Strovek Writes

analytics


Wednesday, June 27, 2012

Prescription for Guaranteed Misery in Life

This is an interesting article on how to ensure misery in Life.   In case you wonder why I bother to bookmark this page, it is because it is funny and by one of the greatest investor of our time - Charlie Munger.

Tuesday, June 26, 2012

Quotes and book recommendation by Charlie Munger

These quotes were taken from the following site.

“We both (Charlie Munger and Warren Buffett) insist on a lot of time being available almost every day to just sit and think. That is very uncommon in American business. We read and think.” 
 Charles T. Munger

“We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.” 
 Charles T. Munger

“In my whole life, I have known no wise people who didn't read all the time -- none, zero. You'd be amazed at how much Warren(Buffett) reads -- at how much I read. My children laugh at me. They think I'm a book with a couple of legs sticking out".” 
 Charles T. Munger, Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger


The following is taken from another source:

“SOME OF THE MOST ADMIRED PEOPLE IN FINANCE—INCLUDING 
ALAN GREENSPAN—ARGUED THAT DERIVATIVES TRADING, SUBSTITUTING FOR
THE OLD BUCKET SHOP, WAS A GREAT CONTRIBUTION 
TO MODERN ECONOMIC CIVILIZATION. THERE’S ANOTHER WORD 
FOR THIS: BONKERS.”   CHARLES T. MUNGER 




The following quotes were taken from this site.

On the importance of scepticism
How do you avoid being part of the majority that’s going crazy and be in the minority that stays sane? Well, that’s a very good question. Personally, I think it’s a lot like golf. You have to practice the right swing in golf. I think in the rest of life, you have to practice the right decision-making process. You have to be sceptical in many cases of conventional wisdom. And you have to be able to do what Kipling recommended—which is to keep your head when all about you are losing theirs. And that’s a wonderfulquality for an investor or a corporate executive to develop…
For instance, academics taught that diversification was the secret of success. Well, diversification may be a way of avoiding disaster for some people, but it’s not the way to success. And if all you have is a way of avoiding disaster, you’re not much of a teacher in a world that wants a fair amount of success. That’s why some people who think the way I do don’t call if diversification —they call it di-worse-ification. Certainly, Berkshire and its subsidiaries have generally owned fewer things that we’ve known more about and just accepted a little more volatility.
On how to make money with small amounts of capital
I think I’d be looking in the small-cap world, of course. But I’d be looking anywherewhere there were inefficiencies that I could exploit. I would be looking for  a place where I could figure out something very useful that other people didn’t know—and that’s going to be hard to do if you’re trying to judge, say, Dupont and Dow… So I certainly wouldn’t go into the big places where the big boys have to be. I wouldn’t try to figure out whether the drug pipeline at Merck was better or worse than the drug pipeline at Pfizer—because (A) that’s very hard to do, and (B) a lot of smart people are already trying to do it.
So I’d go where there were market inefficiencies, where you could figure out something that will give you an advantage over other people who were trading in the stock and where by use of your own talent and work you would know important things that other people don’t.
That could be in a lot of different places. However, the basic idea is that if you want to succeed in life in a capitalistic world, go where the competition is low. That’s all I’m telling you to do.
On the importance of different mental models
At a Berkshire meeting of directors one management team came in and said "We've gotten very successful because we follow the 80/20 rule—80% of the profits come from 20% of the business and, therefore, we concentrate on the 20% that creates most of the profits". And sure enough, their figures showed that policy had worked wonderfully for them.
The next man came in and he had an even more profitable division. And he said, "I try to figure out the worst 20% in my business—the activities that nobody else would want—and I specialise only in that. And because everybody else wants to get rid of it, and I have figured out a way to correct the miseries, I've created this wonderful business."
And, of course, both presentations were totally correct.
So I need both models in my head in order to function - because if I had only the 80/20 rule, I would miss the merits of the second business.
On accumulating wisdom
In the end, you’re dead—and they take all the money away. “How much did old Charlie leave? I believe he left it all.” That’s the rule. And, of course, the wisdom goes away too. But I would say that wisdom acquisition is a moral duty if you have the capacity to get it. If you have the capacity to get wisdom and don’t use that capacity, I regard that as a moral failure. You can see why I like the Chinese—because that’s a pretty Confucian though. I literally believe that wisdom acquisition is a moral duty.



A list of books recommended by Charlie Munger can be found in the following page.



Academic Economics: Strengths and Faults After Considering Interdisciplinary Needs - a speech by Charles T Munger


It is a pretty interesting speech by Vice Chairman of Berkshire Hathaway.   The text of the speech can be found here.

The table of content is as follow:

TABLE OF CONTENTS
Page
Introduction by Rajnish Mehra ...................................................................................................... 1
Munger’s Opening Remarks:......................................................................................................... 1
Non-use of Efficient Market Theory at Berkshire ............................................................. 2
Personal Multidisciplinary Education................................................................................ 3
The Obvious Strengths of Academic Economics .............................................................. 4
What’s Wrong with Economics......................................................................................... 5
1) Fatal Unconnectedness, Leading To “Man With A Hammer
Syndrome,” Often Causing Overweighing What Can Be Counted ........... 5
2)  Failure To Follow The Fundamental Full Attribution Ethos of Hard
Science ....................................................................................................... 6
3) Physics Envy.............................................................................................. 7
Washington Post case study....................................................................... 7
Einstein and Sharon Stone ......................................................................... 7
4)  Too Much Emphasis on Macroeconomics................................................. 8
Case study:  Nebraska Furniture Mart’s new store in Kansas City ........... 8
Case study:  Les Schwab Tires.................................................................. 9
Causes of problem-solving success ........................................................... 9 
5)  Too Little Synthesis in Economics.......................................................... 10
6)  Extreme and Counterproductive Psychological Ignorance...................... 13
7)  Too Little Attention to Second and Higher Order Effects....................... 14
Mispredicting Medicare costs.................................................................. 14
Investing in textile looms......................................................................... 14
Workman’s comp madness...................................................................... 15
Niederhoffering the curriculum ............................................................... 15
8)  Not Enough Attention to the Concept of Febezzlement .......................... 17
9)  Not Enough Attention to Virtue and Vice Effects................................... 18
Religion.................................................................................................... 18
Pay for directors and judges..................................................................... 18
Not a vice that some systems are deliberately made unfair..................... 19
Contributions of vice to bubbles.............................................................. 19
Paradoxical good contributions from vice; the irremovability of
paradox......................................................................................... 19
Conclusion ....................................................................................................................... 20
Clinging to failed ideas – a horror story .................................................. 20
Repeating the big lesson .......................................................................... 21


Some quotes from the speech:

But you shouldn’t accept all my notions because you’ll risk becoming unemployable.  You shouldn’t take my notions unless you’re willing to risk being unemployable by all but a few.


Keynes said “It’s not bringing in the new ideas that’s so hard.  It’s
getting rid of the old ones.”  And Einstein said it better, attributing his mental success to
“curiosity, concentration, perseverance and self-criticism.”  By self-criticism he meant becoming  good at destroying your own best-loved and hardest-won ideas.  If you can get really good at
destroying your own wrong ideas, that is a great gift.




Monday, June 18, 2012

Cardio Doesn't work because...

The article, published in Obesity Reviews (Vol. 13 Issue 6),
explained that cardio doesn't work for FOUR reasons:

a) Some people eat more when they start a cardio program
b) Calorie burning at rest often decreases with cardio
c) Calorie-burning lean tissue is often lost
d) Cardio programs cause you to do less activity over the day

Gladwell

While looking for information on "Blink", I came across this website which analyzes a few of the books by the author. 

The website is http://www.gladwell.com

Discussion on:
  1. The Dog
  2. Outlier
  3. Blink
  4. The Tipping point

Sunday, June 17, 2012

Find words of fixed length and starts with

When doing crossword, we sometimes have a fixed number of spaces and have specific words in between.

This web site will help.

The tip provided on how to use it is as follow:

Use a hyphen (dash) to give the location of a missing letter: w-rd or -are
Use an asterisk (star) for any number of unknown letters: lett* or *gry or ar*ct
Exclude words containing the letters that follow a caret (hat): ma-e ^kt
Or enter a few letters (without hyphens or asterisks) to see if they make any words.

Unscrambling words

If you have a scrambled word you need to unscramble here is a resource to help you do that.