Pro-active risk-taking control

"Warren and I get nervous with vast amounts of leverage unless we're 100% confident that risk-taking won't creep into the culture."

"It reminds me of a guy running a company who fired his top producer. The guy asked him, 'Why are you firing me? I'm your top producer.' To which he responded, 'You make me nervous. I'm a rich old man. Why should I be nervous?" (Charlie Munger on Wesco's 2002 Annual Meeting)

Thoughts on investing

Bill Miller gave a recent interview to "Smart Money" where he was specially happy in summarizing some aspects I also believe are key to investing:

" ... the only sustainable [market] anomalies, I think, have to be behavioral, in that behavioral anomalies arise from the way that large groups of individuals function psychologically — the way they react to information, the way that they process it, the sorts of errors that are either cognitive or emotional. Those are the sorts of things that are really unlikely to be arbitraged away. That is, if we know, as all the data indicates, that people feel a loss twice as acutely as they feel a gain, then you know that until people stop doing that in the aggregate, that losses will be things people will shy away from, and that's a potential source of excess return, because you can predict how they're gonna behave in the aggregate."

" ...if you do what other people do, you get the results that other people get. So by diversifying your sources of information, you get insights, analogies and metaphors, and you see connections that other people might not see. That's a fruitful way to go about thinking about markets... "

Democracy

Democracy is a system where 3 wolves and a sheep vote on what they're going to have for lunch...

Options

Closing options are a very ambiguous thing. Sometimes it's one of the most aggravating events, like in the case of serious illnesses or death. But it can also be very liberating, as noted by Sean Scully, an abstract painter: "One advantage of getting older is that you can see what possibilities are not open to you, and where your gifts do not lie, and you are liberated because you can turn all your ambition onto what you do have". Indeed one of the greatest gifts one can give to some people is to decide for them, telling them what to do (or what not to do), elimitating there doubts over options.

Minimizing errors

Minimizing errors is one of the most underated strategies. From investment management to tennis, in most cases a technically inferior player who concentrates in not making mistakes will defeat an otherwise superior opponent that takes bigger risks.

The greatest problem of all

As put by the dying android in Blade Runner, "... those eyes have seen so many things... and all those memories will be lost in time, like tears in the rain." So bad...

Optimization x Satisfaction

Evolution is a process that seeks satisfactory, not optimized states. Allas, failure to understand the difference between that in some processes, as well as which one is more relevant in each case accounts for lots of big mistakes all around us.

The formula for success

The problem with the formula for success is that it is the same as the one for a nervous breakdown.

First things first

“There’s no use running if you’re on the wrong road” - Warren Buffet, Berkshire Hathaway annual report, 1993

Starting up

The idea here is to post some ideas (mine and found elsewhere) that I find interesting, as a repository for my son and daughter. Hopefully they will find them as usueful and stimulating as I did. It's likely to cover subjects like philosophy, finance, art, technology, biology... Let's see what happens next.