Author Archives: SMS

Influential Reads – September 2022

Reading Time: 3 minutes

“When you are a Bear of Very Little Brain, and you Think of Things, you find sometimes that a Thing which seemed very Thingish inside you is quite different when it gets out into the open and has other people looking at it.” ― The House at Pooh Corner by A.A Milne” 

Writers that can consistently and frequently write new and interesting pieces always impress me.  I am pretty thrilled if I have what I consider to be one new and unique thought a month.  Then have the luck to capture that fleeting moment down in writing. And, that generally turns into the Winnie the Pooh moment described above. 

That previous paragraph may be an awkward way of explaining why I have been fairly quiet these days, on top of just being busy at work.

For similar reasons, reading was a bit off this month – although I did notch some easy reads.

Correct, I am a touch out of order on the Travis Mcgee series, but that does not seem to matter too much.

Here are my most influential reads for the month – in no particular order:

  1. You’re not good at this. – “Zero percent interest rates plus fiscal and monetary stimulus with housing up 40% and stocks at an all-time high was a ridiculous policy.”
  2. Entering the Superbubble’s Final Act – “The current superbubble features the most dangerous mix of these factors in modern times: all three major asset classes – housing, stocks, and bonds – were critically historically overvalued at the end of last year.”
  3. A Housing Bubble and Kim Kardashian: More Troubling News for Markets – “Pumped up by Federal Reserve expansionary policies, the public’s wealth in equities and residential real estate has ballooned, relative to the economy, even faster and more furiously than during the housing bubble of the 2000s and the dot-com daffiness of the 1990s.”
  4. Three Things I Think I Think – It’s Breaking – “At 7% the math is totally broken. “
  5. Grim (equity) tidings – “A Fed paper says tax and interest rates can’t fall much further, and that bodes poorly for stocks.”
  6. Quantitative Tightening Is About to Ramp Up. What It Means for Markets. – “Market pricing is determined by supply and demand, and in the coming years, there is going to be a tremendous supply of Treasuries coming from two sources.”
  7. Seeing Red – “Is China our enemy or competitor? The answer is yes.”
  8.  Would You Still Buy A Tesla? – “I used to be a fan of Elon Musk, no longer. The guy is irrational, and he believes the rules don’t apply to him. And he acts like he’s the only one who owns the truth, who can move us into the future, and that’s just hogwash.”
  9. Pillow fight – “That’s like going to a Dallas Cowboys football game at AT&T Stadium, seeing 80,000 fans dressed in silver and blue with stars painted on their faces, all cheering wildly when the Cowboys score. Then, based on that experience, determining everyone across the nation is a rabid Cowboys fan and the 82,500 people at MetLife Stadium cheering for the Giants simply just can’t be real.”
  10. One Of The Smartest Things Anyone Has Ever Said To Me – ” I was finished with my Righteous Indignation phase and had settled more into a phase I would maybe call Please Just Don’t Hit Me With Your Car.”

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

Top clicks across the site last month:

  1. Financial Model vs. Operating Model
  2. Cash
  3. Solamere Trail Loop
  4. EBITDA Is Not A Good Proxy For Cash Flow
  5. Excel Tips: Football Field Chart

Updated stats:

Read ArticlesBooks
January891
February1100
March1023
April1032
May1343
June740
July822
August1127
September724
October
November
December
Total87822

Bears Watching: That Sound

Reading Time: < 1 minute

Multiple choice question.

That giant sucking sound you hear is:

  1. The Fed reducing its balance sheet (i.e., quantitative tightening).
  2. Enormous amounts of paper gains in all sorts of artificially inflated assets vanishing.
  3. Both

Influential Reads – August 2022

Reading Time: 4 minutes

“So much advantage in life comes from being willing to look foolish in the short term. ” – Farnam Street

Happy Labor Day.  After you read this, go outside and ride your bike or something.

Seven books last month!  And I spent some good time reading through aging articles on my list (see How I Read) and culling others to help make my list a bit more manageable.  I am also working on a categorization scheme to guide my reading & research prioritization in the months ahead.  More on that at some future date.

So, I found the John MacDonald Travis McGee series.  So, in the vein of these two thoughts below, I made up some ground on my reading goal.

“I think it’s good to read ambitious books. But if you only get ambitious books (or worse, you force yourself to finish them before reading fun ones) you’ll kill any potential joy for reading you might have. So always have “fun” books—light, easy reads that make you feel good in addition to weightier tomes. That way you can switch between styles depending on whether you want challenge or relaxation and never give up the habit of reading.” – Scott Young

“Yet, many people—even those with a voracious reading habit—make the same mistake: They hardly, if ever, read fiction. They even brag about it! They’re too busy. They don’t have time for “art.” There’s plenty of “real” stuff—the characters in fiction that bear little resemblance to the world we know? I don’t have time for it. But fiction, like all wonderful art, is filled with beautiful bits of insight about the human condition. It can change your life and teach you just as much as any non-fiction book. Actually, no, it can teach you more! It can shine a light on universal truths that non-fiction, bounded by the facts and figures of its specific world, often cannot (to say nothing of the research that connects literature with improved empathy, reduced stress, and hone social skills).” – Ryan Holiday

Here are a few highlights from the series:

  • “Savagery, venom and guile are good survival quotients.”
  • “There is as much danger in overestimating as in underestimating the quality of the opposition.”
  • “These are the slums of the heart. Bless the bunnies. These are the new people, and we are making no place for them. We hold the dream in front of them like a carrot, and finally say sorry you can’t have any. And the schools where we teach them non-survival are gloriously architectured. They will never live in places so fine, unless they contract something incurable.”
  • “Somebody has to be tireless, or the fast-buck operators would asphalt the entire coast, fill every bay, and slay every living thing incapable of carrying a wallet.”
  • “Being a beach bum takes money. If you want to do it with flair. If the money comes in regularly, then you’re working for it, and you lose your status. I have to come by it in chunks now and then, to protect my way of life.”
  • “The old city was being filled with these tall tasteless rectangles, bright boxes which diminished the people who had to live and work in them. People kennels. Disposable cubicles for dispensable people.”
  • “Self-evaluation. It is the skin rash of the emotionally insecure.”
  • “Temptation does not deliver most of us into evil, because temptation is a constant and evil is a sometime thing with most of us.”
  • “The incomparably dull tract houses, glitteringly new, were marching out across the hills, cluttered with identical station wagons, identical children, identical barbecues, identical tastes in flowers and television.”
  • “My friend Meyer, the economist, says that cretins are the only humans who can be absolutely certain of their own sanity. All the rest of us go rocketing along rickety rails over spavined bridges and along the edge of bottomless gorges. The man who believes himself free of any taint of madness is a damned liar.”
  • “The stars were bright. A dog-thing hollered a hundred miles away. Somebody walked over my grave.”

Here are my most influential reads for the month – in no particular order:

  1. Recession Is Already Here for Many Small Businesses – “That’s for good reason. Some analysts say that while a mild fall in demand has weighed on energy prices, the drop in gas prices is largely due to the government’s release of strategic petroleum reserves.”
  2. Finding persistent invisible systems – “But plastic persists as a commercial solution, because the system is invisible and resilient. Each member of the system does what they do, usually for good reasons.”
  3. Brain Food: Appearing Foolish – “To be a good manager, you want things to run smoothly. And insights are not ways of running smoothly. Insights are disorganizing and disruptive. And so, that’s a major reason that organizations, without even intending to, block the insights that come their way.”
  4. Brandon Sanderson’s Advice for Doing Hard Things – “I can do hard things. Doing hard things has intrinsic value, and they will make me a better person, even if I end up failing.”
  5. Latticework: The New Investing – “Hagstrom makes a case that a successful stock picker must be ready to shift models and look at the markets from different vantage points with the passage of time.”
  6. Welfare Queens – “The Inflation Reduction Act (“IRA”) is being hailed/hated as a climate bill, but it’s really just the most recent investment by Eagle Capital”
  7. The Climate Bill Is About to Reshape Global Energy – “The age of renewable energy, by comparison, is coming on with lightning speed.”
  8. I Beg to Differ – “The basic idea behind second-level thinking is easily summarized: In order to outperform, your thinking has to be different and better.” and “Readily available quantitative information with regard to the present cannot be the source of superior performance.”
  9. The Fed Is About to Ramp Up Balance-Sheet Shrinkage. It May Get Dicey. – “Starting next month, those caps will rise to $60 billion and $35 billion, respectively, meaning the pace of balance-sheet runoff is about to double”
  10. A Simple Way to Introduce Yourself – “That’s it for the self-introduction framework. Present, past, future. Eloquent and effective”

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

Top clicks across the site last month:

  1. Financial Model vs. Operating Model
  2. Excel Templates & Other Free Stuff
  3. Solamere Trail Loop
  4. Operating Model Tips
  5. EBITDA Is Not A Good Proxy For Cash Flow

Updated stats:

Read ArticlesBooks
January891
February1100
March1023
April1032
May1343
June740
July822
August1127
September
October
November
December
Total80618

Three Take-Aways: Titan: The Life of John D. Rockefeller, Sr.

Reading Time: 2 minutes

“Rockefeller equated silence with strength: …’success comes from keeping the ears open and the mouth closed.” (pp. 174)

This was a beast of a book: 676 pages not including Acknowledgments and Notes.  I fought a valiant fight and eventually made it through it.  The book was an interesting take on the industrialist period and Rockefeller’s contribution to it, but not gripping.

Three take-aways from the book:

  1. Legacy

“As architect of the first great industrial trust, he proved the ultimately fragile nature of free markets, forcing the government to specify the rules that would ensure competition and fair play in the future.” (pp. 667)

Rockefeller’s legacy has oscillated a bit depending on the time and viewpoints.  A point made in the book about Rockefeller and other industrialists (a.k.a. robber barons) of that period, is that they operated in a business environment that was radically different than the one we have today.  Many of the laws around corporations and capitalism did not exist, or took a much different form.  And so, defensibly, many of the industrialists felt that they were pioneering and stabilizing forces in their industry rather than anti-competitive.  In hindsight, we look at their actions with a much different lens.   

  1. Timing of Wealth Creation

“Beyond his talents as a businessman, Rockefeller benefited from a large dollop of luck in his life, making more money in retirement than on the job.” (pp. 557)

Compounding.  The eight wonder of the world.  If you read about Buffet, the pattern is similar in terms of wealth creation.  Rockefeller made more money after the Standard Oil breakup than before it.

  1. Personal Finances & Philanthropy

“Rockefeller engaged in strenuous rituals of austerity, and he grimly sought to simplify his life and reduce his wants.” (pp. 504)

“They [his children] were expected to spend a third of their money, save a third, and donate a third to charity.” (pp. 629)

Rockefeller was not ostentatious like some of his contemporaries – at least relatively speaking.  In fact he was almost humorously frugal, which stemmed from a fairly religious (Baptist) belief system.  And he required his kids to follow suit.

Rockefeller Sr. also pioneered a model of philanthropy imitated by many of the wealthy today.  And he was notoriously private and hand-off regarding most of his philanthropic works – including the University of Chicago and some of what are now National Parks – like Grand Teton.

A few other recent book reviews:

  1. Range
  2. Principles
  3. That Wild Country
  4. Superforecasting: The Art and Science of Prediction
  5. Essentialism: The Disciplined Pursuit of Less
  6. Fortune’s Formula

Excel Templates & Other Free Stuff

Reading Time: < 1 minute

Readers,

Financial modeling and excel are skills that I am good at.  I am not sure if that is a good or bad thing.

And at times, I have posted some templates and workbooks that I find useful or use a lot.  Hopefully, they will save you a bit of time.

Here is a current listing:

  1. Excel Template: Stacked Bar Chart with Total
  2. Excel Template: Football Field Chart
  3. Maturity Schedule

These are all downloadable on Gumroad at no cost.  

Drop a note in the comments if there is something excel that you would like to see.  No promises.  

Remember, you get what you pay for…

Grand Teton N.P. Map

Reading Time: < 1 minute

We love Grand Teton Natoinal Park. We’ve had many adventures there. See some highlights:

  1. Camping In Grand Teton N.P.
  2. Teton Canyon
  3. Camping In Grand Teton National Park #3
  4. Winter in Yellowstone N.P.

Recently, we had some family come out this way and I put together this interactive Google Map of the Grand Teton area with a bunch of points of interest, places where we have had good wildlife sightings, and camp spots.

This was a heck of lot easier than trying to explain where some of these places are, since they area by definition, in a fairly undeveloped area.

I will update as we have more adventures….

Influential Reads – July 2022

Reading Time: 2 minutes

“Predicting the future is harder than misremembering the past.” – Cliff Asness

I have been pretty quiet this summer, since I have no special insights into what the future holds.  There are things that I think are likely to happen.  Or should happen, but probably won’t.  But the error bars seem pretty wide at this point.

I keep coming back to the fact that there have been massive flows driving asset prices over the last few years.  And that seems to still be the case.  The Fed is on track to ramp up their balance sheet reduction in September and that will most certainly be interesting to watch unfold.

Here are my most influential reads for the month – in no particular order:

  1. Drinking Too Much Is an American Problem – “The social context of drinking turns out to matter quite a lot to how alcohol affects us psychologically.”
  2. The Bid/Ask Spread in Venture Capital – “When the bid/ask spread exceeds 5 or 10%, the market seizes up, like a combustion engine without oil. No one trades. Investors pack their vests into a rolly-suitcase and head to the beach.”
  3. Trout savant in a big black cape – “Even with that cape, Sheridan Anderson was always a stealth man.” SMS: Mrs. SFTE is attempting to turn me into a fisherman.
  4. June CPI report: bad, bad, bad, bad, bad – ” As I have been saying for 9 months, house prices (black) lead OER by 12-18 months, meaning we were likely to see the highest YoY% increases in OER ever. “
  5. Summary of My Post-CPI Tweets (June 2022) – ” And the Median CPI y/y chart is unambiguous at this point: still accelerating.”
  6. Tech and War – “If a country, corporation, or individual assumes that the tech platforms of another country are acting in concert with their enemy, they are highly motivated to pursue alternatives to those tech platforms even if those platforms work better, are more popular, are cheaper, etc.”
  7. JPMorgan’s Aronov Ignores the ‘Cash Is Trash’ Chorus – “But the reality is that if you have been in cash for the last five years, you’ve essentially outperformed the Bloomberg Aggregate index year-to-date, over one year, three years, and, depending on the day, yes, even five years. “
  8. 3.5% ASAP – “Be patient. 12 month Treasuries at 2.7% are better than your money market fund and almost all other alternatives.” SMS: The spread between MM funds and Tbills seems nonsensical to me.
  9. Brain Food: Good Advice – “You have to learn to quit being right all the time, and quit being smart all the time, and quit thinking this is a contest about how smart you are and how right you are, and realize that you are here to make a positive difference in the world.”
  10. Elon’s Out – “Musk seems to get a lot of joy out of using Twitter, and pretending to buy Twitter is a good way to create drama on Twitter.”

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

Top clicks across the site last month:

  1. Financial Model vs. Operating Model
  2. Cash
  3. Solamere Trail Loop
  4. EBITDA Is Not A Good Proxy For Cash Flow
  5. Excel Tips: Football Field Chart

Updated stats:

Read ArticlesBooks
January891
February1100
March1023
April1032
May1343
June740
July822
August
September
October
November
December
Total69411