“If a man does not know to what port he is steering, no wind is favorable to him.”
- Going the DistanceStarting out too quickly in a marathon is a classic beginner’s error. The adrenaline rush of the starting line, a rested body, and watching others start off strong can conspire to accelerate your pace beyond the level that can be sustained for 26.2 miles. Exceeding your physical capacity at the start can have dire consequences toward the end of the race. Aspects of personal finance resemble marathon running as well. To go the distance, you must pace yourself.
- Deprival-Superreaction TendencyDeprival-Superreaction Tendency refers to the human reactions to the experience of loss — both the loss of something one already possesses as well as the loss of something that one has almost obtained. Human beings feel the pain of loss much more intensely than the pleasure of an equivalent gain and there are important consequences stemming from this tendency. This article is part of a series on Charlie Munger’s Psychology of Human Misjudgment.
- Berkshire Hathaway’s Great TransformationOn a spring day in 1964, Warren Buffett received a letter from Seabury Stanton offering to purchase the Buffett Partnership’s stake in Berkshire Hathaway. Buffett and Stanton had agreed to a price of $11.50 but Stanton’s letter offered only $11.375. This annoyed the thirty-three year old Buffett and he started buying more shares starting his long journey of transforming Berkshire Hathaway into what it is today.
- Lighthouse: Women Leading the Way in FinanceMaya Peterson wrote Lighthouse to inspire and empower women to study “female lighthouses in the world of finance.” While these women have navigated different paths, what they have in common is the shared experience of being women in a male-dominated field and how they found ways to overcome challenges. Although young women embarking on their careers will find the stories highly relevant, all readers should be able to draw lessons from the book.
- Buffett’s SEC Filing Implies RepurchasesOn July 8, Warren Buffett submitted a regulatory filing to document his annual contributions of Berkshire Hathaway stock to several charitable foundations. The filing included the total number of shares Buffett held as of July 8 along with the percentage of economic interest of Berkshire he controlled as of that date. Sharp-eyed investors and journalists noted that the disclosure implied that Berkshire has been repurchasing shares.
- The Irrational Tax TrapAs an investor, are you making rational decisions when it comes to taxes? Everyone obviously likes to think that they are rational, but it is quite likely that tax considerations have hurt your results over time. However, hindsight bias and a human tendency to remember triumphs while relegating errors to the deep recesses of memory makes it likely that we have forgotten cases where tax considerations hurt us.
- The Buffalo News: From Butler to BuffettFrom Butler to Buffett provides a great example of the evolution of newspapers from the late nineteenth century up through the consolidation of the industry that was largely complete a hundred years later. Murray Light provides a fascinating account of how the paper transformed from a scrappy startup founded in 1873 into the only surviving newspaper in the city 110 years later following Buffett’s acquisition of the paper.
- Summer Book Recommendations for 2020Summer is a great time to get away from the business world. Although taking a vacation during a pandemic can involve overcoming a number of issues, it is always possible to take a virtual vacation through the pages of a great book. The mini-reviews in this article cover a range of topics, most unrelated to the business world, and hopefully a few of them will spark an interest this summer.
- The Evolution of Robert MosesRobert Moses came of age at the dawn of the twentieth century and shaped the New York metropolitan region in ways that continue to have profound impacts on the lives of its inhabitants to this day. As his biographer points out, it is impossible to say that New York would have evolved into a better city if Robert Moses never lived. But it is possible to say that New York would be a very different city.
- What’s Your Magic Number?The goal of financial independence is best viewed as a means to an end rather than an end in itself. Simply defined, financial independence is achieved when a person can generate a stream of cash flows from accumulated assets that exceeds his or her spending needs. No specific “magic number” translates into independence for everyone.
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Credit for cover art: A Pier Overlooking Dordrecht, early 1640s by Aelbert Cuyp, oil on canvas, National Gallery of Art