rishig

Morgan Housel on Musk's erratic behavior: "Risk and reward does not grow linearly – the bold bets come with some nasty warts. That’s as true for people as it is assets" http://www.collaborativefund.com/blog/natural-maniacs/

We have a new SF Bay 10-K club (https://www.linkedin.com/groups/13608959/). If you would like to be part of it or learn more about it, please send a request on LinkedIn.

Here's the best guide I have found so far: https://www.shopify.com/guides/facebook-advertising

In the old days, powerful retailers charged shelving fees to product companies. The first page on Amazon search along with prime are the most visible "shelves". The monetization of sponsored ad products would come out as "shelving" fees.

The easiest way to think of Amazon is as three different businesses: US Retail 1P: Amazon selling products 3P: Third party selling products International: 1P, 3P AWS Furthermore, also consider that some of these businesses are matured and profit making while others are not (yet). Amazon is losing money on international business (so far). Amazon discloses enough information in its 10Ks to come up with a valuation range for each of these businesses. Saying the PE is 250x is too simplistic. May I refer you to Phil Fisher's book "Common Stocks and Uncommon Profits" Chapter "When to Buy" where he describes these types of situations.

Yes, I have followed LVMH over the years, but never owned the stock. I follow most European global company to some extend. I have owned Nestle for a long time (bought in 2003), but had to sell, because my German brokerage where I held the shares would not do business with German citizens living in the US any more, due to more stringent money laundry laws, I never bought again, since the valuation at that point (and now) seems rich. Another company in ultra luxury is Hermès. They are ridiculously profitable, but the shares are expensive (40x earnings). I think the brand cache of the ultra luxury brands is unassailable, because part of it comes from their French origin. I think there are some Italian leather good / assessory companies that are cheap, albeit with less valuable brands equity. I've had Hermes, LVMH & CF Richemont on a watch list forever. Waiting on recession or bad China news to make them cheap? Hermes manages to do reasonably okay, businesswise, during recessions too - simply by keeping the supply and demand curves very far from each other. So, surely, the demand goes down during a recession but the supply is much further down that it doesn't matter. Having a very efficient supply chain, for lack of better words, is a curse for these companies :)

The best book that really demonstrates Feynman's talent as a science teacher: QED: The Strange Theory of Light and Matter (https://www.amazon.com/QED-Strange-Princeton-Science-Library/dp/0691164096/ref=sr_1_1?ie=UTF8&qid=1526447049&sr=8-1&keywords=qed+feynman) This topic, Quantum Electrodynamics, is what he won the Nobel prize for. I read this book when I was in my tenth grade, the book has no equations and is written for the layman. How many noble prize winning physicists can explain their theory to a 16 year old in real depth? This is Feynman at his best! Highly recommend it. If you want a more technical book that shows how awesome Feynman is as an undegrad teacher, I recommend the second volume of Feynman's lectures. If you are looking for life of Feynman, I recommend Surely You're Joking..

Having owned BAM for some time now - the major insight I picked up that I did not realize: Many competitors (large banks) have completely exited this area, which I did not realize. I've always worried about too much dumb money coming in, just like the re-insurance business. There is plenty of competition - but the exit of these banks is significant and a strong advantage in my mind. The demand side of the business is pretty obvious, but the supply side is where my concerns are.. -- This business is not as easy as it may look from the outside. The other insight - Bruce Flatt is low key, but confident, and extremely shareholder oriented. He refused to be put on the pedestal with Berkshire and Buffett as an equal - in spite of an admiring and friendly crowd. This CEO is great. One important comment: In his mind, the value of the asset management side of the business exceeds the entire market cap of the company right now. In that regard, you just have to ask yourself is - if you trust the guy and is he competent? Don't be worried. https://photos.app.goo.gl/dsDmI00p8btsrXJn1

I think majority of the users would be willing to share data. 1. Look at the impact of cambridge analytica episode on actual users. We need to see in next couple of quarters but so far seems limited. 2. Look at sales of home assistant devices from Amazon and Google. They are in living room hearing you continuously. I think the market is now at 30 million households and going up pretty fast. Users are fully aware in this case. 3. Look at other schemes where users are willing to share a lot of data for a small prize. But the user willingness to keep sharing data is the key factor that one needs to keep an eye on. Vinod I agree that users are willing to share data today. How much of our willingness to share data comes from default settings and appeal to system one thinking. Question is if regulations force platforms to allow system two thinking of users to kick-in, will we be willing to do the same. I think even with default settings and a questionnaire to answer, it would be difficult to get system 2 to kick in. If people do not care really all that much about digital privacy and FB is going to take away (FB limiting functionality in some way if users do not share some data) something they do care about (a lot of the FB functionality), it would seem to me to be a system 1 decision for most people. Especially when FB can now say "We do not share your individual information with anyone, it would only be used to help us identify relevant content for you" or something along those lines. We do see that already with apps and some video games. Dont accept terms at first, then you try it out and it does not work, you go back and accept all the terms. If all that stands between a very addictive behavior that people are used to are going to be a few clicks of FB terms, do you think people would stop and ponder about the terms? Think about warning labels on tobacco products. Vinod Fair point. I agree with you. I have been thinking of regulations that would cause a meaningful damage to user engagement and I really don't know if there is anything short of shutting down. Thanks

I think majority of the users would be willing to share data. 1. Look at the impact of cambridge analytica episode on actual users. We need to see in next couple of quarters but so far seems limited. 2. Look at sales of home assistant devices from Amazon and Google. They are in living room hearing you continuously. I think the market is now at 30 million households and going up pretty fast. Users are fully aware in this case. 3. Look at other schemes where users are willing to share a lot of data for a small prize. But the user willingness to keep sharing data is the key factor that one needs to keep an eye on. Vinod I agree that users are willing to share data today. How much of our willingness to share data comes from default settings and appeal to system one thinking. Question is if regulations force platforms to allow system two thinking of users to kick-in, will we be willing to do the same.

One type of regulation that could made a dent in FB's business is the following: Change the default setting for all users to be reduced functionality with minimal use of personal data. So an example, may be, that FB can only use your age, sex, and city for doing targeted advertising by default. Obviously, with such high level targeting, your attention is of very little value to FB's advertising business. In exchange, FB may only offer you reduced functionality by default. Say, you can use your FB, only 10 mins a day by default. For additional functionality, you have to explicitly opt-in to allow FB to use additional data for more personalized targeting. However, regulation again get FB here by requiring FB to show you all the opt-in choices with easy to understand checkboxes. When users go through these explicit choices, system 2 kicks-in and, may be, a lot of users may decide that 10 mins a day may be good enough for them, given how much data FB really needs from you. Another way to think about this is that a lot of the addictive usage and engagement comes from FB's ability to appeal to our system one thinking. Any regulation that forces FB to let users pause and think may cause a real damage to engagement over the long-term. Two questions: (1) how motivated are regulators globally to enforce such harsh measures? (2) if they are motivated to do something like this, are the possible outcomes drastic to the business? Thoughts?

Sequoia fund buys FB in Q1: https://www.sequoiafund.com/Download.aspx?ID=e13ac0a9-f76b-4a45-a2a7-2e760f7f025e&Name=Q1_2018_-_Investor_Letter

Can you provide more context on these two statements. I am curious to hear why you say this.

You can teach a lot of the mental models stuff to kids, much of it by reading books together. My kids and I have been reading books that teach "systems thinking" concepts - limits to growth, unintended consequences, long-term thinking... https://thesystemsthinker.com/wp-content/uploads/2016/01/PG01E-System-Archetypes-at-a-Glance.pdf

http://www.markelcorp.com/About-Markel/NewsRoom/Reuters2328559