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When Charlie Munger Calls, Listen and Learn
Jan. 25, 2019 | WSJ | By Jason Zweig.

Mr. Munger was calling to say that he had read the novel Mr. Taylor was about to self-publish, “The Rebel Allocator.” He was “surprisingly engaged,” recalls Mr. Taylor, 37, who had sent the book to Mr. Munger without much hope the great investor would read it. Mr. Munger proceeded to reel off roughly 20 minutes of unsolicited, detailed advice, mostly about plot and character.

In an interview, Mr. Munger tells me he tends to “skim” or “at least give some cursory attention” to any book that mentions Berkshire Hathaway......“The Rebel Allocator” is the opposite of most business novels. Here, the rich capitalist isn’t an evil genius using genetic engineering to hijack the brains of newborn babies. Instead, he is a hero: an investing mastermind who regards allocating capital as a noble calling that improves other people’s lives.

In the novel, a business student named Nick is on a field trip with his MBA class when he meets a 77-year-old billionaire, Francis Xavier, a restaurant mogul also known as “the Rebel Allocator” and “the Wizard of Wichita.”

Blunt and bristly, with zero tolerance for stupidity, Mr. Xavier spouts proverbs and zingers. A mash-up of Mr. Munger and Mr. Buffett, he often invokes their ideas.

Taking a shine to Nick, Mr. Xavier asks him to write his biography. Like many young people today, Nick wonders if becoming a billionaire is inherently immoral when poverty is still widespread.

Mr. Xavier teaches Nick what separates great businesses from good and bad ones. He uses three drinking straws, labeled “cost,” “price” and “value,” to demonstrate: When a business can charge a higher price than its goods or services cost, the difference is profit. When the value its customers feel they get is greater than price, that difference is brand or pricing power—the ability to raise prices without losing customers.

As Mr. Xavier moves the straws around, Nick learns that investing decisions can make the world a better place: “Good capital allocation means doing more with less to create happier customers,” says Mr. Xavier. “Profit should be celebrated as a signal that an entrepreneur provided value while consuming the least amount of resources to do so.”
asset_management  Berkshire_Hathaway  books  capital_allocation  Charlie_Munger  fiction  intrinsic_value  investing  investors  Jason_Zweig  novels  Warren_Buffett 
january 2019 by jerryking
Christie’s Jussi Pylkkanen and superauctions
NOVEMBER 10, 2015 | FT | John Gapper.

....Of all his crafty sales tactics, the one used to greatest effect by Christie’s 52-year-old global president — the auctioneer on top of the wave of wealth in the world’s art market — is the query: “Are you sure?” He asks it as one of the last two bidders in an auction drops out, threatening to finish it. As he halts the action for a few seconds — what he calls “the auctioneer’s pause” — pressure builds on the reluctant bidder.

'Are you sure, sir?'

Auctions are unusual in the 21st century - most things, even luxury items such as watches and clothes, sell at fixed prices although there is some room to haggle. Even many items on eBay, the electronic platform, are sold at fixed prices. In The Dynamics of Auction , Christian Heath, a professor of work at King's College, London, describes them as "a somewhat anachronistic method of selling goods, more common perhaps to traditional agrarian societies than post-industrial capitalism."

They are still used for art because every painting is different and has no intrinsic value - it does not yield anything and the cost of manufacture is usually tiny. They are also a good way to get high prices - when buyers compete against a deadline, they behave differently. The desire not only to acquire it but to beat others causes what Deepak Malhotra, a Harvard professor, terms the "emotional arousal" of auctions.

"We know that the Modigliani [being sold on Monday] is the artist's greatest work," says Pylkkanen, never short of an extravagant compliment for his inventory. "We know that it was painted in 1917. We know that it is being sold 100 years later, and that nobody in their lifetime has had an opportunity to buy it on the open market. We're all individuals and when we get a chance, it's like, 'That's the one. I've got to go [for it].' "

The task of the auction house is to gather as many people as possible - especially wealthy people - in a saleroom, or on the end of a phone line to the room, and to create the atmosphere for such moments to occur. The auctioneer must be charming, relaxed, and pleasantly ruthless. "You need poise, control and an element of openness because you're inviting people to this thing. You're making them compete without pushing too hard."
art  art_market  auctions  books  Christie’s  collectors  collectibles  high_net_worth  intrinsic_value  Jussi_Pylkkanen  power_of_the_pause  pricing  sales_tactics 
may 2018 by jerryking
This Tech Bubble Is Bursting - WSJ
May 2, 2016 | WSJ | By CHRISTOPHER MIMS

ALEJANDRO AGHAYAN May 3, 2016
It's essentially impossible to compute the intrinsic value of a company in a zero percent interest environment.
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start_ups  valuations  bubbles  Silicon_Valley  technology  software  intrinsic_value  Christopher_Mims 
july 2016 by jerryking
Why Panic Passes Him By - WSJ.com
October 15, 2008 | WSJ | By PAUL B. CARROLL who reviews
The Snowball
By Alice Schroeder
(Bantam, 960 pages, $35)

Why Panic Passes Him By
All you wanted to know about Warren Buffett – and more.

While much of Mr. Buffett's methods can't be duplicated -- genius is genius, after all -- "The Snowball" usefully emphasizes a few core Buffett imperatives: taking a close look at an investment's intrinsic value, making a brutal evaluation of its risks, and calculating a margin of safety. The book also underscores the importance of learning from failures. The Buffett-Munger approach is to "invert, always invert. Turn a situation or problem upside down. Look at it backward. What's in it for the other guy? What happens if all our plans go wrong? Where don't we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead."
Berkshire_Hathaway  book_reviews  books  Charlie_Munger  failure  genius  intrinsic_value  investing  investors  lessons_learned  margin_of_safety  off-plan  panics  Plan_B  post-mortems  risk-assessment  thinking_backwards  thinking_tragically  Warren_Buffett  worst-case 
june 2012 by jerryking

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