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Influential Reads – December 2021

Reading Time: 2 minutes

“The roads not seen almost always matter more than the potholes we hit along the way.” – Seth’s Blog

Another relatively low volume reading month. I did try to clean out my article “Read Me” folder a bit and you see that reflected in my article count.  Book reading was a different matter.  I need to figure something else out there.

Focusing on a few positives (possibly a New Year’s goal).  I had a goal of increasing my writing & posting and posted 45 new updates to the site in 2021.  For those of you who know how many weeks are in a year, you will notice that it was not quite weekly but much better than my prior cadence.  Ignoring the fact that I am pretty sure 98% of my site traffic is North Korean bots, overall site traffic was up 76% over 2020.  Thank you, dear North Korean bot, for reading…

And by the way, Happy New Year!

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

  1. Nervous Breakdowns Can Be Good – “This got me thinking that maybe we need to bring back the nervous breakdown, to protect the nation’s collective reserve of nerve force at a time when it’s stretched so thin. What would the modern version of a culturally accepted, nervous-breakdown-precipitated time-out look like?”
  2. Credit-Driven Asset Price Inflation – “Consumers simply have more borrowing power now when it comes to homes than they have on record in this data series”
  3. The 43rd Lesson – ” The law of karma puts a person at the centre of responsibility for everything he or she does and everything that is done to him or her.”
  4. Where Are Workers Going? Long Covid Prevents Millions From Returning to Work“Doing some back-of-the-envelope math, that’s 4.6 million people. “
  5. You Have Not Missed It – “Thus, I think we are out of the 2-percent-as-the-center-of-the-distribution era, and into an era where the middle is more like 3%.”
  6. Slow Holidays – “If we want space, we have to create it intentionally.”
  7. Why Small Habits Make a Big Difference – “Habits and mental disciplines are controllable, offer enormous opportunity for returns, have extremely low risk, and you can use them for the rest of your life.”
  8. Dave Barry’s 2021 Year in Review – “Because nobody knows what 2022 will bring. Will it suck as much as this year? Will it suck more? Or will it suck a LOT more? These appear to be our choices.”
  9. Getting ahead vs. having enough – “You don’t have to participate in a game that will constantly pit you against the competition (i.e., everyone else in the world). You can opt for simple satisfaction instead. “
  10. How Writing Daily Wins Can Help Rewire Your Brain for Confidence and Energy – “Our brain has a negative bent, often referred to as negativity bias.” SMS: I thought it was just me.

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. Influential Reads – November 2021
  3. Three Key Take Aways: That Wild Country
  4. Excel Template: Football Field Chart
  5. EBITDA Is Not A Good Proxy For Cash Flow

Updated stats:

Read ArticlesBooks
January654
February491
March643
April532
May970
June542
July1061
August1032
September1192
October911
November800
December1050
Total98618

You Cannot Eat Growth

Reading Time: 2 minutes

History may not repeat, but it seems to rhyme.  I am totally plagiarizing that quote for somewhere, but I am being too lazy to go reference it.

But I feel like I have seen this story before.  And it ended fairly predictably last time.  Lots of publicity around high growth, but unprofitable business.  And asset classes with no inherent earnings power.

Remember, you cannot eat growth.  Growth won’t pay mortgages or tuition.  Or really anything else for that matter.

The focus on growth and sales, for the sake of growth and sales, feels eerily reminiscent of the late 1990’s and early 2000’s.  You can see some of that in metrics like the following:

The only part that seems to be missing is some metric like “eyeballs”.

The concept of scaling a business and taking market share is not lost on me.  However, many of these growthy businesses have no clear answer to when can you stop scaling and focus on driving operating leverage and creating economic profits.  Do not underestimate the operational challenges in turning that corner.

If you were running your own business that was your livelihood, would you prioritize sales growth or cash flow?  Why would you think about investments in other situations any differently?

At some point in the future, more investors are going to be forced to think about that and decide which one matters more – sales growth or cash flow.  

In February, there started to be some pullback in some of the growth oriented names, most evident in the pullback in the NASDAQ 100.

There’s probably no one reason.  However, an increasing focus on future cash flows would be bad news for many of these names.  A change in speculative appetite is a change in the degree to which investors care about cash flows at all — the degree to which they believe that there will always be another person (the “greater fool”) who will pay more for an asset than they did.

Focus on math and fundamentals.  Boring, yes.  A little FOMO, for sure.  But, unlikely to lead you astray.

Influential Reads – July 2020

Reading Time: 2 minutes

I got shut out on books.  Did I mention moving sucks.

Updated stats through July:

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

  1. Creating Impeccable Structure for Your Life – “We deeply feel the messiness of our lives.”
  2. Best Route to Wealth: Savings or Earnings, a Debate – “The things we own, and more broadly the lifestyle we lead, often end up owning us.”
  3. The 100 hour asset – “We’re all so busy doing our work that sometimes we fail to build a skill worth owning.”
  4. How a $30 digital product cleaned up at the Grammys – “YoungKio’s story shows that creating small digital projects is a fun, accessible, and “non” gatekept path for creative expression with a ton of optionality.”
  5. 4 Surprising Steps to Achieve Your Long-Term Financial Goals – “A much better approach is to look directly at your wants and desires. Don’t ignore them. Instead, understand them.”
  6. The Things We Take With Us When We Move – “Sparks Joy.”
  7. Chris Wallace masterfully turned in what might have been the best TV interview ever with President Donald Trump – “Watch for yourself. Ultimately, how the president did is your call. But there’s not much debate about how Wallace did. He was excellent.”
  8. Intel ‘Stunning Failure’ Heralds End of Era for U.S. Chip Sector – “Intel Corp.’s decision to consider outsourcing manufacturing heralds the end of an era in which the company, and the U.S., dominated the semiconductor industry.”
  9. Low Real Yields – You Can’t Avoid Them – “Indeed, if you can figure out a way to buy an asset without locking in the fundamental reality that the real risk-free rate is -1%, please let me know.”
  10. The Grifters, chapter 1 – Kodak – “I mean … I knew things were bad in Rochester, but I didn’t know they were that bad.”

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.