Berkshire Hathaway Letters (1983-1987)

Berkshire Hathaway Letters (2003-2007)

A word cloud is a visual representation of a group of words, with the size of each word weighted to how many times it appears. The above two examples use the Berkshire Hathaway shareholder letters for the 5-year periods ending in 1987 and 2007. You can see some often-used words between the 20-year period: business, earnings, value, company, insurance. Word clouds are a good representation of what subjects the author is focusing on.
Below are a few more examples: (all created at Wordle)

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The following three videos from TED are not necessarily related to business or investing. But you should watch them anyway.

Benjamin Zander: Classical music with shining eyes

Benjamin Zander has two infectious passions: classical music, and helping us all realize our untapped love for it — and by extension, our untapped love for all new possibilities, new experiences, new connections. [See Zander's book "The Art of Possibility"].

Chris Abani tells stories of people: People standing up to soldiers. People being compassionate. People being human and reclaiming their humanity. It’s “ubuntu,” he says: the only way for me to be human is for you to reflect my humanity back at me. [See his first TED speech here].

Sir Ken Robinson makes an entertaining and profoundly moving case for creating an education system that nurtures (rather than undermines) creativity. [This is an old talk, but if you've never seen it, stop everything you're doing and watch it now.]

A few good articles on the Freakonomics blog:

Phil Gordon Answers Your Poker Questions / Great interview with poker pro Phil Gordon where he talks about randomness, psychology and the future of card playing.

Not-So-Free Ride: The trouble with negative externalities / On creating better-aligned incentives to deal with the effects of cars and the environment/costs to society. Perhaps some good suggestions for Buffett’s GEICO subsidiary.

This article by Sanjay Bakshi courtesy of Reflections on Value Investing explores the sunk-cost fallacy and the endowment effect. Both good heuristics to be aware of when making decisions.

Over the next few months, due to other commitments I won’t be writing posts as frequently. [Removed] Until then, you’ll have to settle with a few posts here and there with links I may find interesting.

On that note, I’ll take this time to thank all the readers and subscribers of this blog. It’s been running for about 6 months now, and has received about 15k views from 78 countries around the world. I don’t write as often as some other blogs, but when I started FutureBlind I wanted the quality of the posts to make up for it. So hopefully you’ve either enjoyed the articles, learned something new, or gotten some kind of insight from this blog.

In the first part of May, I will be attending the Berkshire Hathaway annual meeting in Omaha, Nebraska. I hope to see any readers who will be at the meeting or at the Yellow BRK’er party Friday night. For those who can’t make it, I’ll probably be posting a brief summary of my experience (every year it seems there are plenty of bloggers/writers who give great summaries of the meeting). This is the second Berkshire meeting I’ll have gone to (first time in 2006), and hopefully it will be just as good as the last.

Here’s a few good links before I go:

Fear of a Black Swan — interview with Nassim Nicholas Taleb.

Sam Zell: A Tough Guy in a Mean Business

Evolving the Wow! Factor – Olivia Judson is a science writer for the NYT. She is an evolutionary biologist and always has very fascinating articles. For anyone interested in evolutionary mental models, Olivia is one of the best writers out there.

Place Your Stock Bets Here — A post on the Freakonomics blog on the site Inspectd.com. A good site to show you how futile charting and technical analysis techniques are (once again, the rear-view mirror doesn’t help much).

The above also links to another good Freakonomics post on the media’s insistence on finding a reason for every market move. My favorite future headline: “Stocks Dive: Three First-Movers Sold Hard and Then Everyone Else Inexplicably Followed“.

Studying Students’ Reaction to Chance

An interesting article on a contest held at University of Virginia’s Darden School of Business. The contest split 269 students into two groups:

1. The first chooses one of two unmarked briefcases. One has a check for $18,750, and the other has nothing. Before opening the case, they are offered a chance to receive a fixed amount of cash in its place. It’s their choice.

2. The second group is given the cash upfront, and then offered the chance to buy one of the briefcases. For the student mentioned in the article, he was given $3,000. He could have walked away with the $3k, or bought the right to choose one of the cases.

The research showed that “buyers” (the second group) were more likely to keep the cash. Of course that isn’t rational, because the expected value of the case selection is $9,375 (a 50% chance of getting the $18,750 check).

The students admitted the decision is easier on paper, and more difficult when you have a handful of cash.

Overall, I’m glad Darden is doing research like this and teaching the students about decision making in the face of uncertainty. More schools should be doing the same.

Death, Taxes, and Reversion to the Mean / Michael Mauboussin’s latest paper on reversion to the mean – why high return on capital can’t stay high forever – incorporating reversion to the mean in DCF valuations – “Good to great” and “Great to good”.

I came across Shahin Khezri’s blog a few days ago, and really enjoyed his post “Lessons From Ted Williams“. Shahin talks about Buffett’s comparison of the stock market to baseball. The market throws thousands of pitches a day, but you must decide which to swing at and which to let fly by. The difference between an investor and a baseball player is that the investor never has to swing. Great investors like Buffett don’t swing very often, even if the ball is in the strike zone. They wait for the obvious ones—the fat pitches—that can be hit out of the ballpark almost every time.

Reflections on Value Investing points readers to Authors@Google – a series of talks with respected authors hosted by Google. I’ve only watched the talk with George Soros (which was very good), but many of the other talks look interesting. See also my post on the TED Talk Videos.