Food for Thought #54 // Links

Includes: 2022 mistakes to avoid, Russia, Japan, Energy, …

GMO’s Q4 2021 letter provides us with four general mistakes to avoid in 2022:

  1. Keep riding winners and losing faith in your losers (ie betting on us tech and avoiding China tech)
  2. Trying to copy recently successfull portfolios
  3. Excessive faith in recent results or recency bias (ie believing companies coming well through the pandemic carrying less fundamental risk)
  4. Failing to understand sources of historic returns (I dare everyone to understand some basic theory, say risk free rates and risk premiums) and using simplistic return extrapolation instead

Lyall Taylor provides an alternative view on Russia’s behavior. It is quite a (welcomed) contrast to the western mainstream media story, and I think the least one can say is: it is not to be discarded with 100% certainty (unless you trust western media and politics stories 100% — but who would do so today, or after the CIA/US’s chemicals weapons tale). Everybody has its incentives and own agenda!

Japan’s Coming Wave of Reform.

Why Green Energy is a Luxury Belief – But Won’t Be One Forever.

Vltava with an important Q: What is a technology stock?

Ensembles Q4 2021 letter is a good read. They do a great job here (even using ‘entropy‘ which is always a great signal, acc. to Fortune’s Formula if I am correct) touching on ROIIC as the return driver & emerging moats and position sizing, Blackline, Costco (Part of Costco’s brilliance is its ability to convince you to keep its inventory at your house).

Swen Lorenz’ weekly dispatch* is part three and the last part of a mini series on subscription businesses and specifically about investing letters.

Junto‘s Sunday Briefing with Labor supply and the attention tax. probabaly contradicts with most basic economic theory, but it makes absolute sense to me. Consuming online media/games can bring much fun for a long time at a very low price point, thus the logic of working more to earn more to being able to consume more might be broken (think of the Chinese lying flat).

Best and happy investing, s4v


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