Links - 6/9/2020
“This is a nightmare, which will pass away with the morning. For the resources of nature and men’s devices are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life—high, I mean, compared with, say, twenty years ago—and will soon learn to afford a standard higher still. We were not previously deceived. But today we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time—perhaps for a long time.” —John Maynard Keynes, “The Great Slump of 1930”
[In his first annual letter, Bill Gates wrote that Warren Buffett sent him this quote during the financial crisis.]
Invest Like the Best Podcast: Jeremy Grantham – An Uncertain Crisis (LINK)
Related links: 1) The Q1 2020 GMO Quarterly Letter - by Ben Inker and Jeremy Grantham; 2) Jeremy Grantham Letters - Q1 1999 through Q2 2012
BYD Gets U.S. Approval to Supply N95 Masks ($) (LINK)
[From last week]… Barry Diller on CNBC: Expedia and IAC will no longer provide earnings guidance (video) (LINK)
What’s Your Magic Number? (LINK)
Chance Has No Memory (LINK)
The Knowledge Project Podcast: #85 Bethany McLean: Crafting a Narrative (LINK)
Against the Rules with Michael Lewis (podcast): The Unfair Coach (LINK)
3 Things The Most Resilient People Do Every Day (LINK)
Excerpt from Graham & Dodd’s Security Analysis that has some parallels to today:
The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new-era theory [of 1927-1929] led directly to this thesis. If a public-utility stock was selling at 35 times its maximum recorded earnings, instead of 10 times its average earnings, which was the preboom standard, the conclusion to be drawn was not that the stock was now too high but merely that the standard of value had been raised. Instead of judging the market price by established standards of value, the new era based its standards of value upon the market price. Hence all upper limits disappeared, not only upon the price at which a stock could sell but even upon the price at which it would deserve to sell. This fantastic reasoning actually led to the purchase at $100 per share of common stocks earning $2.50 per share. The identical reasoning would support the purchase of these same shares at $200, at $1,000, or at any conceivable price.
An alluring corollary of this principle was that making money in the stock market was now the easiest thing in the world. It was only necessary to buy “good” stocks, regardless of price, and then to let nature take her upward course. The results of such a doctrine could not fail to be tragic.