This Week I Learned #51

“Go to bed smarter than when you woke up”
— Charlie Munger


  • "The purpose of thinking is to let the ideas die instead of us dying" - Alfred North Whitehead, Mathematician and Philosopher


  • Interview with investor Paul Lountzis. 1) Understanding the business: "What is the problem that these guys are solving? How big is the problem?". 2) Evaluating CEOs: "For a CEO we look for their skills in 1) capital allocation, 2) ability as an operator, 3) shareholder orientation. Very few are great at all three." 3) Lot's of great investing stories on "omission" with a view of the information Paul had available to him. The stories I especially enjoyed were on how he could think independently of each investing situation. A trap for many investors is anchoring the current development on a past action (i.e. I didn't investing Stock A 5 years ago so if I invest now it means I missed out on a 5x so I've missed that ride). The reality is that a stock that went up 5x can still go up another 20x. One needs to be able to look at each situation independently.


  • Tim Ferriss & Ramit Sethi's podcast chat on personal finance and prenups. I've always appreciated Ramit Sethi's candidness and in this episode he goes in-depth into his prenup process. He begins the process of disintermediating emotion from the process with his wife, a hurdle many don't get to overcome. Turns out it's a very long process where each person needs their own lawyer and they will draft an extremely detailed contract. The contract can go as detailed as answering specific scenarios of "what to do if the marriage ends in 1 month, 6 month, 3 years, 30 years etc...". How custody will be handled, how assets will be distributed etc.. It's a very onerous process where Ramit recommends getting couples therapy to have a 3rd party help with changing the narrative around money and it's relation to money and the concept of marriage. I loved how he referenced various case studies of friends who were going through the process and various mistakes they made. He also communicates how a prenup is prepping for the worst with the intention of never having to use it. It's the same as home insurance. Which nulls out the common argument for a prenup meaning one is prepping for failure. It's a topic so few people speak of and I'm very happy the podcast shed lot's of detail on this matter.


  • "If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours." - Henry David Thoreau


  • Buffet on difficulty levels in investing: Unlike diving, where you get rewarded differently for trying the most difficult dives, investing does not discriminate the reward by difficulty level. Hence him and Charlie focus on finding what they consider to be "one foot" hurdles instead of something of obscene difficulty.


  • On opportunity cost and why Buffet uses the risk-free rate as the discount rate. This is because Buffet isn't looking at just common stocks when investing. He is looking at every possible investment in the private and public universe and to make each investment comparable to each other Buffet uses the risk-free rate as the constant to make all these opportunities comparable. Simply put, the risk-free rate is used to compare various kinds of investments. But, upon such a filtering process he may go through a further comparison of each individual business that has gone past the filtering process. At which point one would compare each business opportunity with one another to come to a single best opportunity.


  • "People are frugal in guarding their personal property; but as soon as it comes to squandering time they are most wasteful of the one thing in which it is right to be stingy" - Seneca