“In investing, what is comfortable is rarely profitable.”
– Rob Arnott
GMO – 35-Year Highs for the Dollar (10 pages)
In the Q2 2022 quarterly letter, GMO covers the US dollar, undervalued developed market currencies as tail winds for securities holders in those countries, and the impact on the rest of the world of a strong dollar relative to other currencies.
Former poker champion turned author and decision-making expert, Annie Duke, is out with her newest book this week, and it is fantastic. She looks at why we’re biased to stick with the status-quo in all walks of life, including investing, and how we can counteract that to quit when we should (or stick with what we’re doing instead of quitting). She shares advice based on empirical studies to become a better ‘quitter’ and hence, a better investors.
Meb’s episode with Annie will be released on Wednesday this week, so be sure to subscribe to the podcast so you don’t miss it!
Check out some of our favorite passages below
When to quit – Quit while you are ahead…when the game you are playing or the path you are on is a losing proposition. If you are in a situation that carries with it a negative expected value, by all means quit. But keep going when you have a positive expected value.
On trading – …when traders are losing, they cancel their stop-loss orders, preferring to gamble that the position will recover and they won’t have to turn their loss on paper into one that’s realized, a decision that carries with it the risk of accumulating bigger and bigger negative returns.
Cut your losses – If we don’t cut our losses when it’s warranted, those losses will continue to accumulate.
Quitting part of your identity – In large part, we are what we do, and our identity is closely connected with whatever we’re focused on, including our careers, relationships, projects, and hobbies. When we quit any of those things, we have to deal with the prospect of quitting part of our identity. And that is painful.
On prioritizing what’s important – Be picky about what you stick to. Persevere in the things that matter, that bring you happiness, and that move you toward your goals. Quit everything else, to free up those resources so you can pursue your goals and stop sticking to things that slow you down.
This is a must-listen if you’re a parent. Gladwell investigates what led a group of students at UPenn to end up there and become some of the highest achievers in the country for their age group, and one factor stands out from the rest.
From The Episode:
“…we want to think about success as a word to describe ourselves, our own progress, but it’s not really people who are successful, it’s the systems around us. Great students and great hockey players come from great teams and great classrooms. And if you want to judge the success of those teams in classrooms, start by looking at their composition. Like when was everyone born? And if we can’t get that one, right? God help us with everything else.”
Mark Cuban doesn’t believe in following your passions
[9/13/22 – 44 minutes]
Apple | Spotify | Google
Mark Cuban shares the story behind Cost Plus Drugs, the benefit of radical transparency and trust as a moat, and the future of capitalism.
From The Episode:
“The only true understanding of drug pricing that consumers or patients have is via the pharma bro Martin Skreli with the idea that you can raise a drug price by 5,000%. And I told him (Dr. Alex Oshmyansky), if you can raise it by 5,000%, there’s a really good chance you can reduce it by 5,000%”
Harvard professor Arthur Brooks talks about what it takes to build a good life. He touches on the power of social comparison, the limits to identity, the nature of love, and more.
From The Episode:
“Ultimately, that’s (happiness) not a question of wanting more, that’s a question of wanting less.”
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