A few notes about Day One (Monday, Oct. 17th) in the 2011 Value Investing Congress. You can follow their own live updates on Facebook or Twitter. We start with David Einhorn – he wasn’t the first speaker of the day, but things started to get interesting when he came onto the stage. Having attended both, the Ira Sohn Investment Conference is a better event: shorter in length, better attended and with better speakers, more focused and, we dare say, with more committed speakers.
Today, on the 7th day of his passing, we remember Ruy Mendes Gonçalves, Vice-Chairman of Saraiva, who passed away on Saturday. He was a pillar of Saraiva’s success and an esteemed man for his strength of character and kindness. So on behalf of the entire team at Investidor Profissional and, we’re sure they would give us their permission to do so, on behalf of the shareholders of our funds: we’d like to send him a huge “Thank You” for all these years of dedicated service to Saraiva.
We posted some interesting links in Portuguese about Mr. Ruy Mendes Gonçalves at www.buysiders.com.br.
We’ve posted last Friday about the very interesting InfoTrends conference, roughly about the state of Brazilian social media. We continue the topic today with notes from Day One, more specifically the videoconference talk by Wikileaks’ Julian Assange (Part 1 is just for his talk). While his speeches are usually quite radical, so is the notion that transparency can change the world’s governance systems for the best – and Wikileaks (along with its offspring organizations) is the most interesting experiment in this realm.
Brilliant article by John Kay in the Financial Times – “Sex, lies and the pitfalls of overblown statistics”. Questioning is vital when dealing with data: what does it really mean, where did it come from, what is it trying to answer, is it the best data to answer that question, what are the incentives of the source of the data, what are my own incentives and biases in interpreting this data… and so on. In fact, one should start with the right questions, but that’s another subject. Skepticism and intellectual honesty makes for a hard way to live one’s life, but there’s really no choice if one is to minimize the traps of “data”.
The London Business School’s Business Strategy Review (BSR) magazine/ website has a “World Business Leaders Series” worth spending some time on. We comment on a video with the Chairman of the London Stock Exchange and we highlight sections that, although intended for business in general, can also be framed for the specifics of investment management.
We don’t have Baupost Capital’s full 2010 letter, but these excerpts are still very interesting. Seth Klarman’s straight talk is always refreshing. Bits on Cash as strategic asset (being able to pull triggers in the midst of panic), “Short-termism” and how that affects everything, and Edge are particularly interesting.
We highlight a very interesting article called “How Aha! Really Happens”. In it, the author argues that the notion of the brain’s two hemispheres being extremely specialized – “left” being rational/ analytical, “right” creative/ intuitive – has been proven inadequate since 1998, which means that companies focusing on “right-side brainstorming” exercises to foster innovation are not doing themselves many favors. The main point is this: “(…) our most-accepted approach to problem solving is grounded in an incorrect premise about the source of creativity in the brain.” The implications are very interesting.
In our latest quarterly report, we discuss the notion of “economic moat” in the second part of the Sand Castles, Concrete Walls text. In it we quote from a 1998 Warren Buffett talk to Florida University MBA students that is simply a must-see. It’s a very candid talk in which Mr. Buffett discusses not only the fundamental aspects of value investing in a bit more detail than we get nowadays, but also some sector and company-specific opinions that, again, he now seems more reluctant to share outside of the Berkshire letters to shareholders. We post the 10 videos inside and the link to a transcript of the entire session. Video number 10 alone is worth watching and sharing with friends, and not just those in the financial industry: he proposes a mental exercise about the “ovarian lottery” that’s really thought-provoking.
Read more about Investment classics: Buffett @ Florida, 1998
Abraham Lincoln supposedly said: “How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn’t make it a leg.” A recent report had us thinking about an issue that we’ve been discussing repeatedly in our reports: fiscal accounts in Brazil have been deteriorating. It’s unusual for this blog to mention sell-side research, but a piece by Santander’s Alexandre Schwartsman called “Brazil: The Naked Truth” is very well written and unfortunately recalls Mr. Lincoln’s quote. Mr. Schwartsman posted the main arguments (in portuguese) in his blog, which is a great source.
A few (seemingly) random thoughts and quotes on misdirection, disorientation and how to benefit from it. If that doesn’t convince the reader to click on “read more”, there’s a Charlie Munger quotation inside worth the read.
