What We’re Reading

A few good pieces the Collaborative team came across this week …

Failure:

Successful investing requires that investors navigate around a large number of risks throughout their lifecycle. We believe that the two most daunting risks investors face are the risk of failing fast and the risk of failing slow.

Slow failure occurs when an investor does not grow their investment capital sufficiently over time to meet future real liabilities. This often occurs because they fail to save enough or because they invest too conservatively.

Fast failure occurs when an investor – often those who are living off of portfolio withdrawals and for whom time is no longer an ally – suffers a significant drawdown that permanently impairs their portfolio.

Advice:

If you can’t code, write.

If you can code…don’t forget to write.

Salesforce is the new IBM.

The language of the markets and investing are the new Chinese.

If you can’t code, write, or sell…you will be being paid by the hour or be billing for your hours…yuck.

There is no retirement anymore. Pace yourself.

College:

The evidence shows that a college degree delivers a large and sustained income premium over a high school diploma, but a selective college doesn’t make the premium bigger. There are exceptions, but most people who prosper after graduating from such a college would likely have prospered if they had attended a less prestigious institution as well.

Market share:

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Gambling:

On September 24th, 1980, a man wearing cowboy boots and carrying two brown suitcases entered Binion’s Horseshoe Casino in Las Vegas. One suitcase held $777,000 in cash; the other was empty. After converting the money into chips, the man approached a craps table on the casino floor and put everything on the backline. This meant he was betting against the woman rolling the dice. If she lost, he’d double his money. If she won, he’d lose everything. Scarcely aware of the amount riding on her dice, the woman rolled three times: 6, 9, 7.

“Pay the backline,” said the dealer. And just like that, the man won over $1.5 million. He calmly filled the empty suitcase with his winnings, exited Binion’s into the desert afternoon, and drove off. It was the largest amount ever bet on a dice roll in America.

Sears employees:

Fred Imber: I never saw a reward card that gave away so much money. You buy $100 worth of merchandise, you got $75 back in rewards points. That encouraged people to come back and buy more stuff, but they were getting a lot of it for free.

Lynn Walsh: The weekly Thursday morning teleconferences with Eddie were embarrassing. We would all avoid eye contact with each other in those meetings, because it was humiliating. He would say, ‘How could you possibly think that was a good decision?’

Why pay your direct reports millions of dollars if you’re just going to ignore their recommendations?

Have a good weekend.


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