- The Idea Farm
- Posts
- You Have One Job
You Have One Job
+ Aswath Damodaran, Michael Mauboussin, Barry Ritholtz, Diamond Disasters & More
The Idea Farm
March 23, 2025
Sponsored by
“Recognize that many of your best practices were designed for a world that no longer exists. In the face of rapid change, past patterns don’t predict the future.”
Research
Professor Aswath Damodaran provides a framework for thinking about how much cash a business can return to its owners, and then argues that, in reality, this decision is affected by inertia and me-tooism. Then he breaks out the total cash returned during the year, by public companies, in the form of dividends and buybacks.
He finds that globally, 17.5% of money losing companies continue to pay dividends, and 31% of money-making companies choose not to pay dividends.
Man Group - DeepFreak (11 pages)
Man compares the Dot-Com bubble to the market today, highlighting the level of market concentration as the key difference. Then they cover what is needed for companies to justify their current valuations.
Robeco’s David Blitz decomposes equity returns into earnings growth and multiple expansion to help understand why most markets and styles have lagged the US equity market. He finds:
Small-cap and low-volatility stocks have delivered solid earnings growth but lagged due to stagnant valuations.
Emerging Markets equities have suffered from weak earnings growth despite rising valuations.
UBS’ huge report covers diversification from every angle. You can either download the PDF or read the individual sections.
Bonus Content
Much like navigating the seas with dead reckoning, investing is an exercise in managing uncertainty. Link
Lindsell Train wrote a great piece about the power of compounding. Link
AngelList data suggests that 18 months after closing, a Series A investment that hasn’t been marked up yet is more likely to never be marked up than to be marked up. Link
Bloomberg explains why the $80 billion diamond market is struggling and the implications on De Beers, which was once the titan of the industry. Link
Join a Community of Sophisticated Investors from Industry-Leading Firms
10 East, led by Michael Leffell, allows qualified individuals to invest alongside private market veterans in vetted deals across private credit, real estate, niche venture/private equity, and other one-off investments that aren’t typically available through traditional channels.
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Interested investors are encouraged to inquire for membership to unlock 10 East’s detailed track record and upcoming deal flow.
Join with complimentary access at 10east.co
Podcasts
 2/13/2025 - 65 minutes | Mauboussin covers capital allocation strategies, the shifting landscape of private equity, accounting challenges with intangibles and more. |
 12/27/24 - 75 minutes | This episode shares lessons of a man who grew up in dire poverty and escaped through manual labor to become the richest person in Korea. |
What Else Is Happening
Meb Faber spoke with Barry Ritholtz on how not to invest. Apple | Spotify | YouTube
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