Thursday, April 18, 2019

Sears Files Plan of Reorganization


*The Plan contemplates a Wind Down of the remaining assets of the Debtors’ estates—primarily litigation claims—and a distribution to creditors in accordance with the absolute priority rule and certain settlements, as described herein. Specifically, the Plan provides for the approval of the settlement with the Pension Benefit Guaranty Corporation (the “PBGC” and, such settlement, the “PBGC Settlement”).

*On the Effective Date of the Plan, all of the Debtors’ assets will be transferred to the Liquidating Trust (defined below) and the Debtor legal entities will be dissolved. A Liquidating Trustee and board of directors will be appointed to carry out the terms of the Plan. The Plan constitutes a single chapter 11 plan for all of the Debtors and the classifications and treatment of Claims and Interests therein apply to each of the Debtors separately. The Plan does not propose to substantially consolidate the Debtors.

*On the Effective Date, all Existing SHC Equity Interests shall be cancelled. Each such holder thereof shall: neither receive nor retain any property of the Estate or direct interest in property of the Estate of SHC on account of such Existing SHC Equity Interest.

*Disclosure Statement Objection Deadline: May 9, 2019 at 4:00 p.m.
Voting Record Date: May 9, 2019
Disclosure Statement Hearing: May 16, 2019 at 10:00 a.m.
Plan Confirmation Hearing: July 23, 2019 at 10:00 a.m.

Monday, April 15, 2019

Sears Asks for More Time to File Chapter 11 Plan

Sears Holdings Corporation and its debtor affiliates, as debtors and debtors in possession in the above-captioned chapter 11 cases (collectively, the “Debtors” and, together with their non-debtor affiliates, “Sears” or the “Company”), file this motion (the “Motion”) for entry of an order further extending the periods during which the Debtors have the exclusive right to file a chapter 11 plan (the “Exclusive Filing Period”) and to solicit acceptances thereof (the “Exclusive Solicitation Period,” and together with the Exclusive Filing Period, the “Exclusive Periods”) by two (2) months through and including June 12, 2019 and August 13, 2019, respectively.

*The Debtors are seeking another modest extension of the Exclusive Periods at this critical juncture of their chapter 11 cases in furtherance of their fiduciary duties and to continue to try to broker a consensual chapter 11 plan among their various stakeholders. Despite receiving only a two-month initial extension of the Exclusive Periods pursuant to the first exclusivity order entered on February 15, 2019 (ECF No. 2626) (the “First Exclusivity Order”), the Debtors have made significant progress on a chapter 11 plan. Since the First Exclusivity Order was entered, the Debtors have drafted a proposed chapter 11 plan and accompanying disclosure statement and distributed the plan to their key stakeholders, including the Official Committee of Unsecured Creditors (the “Creditors’ Committee”), the Pension Benefit Guaranty Fund (the “PBGC”) and Cyrus Capital Partners, L.P (“Cyrus”). The Debtors have been working cooperatively with these parties and have conducted numerous calls and inperson meetings to negotiate the terms of the plan.

*Unfortunately, just over a month after obtaining approval of the sale transaction (the “Sale Transaction”) with Transform Holdco LLC (the “Buyer”) for substantially all of the Debtors’ assets, the Debtors have had to divert limited resources to take action to enforce the terms of the asset purchase agreement dated as of January 17, 2019 (as amended, “Asset Purchase Agreement”) against the Buyer to ensure that assets belonging to the Debtors’ estates are rightfully turned over to the Debtors. The Debtors have been pressing forward with their chapter 11 plan negotiations while simultaneously pursuing these assets. The outcome of this dispute will impact the analysis underpinning the plan, further bolstering the Debtors’ need for a modest extension of the Exclusive Periods.

Monday, April 8, 2019

April 8th Links

  • If, on a certain evening about sixty-­six million years ago, you had stood somewhere in North America and looked up at the sky, you would have soon made out what appeared to be a star. If you watched for an hour or two, the star would have seemed to grow in brightness, although it barely moved. That's because it was not a star but an asteroid, and it was headed directly for Earth at about forty-five thousand miles an hour. Sixty hours later, the asteroid hit. The air in front was compressed and violently heated, and it blasted a hole through the atmosphere, generating a supersonic shock wave. The asteroid struck a shallow sea where the Yucatán peninsula is today. In that moment, the Cretaceous period ended and the Paleogene period began. [New Yorker]
  • The genome sequencing showed that there were four distinctive versions of the fungus, with differences so profound that they suggested that these strains had diverged thousands of years ago and emerged as resistant pathogens from harmless environmental strains in four different places at the same time. [NY Times]
  • While liberals go crazy about catastrophic global warming, which is fake science, the real catastrophe for mankind will be dysgenic fertility. (1) Global IQ is falling because people with higher IQs have fewer children. How long before our average intelligence becomes too low to maintain our technology, and everything falls apart? (2) Beta-male genes are being culled. I think this is an even bigger problem than declining IQ, because it's happening more quickly. When society moves from system of monogamous marriage to single motherhood, what happens is that a disproportionate number of children are fathered by alpha-males. Despite the worship of alphaness in some parts of the non-establishment right, civilization is built by beta males and not by alpha males. Beta males create value, alpha males are value transferors. [LotB]
  • Excerpts from a Harvard study on financial reporting for the Internet era. They interviewed several CFOs of leading technology companies and senior analysts of investment banks who follow tech stocks. "The CEOs principal aim is not necessarily to judiciously allocate financial capital but to allocate precious scientific and human resources to the most promising projects and pull back and redeploy those resources in a timely manner when the prospects of specific projects dim. An idea with uncertain prospects but with at least some conceivable chance of reaching a billion dollars in revenue is considered far more valuable than a project with net present value of few hundred million dollars but no chance of massive upside. CFOs admit that they cannot justify their market cap based on traditional metrics. They conjecture that their market values might be a sum of best-case scenario payoffs. One CFO said that her valuation should be considered on a per idea basis instead of a per earnings multiple." [jsmian]
  • I am looking for ways to hack this: the discipline and social validation of having a schedule, without actually having to work at nine. I have been considering getting an office just to have mental separation between work and non work. (They give them away in this town if you work in tech. I could pay the rent with the savings in my iced cocoa budget.) [Kalzumeus]
  • This is the first of three major tactics for improving productivity: outsource anything that your personal presence does not add value to. Equivalently, outsource anything where the replacement price is less than your desired pseudo-wage. [Kalzumeus]
  • Today in new ways to tricking a Tesla into trying to kill you: someone finally got around to applying the 'perturbation' concept to the machine learning in Tesla's 'Autopilot' assisted cruise control. Background: since machine learning does not necessarily use the same cues that humans use to spot things in data (in images/ voice etc), sometimes you can add something to the data that people either do not notice or cannot see at all (noise, seemingly irrelevant details), but that a ML system (especially a simple one) sees as very significant - this is 'perturbation'. As proof of concept, people have added imperceptible background noise to a picture of a dog, that results in an ML system now thinking it's a tree or a car. So, now someone worked out how to make a series of very small stickers you can put on a road, that people can barely see but that Autopilot will interpret as a change in lane - and cause it to swerve into oncoming traffic. Paging William Gibson. [Benedict Evans]
  • In general, gamblers (like the retail investors who buy worthless stocks), prefer bets that offer the greatest maximum return even though they have very poor (negative) expected returns. "[T]he rich are stupid because they contain a disproportionate number of lucky morons who did not realize they were taking as much risk as there were," see "Noise Trader Risk in Financial Markets". Philosophically, "the idea that financial courage [to take risk] produces a strictly increasing and linear expected payoff to risk bearing is contrary to the payoffs to every virtue, which all require moderation and trade-offs with competing virtues" He points out that "a theory that implies a ubiquitous linear payoff to an action like exposure to volatility, regardless of context or quantity, would be unprecedented" [CBS]
  • "Lexington has some interesting characteristics"? I had to LOL at that. I mean, what kind of return are you expecting from real estate in Lexington that would justify paying a corporate board, CEO, CFO, auditors, exchange fees, etc etc? Micro cap companies are for high risk, high return investments. Biotech, gold mines, roll ups. Not for rentals in Lexington. That the CEO doesn't understand that suggests to me that the whole thing should be sold and cash returned ASAP or else insiders will continue to drain even more money. By that argument, every city on a coastline has "limited supply" because it can't grow into the ocean. And what medium sized city doesn't have a hospital or university? It's hilarious that management is STILL trying to sell investors on the glorious investment potential of crapshacks in Lexington, Kentucky. I'm sorry for ranting about this, I just find the whole thing so ridiculous. [CoBF]
  • I spend quite a lot of time in Paris at the moment and usually I go by public transport, but sometimes I drive. The result is that when I see a parking space in the city, wherever it is, I think it a terrible pity I have not my car with me to take advantage of it. I regret it as a terrible missed opportunity; and this is so even if it is a street far from where I am actually staying. 'Suppose,' I think to myself, 'I were driving in this area and trying to park. Never in a hundred years would I find a space, and there is one going begging.' The thought depresses me, as if I had failed to make the most of my opportunities in life; I suppose my philosophy has become 'Gather ye parking spaces while ye may.' So I am not really a fan of cars, I prefer public transport. I find it more relaxing as it relieves me from parking anxiety (not yet a diagnosis in the Diagnostic and Statistical Manual of the American Psychiatric Association, but surely destined one day to become one), besides which the human comedy on buses and trains is much to be preferred to the fruitless and frequently infuriated solipsism of driving. On a train, one can even sometimes read. [Dalrymple]
  • "The scientists, economists, and environmentalists that are saying this stuff, they don't realize what a wealthy area this is." She said that she lived here and wasn't leaving, and that the people selling Miami were confident, and all working on the same goal as a community to maintain this place, with the pumps and the zoning and raising the streets. There were just too many millionaires and billionaires here for a disaster on a great scale to be allowed to take place. [Popula]
  • Tesla pointed out Wednesday evening that, despite the inevitable hit to profits, "we ended the quarter with sufficient cash on hand." That's one of those phrases meant to reassure but somehow by their very utterance don't quite hit the mark, like: "So-and-so has the total support of the president." [Bloomberg]
  • Our delivery was scheduled for 3/31 but as the car was being prepped for delivery it was discovered that the VIN plate on the dash did not match the VIN of the door sill. After a week of waiting, the guidance is that they do not know how long it would take to fix because they've never encountered this before, and are suggesting we take a new VIN assignment. I'm just wondering how this works though? All of our paperwork was sent two weeks ago tomorrow. The loan is finalized. The checks are cashed. I left a message with my loan officer but I'm very curious as to how others have dealt with this while I wait. I'm hoping it's not as big an issue as I'm thinking it will be. [TMC]
  • The existence of hemochromatosis, a genetic condition increasing iron absorption, has fascinating implications for our thinking about evolutionary diet and psychology. It originated only ~65 generations ago and was highly selected for, undoubtedly because it reduced anemia risk in women with an iron-poor agricultural diet. Today it's very disadvantageous for men and can eventually have severe negative effects on health as excess iron accumulates. What strikes me as very important here is that hemochromatosis is a clear-cut case of de-adaptation: it makes us less fit in the red-meat rich paleo environment, though more fit in the early agricultural environment. We should assume that there are many weaker, unidentified genes that do the same--both physical and psychological. This is an important limitation to understanding contemporary humans through the paleo lens. Evolutionarily, we've taken half of a step away from that period. [Twitter]
  • War before Civilization is a great little book written in 1990's about prehistoric warfare, although there is no attempt to tie it to Darwin or Malthus or any evolutionary explanation. There is a lot of empirical data, and it is framed as a debate between Hobbes and Rosseau, the author is an archaeologist. [West Hunter]
  • About eight or nine years ago my best friend's oldest son asked me if I had ever been to an Italian restaurant in Manhattan called Pó. I was astounded. Taylor is a smart kid, but he was barely in junior high school, in the Mississippi Delta no less, a place where Italian red sauce is invariably referred to as "spaghetti gravy." He had never been to New York, no one in his family could be called a "foodie" — how on earth had he heard of a tiny West Village restaurant whose specialties included grappa-cured salmon and linguini with clams and pancetta? [NY Times]

Monday, April 1, 2019

April 1st Links

  • Most readers don't want to spend most of their time reading verbose works by single author, when a greater variety of more relevant and thoughtfully concise works are available from a much larger pool of thinkers. Prior to the Internet they had much less choice: books were just the way educated people learned and taught. (And many people still believe that reading and writing books is the sine quo non of being educated, just as many Europeans in 1500 still lauded the superiority of scribal methods and scholastic thought). [Nick Szabo]
  • Dos Passos was very famous. His name is little remembered today, but it was one of the biggest in American letters from the 1920s until, say, midcentury. In fact, that's the title of one of his novels: "Midcentury." Dos Passos was born in 1896. Sartre called him "the greatest writer of our time." But something happened: Dos Passos broke with the Left, where everyone was, and moved right, for he was essentially a liberal, in the old sense. Hemingway told him that, if he persisted in his independence of thought, "the New York reviewers will kill you. They will demolish you forever." They did. [National Review]
  • Halifax sent 6,000 sons to the Great War, roughly a quarter of its male population. It seemed almost every home had sent a brother, a husband, a father, or a son. The Great War drained the town of its able-bodied young men and left behind women, boys, girls, and men too old or infirm to fight. [Phil G]
  • We've been talking about this lately... price rules. Whenever a business sells for a really low price (e.g. for no price once you subtract current assets minus all liabilities, or for zero or negative enterprise value), the market is already acknowledging the problems people are worried about: a recession, a business that seems to be highly competitive and lacking a moat; or in other cases, bad management, bad capital allocation, unfriendly insiders. Sometimes bad factors win out and a company goes to zero. Or a stock purchase can do really poorly even if they company survives when too high a price is paid. But when companies don't have much debt (and that's what a low or negative enterprise value is telling you), there is a lot more runway to try to improve things. So much more runway, in fact, that most shortsellers are not very interested in situations where there are not financial debts or other fixed liabilities to act as catalysts. [Oddball Stocks]
  • Musk uses Mr. Ito's fears of career risk against him and negotiates some sweetheart concessions from Panasonic, promising all along that the extra leeway will let Tesla turn things around. Ito has no choice but to hope Musk can pull it off. In Q1 2019, other members of the Panasonic leadership decide they've had enough. Mr. Ito has clearly failed to take care of Panasonic's interests, and he's forced out of the company. Note that Mr. Ito resigned, not retired. In Japanese culture and at this rarified level, that likely indicates a serious fall from grace. [Perseid Capital]
  • Over the years, shipping has been net-destructive of capital (like airlines) but you need occasional brief periods of strong earnings or otherwise the whole industry melts away. Hence, at some point in the cycle, these boats need to earn an acceptable return on capital for long enough to bring new capital into the industry. As this is a highly cyclical industry, those brief periods experience stunning profits, but it is ultimately self-correcting, as new supply comes and crushes everyone. Due to IMO 2020, I think this cycle will be steeper than prior ones and possibly last longer. [AiC]
  • In 1702 Queen Anne was able to free the remaining English slaves by agreeing to help attack a Spanish outpost, and it was the first time in 150 years there had not been English slaves held in Morocco. Only a handful of English vessels ever attempted to defend themselves. Salé did a brisk business in European slaves for centuries. European powers would clumsily allow arms to fall into Moroccan hands, e.g. when the Spanish surrendered two different heavily armed forts there without a fight. (Reminds me of the British in Kabul.) Bet you have never heard of the Society of Knights Liberators of the White Slaves of Africa. The Bombardment of Algiers was a big deal that finally ended white slavery by north Africans. Celebrate with a 9,000 piece jigsaw puzzle. [CBS]
  • The test of whether you are an electric vehicle "disrupter" is: how many manufacturers are licensing your battery? If you'd actually invented a better electric battery or other EV technology (battery is the only technology that matters though), you could license them and have a 10x book business. Tesla not only did not do a battery licensing model, but they effectively did the opposite. Consider the parts of the vehicle industry that they have decided to in-source versus the ones they have decided to outsource. As we know, they decided to in-source and compete head-to-head on manufacturing. The results have shown that they are worse than their more experienced competition. They decided to in-source the automotive retail, which had not been done before and was not legal in most states. (And still is not legal in eight states). This had been a huge distraction from the manufacturing side and has resulted in abysmal customer service. But of all things to outsource, they outsourced the battery production to a joint venture with Panasonic. What should be the entire premise of an electric vehicle company is not even enough of a competitive advantage to do in house. [CBS]
  • I suspect that if Musk could raise $5 or 10 billion (even now at the lower valuation) the stock would probably go UP. He could instill so much hope with cash: avoid layoffs, pay off current liabilities, pay off some long-term debt, build more supercharger locations and add supercharger stalls, keep supercharging free, get people their repair parts, get vehicle buyers their registrations, poach some autonomous vehicle people from Uber or Google, put LIDAR in new models and make noise about gathering that data, make some real prototypes of a new model and have them out getting road tested and photographed, hire enough customer service people to keep the email inbox from filling up, and expand the service network. [CBS]
  • How do you know if your local industry is going to dry up and blow away, crushing your real estate value and personal earning prospects? (Also devaluing your social capital because two-thirds of your town is forced to move away.) What if northern Virginia is the next Gogebic Range? They're remarkably good at extracting money from the taxpayer, but what if the taxpayer became more reluctant or simply has less to give? Better people have suffered worse business misfortunes than that. [CBS]
  • Imagine a thousand parallel universes beginning in 1920 where high school dropouts drill exploratory wells in Texas based on gut feelings. There would be oil billionaires in every one of the universes, but unless any of them had an intelligent mechanism for predicting the presence of oil, it would be a different group of billionaires in each universe. In other words, if success is based on luck, you can expect outcomes to quickly revert to the mean. [CBS]

Sunday, March 31, 2019

Books Read - Q1 2019

  • The Road (1/5) This was an unbelievably bad novel, and an inauspicious start to the year's reading, but there is one useful side effect. The site Goodreads has a repository of reader's ratings (out of five) and reviews. Positive reviews of books are generally not very useful. Most people read so few books that they have not developed any taste, plus they like to give themselves a pat on the back for the time they've invested. So, the book was "pretty good". And sometimes they are just rubes. The value of Goodreads is in the negative reviews. This brutal one-star review of The Road captures the problems with it. (That guy has given low reviews to a bunch of other overrated books.) So does this two-star review in the form of a parody. Bad writers are easy to parody - like this parody of Taleb, who officially jumped the shark this Christmas with his breakdown over IQ psychometrics. And here's someone who submitted The Road's two clunky opening sentences at a writer's workshop and got an unenthusiastic reception. Anyway, with fiction you really have to stick to classics that stand the test of time. On the fiction reading list for 2019, we have Jane Austen, HG Wells, RL Stevenson, Alexandre Dumas, Jack London, Kipling, and Borges. 
  • Norwegian Wood (4/5) "Trees that are of modest size and easy to handle can provide a surprising amount of energy in return for the amount of work involved... A birch 50 feet high with a diameter of size inches at chest level gives a volume of 0.12 cubic meters, which is equivalent to 150 pounds of normally dry wood. Burned in an oven that is 75% efficient, this tree will produce 225 kilowatt-hours." Key topics are splitting axes and efficient wood stoves. This is one way to think about the value of timberland owners like KEWL and PDER. Let's say that you can harvest 800 trees per acre and the energy is worth a penny per kwh. (It stands to reason that the energy from wood fuel is worth less, maybe an order of magnitude less, than current delivered to your outlet because there's so much less that can be done with it.) If those assumptions are true, the energy value of the timber stand is $1,800 per acre. The enterprise value of KEWL is $111 million and it owns 185k acres of timber in northern Michigan. That's $600 per acre. In 2018, KEWL entered into an option agreement with the state of Wisconsin to sell a conservation easement on 14,352 acres for $372 per acre. So $600 per acre is starting to seem really cheap. The PDER market cap is down to $116 million and it has an enterprise value of about $120 million. They own 165k acres of timber which means $728 for the timber and then over 300 million tons of coal reserves, 32 million mcfe of gas reserves, and a good $10-20 million of photovoltaic solar for free. If you subtract $15 million for the PV solar and ignore the value of the carbon in the ground, you're down to $636 per acre for the wood. From a timber perspective: the lowest price that random length lumber has traded in the past 20 years is $138 per 1,000 board feet, in February 2009. (Which brought it back down to the 1992 price.) Lumber traded for over $550 last summer. If you assume 5k board feet per acre, the lumber (harvested and sawn into 2x4s which obviously costs money) would be worth $690 at the 20 year low price.
  • God's Secret Agents: Queen Elizabeth's Forbidden Priests and the Hatching of the Gunpowder Plot (3/5) One person said, "if you really want something ruthless done right, call in 16th century Calvinists." The pope called Queen Elizabeth "the pretended Queen of England and the servant of crime" which is a great title. Protestantism in England led to intense conflict for two centuries. The British were brutally slaughtering their fellow countrymen while at the same time allowing north African Muslim pirates to abduct countless sailors and inhabitants of coastal towns. Henry 8th dismantled the Catholic Church in England during the 1530s, fewer than 20 years after the publication of Luther's theses in 1517 - remarkably quickly. It seems apparent that no English monarch during these centuries of religious strife actually believed in Christianity, but rather saw control of the state church as a fulcrum of power, and more importantly saw a Catholic church to which subjects owed a higher duty as an absolutely unacceptable competitor. As far back as 1392, during the reign of Richard II, an act of parliament called the Statute of Praemunire limited the powers of the papacy by making it illegal to appeal an English court case to the pope if the king objected, or for anyone to act in a way that recognized papal authority over the authority of the king.
  • The Great Depression: A Diary (3/5) A diary of an attorney in Youngstown, OH during the 1930s. What if it was the falling prices resulting from the great productivity increase at the turn of the century combined with an asset bubble related to fractional reserve banking that broke the economy? The deflation: "actual money in Youngstown can't be gotten." Response to crop price deflation (which made farm loans unrepayable) was to destroy crops even when people were hungry - a wealth destroying policy like cash for clunkers. People who survived this were very wary of stocks because investments in even the best companies (that survived) fell so much. The post-depression IRR of stocks is based on a best case scenario of moving from extreme caution to extreme in-caution. Prior to 1932 business leaders would predict definite times that things would improve but by that year duration was perceived as indefinite. "Those men who were wise enough to sell during the boom and then keep their funds liquid in the form of government bonds were not far-sighted or patient enough to wait almost three years to re-invest." Two Japanese premiers were assassinated during 1932. His bar association met with the judges in June 1932 "to devise means to keep the courts open in view of failure of tax collections." One thing I’d never heard of before is a secondary market for bank savings account deposits ("passbooks") selling for 60 cents on the dollar. In 1932, "almost all personal injury cases are worthless because no insurance is carried and defendants are judgment proof." "The farmers are the best organized and most militant group in the country." Also, after the inauguration of FDR: "the U.S. takes action against gold hoarders by demanding from each Federal Reserve Bank the names of persons who withdrew gold after Feb 1." He mentioned that in 1936 there was 1 lawyer in Youngstown for every 600 people. Note that 1932 was the nominal bottom but Dow/gold didn't bottom until 1933, and didn't recover to the 1929 high until 1959! I still think that Roosevelt (the low IQ, underclass man's candidate) made things vastly worse. The Trump crash will lead to a similar socialist disaster.
  • On Trails (3/5) "A path is a way of making sense of the world... The function of a path is to reduce this teeming chaos into an intelligible line. The ancient prophets and sages - most of whom lived in an era when footpaths provided the primary mode of transport - understood this fact intimately, which is why the foundational texts of nearly every major religion invoke the metaphor of the path." "A skillful herder with a willing flock can radically transform the ground they walk on... over the course of forty years, he and his sheep converted a tract of land covered in bracken, bush, and flax into a bucolic, grassy sheep ranch." "It was possible, I gathered, to spend one's life doing little else but walking. Life on the trail being exceedingly cheap, a handful of full-time hikers have managed to live for years or even decades off meager savings and seasonal work. These wanderers reminded me of mendicant monks, slipping free of the gravitational pull of society to live plainly, outdoors." At REI, I saw this cool map of the Pacific Crest Trail and a set of three maps for the Triple Crown of Hiking. It would be cool to hike those, although there are some downsides to consider. Being gone (and semi-inaccessible) for five months is not compatible with business or family concerns. Also, very long distance hiking does not seem to be physical fitness maximizing. You can lift weights, build muscle, and do occasional trail runs of the Grand Canyon. But the through-hikers report that they lose a lot of weight (including some muscle) on these long hikes.
  • Panic (5/5) Reread this - I previously reviewed back in 2015. It's now out of print and only available used. Back then, I said: "If you synthesize the best parts of Falkenstein and Redleaf, you predict that the next crisis is going to come in the investment that is currently perceived as riskless enough for highly leveraged institutions like banks to buy. In the 2000s that was mortgages, at other times it has been other investments like railroads. Right now, government bonds are accorded zero risk in calculating bank capital ratios. The idea that government bonds are riskless when governments are planning to flood the market and when the expenditures are consumed (building no collateral) may prove to be the latest delusion." Some highlights this time: "Modern financial theory amounts to the belief that hard work, superior insight, and good judgment - the keys to success in the real economy - are ineffectual for the investor in public financial markets. It tells the investor: hard work and clear thinking doesn't help here..." We are active investors, so we think in terms of sleuthing. Speaking of good judgment, he says that men who make good decisions tend to make them consistently. "Careful, diligent, and well-prepared men tend to have 'good luck'..." This fits with our high agency mindset from last year. Also, something which is relevant to indexation and the passive bubble: "Public securities markets surrender all the characteristics of strong ownership, including depth of knowledge and power to execute judgments. In exchange, public markets gain liquidity, breadth of participation, and low transaction costs."
  • Cracking the Aging Code: The New Science of Growing Old - And What It Means for Staying Young (3/5) Mitteldorf believes in group selection, and believes that aging is a group-selected adaptation that serves to "stabilize ecosystems, to level the death rate in good times and hard times." Aging is a puzzle: "despite the fact that aging is a disaster for the individual, evolution seems to have guarded and preserved the genes for aging as though they were the crown jewels. This is a dead giveaway that aging must have an essential biological function." He considers and rejects three hypotheses for aging: mutation accumulation, antagonistic pleiotropy, and disposable soma. One big problem with the MA theory for aging is that you would expect less-related organisms to age (at the genetic level) increasingly differently. Yet, "the homology of aging genes across such different species can only mean that aging has been around a long, long time, has been subject to natural selection, and has not been weeded out." The problem with AP theory is that in experiments (e.g. fruit flies), there is a positive correlation between longevity and fertility, not a negative correlation! And the biggest problem with DS theory is that caloric restriction universally results in longer lived organisms. Mitteldorf sees evidence for hormesis in these various research efforts: "If the body is able to prolong life under stress, despite the burden of the stress, then this can only mean that when the body is not stressed, it is holding something in reserve and not doing its best to prolong life. In this sense, the body is purposefully withholding the repair and maintenance that would help it to live longer." Also: "[Hormesis] is incompatible with the idea that the body is programmed to live as long as possible... It seems that aging is leveling out the death rate, killing more when disease and starvation are killing less." The problem with his ultimate theory - that aging has evolved via group selection - is that it is tough to make the math on group selection work, and most evolutionary biologists reject it. See Cochran's withering dismissals when it comes up on his blog, or his occasional posts: 1,2. One other observation from Mitteldorf: "Most mappings [between genotype and phenotype] could never evolve - not in a billion years, not in a billion times a billion years. It seems the genotype-phenotype map we have is optimized for efficiency of evolution [via hox genes]. This demonstrates that evolution itself is a highly evolved process. Not only has natural selection evolved living beings that are robust, resourceful, and efficient reproducers; natural selection has also created a superbly efficient system for evolving." He concludes the book with ideas for hormetic and calorie restriction mimetic anti-aging interventions. The usual stuff - aspirin, metformin. The most novel idea here is that these hormetic interventions may be tricking the body into living longer.
  • The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility" (Incerto) (3/5) We have previously reviewed Taleb's other works: Fooled by Randomness (4/5) and Antifragile (2/5) and The Bed of Procrustes: Philosophical and Practical Aphorisms (3/5). Some interesting observations in TBS: "Venture capitalists do better than entrepreneurs, publishers do better than writers, dealers do better than artists, and science does better than scientists." Another good thought: "Seize any opportunity, or anything that looks like opportunity. They are rare, much rarer than you think. [...] Many people do not realize that they are getting a lucky break in life when they get it. [...] Collect as many free nonlottery tickets (those with open-ended payoffs) as you can, and, once they start paying off, do not discard them. Work hard, not in grunt work, but in chasing such opportunities and maximizing exposure to them. This makes living in big cities invaluable because you increase the odds of serendipitous encounters..." For a variety of reasons I have shifted away from Taleb and towards Falkenstein (with his devastating critiques of Taleb's bloviation). Falky's book is a 5/5 and nothing by Taleb comes close to that. Most readers have probably seen Taleb's freak-out about IQ (where he's utterly wrong) in early 2019, but if not see some summaries [1,2,3,4]. Taleb's level of humility relative to accomplishment and actual novel ideas discovered is an unfortunate outlier. The reason we took a look at TBS and FBR within the past year is that they go from the review desk into the trash can. Now we are left with zero Taleb works on the premises.
  • The Count of Monte Cristo (4/5) Funny editor's note in this edition: "Nearly everyone has attempted to read it, but few have ever penetrated the labyrinth of the second part! Dumas was paid for quantity and nobly he responded." The famous Dantes observation about the three classes of fortunes: "I make three assortments in fortunes — first-rate, second-rate, and third-rate fortunes. I call those first-rate which are composed of treasures one possesses under one’s hand, such as mines, lands, and funded property, in such states as France, Austria, and England, provided these treasures and property form a total of about a hundred millions; I call those second-rate fortunes, gained by manufacturing enterprises, joint-stock companies, viceroyalties, and principalities, not drawing more than 1,500,000 francs, the whole forming a capital of about fifty millions; finally, I call those third-rate fortunes, composed of a fluctuating capital, dependent upon the will of others, or upon chances which a bankruptcy involves or a false telegraph shakes, such as banks, speculations of the day—in fact, all operations under the influence of greater or less mischances, the whole bringing in a real or fictitious capital of about fifteen millions. I think this is about your position, is it not? [...I]f you indulged in such reflections, you would never risk your principal, which is to the speculator what the skin is to civilised man. We have our clothes, some more splendid than others,— this is our credit; but when a man dies he has only his skin; in the same way, on retiring from business, you have nothing but your real principal of about five or six millions, at the most; for third-rate fortunes are never more than the fourth of what they appear to be, like the locomotive on a railway, the size of which is magnified by the smoke and steam surrounding it."
  • The Tangled Tree: A Radical New History of Life (3/5) Darwin saw three key principles driving evolution: "grandchildren, like, grandfathers" (inheritance), "tendency to small change... especially with physical change" (variation), and "great fertility in proportion to support of parents" (overpopulation). Darwin's evolution ideas are yet another example of simultaneous invention - there is enough overlap with Alfred Russel Wallace that some people feel the idea was stolen. The "Tree of Life," of the descent from the last universal common ancestor, is "tangled," and this book describes the scientific history of that discovery. Like most (all?) scientific discoveries, it took the invention of new measurement tools. In this case, molecular phylogenetic research using primitive sequencing of DNA and RNA segments resulted in big surprises that tangled the tree. For example, eukaryotic cells have mitochondria that are captive prokaryotes. Similarly, chloroplasts are captured cyanobacteria. And horizontal gene transfer makes it even more tangled: "If there had been continued and extensive gene transfer, there would be a complex network with many ancestors, instead of a tree of life with sharply delineated lineages leading back to a LUCA." Takeaway: "the logical conclusion was that genes have their individual lineages of descent, not necessarily matching the lineage of the organism in which they are presently found." "Each gene has its own history."
  • The 50,000 Watt Broadcast Barnum: A Book Noir of Stanley E. Hubbard, his life and times (3/5) We need more books about how rich families got started. This one is about the founder of St Paul's Hubbard Broadcasting, Stanley E Hubbard, whose son Stanley S Hubbard is now on the Forbes billionaire list. The early days of radio overlap with the Great Depression and the crime boom in the Midwest. St Paul was a haven for Chicago criminals who needed to get out of town to escape the heat. This was when corrupt socialist Floyd Olson was governor of Minnesota. This author says that underworld figures fed information (indirectly) about competitors they wanted to get rid of to Hubbard, who would broadcast the details. There's nothing to say that Hubbard was funded by or involved with organized crime, just that he used his broadcasting power to get favors and information, and information to get favors and power. "Cross Hubbard and you'll get 50,000 watts of unpleasant news about you shot up your ass on the [10:00 news] and see how you like that. On the other hand, if you're willing to do a few favors he wants you'll receive 50,000 watts of favorable comment..." Also regarding St Paul: "[It] will never be a 'night' town. The guys that own the town want it that way. They want it nice and quiet and peaceful. Get to bed early, get up early, and get to the job and make money. You don't want noise disturbing your peace like downtown Minneapolis where on Hennepin Avenue every night there is a representative of every misfit, goofball, transvestite, doper, kook making all kinds of noise and levitating amid the glitzy, gooky crowd of disconnected or unconnected insanity. Like a big outdoor Zoo."
  • The Goal: A Process of Ongoing Improvement (3/5) Wiki: "The protagonist is a manager in charge of a troubled manufacturing operation. At any point in time, one particular constraint (such as inadequate capacity at a machine tool) limits total system throughput, and when the constraint is resolved, another constraint becomes the critical one. The plot of Goldratt's stories revolve around identifying the current limiting constraint and raising it, which is followed by finding out which is the next limiting constraint. Another common theme is that the system being analyzed has excess capacity at a number of non-critical points, which, contrary to conventional wisdom, is absolutely essential to ensure constant operation of the constrained resource." Also: "Alex and his team struggle to generalize a process that Alex can use when he begins his new job based what the whole team has learned as they turned the plant around. The process they find is: Find the bottleneck in the flow of work. Decide how to 'exploit' the bottleneck (make sure you maximize the flow through the bottleneck). Subordinate every other step to the bottleneck (only do the work the bottleneck can accommodate). Elevate the bottleneck (increase the capacity of the bottleneck). If the bottleneck has been broken repeat the process (a bottleneck is broken when the step has excess capacity). As chapter 36 concludes the team reflects that the word bottleneck should be replaced with the slightly broader concept of constraint."
  • Founders at Work (4/5) Interviews with 32 startup founders (mostly 1990s or very early 2000s) by Jessica Livingston, who started Y Combinator with Paul Graham. This interview project was obviously part of their process of training their startup founder identification algorithm. One of the interviewees is Phil Greenspun who often appears in our links: "Each class of company has one class of stars... If it's a good hospital, the doctors will be good, and it's very easy for them to hire good doctors. But it's hard for them to hire any other kind of person." Also: "People don't like to write. It's hard. The people who were really good software engineers were usually great writers; they had tremendous ability to organize their thoughts and communicate." Another interview was with the founder of Adobe who said something interesting - before desktop publishing, when people saw printed material that was printed in something besides Courier (the typewriter typeface) they thought it was old news because it would've had to be typeset and printed. Could be worth reading the other "X at Work" series: Venture Capitalists at Work and Coders at Work.
  • Structures: Or Why Things Don't Fall Down (4/5) "A society which was more creative and self-confident would not feel quite so strong a nostalgia for its great-grandfathers' buildings and household goods." Stress = load / area; how much force is pulling something apart. Strain is how far atoms in a solid are being pulled apart (increase in length/original length). Plotting these against each other for a given material results in stress-strain diagram. Hookean materials have linear relationship, but the slopes vary for different materials. The slope is the Young's modulus of elasticity; the stress that would double the length of the material (in theory). Wood has 30x higher strength along the grain than across the grain. In 19th C, metal structural collapses were blamed on "defective material," but these variances should not have been sufficient to overwhelm the factor of safety. Rather, at some unknown place in the structure the real stress must have been much higher than the calculated stress ("factor of ignorance"). Stress concentrations can come from adding or removing material: "partial strength produces general weakness." Work of fracture and tensile strength are inversely related, so almost all steel made is "mild". The key to improving steam engines was developing pipes and boilers (pressure vessels) that could handle higher pressures, so that the engines could operate at higher pressures and work more efficiently. Compression vs tension structures: "The whole business of making tension structures is set about with difficulties, complications, and treacherous traps for the unwary. This is especially the case when we want to make a structure from more than one piece of material, so that we are faced with the problem of preventing it from coming apart at the joints. For these reasons, our ancestors generally avoided tension structures as far as they could and tried to use structures where everything was in compression." Behavior of masonry structures could be predicted using scale models despite square-cube problem because they don't fail due to the materials breaking in compression. Arches are compression structures; arch bridges last a very long time. With modern arch bridges, using a suspended roadway (e.g.) means there need be no limit to rise of arch. English railways ran straight and level - "lavish use of cuttings and embankments" thanks to being rich in labor and capital. American railways used lots of bridges - timber trestle. Relative weights of tension and compression structures. In something like a tent or a sailing ship, "it pays to collect the compression loads into a small number of masts or poles, contrived to be as short as possible. The tension loads are better diffused into as many strings and membranes as may be." Overall: the topic of structures could be thought of as the economics of holding up weight. "A structure is a device which exists in order to delay some event which is energetically favored." Also, thinking about how to build stuff, and why stuff is built the way it is, continues the high agency and dimensional analysis themes from last year. I'm paying more attention to the design of bridges that I see now (suspension, arch, etc.).
  • On Growth and Form (3/5). Abridged version. This was mentioned in previous book (Structures), and I had it on my unread shelf anyway. About how a budget and a purpose interact to produce a form or a confined set of possibilities. This is dimensional analysis before it was cool. "It often happens that of the forces in action in a system some vary as one power and some as another, of the masses, distances, or other magnitudes involved... the strength of an iron girder obviously varies with the cross-section of its members, and each cross-section varies as the square of a linear dimension; but the weight of the whole structure varies as the cube of its linear dimensions. It follows at once that, if we build two bridges geometrically similar, the larger is the weaker of the two, and is so in the ratio of their linear dimensions."
  • Village in the Vaucluse (4/5) Twitter classicist Wrath of Gnon mentioned this book by an American French professor (Wylie) who moved to rural France (Roussillon) for a year in 1950: "the lifestyle of his family changed after they moved from an American home with central heating to a farm house in Provence: it brought his family together". "Accustomed to our American house where a movement of the finger regulates the heat of the whole house... our family life, which at home was distributed throughout the entire house and which we tried to distribute throughout the Roussillon house, withdrew from all other rooms and was concentrated in the salle.""The fire of oak logs which burned day and night for siz months became the focal point of our family life."The homes were very rustic, many without plumbing or modern kitchens, far behind American houses of the time. "The absence of conveniences in the houses of some of the wealthiest people indicates that money is not the only factor involved... The teachers and the Doctor, who are the principal propaganda agents for modern hygiene, complain that whenever a family gets enough money to improve its sanitary facilities the money is invested in some other way that will increase the family's capital without drawing attention to its prosperity. If prosperity is publicized, it means a rise in taxes... For most families investments must increase income." When the industrial revolution hit France in the late 19th century, rural inhabitants fled to the cities: "by 1886, 79 of 349 houses stood empty." Real estate prices would have been crushed. (Previously.) Wylie also studied the history of the town. The generation of men born between 1785 and 1795 was "bled white" by Napoleon. More losses in WWI and WWII. He said that the demographic pyramid of 1951, compared with 1851, was "only a ragged ghost." Some economics highlights: food was expensive, the largest part of people's budgets, even though they were doing things like raising vegetables, keeping chickens, or making their own wine. Rent was the least expensive! Fuel and electricity were quite expensive. The villagers thought it was extravagant for Wylie to try to keep his house at 65 degrees during the winter. An interesting observation about farming: "One could never establish from a farmer's records exactly what his real income is... to discover his real income Pascal would have to be shadowed for three hundred sixty-five days of the year so that each of his many little transactions could be recorded..." When civilization had less division of labor, less specialization, and more self-help, people's economic concerns were less legible to the state and harder to tax. A French observation: "No one can become sérieux until he has tasted excess to the point of preferring moderation."
n = 16

Monday, March 25, 2019

March 25th Links

  • Per Olson the Navajo, being roving bandits (with respect to both people and fixed resources) would have had a far higher Laffer maximum extortion rate and thus were not able to accumulate wealth to support a level of civilization nearly as high as the Anasazi under stationary bandits had supported. The Pueblo Indians and later the Mexicans who bordered the Navajos and other roving bandit cultures were able to support agriculture, but were far poorer than other most other fully agricultural regions of the time due to the costs of Navajo and Apache raids. The fall of the Anasazi was hardly the first time roving bandits had conquered stationary bandits causing a massive decline in wealth and civilization: it is a common pattern throughout history. [Nick Szabo]
  • "And every pound of it is dependent on my personal exertions." Here spoke a sea-valve that communicated directly with the water outside, and was seated not very far from the garboard-strake. "I rejoice to think that I am a Prince-Hyde Valve, with best Para rubber facings. Five patents cover me - I mention this without pride - five separate and several patents, each one finer than the other. At present I am screwed fast. Should I open, you would immediately be swamped. This is incontrovertible!" Patent things always use the longest words they can. It is a trick that they pick up from their inventors. [Rudyard Kipling]
  • The amount of time I've spent on low-value business administration has declined from about 10~20% of my week (really!) to functionally zero. A surprising portion of running my own businesses was contract negotiation, making sure vendors got paid, and wiring profits in time to make rent. We have people who specialize in all those things so I no longer have to. (I miss getting woken up because a server had... just kidding, I do not miss that at all.) [Kalzumeus]
  • People say that your house is the biggest purchase you'll ever make, but it won't be the most consequential negotiation. If you're sane only about 25% or so of your gross income is subject to the results of real estate negotiations. Close to 100% is subject to the results of salary negotiations. Thus, your salary negotiations are probably going to be the most important financial decisions you will ever make. We socialize middle class Americans to go into them unprepared, demotivated, and fearful of success. The reality is that rich, successful people negotiate. (This is one important way in which they get — and stay — rich.) It is an all-day-every-day thing in much of the business world, which is where most rich people get their money. [Kalzumeus]
  • I moved to Spain from New York City in 2002, and the Prado was absolutely part of the reason I chose to live in Madrid over Barcelona or Seville. My first assignment as a journalist was a story on the Prado's expansion, designed by Rafael Moneo, though I would have to wait five years to write it as legal battles and construction delays pushed the opening to 2007. Later, I followed Gabriele Finaldi, currently the director of London's National Gallery, but then deputy director of the Prado, on the whirlwind 45-minute highlights tour he often gave to visiting heads of state. And whether they want it or not, visiting family and friends are subjected to my own highlights tour of the Prado. [NY Times]
  • Yak shaving is a sign that you are living with problems waiting to crash down. And living in a situation where you don't have time to do the sort of maintenance that would fix things and keep smoulders from bursting into flames. Yak shaving is a sign that you are living with problems waiting to crash down. And living in a situation where you don't have time to do the sort of maintenance that would fix things and keep smoulders from bursting into flames. [Less Wrong]
  • Tesla also trades at an extreme premium compared with its peers, says Bapis. "They're trading at per units sold to market cap of $120,000. Daimler and BMW trade at $30,000. So it's four times any other market cap per units sold out there," he said. [CNBC]
  • Is it fair to think of immigration as the reverse of the Black Death? We're dramatically growing our population via immigrants and children of immigrants. What seems surprising, then, is that the people who say that they want to see all of the economic results of the Black Death simultaneously say that they want to adjust U.S. demographics in precisely the opposite direction of the Black Death. [Phil G]
  • At the mid-point of the offering range $18bn, the price to revenue multiple is roughly 5x (18/3.5) and the multiple of net revenues (what Lyft keeps after paying drivers) is roughly 11x (18/1.6). [A VC]
  • Indeed, this is why most of the other self-driving projects use LIDAR. Musk believes that cars should be able to drive with just their cameras, since people drive with just their eyes. I'm sure we will get there one day, but LIDAR works better in the short term for exactly this situation. It will be really interesting to see how the LIDAR / no-LIDAR debate plays out. [Reddit]
  • Around this point, my thumb started to hurt. To move forward on the scooter, you have to push the throttle down with your right thumb. It starts to hurt after a while. Maybe one day we will merge with the technology in a scooter singularity, but until then, the scooters aren't made for long trips. Also, it should be noted that they are pretty janky. Despite their intended use in urban areas, their shoddy construction and tiny wheels seem ill-equipped to handle aging, bombed-out city streets. They could be felled by the smallest of potholes. Should we be letting anyone ride around on these things, unsupervised? I say this as someone who spent much of his adult life bike-commuting around New York: The scooters seem incredibly dangerous. [Gizmodo]
  • Holmes provided the media with a glorious example of what women can do in tech. See, peasants, women can create the next Apple and Google! See, note she is a woman, too, not some ugly lesbian who would reinforce the idea that one has to think like a man to be good at computers! The media could not have conjured up a character to hit all of their needs in one package. Holmes is a cute, young woman. She is thin with pretty eyes and nice hair. She is white, so there's no awkward Asian math exceptionalism at play. She looks like she could be your daughter if your daughter cleaned up for business interviews. Holmes was too good of a symbol for the media to resist using. [Social Matter]

Monday, March 18, 2019

March 18th Links

  • The key feature of bubbles like 2000, 2007 and today is that, by the market peak, actual S&P 500 total returns over the most recent 12-year period outpace the return that one would have anticipated on the basis of valuations 12-years earlier. This is not an indication that valuations have failed, but rather an indication that prices are likely to do so. [Hussman]
  • Eddie believed he knew more than anybody else. I had a conversation with him about putting the right merchandise in the store for the customer that lived within the radius of that store, and Eddie said, 'We have a Kmart in the Hamptons that does great.' The customers come in and they buy, I think he was saying, the $15 folding chairs. They'd buy them for their parties and then they'd throw them away. So why can't a store be anywhere and do business? That was a huge disconnect, because most people would buy that chair and hold on to it for 20 years. [WSJ]
  • When egg prices rose in the spring of 1966 and Agriculture Secretary Orville Freeman told him that not much could be done, Johnson had the Surgeon General issue alerts as to the hazards of cholesterol in eggs. [The Great Inflation and Its Aftermath]
  • There are 12 lines on the Mexico City metro, each of which has its own colour and number/letter. This makes the Mexico City metro lines really easy to navigate, because you can just look out for the colour-coded signs in the stations, instead of flailing about looking for names or numbers. You can also do the same for the individual stops, which all have their own logos, as well as names. (Fun fact: this was because a lot of the Mexico City population was illiterate when the first metro line was inaugurated.) [link]
  • San Jose is a dump, with nothing of interest to tourists (you have to get out around the country), whereas CDMX is one of the world's great cities. No comparison. [Trip Advisor]
  • Four open computers and frantic clicking couldn't snag Jillian Hiscock tickets to Michelle Obama's Wednesday book event in St. Paul when they went on sale in December. The moment they hit the web, the St. Paul resident found herself jostled in online queues as the seats she desired in the upper level of the Xcel Energy Center disappeared, with the event virtually selling out within minutes. "We were trying everything and couldn't get in," said Hiscock, 35. [Star Tribune]
  • As time went on, the earplugs-plus-headphones protection rig became standard writing gear. That was because the use of gas-powered leaf blowers in my Washington, D.C., neighborhood evolved from a few hours a week during the leafiest stretch of autumn to most days of the week, most weeks of the year, thanks to the advent of the "groomed" look that modern lawn crews are expected to achieve. [The Atlantic]
  • A while back I attended a talk at the Long Now Foundation based here in San Francisco. Jesse Ausubel suggested that we wouldn't even need to grow grain, soy, or sugar to feed the yeast in vats. Plain old hydrogen is an excellent chemical feedstock for hydrogenomonas. These micro organisms are capable of combining hydrogen with carbon dioxide and oxygen in the atmosphere to produce all the protein we need. Put a biodigester next to a power plant (nuclear, gas, coal, wind, solar, hydro...) that supplies the hydrogen and enough diversified formatted foods can be produced to feed an entire city. [Granola Shotgun]
  • While I was waiting for the county paperwork to be processed I did a lot of research and decided I wanted a solar powered well pump. Since the fir tree was going away the pump house would receive full southern sun all day. Ranchers and off grid properties use solar pumps all the time. One huge advantage of a DC solar pump is there's no need for inverters or batteries which are not only the most expensive part of a solar power system, but they also need ongoing maintenance and periodic replacement. But with a basic DC solar pump the sun hits the solar panels, the pump kicks in, and water is brought to the surface. Super simple. [Granola Shotgun]
  • To those who like the notion that the Indo-Europeans triumphed because they carried in bubonic plague (or some other pathogen) that blasted immunologically naive EEF farmers: find me a plague that only kills men – all of them. [West Hunter]
  • Here's a conundrum: in a ratio of 500:28, Hillary Clinton was endorsed by our smartest citizens (journalists, editors, and publishers) as the best qualified person, out of more than 325 million, to lead the United States government. After November 2016, however, she didn't have any pressing job responsibilities and her family foundation was also winding down. Why wouldn't a country of 5 or 10 million have tried to persuade her to come over and be their leader? From a statistical point of view, assuming equal intelligence and education levels, it is unlikely that a country of 10 million would have a better person available than someone who was #1 out of 325 million. [Phil G]
  • Lori Loughlin's daughter Olivia Jade Giannulli, who is attending the University of Southern California, would have probably been fine attending Arizona State University. (Arizona State is a thriving public research university that Ms. Giannulli's father is reported to have cited on F.B.I. wiretaps as the unthinkable destination he would pay bribes to avoid.) [NY Times]
  • Even a 30% annual rate of return seems incredibly high, but it's not and here's why. While Western Lime was only earning 8.72% on it's equity an investor buying at a 67% discount to book was earning 26% on their investment. Over the ensuing nine years Western Lime continued to execute as they had in the past. The investor buying at such an extreme discount was able to realize a consistently high rate of return. You don't need to buy a great business that compounds at high rates, just a consistent business at a considerable discount. [Oddball Stocks]