Links - 6/19/2020
“Partly, we do things in our different way because it suits us — it suits our temperaments and our natures. And partly, we do it because we’ve found through experience that it works better, at least with us sitting where we sit. It’s just that simple. And we’ve had enough good sense when something is working very well to keep doing it. So I’d say we’re demonstrating what might be called the fundamental algorithm of life: Repeat what works.” —Charlie Munger (2010)
New Memo from Howard Marks: The Anatomy of a Rally (LINK)
Thus far in 2020, the swing from flawless to hopeless and back has taken place in record time. The challenge is to figure out what was justified and what was aberration.
…The powerful rally we’ve seen has been built on optimism; has incorporated positive expectations and overlooked potential negatives; and has been driven largely by the Fed’s injections of liquidity and the Treasury’s stimulus payments, which investors assume will bridge to a fundamental recovery and be free from highly negative second-order consequences.
A bounce from the depressed levels of late March was warranted at some point, but it came surprisingly early and quickly went incredibly far. The S&P 500 closed last night at 3,113, down only 8% from an all-time high struck in trouble-free times. As such, it seems to me that the potential for further gains from things turning out better than expected or valuations continuing to expand doesn’t fully compensate for the risk of decline from events disappointing or multiples contracting.
In other words, the fundamental outlook may be positive on balance, but with listed security prices where they are, the odds aren’t in investors’ favor.
Wirecard says it cannot rule out 'fraud of considerable proportions' (LINK)
Related articles I had linked to on the blog last year: 1) Wirecard AG: The Great Indian Shareholder Robbery - by Roddy Boyd (January 2018); 2) The FT's articles on Wirecard (starting in February 2019)
Invest With the Upper Crust and Sometimes You Just Get Crumbs - by Jason Zweig ($) (LINK)
Financial Stability at Risk: Déjà Vu 2007 - by Frank K. Martin (LINK)
eBay’s Harassment Campaign Didn’t Happen in a Vacuum - by Steven Levy (LINK)
Hierarchy of Marketplaces — Level 3 - by Sarah Tavel (LINK)
ReSolve’s Riffs Podcast – On Value Investing (EP.17) (LINK)
This Week in Startups Podcast: E1077: “Alchemy” Author Rory Sutherland (LINK)
100 Favorite Heuristics - by Thomas Kamei [H/T @LAForeverHall] (LINK)
Book of the day (recommended by Paul Graham): Born Red: A Chronicle of the Cultural Revolution
“It is better, by yielding to truth, to conquer opinion; than, by yielding to opinion, to be defeated by truth.” —Epictetus