Friday, November 16, 2012

More Books on Mister Market

More decent books on Value Investing:

You can be a stock market genius, Joel Greenblatt
Value investing, Bruce Greenwald et al.

A very entertaining read on the sociology and inner workings of the markets and market contrarians:

The Big Short by Michael Lewis

Sunday, September 30, 2012

The Toilet

There are essentially four operations that an amateur might consider performing on his toilet : replacing the mechanism that controls the water flowing out of the water closet, replacing the mechanism that controls the flow of water into the water closet, fixing a leak in the drain pipe, and unblocking it. All of these are fairly straightforward, as long as you understand the flow of water, and do not have to break through walls to reach the relevant portion of the circuit.

The first operation you would typically perform if there is a small leak at the bottom of your water closet tank, causing your toilet to flush now and then for no apparent reason. The second replacement you would do if you for instance don't hear your water tank fill anymore. The third you would do if you or your downstairs neighbour is bothered by water or funny smells, and it will be clear to you when to engage in the fourth.

Books on the Sociology and History of Wall Street

I found the following fascinating informative reads (in order of quality of writing
and  non-trivial content) -- these are books on the sociology, history and development of
contemporary capital markets and firms:

Lords of Finance, Ahamed.
Keynes biography, Skidelsky.
Liars Poker, Lewis.
When Genius Failed,  Lowenstein.
What's wrong with Wall Street, Lowenstein.

Books on Value Investing

In order of importance :

The Intelligent Investor, Graham.
Security Analysis, Dodd and Graham.
The Essays of Warren Buffett, Buffett et al. 
Margin of Safety,  Klarman.
One up on Wall Street, Lynch.

There is surprisingly little decent literature on the subject.


Should the New York Times fact-check ? Can North Carolina outlaw scientific predictions on how much the sea level will rise in the coming years ?

These are just two illustrations of the phenomenon that people no longer understand the difference between fact and opinion, between truth and social construct, between results and presentation. It is clear that a lack of proper education is to blame.

If we concentrate for a while on the written media, for instance, then we see that journalists quickly write their required number of words on the topic of the reader's choice, without being bogged down by too much background knowledge. Authorative sources are quoted saying 'yes', and other authorative sources are quoted saying 'no'. No attempt whatsoever is made to lay bare the correct statement. These articles are then branded as good objective journalism, representing the various facets of the problem at hand. It's like arguing that a child must be free to choose between evolutionism and creationism, and must be made aware of both.

This type of argument is not only repeated ad nauseam, but also implicitly and much more subtely and generally applied in the serious media. It is mindboggling how many panels consist of one person that knows what she is talking about and five others that have an opinion on the matter that is based on what they thought up while attempting to boil a soft-boiled egg for the correct amount of time, and failing.

The analytic mindset is hardly defended anymore. Analysis is considered boring, both in the media and at cocktail parties. When somebody voices an opinion, and somebody else asks what it is based on, it will be the second person who will be considered slow and annoying. Yet, it is the multitude of unfounded opinions which is disquieting, and it is those who voice them who are wasting our time.

Monday, March 12, 2012


It is interesting that it seems that oil discovery peaked around 1970. Gas discovery peaked a little later. The global depletion of oil and gas reserves is happening at a staggering rate. It seems that we will keep up with oil and gas production for a while still, but not for much longer. Increasing energy prices, increasing profits for oil and gas companies and severe economic crises will likely be the result. These are interesting times indeed. The transition to a new period should be prepared in order for it to occur as non-violently as possible. Coal will become the first alternative (despite dangerously high levels of CO2 emission), then nuclear energy, then water, sun and wind. Let's consider our options more carefully than by mere shortsighted economic bottom line calculations.