegeni Zamyatin, was best known for We, the book that Orwell’s 1984 was based on. From Zamyatin, I got the idea of oddly punctuated inner thoughts. I began using a lot of exclamation points and dashes and multiple colons. The idea was, that’s the way people think.
The four basic techniques of novels Wolfe tried to introduce to nonfiction:
The first is scene-by-scene construction. In other words, telling the entire story through a sequence of scenes rather than simple historical narration. Second is the use of real dialogue – the more the better. The third, which is the least understood of the techniques, is the use of status details. That is, noting articles of clothing, manners, the way people treat children, the way they treat servants. All the things that indicate where a person thinks he fits in society and where he hopes to go socially. The fourth is the use of point of view, which is depicting the scenes through a particular pair of eyes.
Re: psychedelia and mus:
Without that world, without Ken Kesey and the Grateful Dead, there would have been no serious music by the Beatles. They take off from the Grateful Dead, starting with that album Revolver. Everything from Revolver on comes out of the American psychedelic world, to which they were turned on by Bob Dylan – in person, in private. Not by listening to his records, but by getting involved with him personally.
Here’s another thing that’s now like a foreign notion. The seven deadly sins are all sins against the self. And this is an idea that’s vanished pretty much. Lust for example. The reason that lust in Christian religion was – particularly in the form of Catholicism that originated the seven deadly sins – was considered a sin was not that some man would be leading some nice girl from Akron into white slavery, or the pages of pornographic magazines, but that he would be hurting himself by wasting his spirit on this shallow and pointless, base passion.
I hope editor Dorothy Scura doesn’t mind me quoting so extensively from her book, which is itself a roundup of other interviews. My goal is simply to share some of these wonderful insights with likeminded readers.
A tribe of cats must decide yearly which one will ascend to the Heaviside Layer and come back to a new life
Somebody who saw the movie before me said “it helps if you know that the Cats are competing in a contest of singing about their lives to see who gets to go up in a hot air balloon and die and then get reborn with a new life.” That does help.
A critical failure can be kind of fun, even a badge of honor, but a colossal financial failure is bad. That makes everyone uncomfortable.
I kind of enjoyed my experience of the movie, I wasn’t bored. Several people in my theater (at The Grove) were straight up bawling crying with real emotion, both during “Memory” and during the song Dame Judi Dench sings about growing old (“Finale: The Ad-Dressing of Cats”). I myself was quite moved. I’d never seen Cats the musical and didn’t know much about it. I was struck that this was really kind of a veiled story about city lowlifes and pimps and shady customers and dramatic sad sacks, and theater kids. It’s about finding redemption for a squandered or spent life? The setting appeared to be something like London’s West End and Trafalgar Square.
It’s almost silly to talk about what went wrong with this movie. When Idris Elba is dancing and his genitals are either tucked into a suit or disguised with some kind of CGI, so he doesn’t even have normal cat genitals, that’s a jarring image, certainly, and takes one out of the film.
Francesca Hayward, the Kenyan-born dancer who plays White Cat, the star or at least our guide through this thing, is an amazingly gifted dancer and performer. Probably. It sounds like it, I can’t really say, because this movie hits at level of fakiness where I can’t really tell what’s her, and what’s faked. I can see how that might sound “cool” in conception but in reality it just robs me of seeing human talent.
Why didn’t they just assemble this amazing cast of talented actors for about thirty days and then have them put on a simple production of Cats in a big empty warehouse? It would’ve been much more engaging to see what these performers can really do, to see what they might bring out in each other, to see what kind of magic they can make just with their bodies and voices. I suspect the answer to why they didn’t do that is:
1) they didn’t trust an audience would consider that spectacular, new, unique enough for a movie
2) it would’ve been too hard.
The makers of this movie didn’t trust an audience, they assumed we could be easily fooled by manipulated computer-designed imagery that’s not “cheap” in terms of money but is cheap in terms of artistry. That, to me, explains some of the reaction this movie. These people think we’re fools. Whoever (and I guess we have to say “director Tom Hooper”) made this movie didn’t go forward to make something they themselves would find really cool and impressive and special, just the way they’d like to see the story told, and then struggle to achieve that vision, and then share it with us. Instead, the makers set out to fake us out with tricks that we know are tricks, and they know are tricks. It’s disrespectful, and that’s shameful.
How great would it have been to actually stage Cats with Taylor Swift and Jennifer Hudson and James Corden and Ian McKellan and Dame Judi Dench, stripped down if necessary, and just show us the results? But that’s too hard, they never could’ve convinced those actors, they never could’ve gotten the scheduling right, to do that would’ve been an act of absurd daring and ambition. So instead they just threw money at it and made something cheap and gaudy and unconvincing. The result is kind of like being a kid and being taken to Disneyland and your divorced dad is buying everything but he’s on his phone the whole time. You know you aren’t being given anything of real value.
Money is cheap in movies. It’s not impressive. Making an expensive movie is easy, Hollywood does it all the time. Talent and vision and effort and energy and collaboration are what’s rare. That’s what’s impressive. Some of that actually shines through the movie of Cats, despite everything.
I thought James Corden did a heroic job, a true showman. And Laurie Davidson as Mir. Mistoffelees was great.
I compared a few of the songs to the Broadway versions and preferred the movie versions. (Compare, for instance, Corden’s Bustopher Jones).
No, the reason why people will hunger to see ”Cats” is far more simple and primal than that: it’s a musical that transports the audience into a complete fantasy world that could only exist in the theater and yet, these days, only rarely does.
That’s what Frank Rich said back in 1982. These days movie audiences are REGULARLY transported to complete fantasy worlds that could only exist in the movies. Why mess around with trying to translate a magical theater experience to that? (Deadline highlights the obvious reasons: good track record of musicals for Universal, incredible cast, huge hit IP, etc).
Maybe that was the mistake of the movie, to try and duplicate the massive transformation the show did to a theater to something a movie could do. To do that, while also showing you the faces of these beloved actors, was maybe just a mismatch?
And also the plot is very strange. It’s funny, almost one of the lessons of Cats the Broadway sensation is that people can go along with a pretty dense internal logic without a lot of handholding provided there’s a lot of intense longing, empathy, nostalgia, vivid expressions of where characters are coming from. However many million people who enjoyed Cats the show just accepted the many uses of the word “jellicle” and went along. People will do that, if the vision is coherent! Fairy tales are full of that kind of buy-in. Maybe the filmmaking team just lost their confidence somewhere along the way. I’m made to understand they actually added more of a plot, for the movie.
The Financial Times liked the film! I give it a B+. I’m not here to poo on things, it was a fun early afternoon.
Reader Dan G comments:
To me it seems likely “they” made the choices they made in good faith, with high hopes and something just didn’t quite work. Happens all the time.
See if you can guess the name of this feature
Watching this mesa melt away
Why take pictures of Monument Valley? Someone’s taken better pictures of it. Why take pictures on vacation at all? To show someone else how incredible it is? In a way I felt dumb driving around, stopping, taking pictures. The park is really geared towards taking pictures, even steering you to particular viewpoints (“John Ford’s Point” for example). You become part of a parade of people taking pictures. It gets to feel kinda silly. Aren’t I taking myself out of the moment of experience when I snap away? Couldn’t there be some more meaningful or meditative way to experience this?
When you see something staggering, there’s a need to engage somehow, to do something to mark the occasion, and I guess taking pictures can be an act of acknowledgement.
The act of taking the pictures, too, framing them and composing them, can help you focus on what it is, exactly, that’s giving you the emotion. Hemingway:
Watch what happens today. If we get into a fish see exact it is that everyone does. If you get a kick out of it while he is jumping remember back until you see exactly what the action was that gave you that emotion. Whether it was the rising of the line from the water and the way it tightened like a fiddle string until drops started from it, or the way he smashed and threw water when he jumped. Remember what the noises were and what was said. Find what gave you the emotion, what the action was that gave you the excitement. Then write it down making it clear so the reader will see it too and have the same feeling you had. Thatʼs a five finger exercise.
Similarly, while the landscapes that I have photographed in Yosemite are recognized by most people and, of course, the subject is an important part of the pictures, they are not “realistic.” Instead, they are an imprint of my visualization. All of my pictures are optically very accurate–I use pretty good lenses–but they are quite unrealistic in terms of values. A more realistic simple snapshot captures the image but misses everything else. I want a picture to reflect not only the forms but what I had seen and felt at the moment of exposure.
Looking at my photos later maybe what I was chasing was how the fallen snow revealed the depths of the landscape. Where snow had fallen, where it had stayed, where it was melting. And the way the shadows moved, making a movie out of time, light, place.
Snow, water, mud, sand, rock. Different degrees of permanent but all of it in a process of melting away.
Monument Valley is so epic it feels “timeless” but you are watching temporary freak abnormalities wash and erode back to dust.
Spontaneous Helytimes Travel Prize to The View Hotel, a Navajo-owned property with a one of the best in all planet Earth location. Look at how the building is set into the landscape.
(Note to readers with mild to severe alcohol dependency: there is no alcohol served at the hotel.)
WARNING in three photos there will be a photo of a dead horse
Everybody wants one of a few things in this country. They’re willing to pay to lose weight. They’re willing to pay to grow hair. They’re willing to pay to have sex. And they’re willing to pay to learn how to get rich.
If you buy something because it’s undervalued, then you have to think about selling it when it approaches your calculation of its intrinsic value. That’s hard. But if you buy a few great companies, then you can sit on your ass. That’s a good thing.
– Charlie Munger.
When I was a kid I played this Nintendo game. It was kind of just a bells-and-whistles version of Dopewars.
One significant flaw in the game as a practice tool for the individual investor is it does not account for the effect of capital gains taxes, which would make the rapid fire buying and selling of this game pure madness.
In 2018, my New Year’s Resolution this will be the Year of Business.
Hope and greed vs sound business reasoning
On the speculative side are the individual investors and many mutual funds buying not on the basis of sound business reasoning but on the basis of hope and greed.
So says Mary Buffett and David Clark in Buffetology: The Previously Unexplained Techniques That Have Made Warren Buffett The World’s Most Famous Investor.
By nature I’m a real speculative, hope and greed kinda guy. My mind is speculative, what can I say? Most people’s are, I’d wager. I don’t even really know what “sound business reasoning” means.
The year of business was about teaching myself a new mental model of reasoning and thinking.
Where to begin?
Finally, when young people who “want to help mankind” come to me, asking: “What should I do? I want to reduce poverty, save the world” and similar noble aspirations at the macro-level. My suggestion is:
1) never engage in virtue signaling;
2) never engage in rent seeking;
3) you must start a business. Take risks, start a business.
Yes, take risk, and if you get rich (what is optional) spend your money generously on others. We need people to take (bounded) risks. The entire idea is to move these kids away from the macro, away from abstract universal aims, that social engineering that bring tail risks to society. Doing business will always help; institutions may help but they are equally likely to harm (I am being optimistic; I am certain that except for a few most do end up harming).
so says Taleb in Skin In The Game.
Taleb’s books hit my sweet spot this year, I was entertained and stimulated by them. They raised intriguing ideas not just about probability, prediction and hazard, but also about how to live your life, what is noble and honorable in a world of risk.
Do you agree with the statement “starting a business is a good way to help the world”? It’s a proposition that might divide people along interesting lines. For example, Mitt Romney would probably agree, while Barack Obama I’m guessing would agree only with some qualifications.
I doubt most of my friends, colleagues and family would agree, or at least it’s not the first answer they might come up with. Among younger people, I sense a discomfort with business, an assumption that capitalism is itself kind of bad, somehow.
But could most of those who disagree come up with a clearer answer for how to help mankind?
As an experiment I started thinking about businesses I could start.
My best idea for a business
Selling supplements online seems like a business to start, I remembered Tim Ferriss laying out the steps in Four Hour Work Week, but it wasn’t really calling my name.
My best idea for a business was to buy a 1955 Spartan trailer and set it up by the south side of the 62 Highway heading into Joshua Tree. There’s some vacant land there, and many people arrive there (as I have often myself) needing a break, food, a sandwich, beer, firewood and other essentials for a desert trip.
The point itself – arrival marker of the town of Joshua Tree – is already a point of pilgrimage for many and a natural place to stop, while also being a place to get supplies.
Setting up a small, simple business like that would have reasonable startup cost, aside from my time, and maybe I could employ some people in an economically underdeveloped area.
However, selling sandwiches is not my passion. It’s not why I get out of bed in the morning.
Starting a business is so hard is requires absolute passion. I had a lack of passion.
Further, there was at least one big obstacle I could predict: regulatory hurdles.
Setting up a business that sold food in San Bernadino County would involve forms, permits, regulations.
What’s more, there’d probably be all kinds of rules about what sort of bathrooms I’d need.
This seemed like a time and bureaucracy challenge beyond my capacity.
Work, in other words. I wanted to get rich sitting on my ass, you see, not working.
Plus, I have a small business, supplying stories and jokes, and for most of the Year of Business my business was sub-contracted to HBO (AT&T).
That was more lucrative than selling PB&Js in the Mojave so I suspended this plan pending further review.
Time to pause, since I had to pause anyway.
What can you learn about “business” from books and the Internet?
No way you can learn more from reading than from starting a business, far from it. But in the spare minutes I had that’s what I could do: learn from the business experience of others.
You’ve got to have models in your head. And you’ve got to array your experience—both vicarious and direct—on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head.
What are the models? Well, the first rule is that you’ve got to have multiple models—because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does. You become the equivalent of a chiropractor who, of course, is the great boob in medicine.
It’s like the old saying, “To the man with only a hammer, every problem looks like a nail.” And of course, that’s the way the chiropractor goes about practicing medicine. But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. So you’ve got to have multiple models.
And the models have to come from multiple disciplines—because all the wisdom of the world is not to be found in one little academic department.
Fantastic book, it was recommended to me by an MBA grad. Reviewed at length over here, a great cheat sheet and friendly intro to basic concepts of sound business reasoning.
The most important concept it got be thinking about was discounted cash flow analysis. How to calculate the present and future values of money. How much you should pay for a machine that will last eight years and print 60 ten dollar bills a day and cost $20 a day to maintain?
That’s a key question underlying sound business reasoning. How do you value an investment, a purchase, a property, a plant, a factory, or an entire business using sound business reasoning? The prevailing and seemingly best answer is discounted cash flow analysis.
However, the more one learns these concepts, the clearer it becomes that there’s an element of art to all these calculations.
A discounted cash flow analysis depends on assumptions and predictions and estimates that require an element of guessing. Intuition and a feel for things enter into these calculations. They’re not perfect.
A few more things I took away from this book:
- I’d do best in marketing
- Ethics is by far the shortest chapter
- A lot of MBA learning is just knowing code words and signifiers, how to throw around terms like EBITDA, that don’t actually make you wiser and smarter. Consider that George W. Bush and Steve Bannon are both graduates of Harvard Business School.
- To really understand business, you have to understand the language of accounting.
Accounting is an ancient science and a difficult one. You must be rigorous and ethical. Many a business catastrophe could’ve been prevented by more careful or ethical accounting. Accounting is almost sacred, I can see why DFW became obsessed with it.
The Reckoning: Financial Accountability and the Rise and Fall of Nations by MacArthur winner Jacob Soll was full of interesting stuff about the early days of double entry accounting. The image of a dreary Florentine looking forward to his kale and bread soup stood out. There are somewhat dark implications for the American nation-state, I fear, if we take the conclusions of this book — that financial accountability keeps nations alive.
However I got very busy at the time I picked up this book and lost my way with it.
Perhaps a more practical focus could draw my attention?
Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage by Mary Buffett and David Clark was real good, and way over my level, which is how I like them.
The key concept here is how to find, by scouring the balance sheets, income statements, and so on, which public companies have to tell you and are available for free, which companies have a durable competitive advantage.
The Most Important Thing: Uncommon Sense For The Thoughtful Investor by Howard Marks.
are the two that my friend Anonymous Investor recommended, and they pick up the durable competitive advantage idea. Both books have a central understanding the fact that capitalism is brutal competition, don’t think otherwise. To prosper, you need a “moat,” a barrier competitors can’t cross. A patent, a powerful brand, a known degree of quality people will pay more for, some kind of regulatory capture, a monopoly or at least and part of an oligarchy, these can be moats.
What we’re talking about now is not starting a business, but buying into a business.
There are about 4,000 publicly traded companies on the major exchanges in the US, and another 15,000 you can buy shares of OTC (over the counter, basically by calling up a broker). You can buy into any of these businesses.
Charlie and I hope that you do not think of yourself as merely owning a piece of paper whose price wiggles around daily and that is a candidate for sale when some economic or political event makes you nervous. We hope you instead visualize yourself as a part owner of a business that you expect to stay with indefinitely, much as you might if you owned a farm or apartment house in partnership with members of your family.
so says Buffett. Oft repeated by him in many forms, I find it here on a post called “Buy The Business Not The Stock.”
But how do you determine what price to pay for a share of a business?
Aswath Damodaran has a website with a lot of great information. Mostly it convinced me that deep valuation is not for me.
Extremely Basic Valuation
Always remember that investing is simply price calculations. Your job is to calculate accurate prices for a bevy of assets. When the prices you’ve calculated are sufficiently far from market prices, you take action. There is no “good stock” or “bad stock” or “good company”. There’s just delta from your price and their price. Read this over and over again if you have to and never forget it. Your job is to calculate the price of things and then buy those things for the best price you can. Your calculations should model the real world as thoroughly as possible and be conservative in nature.
Martin Shkreli on his blog (from prison), 8/1/18
The simplest way to determine whether the price of a company is worth it might be to divide the price of a share of a company by the company’s earnings, P/E.
Today, on December 29, 2018:
Apple’s P/E is 13.16.
Google’s (GOOGL): 39.42.
Netflix (NFLX): 91.43.
Union Pacific Railroad (UNP): 8.99.
This suggests UNP is the cheapest of these companies (you get the most earnings per share) while NFLX is the most “expensive” – you get the least earnings).
But: we’re also betting on or estimating future earnings. These numbers change as companies report their earnings, and the stock price goes up and down. Two variables that are often connected and often not connected.
Now you are making predictions.
The most intriguing and enormous field in the world on which to play predictions is the stock market.
What is the stock market?
The stock market is a set of predictions.
Buying into businesses on the stock market can be a form of gambling. Or, if you use sound business reasoning, it can be investing.
What is investing?
Investing is often described as the process of laying out money now in the expectation of receiving more money in the future. At Berkshire we take a more demanding approach, defining investing as the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power – after taxes have been paid on nominal gains – in the future.
More succinctly, investing is forgoing consumption now in order to have the ability to consume more at a later date.
Warren B., in Berkshire’s 2011 Letter To Shareholders.
A great thing about investing is you can learn all about it for the price of an Internet connection. All of Buffett’s letters are free.
How to assess a public company as an investment with sound business reasoning
In researching a specific company, Buffett gathers these resources:
- most recent 10-Ks and 10-Qs
- The annual reports
- News and financial information from many sources
The authors said he wants to see the most recent news stories and at least a decade’s worth of financial data. This allows him to build up a picture of
The companies historical annual return on capital and equity
Management’s record in allocating capital
(from The New Buffetology, Mary Buffett and David Clark).
Cheap stocks (using simple ratios like price-to-book or price-to-sales) tend to outperform expensive stocks. But they also tend to be “worse” companies – companies with less exciting prospects and more problems. Portfolio managers who own the expensive subset of stocks can be perceived as prudent while those who own the cheap ones seem rash. Nope, the data say otherwise.
(from “Pulling The Goalie: Hockey and Investment Implications” by Clifford Asness and Aaron Brown.
This sounds too hard
Correct. Most people shouldn’t bother. You should just buy a low cost index fund that tracks “the market.”
What can we we expect “the stock market” to return?
The VTSAX, the Vanguard Total Stock Market Index, has had an average annual return of 7.01% since inception in 1992. (Source)
10% is the average, says Nerd Wallet.
9.8% is the average annual return of the S&P 500, says Investopedia.
Now, whether the S&P 500 is “the market” is a good question. We’ll return to that.
O’Shaughnessy has thought a lot about the question, it’s pretty much the main thing he’s thought about for the last twenty years or so as far as I can tell, and comes in at around 9%.
Some interesting data from here.
Munger cautions against assuming history repeats itself, in 2005:
Why Bother Trying To Beat The Market?
A good thing about the Buffettology book is they give you little problems for a specific calculator:
The Texas Instruments BA-35, which it looks like they don’t even really make anymore,. You can get one for $100 over on Amazon.
This calculator is just nifty for working out future values of compounding principal over time.
One concept that must be mashed hard into your head if you’re trying to learn business is the power of compounding.
Let’s say you have $10,000. A good amount of money. How much money can it be in the future?
9% interest, compounded annually, $10,000 principal, 20 years = $61,621
15% interest, compounded annually, $10,000 principal, 20 years= $175,447
9% interest, compounded annually, $1,000 principal, 30 years= $13,731
15% interest, compounded annually, $1,000 principal, 30 years= $86,541
9% interest, $10,000 principal, 40 years= $314,094.2
A significant difference.
Any edge over time adds up.
Let’s say the stock market’s gonna earn 7% over the next years and you have $10,000 to invest. In twenty years you’ll have $38,696.
But if you can get that up to just 8%, you’ll have $46,609.57.
A difference of $8,000.
Is it worth it? Eh, it’s a lotta work to beat the market, maybe not.
Still, you can see why people try it once we’re talking about $1,000,000, and the difference is $80,000, or the edge is 2%, and so on.
Plus there’s something fun just about beating the system.
Lessons from the race track
This book appeals to the same instinct — how to beat the house, what’s the system?
Both Buffett and Munger are interested in race tracks. Here is Munger:
This might be the single most important lesson of the Year of Business. Buffett and Munger repeat it in their speeches and letters. You wait for the right opportunity and you load up.
“The stock market is a no-called-strike game. You don’t have to swing at everything – you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘swing, you bum!'”
“Ted Williams described in his book, ‘The Science of Hitting,’ that the most important thing – for a hitter – is to wait for the right pitch. And that’s exactly the philosophy I have about investing – wait for the right pitch, and wait for the right deal. And it will come… It’s the key to investing.”
“If you find three wonderful businesses in your life, you’ll get very rich. And if you understand them — bad things aren’t going to happen to those three. I mean, that’s the characteristic of it.”
OK but don’t you need money in the first place to make money buying into businesses?
Yes, this is kind of the trick of capitalism. Even Munger acknowledges that the hard part is getting some money in the first place.
“The first $100,000 is a bitch, but you gotta do it. I don’t care what you have to do—if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”
The Unknown and Unknowable
One of the best papers I read all year was “Investing in the Unknown and Unknowable,” by Richard Zeckhauser.
David Ricardo made a fortune buying bonds from the British government four days in advance of the Battle of Waterloo. He was not a military analyst, and even if he were, he had no basis to compute the odds of Napoleon’s defeat or victory, or hard-to-identify ambiguous outcomes. Thus, he was investing in the unknown and the unknowable. Still, he knew that competition was thin, that the seller was eager, and that his windfall pounds should Napoleon lose would be worth much more than the pounds he’d lose should Napoleon win. Ricardo knew a good bet when he saw it.1
This essay discusses how to identify good investments when the level of uncertainty is well beyond that considered in traditional models of finance.
Zeckhauser, in talking about how we make predictions about the Unknown and Unknowable, gets to an almost Zen level. There’s a suggestion that in making predictions about something truly Unknowable, the amateur might almost have an edge over the professional. This is deep stuff.
“Beating the market”
When we talk about “beating the market,” what’re we talking about?
If you’re talking about outperforming a total stock market index like VTSAX over a long time period, that seems to be a lot of work to pull off something nearly impossible.
Yes, people do it, but it’s so hard to do we, like, know the names of the people who’ve consistently done it.
There’s something cool about Peter Lynch’s idea that the average consumer can have an edge, but even he says you gotta follow that up with a lot of homework.
Lynch, O’Shaughnessy – it’s like a Boston law firm around here. I really enjoyed Jim O’Shaughnessy’s Twitter and his Google talk.
Sometimes when there’s talk of “beating the market,” the S&P 500 is used interchangeably with “the market.” As O’Shaughnessy points out though, the S&P 500 is itself a strategy. Couldn’t there be a better strategy?
is full of backtesting and research, much of it summarized in this article. Small caps, low P/S, is my four word takeaway.
Jim: Sure. So when I was a teenager, I was fascinated because my parents and some of my uncles were very involved in investing in the stock market, and they used to argue about it all the time. And generally speaking, the argument went, which CEO did they feel was better, or which company had better prospects. And I kind of felt that that wasn’t the right question, or questions to ask. I felt it was far more useful, or, I believed at the time that it would be far more useful to look at the underlying numbers and valuations of companies that you were considering buying, and find if there was a way to sort of systematically identify companies that would go on to do well, and identify those that would go on to do poorly. And so I did a lot of research, and ultimately came up…
says O’Shaughnessy in an interview with GuruFocus. I’m not sure I agree.
Narrative can be a powerful tool in business. If you can see where a story is going, there could be an edge.
I like assessing companies based on a Google image search of the CEO, for instance.
O’Shaughnessy suggests cutting all that out, getting down to just the numbers. But do you want to invest in, I dunno, RCI Hospitality Holdings ($RICK) (a company that runs a bunch of Hooters-type places called Bombshells) or PetMed Express ($PETS) just because they’re small caps with low p/s ratios and other solid indicators?
Actually those both might be great investments.
I will concede that narrative investing is not systematic. I will continue to ruminate on it.
Charlie Tian’s book is dense but I found it a great compression of a lot of investing principles. It’s also just like a cool immigrant story.
The service that Charlie Tian built, GuruFocus, is a fantastic resource.
Premium membership costs $449 for a year, which is a lot, but I’d say I got way more than that in value and education from it.
J. R. Collins
His book is great, his Google talk is great.
Investing doesn’t have to be all Munger and Buffett. Towards the end of the Year of Business I got into Sir John Templeton.
His thing was finding the point of maximum pessimism. Australian real estate is down? South American mining companies are getting crushed? Look for an opportunity there.
This guy worked above a grocery store in the Bahamas.
Great-niece Lauren carrying on the legacy.
Thought this was a cool chart from her talk demonstrating irrational Mr. Market at work even while long term trends may be “rational.”
Why bother, again?
At some point if you study this stuff it’s like, if you’re not indexing, shouldn’t you just buy Berkshire and have Buffett handle your money for you? You can have the greatest investor who ever lived making money for you just as easily as buying any other stock.
It seems to me that there are 3 qualities of great investors that are rarely discussed:
1. They have a strong memory;
2. They are extremely numerate;
3. They have what Warren calls a “money mind,” an instinctive commercial sense.
Alice Schroeder, his biographer, talking about Warren Buffett. I don’t have any of these.
Even Munger says all his family’s money is in Costco, Berkshire, Li Lu’s (private) fund and that’s it.
In the United States, a person or institution with almost all wealth invested, long term, in just three fine domestic corporations is securely rich. And why should such an owner care if at any time most other investors are faring somewhat better or worse. And particularly so when he rationally believes, like Berkshire, that his long-term results will be superior by reason of his lower costs, required emphasis on long-term effects, and concentration in his most preferred choices.
I go even further. I think it can be a rational choice, in some situations, for a family or a foundation to remain 90% concentrated in one equity. Indeed, I hope the Mungers follow roughly this course.
The answer is it’s fun and stimulates the mind.
A thing to remember about Buffett:
More than 2,000 books are dedicated to how Warren Buffett built his fortune. Many of them are wonderful.
But few pay enough attention to the simplest fact: Buffett’s fortune isn’t due to just being a good investor, but being a good investor since he was literally a child.
The writings of Morgan Housel are incredible.
You can read about Buffett all day, and it’s fun because Buffett is an amazing writer and storyteller and character as well as businessman. But studying geniuses isn’t necessarily that helpful for the average apprentice. Again, it’s like studying LeBron to learn how to dribble and hit a layup.
Can Capitalism Survive Itself?
The title of this book is vaguely embarrassing imo but Yvon Chouinard is a hero and his book is fantastic. Starting with blacksmithing rock climbing pitons he built Patagonia.
They make salmon now?
Towards the end of his book Chouinard wonders whether our economy, which depends on growth, is sustainable. He suggests it might destroy us all, which he doesn’t seem all that upset about (he mentions Zen a lot).
The last liberal art
Have yet to finish this book but I love the premise. Investing combines so many disciplines and models, that’s what makes it such a rich subject. So far I’m interested in Hagstrom’s connections to physics. Stocks are subject to some kind of law of gravity. Netflix will not have a P/E of 95 for forever.
Compare perception to results:
Dominos, Amazon, Berkshire, and VTSAX since 2005.
Stocks Let’s Talk
The stock market is interesting and absurd. The stock market is not “business,” but it’s made of business, you know?
The truth is the most I’ve learned about business has come from conversation.
To continue the conversation, I started a podcast, Stocks Let’s Talk. You can find all six episodes here, each with an interesting guest bringing intriguing perspective.
I intend to continue it and would appreciate it if you rate us on iTunes.
- you can get rich sitting on your ass
- business is hard and brutal and competitive
- you need a durable competitive advantage
- if you are unethical it will catch up to you
- we’re gonna need to get sustainable
- the works of Tian, Lynch, O’Shaughnessy, Templeton, Chouinard, and Munger are worth study
- accounting is crucial and must be done right, even then you can be fooled
- I’m too whimsical for business really but it’s good to learn different models