The Tao of Charlie Munger - David Clark

• He decided that each day he would devote one hour of his time at the office to work on his own real estate projects (90/60/1 rule)
• I succeeded because I have a long attention span
• I think that, every tiem you see the word EBITDA, you should substitute the word “bullshit earnings.” … Charlie considers interest, depreciation, and taxes to be very real expenses that have to be paid.
• If you want accurate numbers from financial companies, youre in the wrong world
• Derivates hide risks
• never set aside any reserves to cover its losses
• risk exposure
• Charlies lessno here is that a combination of supersmart people and large amounts of leverage often ends in disaster.
• The economic reality of the hedge fund business model makes it madness for hedge funds to do anything but leverage up and throw the dice.
• “All of humanitys problems stem from mans inability to sit quietly in a room alone.
• Waiting, for most investors, is no tan easy thing to do.\
• Applies to mutual and hedge fund managers, hey are driven to produce quarterly results.
• When Charlie and Warren say that they intend to hold an investment forever, they mean forever
• View a stock as an ownership of the business and judge the staying quality of the business in terms of its competitive advantage.
• it it has a durable competitive aadvantage, he will keep an eye on it in the hope that at some future date it will be selling at a bargain price or even a fair price.
• Companies that have manufactured the same product or provided the same service for fifty or more years.
• Its the strong swimmers who drown
• Strong swimmers are the ones who swim way out and potentially get themselves in trouble. Weaker swimmers stay close to shore, where it is safe.
• How do we know when the stock market is too high? When the financial press starts writing articles about how Charlie and Warren have lost their Midas touch.
• Thats contrary to human nature, just to sit there all day long doing nothing, waiting. … For an ordinarz person, can you imagine just sitting for five years doing nothing? You dont feel active, you dont feel useful, so you do something stupid.
• Greedy bankers: Mortgage lending became a dirty way to make money. You take people that cant handle credit and try to make very high returns by abusing and encouraging their stupidity - thats not the way I want to make money in banking. You should try to make money by selling people things that are good for the customer. … In the old days banks kept home mortgages on their own books, so they were very careful whom they loaned money to. But then the business model changed and banks started selling the mortgages they wrote to other companies. It no longer mattered whom they loaned money to, because they were oing to sell off the mortgage as soon as they wrote it.
• I dont think anyone should buy a bank if they dont have a feel for the bankers. Banking is a business that is a very dangerous place for an investor. Without deep insight, stay away
• As Warren says, if you get into a card game and you cant figure out who is the patsy, you are the patsy.
• Inflation is the friend of people who own assets. Inflation is also he enemy of the people who own cash or bonds.
• It wasnt greed that drove our grandparents to work so hard, it was the fear that they wouldnt be able to pay the rent and their family would go gunfray. Today that fear is gone. It has been replaced with a sense of entitlement that demands that health care be free, that a college education be free, that freee food and housing be provided if one is out of work.
• I do not think you can ttrust tbankers to control themselves. They are like heroin addicts.
• Bankers can destroy themselves and an entire nations economz. Bankers are entrusted with an enormous amount of other peoples money and should be conservative in investing it.
• About trading with derivatives> Its like having thousands of professional poker players. What damn good are they doing for anybody?
• A carry trade is the borrowing of large amounts of money at one rate and using it to buy an asset that earns a higher rate of return.
• all of Berkshires business have in common> Keep costs low.\
• Berkshire itself> Doesnt have a public relations or investor services department and for many years the annual report was printed on the cheapest paper possible and had no expensive color photos.
• A great business at a fair price is superior to a fair business at a great price.
• the product was the same year after year. The business required very little in capital expenditures, so it was possible to take money out of it every year to invest in other businesses.
• From Carl von Clausewitz: No war plan outlasts the first encounter with the enemy.
• Strategz of decentralization frees Berkshires subsidiary managers - the people with the best knowledge - to adapt their businesses to the economic environment as they see fit, without being meddled with by a less knowledgeable home office. It also allows Charlie and Warren to avoid the financial costs and inefficiencies of running a large corporate bureaucracy.
• Spend each day trying to be a little wiser. One inch at a time, day by day.
• He implemented a self/educatin regime for one hour a day
• The compounding effect of knowledge
• The best way to get a good spouse is to deserve a good spouse.
• Extreme specialization is the way to succeed.
• Its specialists who make the big bucks - everyone else, the little bucks
• Just keep thinking and reading, and you will be all right
• That is all there is to the investment game
• you think a lot, and you read a lot
• Overspending can make us miserable.
• Oh, its just so useful dealing with people you can trust and getting all the others the hell out of your life.
• In my whole life, I have known no wise people who didnt read all the time - none, zero. Youd be amazed att how much Warren reads - and how much I read. My children laugh at me. They think Im a book with a couple legs sticking out.
• Thats what manhood is, taking life as it falls. Not whining all the time annd trying to fix it by whining.
• I dont think its terribly constructive to spend your time worrying about things you cant fix
• I constantly see people rise in life who are nott tthe smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a litlle wiser than they were when they got up, and boy, does that help, particularly when you have a long run ahead of you.
• compounding our intellect.
• Thomas Edison:”I failed my way to success.”

How to turn down a billion dollars - the snapchat story

• "While standing in line to register at Stanford, I met this guy who asked me what I was reading. I said "What am I reqadin? Classes haven't started." And he kind of rolles his eyes, like, "What kind of an idiot is this?" The new classmate then bought him a copy of George Orwell's Animal Farm. "And I just thought it was fantastic; There hasn't been a day since that I haven't been interested in learning something.
• "When everyone is tired and the night is over, who stays and helps out? Because those are your true friends. Those are the hard workers, the people that believe that working hard is the right thing to do."
• Before smartphones were ubiquous, Facebook had to work extremely hard to build a social graph on the web. But with smartphones, people had a computer in their pockets with a complete social graph - their address book. This allowed Snapchat, Instagram, WhatsApp, and others to quickly build enormously valuable services.
• Evan wanted his statement to be just three words: "Wecome, Facebook. Seriously." It was an homage to Steve Jobs and Apple taking out a full-page ad in "The Wall Street Journal" saying, "Welcome, IBM. Seriously," when the much larger computer giant started competing with Apple in the personal computer business.
• "The tension between experience for its own sake and experience we pursue just to put on facebook is reaching its breaking point."
• This traditional social media view of identity is actually quite radical: you are the sum of your published experience. Otherwise knows as: pics or it didnt happen
• or in the case of Instagram: beautiful pics or it didnt happen AND youre not cool
• Snapchat: We are who we are today, right now.
• We no longer have to capture the "real world" and recreate it online - we simply live and communicate at the same time.
• Engineers and data scientists can't do anything with "this makes people feel warm and fuzzy."
• The mobile phone as the remote control for life.
• Despite the wild changes in media formats over the past century, the amount of money spent on advertising has generally remained constant. ... made up about 1.3 percent of US GDP
• Evan told reporters he found it annoying when brand tried to act like people on SNapchat by creating an account.
• There's a weird obsession with the idea that data can solve anything. I really havent seen data deliver the results that I've seen a great editor deliver.
• Zuckerbergs "I'm CEO, Bitch"
• The internet is not a friendly place. Things that don't stay relevant don't even get the luxury of leaving ruins. They disappear.
• Dont be to proud to copy
• As young people, we are trying to find our voice. Trying out who we are, again and again, until something feels more accurate than the previous thing... We believe what we see. And we cant be what we cant see. We are so credulous when we assume that everyone else must be the version of themselves they portray in public, even if we are hardly the people we present ourselves as.

Louis V. Gerstner jr. – Who says Elephants can’t dance?

Louis V. Gerstner jr. – Who says Elephants can’t dance?

• “It is not helpful to feel sorry for ourselves. I’m sure our employees don’t need any rah-rah speeches. We need leadership and a sense of direction and momentum, not just from me but from all of us. I don’t want to see a lot of prophets of doom around here. I want can-do people looking for short-term victories and long-term excitement.”
• I told them there was no time to focus on who created our problems. I had no interest in that. “We have little time to spend on problem definition. We must focus our efforts on solutions and actions.”
• Management principles
• I manage by principle, not procedure
• The market place dictates everything we do
• I look for people who work to solve problems and help colleagues. I sack politicians
• I am heavily involved in strategy; the rest is yours to implement. Just keep me informed in an informal way. Don’t hide bad information. Solve problems laterally; don’t keep bringing them up the line.
• Move fast. I f we make mistakes, let them be because we are too fast rather than too slow.
• Hierarchy means very little to me. Let’s put toether in meetings the people whi can help solve a problem.
• 5 ninety-day priorities upon start:
• Stop hemorrhaging cash
• Make sure we would be profitable in one years time
• Develop and implement a key customer strategy for year 1 and 2
• Finish right-sizing by the beginning of third quarter
• Develop an intermediate term business strategy
• Plus a thirty days assignment:
• Ten-page report from each BU leader
• I stepped to the table and, as politely as I could in front of his team, switched of the projector. After a long moment of awkward silence, I simply said, “Let’s just talk about your business”.
• I told the team that, effective immediately, the milking strategy was over and instructed them to get back to me with an aggressive price reduction plan
• When people realized that I really did read every one of the reports (from big clients problems to be solved from visiting them), there was quick improvement in action and responsiveness
• Turning around troubled companies, whatever hard or painful things you have to do, do them quickly and make sure everyone knows what you are doing and why.
• Sooner is better than perfect
• The real issue was going out and making things happen every day in the marketplace
• With an eye to the old management committee, I also announced what the CEO would not do: It would not accept delegation of problem solving. It would not sit through presentations or make decisions for the business units. Its focus would be solely on policy issues that cut across multiple units.
• No institutional transformation takes place, I believe, without a multi-year commitment by the CEO to put himself or herself constantly in front of employees and speak in plain, simple, compelling language
• This is about the bone-jarringly difficult task of forcing the organization to limit its ambition and focus on markets that made strategic and economic sense.
• I came to see, in my time at IBM, that culture isn’t just one aspect of the game – it is the game. An organization is nothing more than the collective capacity of its people to create value.
• My kind of executives dig into the details, work the problems day to day, and lead by example, not title.
• A good portion of our success was due to all of the deals we didn’t do
• People do what you inspect, not what you expect
• Companies don’t like to change because individuals don’t like to change
• I have always believed that it is better to underpromise and outperform than to overpromise and underperform

Who say Elephants can't dance? - Louis Gerstner

• There was not a single indication in the artwork or other displays that this was a computer company. There was no computer in the [IBMs] CEO's office.
• It's not helpful to feel sorry for ourselves. I don't weant to see a lot of prophets of doom around here. I want can-do people looking for short-term victories and long-term excitement. There is not time to focus on who created our problems. I had no interest in that. We have little time to spend on problem definition. We must focus our efforts on solutions and actions.
• Five 90 days priorities: Cash to not run out of money / Profitable by 1994 as a signal to the world and employees / Customer strategy that we serve their interests / Finish right-sizing orga / Develop intermediate business strategy
• There was a huge executive administrative assistant program. Hundreds drawn from the ranks of the best and brightest of the up-and-coming managers. What they didnt do was interact with customers, learn the guts of the business, or develop leadership competencies.
• Powerful geographic fiefdoms with duplicate infrastructure in each country
• I stepped to the table and, as politely as I could in front of his team, switched off the projector. After a long moment of akward silence, I simply said, "Let's just talk about your business."
• I told the team that, effective immediately, the milking strategy was over and instructed them to get back to me with an aggressive price reduction plan
• I began by telling my audience that a customer was now running IBM
• Operation Bear Hug - each senior management team member was to visit a minimum of five of our biggest customers during the next three months. I asked that a one- to two-page report be sent to me and anyone else who could solve that customer's problem. When people realized that I really did read every one of the reports, there was quick improvement in action and responsiveness
• My 100 day plan
• Keep the company together
• Change our fundamental economic model
• Reengineer how we did business
• Sell underproductive assets in order to raise cash
• Turning around troubled companies... Whatever hard or painful things you have to do, do them quickly and make sure everyone knows what you are doing and why.
• Sooner is better than perfect
• With an eye to the old management committee, I also announced what the CEO would not do: It would not accept delegation of problem solving. It would not sit through presentation or make decisions for the business units. Its focus would be solely on policy issues that cut across multiple units.
• No institutional transformation takes place, I believe, without a multi-year commitment by the CEO to put himself of herself constantly in front of employees and speak in plain, simple, compelling language
• "Clearly what we have been doing isn't working. We lost $16 billion in three years. Since 1985, more than 175,000 employees have lost their jobs. The media and our competitors are calling us dinosaur. Our customers are unhappy and angry. We are not growing like our competitors. Dont you agree that something is wrong and that we should try something else?
• The market, over time, represents a brutally honest evaluator of relative performance, and what I needed was a strong incentive for IBM'ers to look at their company from the outside in.
• Executives should know they don't accumulate wealth unless the long-term shareholders do the same.
• put their own money into direct ownership of company stock. 
• "You have to have some skin in the game."
• I bought stock repeatedly on the open market in the early days, because I felt it was important to have my own money at risk.
• 
  

Book "Strategy beyond the hockey stick"

• In strategy presentations, it seems that everyone is a winner. All the time.
• The strategy process is a ritual dance before you get to what really matters: The annual budget
• Good performance is attributed to superior management, and bad performance is blamed on market conditions
• Ed Catmull at Pixar was very deliberate about how to allow for noble failures. He labeled some projects as being "experimental", not aimed at theatrical release, to encourage people to try riskier ideas. He also funded some ideas considered to be "unlikely".

What is financial planning?

What is financial planning?

Planning is a mix of
- lies
- politics
- wishful thinking