Warren Buffett's Ground Rules by Jeremy Miller is a new book covering Buffett's years before Berkshire Hathaway, when he ran Buffett Partnership Limited ("BPL"). These are years that many of us know very little about, mostly because Warren and Berkshire did not become widely famous until further in his career. Buffett ran the partnership from 1957 - 1969 with astounding results (see table at the end of this post). In these years, he was working with much less money than he is today, and therefore the universe of investment opportunities was much greater to him. Additionally, his investing philosophy was in it's early stages. He was not focused on buying high quality businesses like he is today. Buffett went after very cheap stocks despite their lack of luster, still being sure he was finding opportunities that would give his investors the highest after-tax return over a few short years, and then move onto his next investment ideas. I believe this book is great for any investor out there trying to learn more about business and investing. The wealth of knowledge Buffett extends through his letters, in addition to his candidness and care for his shareholders shows his high intelligence and the integrity he has held throughout his life. … [Read more...] about Warren Buffett’s Ground Rules – A little known era of the world’s greatest investor
From The Ten Commandments for Business Failure by Donald Keough, there is a great section covering Coca Cola's diversification into the wine business. For years, Coca Cola met with consultants who would pitch acquisition ideas to diversify their business. They said the "core business of soft drinks and juices gave [coke] no hedge against the future and the comany needed to look around to acquires businesses that were compatible but different. From there, they were pitched a nice wine business and they bought it. Robert Woodruff, the former president of the Company (and also the one who made Coca-Cola the cultural icon it is today), decided to take a "personal look at this wine business "his" company had gotten into." Below is the excerpt of what Woodruff told Keough after visiting the winery. … [Read more...] about What a bad business looks like
Introduction Alaska Airlines is a solid, well-run company that is trading at a discount to its intrinsic value. It holds attractive characteristics and a risk-reward ratio that can't be found in other airlines. The company was found in 1932 and is headquartered in Seattle, WA. It is a low-fare premium product carrier that focuses on Alaskan, west coast and regional flights. It is significantly smaller in size to some of the large US carriers, with ~$8 billion in enterprise value compared to $36 billion and $26 billion of Delta Airlines and Southwest Airlines, respectively. In 1986, the company acquired Horizon Air, expanding its reach on the west coast. Its three segments are: Alaska mainline, Alaska Regional and Horizon, which account for ~78%, ~16% and ~7% of the company's operating revenues, respectively. Recently, on April 4, 2016, Virgin America announced that it has agreed to be acquired by Alaska Airlines. … [Read more...] about Alaska Airlines (NYSE: ALK)
I just finished reading Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future by Ashlee Vance. I may be a little behind the rush to read this one, but I am very glad that I read it. I hadn't known very much about Musk. I saw a documentary on him a few years back and all that I could remember from it was that he was from South Africa, he was a genius and that he was involved with Tesla, SpaceX and Solar City. I now know him to be a relentlessly hard-working, visionary, genius that is pushing today's technological advances further than they have ever gone before. After listening to the 13 hour audiobook, I can now recommend to you that you read this one. Elon Musk is nothing short of amazing, and there's something we can all learn from him. One thing is for sure, you may not agree with his work/life balance, but hey, that's just Musk for you. Drive to learn From the start of the book, to the very end, you will learn that Musk has never stopped learning. When he was young and in grade school, he read every book in his school and local library. After this he decided to grab an encyclopedia. He said something to the like of, "It's amazing what you don't know that you don't know. You can learn so much just by reading." Musk was known to be lost in a book when he was young. While I'm sure he continues to read today, the book focused on his reading as he grew up and how it shaped what he has become today today. As an adult, they did give anecdotes showing his continual drive to learn. While Musk is a very talented engineer, there are those that he hires that specialize in certain areas. He often will pull people aside and quiz them for an hour, trying to see everything they know. The employee will feel like they are in an interview, firing off answers time after time, but they soon realize that it is just Musk wanting to learn more. “We’re all hanging out in this cabana at the Hard Rock Cafe, and Elon is there reading some obscure Soviet rocket manual … [Read more...] about Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future
Why do we invest? The main reasons is that we forgo current use of resources for the potential of more in the future. Many new to investing are focused on making a quick return. This of course, would be nice (to get rich quick) but often people get poor, very quickly chasing this goal. A time-tested strategy in the stock market is by value investing. We all hear about the great legendary investors, Warren Buffett, Charlie Munger, Benjamin Graham, among many others. They all have their own investment intricacies, but when it comes down to it, value is at their strategies' core. So why not enjoy life, while making a solid return? … [Read more...] about Why SleepyCapital?
I recently read An Astronaut's Guide to Life on Earth, by Col. Chris Hadfield. If you haven't read it yet, I highly recommend it. It's one of those books that anyone could read and apply the story to their own life. The book is an insightful story of Chris' journey to becoming an astronaut, and his experiences while being one. It truly is amazing how much time, strength, and diligence went into his own work. He loves his job, but even more than loving the job itself, he loves the process of preparing for his job. We can all learn from this book and apply it to our every day life, but also of course, as investors. Below are a handful of great quotes I pulled from the reading: "To me, the only good reason to take a risk is that there's a decent possibility of reward that outweighs the hazard...I accept the risks of being an astronaut, but with an abundance of auction: I want to understand them, manage them and reduce them as much as possible." This is as close to the definition of making an investment as it gets. We are seeking asymmetric bets, where the possibility of reward far outweighs the risks. We need to understand our investment decisions, the risks behind them and try to manage them. "As I have discovered again and again, things are never as bad (or as good) as they seem at the time." This is something we all see every day, in the news. It's one of the reasons our emotions gyrate from highs to lows. The media, as we know, often blows things out of proportion. When listening to the media covering the markets, they are all stretching for good stories, covering companies' recent earnings, quoting prices continuously. My approach is to stop listening to limit your reading to a few good sources and to maintain an open mind to anything you're reading. Like Chris says, things are never as bad (or good) as they seem at the time. "As we work through huge checklists...I go through my checklist" Checklists are something investors often use, whether … [Read more...] about An Investor’s Guide to Life on Earth: Part 1