Books - Q1 2026

• The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success (5/5) Bought two copies of this, one to read and one for the CEO of a company that is cheap and overcapitalized but inexplicably reluctant to buy back stock. (The book has been on sale for half off on Amazon.) The Outsiders is much better than I thought the first time around, when I got bogged down with how unscientific it is. It is true that there is no control group, but you can learn useful things about the world from small sample sizes. I also did not appreciate back than how persistent business quality is, so while it may be a bad idea for a retailer to buy back stock (Sears / Radio Shack), it will work much better for a company that owns royalties or has a durable business "franchise." The Outsiders has eight case studies of companies with very high total shareholder return (significantly better than S&P 500) over long periods of time that also repurchased large amounts of stock (share cannibals). The cases in the book are: Tom Murphy / Capital Cities, Henry Singleton / Teledyne, Bill Anders / General Dynamics, John Malone / TCI, Kay Graham / Washington Post, Bill Stiritz / Ralston Purina, Dick Smith / General Cinema, and Warren Buffett / Berkshire Hathaway. The youngest of these executives is John Malone, who was born in 1941. Bill Anders was an Apollo astronaut! We really need a more up-to-date and scientific study of share cannibalization. (Some incredible share repurchasers of the past decade: AutoNation, DaVita, eBay, Synchrony Financial, Dillard's, Murphy USA, Allison Transmission, Group 1 Automotive.) An honest assessment should also look at attempted cannibalizations that turned into shareholder wipeouts, such as Sears. Could those failures have been predicted in advance? (Share repurchases are much riskier if a company has leverage, low profit margins, or lacks profitability.) The book was written in 2012 and he picks Transdigm (TDG) as a contemporary analog of an Outsider company. An outstanding choice: subsequently it is up 20x vs 6x for the S&P 500, which is 26% compounded vs 15%. Other highlights: Singleton was the "Babe Ruth of repurchases." John Malone's research project at Bell Labs was "studying optimal strategies in monopoly markets." (Paper: Resource Allocation and the Regulated Firm.) "EBITDA in particular was a radically new concept, going further up the income statement than anyone had gone before." What we are most confident in would be that royalty-like businesses should return capital via share repurchases. But managements of large cap companies are much better at this now, as we noticed when we read the AmEx book last year. It is at the Oddball micro caps and small banks where the managers have trouble understanding the benefit of share repurchases.
• The Art of Spending Money: Simple Choices for a Richer Life (2/5) Always looking for a good personal finance book to give to people with questions about building wealth. The Millionaire Next Door is good in many ways but some of its ideas are out of date now. (In particular, it is much harder to be frugal in buying your primary residence because you don't want to live in an underclass neighborhood.) I should have remembered that the author's (Morgan Housel) previous book was just a blog post turned into a book. Here is the tl;dr summary for this one. Interesting chapter at the end about the lifecycle of greed and fear: "Greed happens when you double down on actions that at one time worked but aren't sustainable, or that cause you to overestimate how influential your actions were on outcomes."
• Landscapes of Extraction: The Art of Mining in the American West (2/5) Nothing more cornucopian than a gigantic open pit copper mine that has been in business since 1906. The Bingham Canyon Mine takes up 0.02% of the land area of the state of Utah. Can we spare the intrusion? To ask an art museum curator the answer would be "no." They think that mines and oil fields are "problematic" and need to be "interrogated" with art. Hey, that energy is keeping the lights on in the gallery. (Also remember: "There would be a lot fewer history professors without cheap energy.") The Works Progress Administration's Federal Art Project (FAP) paid for a lot of this industrial art during the Great Depression. Remember that  there was no demand for artists or writers during the Great Depression and it turned that generation of would-be artists into communists. Some of these paintings are great, though, like the Chasm of the Bingham or Merrill Mahaffey's painting of the Morenci copper mine (owned by FCX).
• In Short Measures: Three Novellas (2/5) They say never meet your heroes. We really like Michael Ruhlman's nonfiction writing. His book The Making of a Chef is a true 5/5 and so is Walk on Water, the book about a pediatric heart surgeon. (The theme in his early books was that the "people who pursue perfection, date-on-a-dime clarity, and impossible high standards are the most compelling human beings alive.") However, this book is a collection of three short novels that he wrote around the time he got divorced. Based on the theme of the first novella (I didn't read the other two), I think that he was working on his own justification for leaving his wife to be with another woman. (Oddly, for a much older and less attractive woman.) Catholic News has a great, based take on the New York Times' story on Ruhlman's second marriage: "I do know that when you are married, it is profoundly dangerous to develop a fast friendship with someone of the opposite sex. Above all, married couples must protect their hearts. One may not be footloose with your heart. In fact, it is no longer yours." "As a final silly coda, the Times reported that crime-novelist Laura Lippman became a Universal Life minister so she could officiate at their wedding in the park. It is all so heart-breaking and, I regret to say, so utterly unserious." Michael had a bad fall last year while drinking. Falls claim a lot of alcoholics. And foodies tend to drink too much.
• The Renaissance: A Short History (3/5) Paul Johnson says that the Renaissance was the first great cultural war in European history. "Medieval certitude - or credulity depending on your viewpoint - was now faced with Renaissance scrutiny, or skepticism." "In response to the Protestant cult of the vernacular - of simplicity, austerity, and puritanism - the Catholic Church, after its earlier defensive and guilt-ridden response, decided to embark on a much bolder policy of emphasizing the spectacular. With the Jesuits in the vanguard, churches and other religious buildings were to be ablaze with light, clouded with incense, draped in lace, smothered in gilt, with huge altars, splendid vestments, sonorous organs and vast choirs, and a liturgy purged of medieval nonsense but essentially triumphalist in its content and amplitude." His chapter "The Buildings of the Renaissance" would be useful if one were to visit Rome, Venice, or Florence.
• Beyond Banks: Technology, Regulation, and the Future of Money (2/5) There was a great tweet about banks three years ago that we often think back on: "what if everyone's paycheck gets automatically deposited into some dude's credit fund and the government guarantees the deposits if the fund manager makes a mistake?" Banks are a 19th Century technology that attempts to do two different, important tasks: safely store medium of exchange, and also finance long-term productive enterprise. We published the idea in Oddball about eight years ago that you could separate the two businesses, lending and payments. That is what the author proposes here. ("Removing banks as ubiquitous but essentially unnecessary middlemen would help reduce the high cost of payments.") However, we have gotten much better at understanding that things are the way they are for a reason. (Reading Calomiris's book about why we have banks.) Who do you think would win in a political struggle over this, the Trump boys and their crypto schemes, or JP Morgan and Visa?
• The Long Way (2/5) This was tedious - it looks like sailing around the world would be somewhat difficult and dangerous but also quite boring. At least with mountain climbing you have great views, exercise and company. Instead of finishing the 1968-1969 Golden Globe race and returning to England where his wife and stepchildren lived, he sailed on to Tahiti and fathered a child with a new partner. Makes sense that someone who could spend years of life alone at see is not very tethered to relationships on land.
• A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market (3/5) This was reviewed in a two part review by our correspondent @pdxsag. Thorp was born in 1932 so he's now almost 94. He looks amazing for his age. (Here's a 2024 photo taken with Boaz Weinstein.) No one can figure out how he's aging so well. Tim Ferriss interviewed him and so did Bloomberg, but we really don't know the secret. Apparently he could still do a chin up at age 91. He mentions in the book that "when I wanted to know some organic chemistry to explore ideas for extending healthy human longevity, I learned it as I needed to." Maybe one thing is that, thanks to inventing an options pricing model and various arbitrage techniques, he was able to retire from working pretty young and lived a chill life in Newport Beach. Thorp says that he has maintained his high school weight, takes magnesium, Vitamin K, and Vitamin D, and exercises a lot. Good to know that if you are a blackjack player, removing the 5s from the deck changes the edge from 0.2% house advantage to 3.29% for the player. Talking about counting cards, he observes that playing with edge results in moderately heavy losses mixed with 'lucky' streaks of the most dazzling brilliance: "I learned later that this was a characteristic of a random series of favorable bets. And I would see it again and again in real life in both the gambling and investment worlds." He told an acquaintance to pull money out of Madoff's fund, but the guy didn't listen to Thorp's points, he "would simply poll everyone he knew for their opinion and go with the majority view." He doesn't believe in keeping deposits at mutual banks, either: "Our hundreds of accounts took capital away from other investments." The book is half autobiography and half "Thorp's bland personal financial advice."
• Crossing the Chasm (3/5) The 1990 book about marketing disruptive technology products, explaining the gap (the "chasm") between early adopters and the mainstream market. Technology adoption life cycle progresses through innovators, early adopters, early majority, late majority, and laggards. He says that model came from research on the adoption of new strains of seed potatoes among farmers. Realized that I am probably early majority (which is mainstream), across the chasm, and not an early adopter. ("Conservatives, in essence, are against discontinuous innovations. They believe far more in tradition than in progress. And when they find something that works for them, they like to stick with it.") Something about the visionaries: "likely to be planning on implementing the great new order and then using that as a springboard to their next great career step." That's a principal-agent problem where they may not have to life with downsides of technologies that they buy. That's also why the visionaries may alienate pragmatists, and pragmatists don't reference visionaries in their buying decisions. Interestingly, Everett Rogers who wrote the book Diffusion of Innovations (1962) doesn't believe in chasms: "innovativeness, if measured properly, is a continuous variable and there are no sharp breaks or discontinuities between adjacent adopter categories (although there are important differences between them)." One of the keys to crossing the chasm: "Can you explain your product in the time it takes to ride up in an elevator?"