š ASB Partners Nuggets 5.9.25
This is a short weekly email that covers a few things Iāve found interesting during the week.
Interesting Links/Reads
Many links are sourced from Marginal Revolution (bold and italics are my own to highlight what I found particularly interesting)
Marriage, under this conception, wasnāt a one-time event. It was a process. There were usually four stages, all of them irreversible. First, a couple made a formal vow or commitment to each other to marry. Then came a public agreement and exchanging of tokensātypically a ring or a split coin. Then there was the ceremony and, finally, the consummation, or sexual congress.
While many of the questions were of the abstract type the editors expected (āWho was Cainās wife?ā āWhy does a dolphin follow a ship until frightened away?ā), many more were about personal relationships
Breaking the pain cycle
Chronic low back pain isnāt merely a physical issue to be mechanically repaired; itās deeply influenced by emotional and psychological factors. Critically, this is not to say that chronic pain is āall in the head,ā but to dismiss the role of the mind altogether, particularly in our experience and response to pain, is to ignore a vital target for pain treatment. As the biopsychological model posits, an individualās thoughts, beliefs, and environment can influence the intensity and duration of their pain, and integrating psychological strategies like cognitive-behavioral techniques into physiotherapy may help sustain pain relief over time. Embracing this holistic approach may ultimately help to break the cycle of hope and disappointment that plagues so many suffering from recurring low back pain.
Expertise is rooted in pattern recognition, and Buffett has seen every conceivable pattern. Given what I know about his work habits, I estimateāconservatively, I believeāthat Buffett has read more than 100,000 financial statements in his more-than-seven-decade career.
Buffett, on the other hand, bought almost nothing that was part of a major market index like the Dow Jones Industrial Average or the Standard & Poorās Composite.
Most investment funds operate under a curse that economists call āprocyclicality.ā After a fund racks up a streak of good returns, investors throw money at the fund, forcing its managers to put the new cash to work in a market that is likely becoming overpriced. That hinders future performance.
Then, when returns falter in a falling market, investors yank their money out, forcing the fund managers to sell just as bargains are becoming abundant. The fundās own investors make its performance worse, intensifying the marketās ups and downs.
Berkshireās only cash flows, however, are internal. Money comes in from (or goes out to) the assets it owns. Cash canāt come pouring in from new investors, or get yanked out by fleeing investors, at the worst possible timesābecause you can invest in Berkshire only by buying shares from someone else in the secondary market.
This package has given Buffett a structural advantage that has enabled him to pursue opportunities wherever and whenever he has perceived them. Thatās a luxury almost no other professional investor hasāor even wants.
Well, I think Iāve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life Iāve underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther.)
I think if you had asked me ten years ago, I would have told you my investing style was extraordinarily focused on incentives. I very rarely buy a stock without a serious incentive angle. At minimum, most stocks I look at / buy have either high insider ownership (so insiders benefit when shareholders make money) or a significant share buyback (signaling management thinks the stock is undervalued)ā¦. and Iād prefer them to have both high insider ownership and share buybacks! Of course, there are plenty of other incentive driven plays; these days, Iām finding myself more and more focused on event driven investing, and a lot of event driven investing comes down to trying to understand the incentives of different key players (the management team, board, etc.). A simple example: I love to look at companies that have recently updated their change of control agreements for management since it signals that management / the board are at least thinking about a change of control!
but Iāve increasingly come to believe that a big reason so many firms underperform is so few boards and management teams have any incentive to actually drive shareholder value.
4.UK estimate of the day by Tyler Cowen
A majority of Britons may now consider themselves neurodivergent, meaning they have a condition such as autism, dyslexia or dyspraxia, according to a leading psychologist.
Francesca HappĆ©, professor of cognitive neuroscience at the Institute of Psychiatry, Psychology and Neuroscience at Kingās College London, said reduced stigma around these conditions had led more people both to seek medical diagnoses and to self-diagnose.
She said: āThereās a lot more tolerance, which is good ā particularly among my childrenās generation, who are late teens and early adults, where people are very happy to say āIām dyslexicā, āIām ADHD [attention deficit hyperactivity disorder]ā.ā
Podcast/Videos
Show notes from Peter Attia Podcast āThe Driveā
Sean Mackey is a professor of pain medicine at Stanford University and the director of the Stanford Systems Neuroscience and Pain Lab,
This dualistic model is utterly completely wrong
Yes, Descartes got Cartesian geometry right, but he complete bollocks screwed it up when it came to pain
Itās only been in the last number of decades that weāve appreciated the nuance of what pain really is
Sean explains about pain, āInstead of it being under this guise of this separate mind and body, we now appreciate it as this integrated biopsychosocial phenomenon meaning that, and I think this is one of the most important things that Iād like to drive across.ā
ā Nociception is a term referring to electrochemical injury signals that occur in the periphery, that what goes on in the body and what goes on in the brain, the experience of pain, they may have nothing to do with each other or very little linkages (and Seanās going to unpack that)
Seanās recommended dose for NSAIDS
800 mg ibuprofen, 3 times a day (would be 2,400 mg per day) for 1-2 weeks
Make sure you have food in the stomach when you take it and fluids
If youāre either older, youāve got kidney issues, youāve got GI issues, talk to your doc first
Donāt just go into this stuff blindly
Peter points out, āIt is interesting that we can buy acetaminophen and ibuprofen over the counter and yet they can cause a ton of damage if not taken correctly.ā
Sean adds that the ER sees people with acetaminophen (Tylenol) overdoses and itās a cause of liver failure
Do we understand how acetaminophen works?
When Peter last tried to understand it, there was no clue as to how it worked
Thereās minimally more information now
Sean discloses that he hasnāt read up on this alot
It has some COX-2 impact [Sean misspoke when he said cyclooxygenase-1]; a lot of it is thought to be central
Sean saw some interesting side studies where it seems to have some impact in the brain around emotional modulation
Thereās a degree of emotional blunting on acetaminophen
Whether it translates into a real world [effect] or if itās just an experimental manipulation, he doesnāt know
Peter points out, āThereās a nice synergy with acetaminophen and ibuprofen because [each has a] different mechanism of action, different organ systems are impacted, so you can take less of each when you combine them.ā
Sean uses those in combination to get that synergy
The 1+1 is not 2, but 3
How much Tylenol you can take per day
Historically we would say up to 4 grams a day
More recently thereās been some push to try to reduce that to 2 grams a day
Clearly if youāve got liver dysfunction, if you are drinking large amounts of alcohol, [take] less
The combination of Advil and Tylenol is Peterās go-to
Harvard economist Kenneth Rogoff approaches global finance with the same strategic foresight that made him a chess grandmaster.
https://conversationswithtyler.com/episodes/kenneth-rogoff/
On the US fiscal position
COWEN: Just predictively, what do you think the United States will do with its fiscal position?
ROGOFF: That is a darn good question. Looking way forward, I would just say weāre on an unsustainable path. We will continue to have our debt balloon. Eventuallyāāānot necessarily in a planned or coherent wayāāāI think weāre going to have another big inflation soon, next five to seven years, maybe sooner with whatās going on, and thatās going to bring it down just like it did under Biden. It brought the debt down. Then the markets are, fool me once, shame on you. Fool me twice, no, weāre raising the interest rate, and then weāll have to make choices.
I think in the United States, a lot of the choices, Iām sorry to say, probably point towards higher taxation because weāre hardly running a welfare state. All due respectsāāāand Iām not sure I have any due respects to DOGEāāāthereāre not that many things to cut in the United States compared to many other countries. I donāt know what the choice will be. I probably wonāt be here, and you might not be either, when weāre making the choices, but if actually weāllāā
COWEN: When you say big inflation, how big is big?
ROGOFF: Last time we probably had a bonus 10 percent inflation over the 2 percent target cumulatively, maybe 12 percent. I think this time, itāll be more on the order of cumulatively over the 2 percent target, 20 percent, 25 percent. Thereās going to be an adjustment. I donāt think the debt is going to be the sole contribution to that. There are many factors. You have to impinge on Federal Reserve independence. Probably, thereāll be some shock, which will justify it. I donāt know how itās going to play out.
I hope you enjoyed it.
Adam