JAB Holdings

 

and soon:

and

are all controlled by JAB Holdings.

Owned by Germany’s Reimann family, 95% of JAB Holding belongs to four of the late Albert Reimann Jr.’s nine adopted children. They are descendants of chemist Ludwig Reimann, who, in 1828, joined with Johann Adam Benckiser (founder of the namesake chemical company).

Allegedly, the heirs take an oath never to discuss their business publicly?

 


Thought this was interesting

Ever heard of Shijiazhuang?  Well it has ten million people.

Here’s an essay by Puzhong Yao, who tells of his journey from there to Goldman Sachs, and his love for Costco:

It seemed like whatever I wished would simply come true. But inside, I feared that one day these glories would pass. After all, not long ago, I was at the bottom of my class in China. And if I could not even catch up with my classmates in a city few people have even heard of, how am I now qualified to go to Cambridge University or Goldman? Have I gotten smarter? Or is it just that British people are stupider than the Chinese?

With these mixed thoughts, I began working as a trader at Goldman in 2007.

(ht Tyler Cowen)

One class was about strategy. It focused on how corporate mottos and logos could inspire employees. Many of the students had worked for nonprofits or health care or tech companies, all of which had mottos about changing the world, saving lives, saving the planet, etc. The professor seemed to like these mottos. I told him that at Goldman our motto was “be long-term greedy.” The professor couldn’t understand this motto or why it was inspiring. I explained to him that everyone else in the market was short-term greedy and, as a result, we took all their money. Since traders like money, this was inspiring.


Gun Stocks

I don’t know why I care about this.  I guess because I’m interested in what moves stock prices, narratives invented around stock prices, and how things get reported?

This effect seems to me to be exaggerated.

Motley Fool notes:

The market for firearms is highly fragmented, with many names — Glock, Colt, Beretta  — privately owned, located abroad, or both. This can making investing in guns tricky. One of the easiest ways for an investor to gain exposure to this market, though, is through buying shares of industry leader American Outdoor Brands.

American Outdoor Brands is a nicer name than “Smith & Wesson”

Yesterday they were up 3.21%.

I asked a financial friend if he thought that was significant:

3%? Not very

The other big gun stock is Sturm, Ruger – RGR.

Yesterday they were up 3.48%.  Today they’re up another 1.78%.

Is that meaningful?  Maybe?  A tiny bit?

Soaring?

There is an initial burst in stock price immediately when trading opened, but that was mostly corrected by the end of the day.

Why do we tell ourselves this story?

I guess because it’s shocking these companies aren’t at all harmed when their product or a competitor’s products are used to shoot hundreds of people.

We tell this story because it’s twisted and we like twisted stories.

Even the Norwegian Sovereign Wealth Fund owns a buncha gun stock:

 

 


Fascinated by: Ray Dalio

Ray Dalio, billionaire founder of Bridgewater Associates, one of the world’s largest hedge funds.

That’s a 30 minute video he made about how the economy works, nbd.

A brilliant person with an atypical mind who lays out their worldview in a kind of manifesto can pretty much always get my attention.

Three of his Dalio’s beliefs:

  • “algorithmic decision-making is coming at you fast”
  • evolution is good
  • to achieve success you must face and accept harsh realities

You can read his Principles online.  Soon they are coming out in book form, I’ve pre-ordered.   Here’s a sample, from the Principles website, which is www.principles.com:

A lot to think about in Ray Dalio’s Principles.

BUT: let’s limit our discussion today to one moment in his TED Talk above.  We’re going to talk about a joke and the audience reaction to it.

You’ll have to watch about one minute of the talk.  Start at 14:30.

Dalio is describing a complex system where everyone in his company rates each other and is radically transparent with each other.  Everyone can rate each other, in different areas.  Even a lowly employee can rate Ray, creating charts like this:

At 14:46 he says that because of this, at Bridgewater there is no politics.

Which: Ray Dalio is 100x smarter than me, but I’ll bet ten dollars there are indeed politics at Bridgewater Associates, probably insane, high-order, wildly weird politics.

Anyway.

At 15:13 Ray Dalio makes a joke.  This being his TED talk, no doubt a joke he had practiced.  Radical transparency, he says, doesn’t apply to everything.

You don’t have to tell somebody their bald spot is growing or their baby’s ugly.

People laugh a little bit.  Dalio continues.

I’m talking about the important things.

People laugh a LOT.

Dalio seems even thrown by how much the audience laughs at the second part, not the intended punchline.

Why?

The audience laughs because Dalio is missing the point.

Dalio inadvertently reveals he doesn’t know what the important things are to most people.

What are “the important things?” Making sound investment decisions? Tweaking the algorithm properly? Workplace communication?

Whatever, yes, in theory.

But really?  No. To most humans whether your bald spot is growing and whether your baby is ugly are the important things.  It would hurt way worse to be told either of those than that you’re ineffectively communicating in the meeting.  That pain is a measure of importance.

The audience is expressing laughter / disbelief at the fact Dalio assumes workplace discussion is more important than stuff like whether your baby is ugly.

Perhaps Ray Dalio doesn’t get it because he’s trained himself not to feel that kind of sensitivity.  That’s one of the points of Principles, to train your mind to get that nonsense out of the way.  It’s served him very well as an investor.

But it’s a little robotic, and a little detached, and a little inhuman.

If I worked for Dalio, I suspect I’d rate him low in the category of “empathy / compassion / understanding for what matters to people / sensitivity.”

But then, are those categories even in the algorithm?

Oh btw James Comey used to work for Ray Dalio, and also Dalio recently recommended allocating 5-10% of assets to gold.

speaking of

algorithm

source: Wiki user Fulvio Spada

looked it up at Online Etymology, my new fave site.

algorithm (n.)Look up algorithm at Dictionary.com1690s, “Arabic system of computation,” from French algorithme, refashioned (under mistaken connection with Greek arithmos “number”) from Old French algorisme “the Arabic numeral system” (13c.), from Medieval Latin algorismus, a mangled transliteration of Arabic al-Khwarizmi “native of Khwarazm” (modern Khiva in Uzbekistan), surname of the mathematician whose works introduced sophisticated mathematics to the West (see algebra). The earlier form in Middle English was algorism (early 13c.), from Old French. Meaning broadened to any method of computation; from mid-20c. especially with reference to computing.

The man from Khwarizmi.

Wiki:

Few details of al-Khwārizmī’s life are known with certainty.

He worked in Baghdad as a scholar at the House of Wisdom established by Caliph al-Ma’mūn, where he studied the sciences and mathematics, which included the translation of Greek and Sanskrit scientific manuscripts.

 


Warren Buffett

New Berkshire Hathaway letter is out.  Free insight and humor for capitalism’s cheery uncle, a great read every year, even if I understand at most 1/12 of it.

wb-1

 

Sunny American optimism:

wb-2

The infectious, enthusiastic amateur style of writing reminds me of Bill James:

wb-3

wb4

Some of the companies Berkshire owns:

wb5

coke

9.3% of your Coke is Berkshire’s.

An unlikely hero:

wb6

Jack Bogle founded Vanguard, and created a simple, low cost index fund for everyday investors.

bogle

found that at JL Collins impressive website.

Buffett tells you, in simple terms, how to get rich:

wb7

Why people don’t do that:

wb8

On the other hand here’s the S&P 500 chart since 1980:

screen-shot-2017-03-03-at-6-46-16-pm

Doesn’t look like a washtubs moment to me.

Over at marketplace.org, Allan Sloan points out some of the things Buffett leaves out:

Allan Sloan: Two things are missing. One was how wonderful the management of Wells Fargo was, which he wrote the previous year. The second thing is he lavished praise on this company called 3G, what’s known as a private equity company, from Brazil, which manages a company called Kraft Heinz, which is Berkshire Hathaway’s biggest investment. And what it does is it goes around, it buys companies — now with the help of a lot of financing from Berkshire Hathaway — it fires zillions of people, the profits go up, and then after a while, it goes out and buys another company and does the same thing.

Buffett makes me think of Andrew Carnegie, a zillionaire of a hundred years ago who also had some kind of public conscience.  If some percentage billionaires weren’t also lovable characters like Buffett, would capitalism collapse?  Does his dad humor, like Carnegie’s library building, plug a dyke that holds back revolution?

carnegie

At the Berkshire Hathaway shareholders conference, you can challenge table tennis champ Ariel Hsing:


Buffett

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Warren Buffett’s advice always sounds simple, which isn’t the same as easy to follow.
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Loved the doc about him on HBO.  The first scene is him advising high school kids to take care of their minds and bodies.  The second scene is him in the drive-through line at McDonald’s.


Perspective worth hearing

img_9186

saw this letter to the editor of the Financial Times on somebody’s Twitter.