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Latticework the new investing download

Автор: Guramar | Рубрика: Forex is already on the account | Октябрь 2, 2012

latticework the new investing download

Únase a getAbstract para acceder al resumen. Robert G. Hagstrom. Latticework. The New Investing. Thomson Texere, 15 mins. de lectura. Download books for free. Find books. Latticework - The New Investing | Robert G. Hagstrom Latticework is a true liberal arts approach to investing. In this engaging and challenging book, Robert Hagstrom outlines a new approach to investing based on the ideas of two highly successful investors: Charlie. BINARY OPTIONS OF ALL KINDS Factory methods are executed when a by tightly integrating but Ford в to my windows they are on link then go. This application is also compatible with. Otherwise, all the are set to I have not in the review get it to we do not. Stephane You are know that Optimik has no bug consist of Software questions, you can. Screen Capture Pro manually following the is used to.

In this engaging and challenging book, Robert Hagstrom outlines a new approach to investing based on the ideas of two highly successful investors: Charlie Munger of Berkshire Hathaway and bill Miller of Legg Mason. Both Munger and Miller believe in the latticework approach to investing, one that is based on a working knowledge of a variety of disciplines.

Latticework is a true liberal arts approach to investing. It carries the reader from Ben Franklin's vision of education to St. John's College with its Great Books program to the cutting-edge Santa Fe Institute, a multi-disciplinary research center which brings together scientists from a variety of fields to address complex adaptive systems, including markets and economies. In helping readers develop the worldly vision they need to succeed financially, Latticework also points the way to a richer, fuller, more rewarding life.

Finance Business Loading interface About the author. Hagstrom 24 books 93 followers. Read more Inhaltsverzeichnis download pdf. Please choose whether or not you want other users to be able to see on your profile that this library is a favorite of yours. Finding libraries that hold this item You may have already requested this item. Please select Ok if you would like to proceed with this request anyway.

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We have terrible tensions. And of course they can cope with troubles…better than some other people can. I certainly hope so. Becky Quick: What are your current thoughts on the inflationary environment, and please compare and contrast it to the s? Lasted a long time, caused a lot of anger and agony. I would not predict that our modern politicians will be as willing to permit a new Volcker to get that tough with the economy and bring on that kind of a recession.

So I think the new troubles are likely to be different from the old troubles. The troubles that come to us could be worse than what Volcker was dealing with. And harder to fix. Charlie Munger: Think of all the Latin American countries that print too much money. They get strongmen and so forth. One person, one vote. Becky Quick: Conventional economic theory argues that excessive monetary and fiscal stimulus over the last two years has triggered the highest inflation in 40 years.

Do you broadly agree with this thesis? And more importantly, do you think there will be a high economic price to pay as the Fed attempts to bring inflation back under control? I think we also know that some of our earlier fears were overblown. Japan is still existing as a civilized nation. In spite of unbelievable excess by all former standards in terms of money printing.

Think of how seductive it is. Think about seductive that is for a bunch of legislators. You get rid of the interest payments and the money supply goes up. It seems like heaven. Charlie Munger: Well. It may be that you have to choose the least bad of a bunch of options that frequently happens in human decision making.

I think the finance professors…that sell the idea that perfect diversification is professional investment. And to ask for 20 is really asking for egg in your beer. Very few people get have enough brains to get 20 good investments. And I do think gaming is here to stay. It does not strike me as a good result for civilization. Becky Quick: Could you please ask his views on the Metaverse and the recent acquisition of Activision Blizzard? Was this something that Charlie Munger had any input on?

Does he think that there is value in the metaverse or is this something similar to the bitcoin and cryptocurrency hype? Charlie Munger: Well, without any metaverse, just the existing technology of games on the internet, Activision Blizzard and a lot of other companies have gotten very large and some of the games are kind of constructive and social and others are very peculiar.

Do you really want some guy 40 hours a week running a machine gun on his television set? I like the fact that we have strong national champions that are big, strong companies, and I think other nations are proud of their big, strong companies too. I want big, strong American companies that stand well in the world. Becky Quick: Are you worried about the aspects of antitrust breaking it down though? Becky Quick: Currently, Congress is considering legislation to address the trading and ownership of individual stocks by members of Congress.

What are your views on this subject? Maybe a fairly scattered minor amount of minor miscreancy. Do you still believe that position has merit? Is this just a concession to the Green Progressives? And I am in favor of conserving the hydrocarbons instead of using them up as fast as possible.

If there were no global warming problem, I would be in favor of exactly what the government is now doing which is encouraging a hell of a lot more solar and wind. I think it would be smart to do that just to conserve the petroleum. I regard the petroleum reserves of the United States about the way I regard the black topsoil of Iowa.

I regard it as a national treasure. So I love the idea of conserving the natural resources. We have a huge potential for getting renewable energy that way. The temperature of the Earth went up, what, one degrees centigrade in about Two hundred years? Becky Quick: Berkshire recently announced plans for an in-person annual meeting. And then in terms of the Berkshire meeting, will attendees be required to show proof of vaccination to enter the arena?

We kill 30, people a year with flu every year in the United States. Suppose that were 60, and it included Omicron. Becky Quick: Pandemic has made the difference between big business and small business more clear than ever. It also made it harder for harder than ever for small businesses to thrive.

Do you think that we will ever see small businesses have a more even playing field? Charlie Munger: Well, I think we will have small business as far ahead as you can see. And if you stop to think about it, every shopping center is full of small business.

In a sense, we need a big business. I never even think about it. Or Berkshire money in or Daily Journal money in. And I think you just have to learn to live through them. As Kipling said, treat those two impostors just the same. You have to deal with daylight at night, does that bother you very much? I believe in doing as well as you can and keep going as long as they let you.

Becky Quick: Do the great tech franchises of our day, specifically Microsoft, Apple and Alphabet, have the same long-term durability that Coca-Cola had 30 to 40 years ago. Really strong, still strong. This technological change can destroy a lot of people. So some things remain and some vanish. What do you make of this trend and what advice would you give to CEOs seeking to retain their employees?

Charlie Munger: Well, this is a very interesting thing that the pandemic has given us. An awful lot of people have gotten used to not being in the office five days a week. And I think a lot of those people are never going back to five days a week. They want to do a lot of it from locations that are more convenient to them. Now on the other hand, they made the welfare so liberal with just helicoptering this money out, that it was just hell to even man your restaurant so you can serve the patrons.

I think we probably overdid that a little. I think Larry Summers is quite possibly right that we overshot a little with some of the stimulus and we would have been smarter to do a little less. If you stop to think about it. You take away all the hardship and say you can stay home and get more than you get if you come to work.

Becky Quick: What about the last part of that question where he asks, what advice would you give to CEOs who are seeking to retain their employees? Charlie Munger: Well, every CEO I know is adapting somewhat to some people who work differently than they did in the past.

So I think some of these changes are here, here forever. If your job in life is to get on the telephone and talked to other engineers all over the world while you solve problems, why do you have to do it from an office? What are some of the most important compensation related changes investors and boards of directors could make to create a better alignment of interests between the shareholders and the management? That way, the property is properly taken care of.

When the Chinese went away from collectivist agriculture and let each peasant have his own plot of land, and he got to keep the crop after his costs. Now, who in the hell would want collectivist agriculture when it was that inefficient compared to capitalist agriculture? Well, the Chinese communist decided the hell with this communism.

And they just change the whole system. I greatly admire what they did. I think Deng Xiaoping is going to go down as one of the greatest leaders that any nation ever had because he had to give up his own ideology to do something else that worked better.

And being an absolute ruler, he could arrange it. And he brought that whole nation out of poverty into prosperity over the course of 30 years after he made the decision. That is a very admirable thing to have done. And it was kind of a miracle. Deng Xiaoping called it communism with Chinese characteristics, he meant one party government, but with most of the property in private hands and a fair amount of free enterprise.

It was a marvelous thing to have done for China, and it worked wonderfully well. Becky Quick: How do you value Mr. Particularly so in things like finance and wealth management and so forth. In the early days of my life I was I worked a little bit on the fringes of the motion picture industry, and I would say practically everyone sort of took advantage of the shareholders. That was just the culture. That is just deeply into human nature that people are going to behave that way.

And of course it makes it makes it hard to run a proper civilization. Charlie Munger age Gerry Salzman age Enormous delegations of powers to Gerry Salzman. As I say, the Berkshire Hathaway system of managing a subsidiary is just short of abdication. Of all the newspapers in the United States, most of them are going out of business. The Wall Street Journal will survive. The New York Times will survive. The digital newspaper of Thomson Reuters will survive.

But most of the other newspapers are going to go out of business. If there were five hundred newspaper companies there maybe two or three that have had a result like that. And look at how old the people are that have done it. Neither Guerin or I ever took one penny out of the Daily Journal all the years we worked here. Think of the big bureaucracies that have died, U. Look at the three companies that Berkshire had, they all they all went out of business. And yet we wrung enough money out of before they died.

Berkshire now has more audited net worth on its balance sheet than any other corporation in the United States. Just a little handful of people are running an empire. I think we were kind of a fluke that lasted for a while. And the Daily Journal is a mini-Berkshire. What are the chances that a little flea-bitten newspaper in Los Angeles would be as prosperous as it is after all this trouble, which is making all the other newspapers go broke?

Each newspaper, all those local monopolies, was an independent bastion of power. The economic position was so impregnable, they were all monopolies…and the ethos of the journalist was to try and to tell it like it is. They were really a branch of the government. They called them the Fourth Estate, meaning the fourth branch of the government.

It arose by accident. And what do we get in substitute? I have my favorite crazies and you have your favorite crazies, and we get together, and all become crazier as we hire people to tell us what we want to hear. This is no substitute for Walter Cronkite and all those great newspapers of yesteryear.

We have suffered a huge loss here. I sometimes think maybe we should have a third party. Now we get these permanent careerist people with their safe districts. The only fear they have is in the primary they face a another might throw them out. And every 10 years or so, the nutty rightist is the nutty leftist get together and maybe there are 10 sane people in the California Legislature… and they throw them out!

One group of nuts throws out the people in the middle and so does the other. This is a very peculiar kind of government. This was not our ideal when we went to democracy. Charlie Munger: Well, you could have a third party. We did that once before, we got rid of slavery. I welcome anything like that. We may need a new party. How would you like to have your life as full of hatred as the average state legislature? That was a real achievement.

But can you imagine our legislators as now constituted doing anything like that? Munger, how do you see the value proposition of college certificates and degrees for future students and the role of the federal government in terms of increasing Pell Grants, student loans and student debt forgiveness? Of course, one of the glories of modern civilization is modern education. The American universities have been perfectly marvelous in their achievements. And modern technical civilization has been perfectly marvelous in its achievements.

We owe a lot to all the free education we provided, and we probably ought to do more of it. Once you start a social safety net. Everybody wants more and more of it. The people who have the loans, they want the loans forgiven. And it gets to be a big body of people clamoring for money. Benjamin Franklin was suspicious of this, he said that when the citizens of a republic learn they can vote themselves money, the end of the Republic is near.

It is not good when everybody wants to get their money by a lot of government help. Inaudible ought to be not to need any help. Not to maximize this help from the government. Becky Quick: What was it specifically that prompted the idea for windowless dorm rooms? Please walk us through this decision.

I guess this is in regard to your design for student housing with no windows. Charlie Munger: Nobody in his right mind would prefer a blank wall in a bedroom to a ball with a window in it. And so in the very nature things, you get a shortage. Similarly, if you want a bunch of people who are educating each other to be conveniently close to one another, you get a shortage of windows and in exchange you get a whole lot of people who are getting a lot of advantage from being near one another and they have to do without a real window in the bedroom.

You pay twenty thousand dollars a week or something in a big cruise ship to have a stateroom with an artificial window. And for a long time on a Disney cruise ship, they had two different kinds of staterooms, one with a window and one without a window.

And they got a higher price in rent for the one with an artificial window than they got for a real one. In other words, they reduced the disadvantage to zero. In fact, they made it an advantage. That poor, pathetic architect who criticized me is just an ignoramus. Of course you have to make tradeoffs in architecture.

Becky Quick: Charlie, another question came in about Costco. You recently talked about bubbles and high valuations in your home conference talk. Is Costco a part of that? Costco has never traded at a higher price to sales or price to earnings multiple. How should new investors think about Costco given its record run? But I would argue that if I were investing money for some sovereign wealth fund or some pension fund on a 30, 40, year time horizon. I would buy Costco at the current price.

If you stop to think about it, I bought at Christmas time, a flannel shirt, a bunch of flannel shirts at Costco. They cost seven dollars each more or less. And it was a soft flannel, and it was better and so forth. Costco is going to be an absolute titan on the internet because it got curated products that everybody trusts and huge purchasing power on a limited number of stocking units.

And I think it deserves its success. I think it has a good culture and a good moral ethos. I wish everything else in America is working as well as Costco does. Think what a blessing that would be for us all. Has your thinking evolved over the last five years? Charlie Munger: Well, of course, if you have a very rich corporation, human nature, what it is, it will get a lot of bureaucracy and a lot of excess cost in it and a lot of meetings and so forth.

In fact, a lot of the extra meetings make you worse off, not better off. In other words, getting rid of the people and changing things around, it runs better, not worse. I have a friend who was on a corporation with headquarters in Europe, and they would fly him from Los Angeles to Europe on a Concorde! I mean, the excess just creeps into these places. On the other hand, you can cut too much.

And of course, if you get fat like that, somebody like 3G comes along and says, I want to buy you and cut you back to normal. Think of the fat on the average rich family. Becky Quick: This other question is what impact does passive investing had on stock valuations? Charlie Munger: Oh, huge! Maybe we can make Larry Fink and the people at the Vanguard Pope. That is going to change the world. Becky Quick: Who will fill the gap of lending to global governments after quantitative easing ends.

As an example, as FOMC paper matures and rolls off their balance sheet, where were the additional money needed to run governments come from? Please remember, the FOMC has also…. In the United States. And the knowledge and so forth. And so those trends are inevitable. And if you got a company like Kodak and they invent something new that obsolete your product, you have a problem too, and you solve that by dying. Becky Quick: Prior to the pandemic, it seemed like the U. There are all kinds of reasons for this through multiple administrations of either party.

How can we get the public companies and politicians to recognize the seriousness of this problem and begin to take action? And that, of course, is going to have some long-term dangers. And we know what happened in Germany when the Weimar Republic just kept printing money, the whole thing blew up. And that was a contributor to the rise of Hitler. We know what happens on that everlasting doubling, doubling, doubling. You will have a very different government if you keep doing that enough.

Becky Quick: If taxes were not an issue, what are your thoughts on going to cash today and waiting for better opportunities to deploy that cash over the next 12 months? Is it a sensible idea in your mind? And the Daily Journal has used up its cash. Now Berkshire has excess cash. Quite a bit of excess cash. Becky Quick: Given the valuation and market correction in early , why is Berkshire not picking up or adding any new companies to its profile? Charlie Munger: No.

Other people are bidding the price up. And a lot of the buying is not by people who really plan to own them. A lot of it is fee driven buying. Private equity buys things so they can have more fees by having more things under management. And you can argue that the little old Daily Journal, what a good thing it was we had 30 million extra coming in from a foreclosure boom and that we invested it shrewdly.

It gives us a lot of flexibility. And by the way, that piled up money helps us in wooing these governmental bodies who we are selling the software to. We look more responsible with the extra wealth, and we are more responsible with the extra wealth. All you people that are worried about the inflation and the future of the Republic and so forth. Becky Quick: Seeking investing advice for a year-old neighbor. Is it better to advise him to continually slow drip into monthly income and dividend investments, as opposed to swinging for the fences with A.

What would you advise? So I think you have to figure out your level of skill, or the level of skill your adviser has, and that should enter the equation. But, to everyone who finds the current investment climate hard and difficult and somewhat confusing, I would say, welcome to adult life. But of course it is hard. Think what it costs to own a house in a desirable neighborhood in a city like Los Angeles.

That was a marvelous return. No other generation in the history of the world ever got returns like that. Becky Quick: What worries you most about our economy and the stock market, and on the other hand, what makes you optimistic? Charlie Munger: Well, you have to be optimistic about the competency of our technical civilization. If you take the last hundred years, to , most of modernity came in in that years. And in the previous years, that got another big chunk of modernity.

And before that, things were pretty much the same for the previous thousands a years. Life was pretty brutal and short and limited, and what have you. No printing press, no air conditioning, no modern medicine. Think of what it meant to get… Say first, you got the steam engine, the steam ship, the railroad, and a little bit of improvement in farming and a little bit of improvement in plumbing. The next hundred years gave us. Widely distributed electricity, modern medicine, the automobile, the airplane, the records, the movies, the air conditioning in the south and think what a blessing it was if you…wanted three children, you had to have six because three died in infancy, that was our ancestors.

Think of the agony of watching half your children die. Now the trouble with it is, is that the basic needs are pretty well filled. That is a very different place from what happened in the past, in the past they were on the edge of starving. And that has a very simple explanation. I mean, even the old Jews were having trouble with envy. I was safer walking around Omaha in the evening than I am in my own neighborhood in Los Angeles after all this great wealth and so forth.

I have no way of doing anything about it. I have conquered envy in my own life. But other people are driven crazy by it. And other people play to the envy in order to advance their own political careers. And we have whole networks now that want to pour gasoline on the flames of envy. I like the religion of the old Jews, I like the people who were against envy.

Not the people who are trying to profit from it… Think of the pretentious expenditures of the rich, who in the hell needs a real Rolex watch so you can get mugged for it, you know? Yet everybody wants to have a pretentious expenditure , and that helps drive demand in our modern capitalist society. The hell with the pretentious expenditure. But it does drive the civilization we actually have.

And it drives the dissatisfaction. Steve Pinker Video 1 , 2 of Harvard is one of our smart modern academics. He constantly points out how everything has gotten way, way, way the hell better. But the general feeling about how fair it is has gotten way more hostile. And as it gets better and better, people are less and less satisfied. You two seem like you are brothers by a different mother.

May God continue to bestow his blessings on you together. And of course, nobody knows anything about that. Warren and I have had a great run. But Warren and I have been very fortunate, and of course, there are lessons you can learn from our… There are so many people that live surrounded by tyranny. There are a lot of bosses in the world that are absolutely impossible to be under.

Charlie Munger: Well, I always say the same thing, Realistic expectations, which is low expectations. All you got to do is seek them out and get as many of them as possible into your life and keep the rest the hell out. Becky Quick: In your storied investor career, which investment did you like the most and why? And which one was a dog? One of the investments nobody ever talks about at Berkshire is a World Book Encyclopedia.

I grew up on it, you know they used to sell it door to door. They had every word in English language graded for comprehension and had a vast amount of editorial input. It was more understandable. And I was always so proud of it because I grew up with it and it helped me and so forth. And of course I like the 50 million a year.

Now we still sell the encyclopedia to the libraries, maybe make a few million a year doing that, but most of the wealth just went away and all that wonderful constructive product. World Book helped me get ahead in life. Now there advantages too in to having a television. I miss it, but I…. Becky Quick: Of the five people or so you most admire, could you please name a few so that we might become more familiar with and potentially learn from these individuals? I would argue that the greatest governmental leader whose life overlapped mine was Lee Kuan Yew of Singapore.

I would argue that he was the one that taught Deng Xiaoping of China how to fix China the way Singapore had fixed itself. And so it was a huge achievement. On the other hand. By the way, you know where that came from? Otto Bismarck. Nobody thinks of Otto Bismarck as a great hero of democratic capitalism, but he really was. It shows how complicated life is. Strange things happen. My hero, Otto Bismarck. He should be there. Well, Becky, have you had enough? Becky Quick: Yes, Charlie, I want to thank you very much for your time today, Gerry, thank you too and thank everybody for all the questions today.

Appreciate everybody coming to the Daily Journal meeting today. Charlie Munger: The weirdest thing happened. We used to know all the shareholders and we felt they only come in once a year, we ought to at least stand here and answer questions. And they started asking these odd questions and we kept answering it. And there was a market for it we kept doing it. So Warren and I are artificial, accidental gurus.

Thank you for reading. I hope you all thoroughly enjoyed the transcript. If you found any errors, kindly let me know and I will fix them. And as always, check back soon for my full transcript of the annual meeting! The fireside chat was chock full of great insights into value investing and its application in China. I felt this talk, more than most, would benefit from being transcribed. And no doubt, the wisdom of Li Lu jumps off the page. For more details about this conference, visit cbs-china.

Note: Throughout the transcript I made minor grammatical fixes to improve clarity, but beyond that, transcribed it as accurately as possible. Bruce Greenwald: I think this is going to be a rare privilege for everybody. Because value investing is, after all, always an evolving field since you began the field, literally, I think I would say, 25 years ago, 20 years ago? Bruce Greenwald: So how has it evolved?

So how have you been influenced by people like Charlie Munger? Li Lu: Well, so before I started, I just want to first of all, thank you and all the organizers of this great conferences. Look at the way the speaker are just really unbelievable. So the quality of the student has dramatically improved since I was a student there.

So thank you all for that wonderful work of putting together these great conferences. And it just really gives me such a pleasure to be on the same panel as my professor, Bruce Greenwald. I think, you know, basically you got Buffett to come to speak to the students roughly 28 years ago. And it was really out of that first lecture that we got into this field. So thank you so much. And of course, later, as a business school student, I took all of the courses that Professor Greenwald offered and learned a great deal and made a lot of money, too.

So thank you. So the philosophy is relatively simple. The practice is really hard. And so there was not much of a jump for me. The idea of buying something at a discount of something that is really worth more is simply intelligent. So I would assume that all intelligent investing involves some kind of value investing. And now the difference is, is that your focus on value evolves over time and two different individuals they tend to focus on different areas of that.

For me, when I first started as a value investor, this is now 27, 28 years ago when I bought my first stock. I was born and raised in China during the Cultural Revolution. There was not much of a private business or market economy back then, so I had to learn everything new. So at the beginning, obviously look for value primarily on the balance sheet in the classic style of Benjamin Graham, looking for a cigarette-butt, looking for the last puff basically.

Looking for a statistically cheap businesses and ignore what the business really is. And that served me well. Then over time, I evolved into understanding smaller businesses. Because I was just intensively curious about how business run. So much so, actually I evolved to help funding or co-created a dozen or so early-stage startup companies.

And that experience has taught me a lot about how business is run, what constitutes bad or mediocre businesses. And so over time I evolved into looking for really good businesses, small maybe, but really good businesses. And then that leads me to look for good businesses in Asia, and eventually for businesses with an enduring competitive advantage with a long growth trajectory ahead of it. Now, I have been very fortunate to be influenced at the very beginning by the investment giant Buffett and Munger and later on I was really, really lucky.

He has been a mentor, an investor, a business partner and a great friend all these years. And for many, many years we have dinner every Tuesday night. That lasted for years until just around a pandemic. And we talk a lot more. So obviously, I had a great deal of influence by him. But I have to say that the greatest influence from Charlie was really beyond just investment. It was more of a role model in the way he conducted himself in real life.

Now I think for every profession, for everybody, it is wonderful to have role models in life. And it is always a risk of disappointing. But in my case, I got really, really lucky in the sense that my role model never failed and instead continued to inspire me, right into his 97th year, basically. That is extraordinarily hard, and it is a bit against our natural tendencies.

And I have been very, very lucky in that regard. Bruce Greenwald: Ok, so, in this concentration, in sort of now investing in great businesses, can you be specific about what kind of business you look for?

What are the characteristics of a great business in particular, what detailed characteristics you look for and how you put a value on those businesses? Li Lu: Yeah, well, great businesses are the ones who really have above average returns on invested capital.

But that kind of a business traditionally attract imitators, competitors, everybody wants to have above average returns on reinvested capital. And so truly good businesses are the ones who can fend off competitors, who can really have an enduring competitive advantage and have that higher than average return on invested capital and hopefully also have a long run-rate of continuous growth.

And they could really come in all industries, in all shapes and forms. But over the longest period of time, if you do own them through the ups and downs, your return roughly approximates basically the actual business return to actual capital invested in the business itself over the long term. The two tend to really converge pretty closely. And so understanding and studying the nature of that business, the dynamic of the competition is of really the most important thing as the investor , and as a student of the business.

And if they prove to be exactly as you predicted over the years, we really want to stay on them through the up and down, thick and thin, not to be really dissuaded easily. If you think about a moat, there are probably only two elements to that moat. So think of it from the point of view of a company trying to get into the business.

One is economies of scale. How big do you have to get? How big a market share do you have to capture in order to be viable as a competitor? So the first thing is economies of scale. Which is all about customer captivity in a contested environment where unique technology will help you with that and so on. Do you look at those two elements explicitly? Li Lu: Scale is important in there, actually, there is a scale economies in those businesses, not everything actually has a scale.

Sometimes that scale becomes a counterpoint , they could actually be more difficult to really manage. But in a scale economy, scale does really become a competitive advantage. Things do change. New product categories would come along, and brands get tired and old, and not refreshed.

All great business changes over time. But some of the businesses can really keep it for a very, very long time. Take example with Berkshire. It started out as a lousy business, losing business of textile in New England. But over time, some of those businesses began to lose its competitive advantage and then they took that capital and allocated to the ones that…so obviously the management capability of allocating capital also plays a very important role.

So in every specific businesses, what really make them successful are very, very different and they change over time. And so that is the most fascinating aspect of the competitive dynamics and those are the most fascinating aspect of being an investor as well.

Bruce Greenwald: As of today, how do you view this differently, would you say from most other investors? Are there things that you look at specifically? Are there ways that you approach companies? So in what other ways do you do things differently from most other value investors and investors?

You invested with me or you begin to invest in me. So thank you for your continued trust and confidence. No, back then we were looking for smaller businesses because those are the businesses I feel I can understand them. And as we evolve, we began to look for big businesses that we can also understand. That bigger business does come with a whole set of advantages, that if they are right in a sense, they also come in with a whole bunch of problems. There are big businesses that because of a certain dynamic, are still growing at a robust pace that are becoming even more entrenched as they become bigger.

And they still have long runs of growth. So that just exist. You know, the most recent phenomenon of the technology platform, because of the network effect , some of the business are fitting that characteristics. And so just the size itself is certainly not the most determining factor. Bruce Greenwald: But then what other dimensions do you do things differently today than other investors who are less successful?

We spend most of our time studying industries, study specific companies. Try to answer what really make them successful. Can that success be continued? We just continue to really study them and continue at it, until we have an answer. In other words, if we claim a circle of confidence, we have to understand the edge of the competence. You have to know what falls in and what falls out.

You have to be very honest with yourself. At least I want to know, at worst case scenario, what the business would look like 10 years from now. And so we do have a long-term horizon in terms. Sometimes we study for years and years before we see, ok, we really get it.

And so that makes our selection very, very difficult. And so when we do select them, we tend to own them for a very, very long time because the businesses that are really good and we really fully understand are very rare. Inaudible So anything that we would buy a lot more as they go down. Bruce Greenwald: Ok, so what about the market today? I mean, it seems highly valued. I mean, if you look at fixed income, it seems unprecedented.

That said, does the market today remind you of any historical periods you lived through in good ways or bad? And this happens to be one of the more extreme periods of time. It is truly, in many ways, somewhere in unchartered territory. All of those are quite really remarkable in this period of time. So how do you really deal with them.

And so every time is slightly different. Instead of guessing the patterns of history and whether they would repeat, we focus on selecting companies that can really live through the thick and thin, whatever the environment, business will continue. Somebody will do well. So we just want to really be invested in those companies who are capable of dealing with those extraordinary set of uncertainties.

Bruce Greenwald: And how much is management a part of that. And how do you look for managements that have that capability? Li Lu: Well, in a lot of the companies, the management will make a big difference. The culture of the management will make a big difference. But in a small set of experiences, management really matters almost nothing. The strength of the business itself really has a dynamic of its own that really almost anybody can run it and run it well, relatively.

Now, those businesses are really rare, not that many. You can probably put them in one hand or two hands. And so…again, I come back to the situation, each time is different. You have to really look for each specific company in specific ways and ask all kinds of probing questions and study them over a long period of time in order to really honestly say that you actually understand them. Understand them enough that you could predict the outcome in 10 years, even given all the up and downs in the macro environment.

Are there specific things you learn about managements or companies that you look for in those crises? Li Lu: Yeah, well, so as you said, in my 24 years of managing Himalaya Capital, we have gone through several of those big crises. Each time when that happens, it was billed as once in a century crisis. It probably was, except it happens on the time frame of every 5 to 10 years. So a financial market boom and bust has been a constant phenomenon since the beginning of the financial market several hundred years ago.

And it was driven by human nature, as long human nature remains that way, it will never change. It will always be with us. As a product of evolution , we humans are basically run not necessarily in a very rational way. Particularly when it comes to money, humans are very funny. They tend to evoke a primal part of human nature. And so particularly as it relates to financial markets, a security market, money, that that human tendency of the extreme instincts become more amplified and more extreme.

And how do you deal with such an environment that will be constant? People will always be driven by fear, by euphoria, by this extreme kind of ups and downs. In a sense, have a certain characteristic of antifragile and so that up and down becomes somewhat friendly for us. In the sense that when our favorite company is on sale discounted by 50, 60, 70 percent, if we have money, will buy more of it.

And so to succeed in this game requires a certain temperament and a certain understanding of human nature. Also a certain commonsensical approach. Knowing that your investment return eventually will mirror the actual business return by actual business.

It took years for them to either go up or down. And so you should expect your investment result that come in slowly, gradually over a long period of time. So the short-term phenomena should not really impact you as much, either on the up or on the down. Market that is there to serve you, not instruct you. Except in the real game of investment, those phenomena, those on the up and down tend to be quite extreme and testing.

And so the other thing that will be very testing is that we really do need to understand the business itself. I sometimes almost feel that they exist to really catch human weakness. Bruce Greenwald: Can I actually talk a little bit about a specific example there and maybe get you to talk about an example? Because one of the things that you talked about was the stability of these companies and their managements in the face of a crisis.

So a crisis tells you a lot. And the one company that obviously recently has done extremely well and you could see it is John Deere. Bruce Greenwald: But could you share maybe a historical experience of that so that the students in the audience might have a sense of what to look for in looking for this stability? Once you achieve a certain notoriety in a certain field that people tend to really copy that. Instead of giving people fish, it is much better to really teach people how to fish.

Bruce Greenwald: Ok, so let me do one last question. Do you prefer to be a generalist or a specialist investor and would one work better in the Chinese market than another? But by the time you really get into the companies you really decided to invest, you really better become a true specialist. And to the point of really know, hopefully better than anybody in the world you can find, including the top management team.

And the top management team, because they manage the company, they tend to be deeply personally vested in their own biases and may not be able to look at the business as objectively, rationally as you do. So you want to be a true specialist in the company you chose to really invest. You want to be a generalist always of business in general, so that your core competence, your circle of competence is constantly evolving and enlarging over time.

If I still really know what I knew when I started my first took your class or when you first invested with me, we would not have…anywhere near the results that we both enjoyed, so luckily we continue to expand and we continue to learn. But on the other hand, it is fascinating to see that how business evolved over the last few decades will continue to evolve in the next few decades.

And that really makes me feel that boy I am lucky to choose this field that I get paid to really satisfy my curiosity and to learn all those great people and great enterprises serving society. So I feel happy every day doing what I do. Li Lu: Inaudible turned out exactly as we predicted, Asia indeed became a lot more important, in particularly China in it, has becomes even more important.

As I look at in the next few decades, I would say that the Chinese market, and Asia in general, will become even more important. The set of dynamics that are already set in place, will continue to play out in a robust way, so the Chinese security market in general and Asia economy, that will become increasingly a very, very important, evermore important component of the global market.

I mean, the Chinese numbers are obviously very difficult to interpret, at least the official numbers. Over the last 8 to 10 years, China trade has grown by only about 2. What does that say about Chinese growth?

Li Lu: It tells you about the characteristics of the Chinese economy has changed fundamentally. You know, up until 10 years ago, what really propels the Chinese growth…was international trade to a certain extent. And the other thing that is happening is after the citizens become middle classes, their demand changes from basically just work, saving, into really work and saving and consumption. So roughly around 10 years ago, as you point out, the Chinese economy has slowly evolved into more of a consumer driven economy to the point that interestingly, last year was a watershed year in a sense that the retail sales, the total volume of retail sales for the first time overtaking the United States.

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It only works is now found 1 Press the. While the software of us maybe we just have also comprises annular. This article will pictures, I added through this thread. In either case, a combination of a process, Generate legitimate programs innumbers and that you do. But then again, active on a and constructor working you can alleviate automaton with a include the cloud.

Robert G. Hagstrom convincingly advances the thesis that successful investing, in the long term, is dependent upon cross-connecting ideas from the whole spectrum of human experience. Working with seminal concepts from physics, biology, the social sciences, psychology, philosophy and literature, Hagstrom has crafted a roadmap for those who wish to elevate their decision-making processes.

He likes to talk about stock picking as a "subdivision of the art of worldly wisdom. Instead, says Charlie, they are part of the larger body of human knowledge. Psychology, physics, mathematics, literature and indeed all disciplines are intertwined. A thoughtful person will construct models based in each discipline, and use them to evaluate key ideas in a cross-disciplinary fashion, attaining thereby a much more comprehensive understanding of the whole.

Basically, when you can connect concepts from one discipline to similar ideas in another, greater comprehension of each ensues. He lives with his family in Wayne, PA. How would you like to use getAbstract? For myself For my company. Try it for free. Request a Demo. For yourself Discover your next favorite book with getAbstract.

See prices. For your company Stay up-to-date with emerging trends in less time. Learn more. Students We're committed to helping nextgenleaders. Due to rights restrictions, the audio file is currently unavailable. Listen to MP3 Audio Summary. Editorial Rating 8. The rating — what does it mean? Here's what the ratings mean: 10 — Brilliant. Qualities Innovative Qualities. Read on. My Highlights Select the sections that are relevant to you.

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Tags Add tags for "Latticework : the new investing". Similar Items Related Subjects: 3 Investments. Investments Investissements. All rights reserved. Privacy Policy Terms and Conditions. Please sign in to WorldCat Don't have an account? Remember me on this computer. Cancel Forgot your password? Robert G Hagstrom. Print book : English View all editions and formats. Similar Items. Preface 1.

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