What I’m Reading

Risk means more things can happen than will happen.

  1. Focus on the quality businesses you would be comfortable holding through a market collapse.
  2. If it’s not worth putting 5% of your portfolio in the stock, then it’s probably either too risky, outside your circle of competence, or doesn’t have enough upside.


The biggest takeaway is to remember that as a fish you don’t notice the water that you swim in. We are so absorbed in the zeitgeist (Spirit of the Times) that we usually miss that other eras are different. We miss the possibility of turning points. We miss the possibility of things that we would have not thought possible, like negative interest rates.

The people that use all-time highs to scare you are the same people who told you that the 27% selloff in the Russell 2000 earlier this year was the canary in the coalmine. Small-cap stocks are now at all-time highs and 40% off their February lows.


Why take a bet where the best return is 100% and the downside is unlimited?

Putting 20% of your portfolio into Stock A which has some chance of going to zero and putting 20% of your portfolio into Stock B which has some chance of going to zero can’t possibly be riskier than putting 100% of your money into an index that has a good chance of declining 40%. For me, the long-term base case for the S&P 500 is a decline of 40%.

When I sat down to write about media manipulation five years ago, my original point was to show how publicists can direct and influence the news. What I found, of course, was that this kind of manipulation is only part of a larger system—that the outlets themselves are the real sources of manipulation. More, I found that these outlets were simply responding to the economic realities of the news business, just as newspapers a generation ago were driven to do it by the invention of the penny press and intense competition. On top of all that was one sad fact—and it’s expressed in the cheerful comments section of any inaccurate, disingenuous and hoaxed article: people don’t really care.

One thought on “What I’m Reading

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