Nevstar Links 30 August 2024
Welcome back to the Nevstar Links, your guide to some of the best articles on markets and investing available on the internet.
Today is the 30th August which makes it 94 years since the birth in 1930 of a certain Warren Buffett, CEO of Berkshire Hathaway and inarguably the most famous investor in the world. And today, just like any other day, Buffett will likely spend about 80% of his day reading. When asked the key to his success, Buffett pointed to a stack of books and said - "Read 500 pages like this every day. That's how knowledge works. It builds up, like compound interest".
Happy Birthday Uncle Warren and thanks for your invaluable help in making us all better investors.
Onto the links for this week which has articles on giants, stars and CEO's.
Should You Follow Buffett Into Cash?
Coincidentally, one of the articles I had picked out for this week's links was a discussion of whether you should invest like Warren Buffett. There has been some commentary lately about how the Berkshire Hathaway CEO is holding an inordinate amount of cash on his balance sheet at the moment. But does this mean that your portfolio should be cashed up too? Probably not; turns out investing $100 billion is a lot different than investing $100 thousand.
"High-yield cash accounts can feel safe. And in the short-term, they are. But parking too much of your net worth in cash, for too long, is an awful idea. Sure, you'll sidestep a potential market crash...but the opportunity cost is likely to be worse than the crash itself."
See also : 25 Surprising Facts About Warren Buffett
Beware The Perils of the MBA CEO
Cutting blogpost making the case for less MBA type Chief Executives and more with marketing or engineering backgrounds. There is a pronounced legacy of MBA types that have systematically destroyed formerly great companies with their emphasis on 'shareholder value'.
"Intel is maybe the most egregious example. First non-engineer CEO manages to say no to Steve Jobs to the offer of manufacturing CPUs for the iPhone. Then of course Intel just totally drops the ball on ARM, GPUs, EUV... literally misses every single development in computing."
What Is Your Time Frame?
This is an excellent piece with a key insight with respect to listening to market experts - what is the time frame that they are focused on? Different investors have different time frames from the milliseconds of quantitative hedge funds to hundreds of years in the case of intergenerational investors. Knowing your investment timeframe is a key to understanding what advice you should heed and what you should ignore.
"The hot shot hedge fund manager on financial TV may present a compelling, eye-catching case for why the stock market could tumble from here. However, reporters don't always follow up and ask what to expect when you stretch the timeframe, which may be more relevant to long-term investors."
The Giant Beneath The Desert Sands
Wonderful profile article from our friends at Quartr about Saudi Aramco - the US$2 trillion company which is arguably the most important company in the world sitting at the nexus of business, geopolitics and global energy supplies. Essential reading.
"One significant moment was the 1973 oil embargo, during which Arab oil producers, including Saudi Arabia, drastically cut exports to the West in response to U.S. support for Israel in the Yom Kippur War. This event not only quadrupled oil prices but also demonstrated the immense power Saudi Arabia wielded over global energy markets."
Chasing Star Manager Performance
Cautionary tale about the hazards of chasing short term performance from 'star' managers. Ben Carlson at 'Wealth of Common Sense' does an excellent job of profiling the dramatic rise and fall of the Ark Innovation fund which has somehow managed to lose about $7.5 billion of investors monies. It is not so much the performance of the fund that is the issue but the timing of inflows into the latest "hot idea".
"The timing by investors here was predictably godawful. You had a spectacular run of performance which brought in a flood of money. That was followed by terrible performance which was inevitably followed by money rushing to the exits. This will likely go down as one of the biggest investor dollar losses in history."
Quote of the Week
"You only have to do a very few things right in your life so long as you don't do too many things wrong."
Warren Buffett
That's all for this week.
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Have a great weekend.
The Nevstar
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Neville Giles
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