A never before released video has been put out by Jeremy Harris Lipschultz at the Huffington Post. I always put everything I’m doing on hold to read/watch anything new by Buffett.
The video is 95% Q&A–Buffett-style but the majority of the questions revolve around the news and the newspaper business. Buffett goes fairly in depth into how the newspaper business was superb at the time, but he could begin to see the cracks in its moat.
I thought the most interesting part relevant to investing was at the end where Buffett analogizes how he makes investments as simply assigning himself a (relatively easy) story to cover.
It is pretty rare that I enjoy reading an academic paper on investment decisions, but I really enjoyed this one by Richard Zeckhauser. In particular, I can’t think of any other papers that are so clear about how one should think about investing it situations where there are large unknowns mixed with potentially asymmetric information on each side. His conclusions are summarized into 9 maxims and I think all of his reasonings and examples are well thought out. It also doesn’t hurt that he is clearly aware of the lines of thinking Buffett and Munger use when making their investment decisions in light of uncertainty.
Maxim I: Do not engage in heuristic reasoning that just because you do not know the risk, others do. Think carefully, and assess whether they are
likely to know more than you. When the odds are extremely favorable, some
times it pays to gamble on the unknown, even though there is some chance
that people on the other side may know more than you.
Fundoo Professor has put up a really great series on how powerful float is. I’ve been looking at float from insurance companies for a long time and they have always seemed to me to be very expensive. I knew Buffett’s use of float through Berkshire’s insurance subsidiaries and AXP, but I didn’t know float could be found in many other types of companies outside of the strictly finance/insurance type. I’ll have to look for float in more unconventional places now after reading this series.
I was looking through some really old issues of Commercial and Financial Chronicles and found this article by Phil Carret. There doesn’t seem to be much written about Phil Carret available on the internet so I thought I would share. Warren Buffett has said of Carret that he had “the best long-term investment record of anyone I know.”
Many people do not know that Buffett wrote another article for The Commercial and Financial Chronicle besides his famous GEICO one. Rarely do you get to see Buffett’s full decision making process in making an investment, so I found this article very interesting on Western Insurance Securities, especially because it is about valuing an insurance business.
I couldn’t find Charlie Munger’s older Wesco letters anywhere on the internet so I’ve gone ahead and collected them from a database and put all of his letters together into a single document for everyone to enjoy. It goes from 1983 when Charlie took over the chairmanship until 2009, the last letter before Wesco was merged into Berkshire Hathaway.
Charlie is clearly more repetitious than Warren in his letters, but there are definitely gems to be found. The reasoning behind the large investment in Freddie Mac in the 1988 report is particularly interesting and is only presented because Wesco reached the maximum legal limit of ownership in the stock.