The Munger Way

I write this article before I will leave La Guardia Airport in New York to Omaha to visit Warren Buffetts Berkshire Hathaways annual general meeting. I cannot wait to see Charlie Munger and Warren Buffett in real life. One of the traits I admire the most in Berkshires success is to drill down a complex company valuation into a set of simple and crystal clear facts and relations. Charlie Munger recommends to learn mental models. Mental models help to dissect complex problems into essential factors. When multiple factor work into the same direction, enforcing each other, a lollapaloosa happens, and driving an outcome. Three books come to my mind when thinking about mental models the following books come to my mind. Poor Charlies Almanack Seeking Wisdom Super Thinking Weinbergs Mental Models One of my favorite source are the mental models of Gabriel Weinberg. Before he wrote his super thinking book (mentioned above), he wrote this blog article on medium . It is one o...

Stay away from industries where everybody seems to be a winner . https://brucepackard.com/everyones-a-winner/ Bruce Packard writes about analyzing text complexity of company filings. Bruce Packard applies natural language processing to investing. https://brucepackard.com/signals-in-obfuscation/ Analyst says Nvidia lied about its cryptocurrency earnings to avoid stock crash https://www.techspot.com/news/78548-analyst-nvidia-lied-about-cryptocurrency-earnings-avoid-stock.html Nvidia Appears To Have A GPU Inventory Problem https://seekingalpha.com/article/4182662-nvidia-appears-gpu-inventory-problem Financial engineers found a way around Dodd-Frank Act. Issueing and re-selling of leveraged loans for corporate debt. https://www.latimes.com/business/la-fi-corporate-debt-risks-20190120-story.html#nws=mcnewsletter

Warren Buffetts and Charlie Mungers value investment style disregards macro economics and encourage bottom up investing. In their opinion most macro investors failed and only a few did macro investing successfully. Yet Howard Marks publishes his new book "Mastering the Market Cycle" and proposes that investors need to take the market cycles into account to be able to deliver above average returns. TLDR I recommend Marks book highly. You will learn from a market veteran about cycles, cycle positioning and investment decision making. Chapters about Cycles Howard Marks starts the first half of his book speaking about cycles. He describes cycles in nature and physics, to economic cycles and cycles in profits, debt and real estate and defines the market cycle. Cycles in nature and physics Nature is full of cycles. The sun circles around the milky way galaxy. Our earth cycles around the sun. So does the seasons. The earth spins every day 1 time around her cente...

In December 2015, oil tankers made u-turns while crossing the Atlantic [ZHOIL]. In March 2016 the mayor German rail carrier announced a 8-10% percent drop in fright shipments for 2015 [RG]. In April 2016 its cheaper to rent a dry bulk tanker than a Ferrari F40 [ZHTANKER]. European capital markets started weak this year, recovered to their highs again while the US dollar weakened during Q1 2016. Are US and Europe's economies are healthy? (Side note: As TTIP is coming back onto the agendas of the media, political parties, NGOs, investors and companies. Why should a rigid trade deal be made, when the benefits are small but the risks of loosing national sovereignty is high while the future economic situation is very uncertain? Maybe some oligarchs try to secure their power before historic changes are happening?) US-EU Trade The first industry which feels a slow down in the (world) economy is the logistic  sector. This early indicator worked like charm the last 2 crisis. Now ...

Here and there I heard about a Harvard study about having goals drives success. I thought "Sounds reasonable, no need to think about it deeply." Today I heard a talk of Gerald Hörhan and he mentioned the example, again. So my many-smart-people-talked-about-it threshold was crossed and I did a short research to find that study. I hoped to get an interesting topic I can use as material for talks. And I found an urban myth [DOMINICAN]. But is there any truth to it? The Dominican University (?researcher Gail Matthews and Sarah Gardner?) did a study, because they saw a research opportunity. I found just a summary (see [SUMMARY]) and no original source to the study. But, well, once you kill a cow, you gotta make a burger. Goal Study The study split the participants into 5 groups and compared what goals they achieved 4 weeks later [SUMMARY, FORBES]: Group 1 - deeply analyzed their goals and the resources they had to accomplish them.   Group 2 – wrote down their goals after ...

2015 was dismissal! I increased my portfolio just by 3.53%. 2015 Buy Price Buy Date Price Date Perf.abs BEGIN END Hold Nestle 67.89 € 2015-02-09 69.66 € 2015-12-30 2.61% 10.00% 10.26% Barrick Gold 10.99 € 2015-02-09 6.98 € 2015-12-30 -36.49% 20.00% 12.70% Oracle 37.79 € 2015-02-09 33.96 € 2015-12-30 -10.13% 10.00% 8.99% Reply 67.69 € 2015-02-09 127.90 € 2015-12-30 88.95% 10.00% 18.89% SMT Scharf 14.67 € 2015-02-09 10.00 € 2015-12-30 -31.83% 15.00% 10.22% Sold Mircosoft 22.30 € 2013-04-18 38.94 € 2015-09-19 74.62% 10.00% 17.46% Cash 25.00% 25.00% Performance 100.00% 103.53% This year I fa...

Silverlake Axis is a banking software company. It operates in south East Asia and is one of a few player in the banking software oligopoly. Prior to August 2015 Sliverlake Axis was a star. Than the bombshell dropped, as razor99 accused Mr. Goh (60% shareholder and CEO of Silverlake) that he and Silverlake did dubious deals in related party transactions at the expense of minority shareholder [RAZOR99]. The stock got slaughtered - from 1.20 to 0.55 SGD. In January 2016 Deloitte cleared Silverlake of these accusation [DELOITTE]. Is Silverlake a value buy now? Can I trust the numbers? Deloitte Singapore was ordered by Silverlake to investigate razor99 accusations [RAZOR99, DELOITTE]. Deloitte found that for the 3 acquisition in question, the prices 2 had fair prices where 1 was in the higher range of fair. ROI is for the 2 fair acquisitions 10 to 12% whereas the other is about 3%. Today the 3 acquired businesses make up to 85% of revenue. Silverlake today is Silverlake because of the 3 acq...