Munger and Buffettisms

I am currently making my way through Poor Charlie's Almanack, a collection of the writings and musings of Charlie Munger, the other genius behind the success of Berkshire Hathaway (BH), the guy who reoriented Buffett away from Benjamin Graham-style value investing towards picking great businesses, a style of/factor within investing that quantitative research has subsequently distilled, roughly, into what is known as "quality."

It is unquestionably a good read, and Munger a wise guy. In some ways reading it institutionalizes the wisdom of the prior generation of Republicans we loved, the guys like Mary's dad George Sr. or my mom's second husband David with whom we would argue over politics at the dinner table but who we knew were at their core super-solid human beings who worked their butts off and loved their families and communities and were tolerant of others. They just like low taxes and didn't view government as the best capital allocator.

But often as Buffett and Munger differentiate Berkshire Hathaway culture from that of other market participants (mutual funds, other corporations), their moralism and superiority can be grating. We have to remember they are -- like all investment managers -- talking their book, and that they are, like Vanguard, an example of a company and a culture which have been at once very successful, forces for good, but also genius marketers, which as a matter of course entails a tendency towards simplification that veers towards obscurantism. In the case of each of them, they write very little. Which I get, because they are not writers and writing is probably not the highest and best use of their time. But it means that when they do write, they are in such a rush to get it out that the gloss over a lot.

In a 1994 address to a class at USC's Business School, Munger talks about what made GEICO so great, which was a culture which focused on cutting out things that didn't work, until they got to the things that did work. OK. In fact we know from Buffett's letters over the years and from our own eyes that have been a number of things that contributed to GEICO's success. It perfected direct marketing (presumably in Munger's eyes that meant throwing away layers of sales force and support thereof), which in recent years means they have reinvented television advertising in an entirely unique way: if you see a commercial and it seems surreal and absurd, you know that in the end it will be selling GEICO. Also Lou Simpson, which managed its portfolio for 30 years, was as good an investor as Buffett and Munger, or at least in the same class, a fact that Buffett extols at length over the years.

Also, there is a moralistic didacticism in Munger's tone, and at times in Buffett's, but they are not always pure as the driven snow. A few instances

• In 2002 Gen Re, a BH subsidiary, was on the other side of the finite reinsurance scandal that eventually brought down Maurice Greenberg from the helm of AIG, leaving it organizationally weak (which was Greenberg's fault) and open to the type of mismanagement that allowed AIG Financial Products to happen in the run up to the financial crisis. The scandal stuck to Greenberg, but not BH
• There was the affair of Dave Sokol, one of the potential heirs to the throne at BH, but was bounced out in the mid-oughts after he broke some laws. BH basically buried that episode to the best extent possible
• More recently, there's been the disastrous transaction with 3G's acquisition of Kraft-Heinz and the zero-based budgeting that eviscerated its brands

I see I gotta get Graham somewhere. Anyway, Buffett and Munger ain't perfect but they do still kick ass and share wisdom, so it's worth reading them.

Vice

And so, I have accepted the role of Vice Chair of my "HOA" (not really an HOA because it existed before the legal form of HOA did) after I was asked to be Chair. This marks an improvement over prior years, when I was "Acting Secretary", which meant that I took notes at meetings but didn't accept the formal designation of "Secretary" because I didn't want it, but also that I could be cc'd and included in all important decisions regarding the organization because it just makes sense for me to be on them.

Being Chair would have been too much. I need to be able to focus on my day job, shepherding Graham through high school, and politics. I just don't have the bandwidth to get sucked too deep into the neighborhood stuff. I already spend tons of time on it, maybe 100-120 hours a year. It is, indeed, a very interesting problem, maintaining a lake in the middle of an ever denser urbanizing area.

But in the end, it's a pretty small canvas.

Interviewing Asian kids for college

I've been assigned two young men of Asian -- seemingly Chinese -- descent to interview for Yale. With the lawsuits alleging cultural bias against the elite colleges in admissions, a cultural bias specifically against very high-achieving Asian kids, this is obviously slippery territory for me. I am ground zero for this conflict, as an older, white alum with a very strong cultural identification with the traditional liberal arts model of which I view Yale as an exemplar. Although I work with numbers and finance, I am not in favor of the kind of quantified reductivism that values anything strictly in terms of metrics and numbers, in this case grades and SAT scores.

So I have to be very cognizant of these biases I bring to the table and remember that these are young people I'm talking to, unformed, with their whole lives ahead of them, that I'm sure they've worked their asses off to have gotten through the fat stacks of applicants just to get interviews. It's fun talking to young people and hearing where they are at, what they are up to, and where they want to go. As the uncle of a couple of kids with a Chinese father, each of whom is very individual, I know all these kids have something distinct and vital within them. It's my job to find it, if it's not really obvious.

Deng Xiaopeng and the Transformation of China

After however many months, and however many books I started and/or didn't finish in the middle of it, I am done with this one, no thin tome, first published by Ezra Vogel in 2011. This was no easy book, and it didn't in many ways cover what I had hoped it would. But it was still very worthwhile. And hell, if they had wanted me to write the book, they would've asked me.

First and foremost, Vogel has written what I would call a "court history," in that it focuses on how Deng operated within the Chinese power structure, and also when he was on its periphery or worse, as during his period of rustication during the Cultural Revolution. This is generally not my kind of thing. I am more into the stories of historical change on the ground: how people lived, how things were made and sold, what they watched, listened to, cared about, dreamed of etc. Vogel does address this kind of thing in passing, at a high level, and he 100% gets that it was Deng who made it possible for all of that to happen. So in a sense the story Vogel tells is necessary and prior to all the things I want to know about.

Vogel focuses on how Deng did it, inch by inch, brick by brick, plenum by plenum, circular by circular. It is a hard story to tell, but there is much to it.

The key is Deng's long view. When Mao died, and even before, Deng understood how far China was behind the West, and he had some vague inkling of what it would take to bridge the gap. Too much waste in the military, too many soldiers? Scale back the army. But how to do that? So many generals and officers, proud of their positions in life, how to overcome their resistance? What happens when millions of soldiers return to their villages? What will they do to feed themselves? That's just one example of one problem set Deng and China faced.

How to address these big challenges? Talk them through. Big meetings. National meetings. Regional meetings. Local meetings. Discuss the problems on the ground, and how they can be addressed in the light of Maoist thought and Party guidance. Because the center needed to hold. China's overarching problem over decades and centuries -- and its greatest shared fear -- had been chaos (most recently the Cultural Revolution) and domination by foreign powers (the West since the Opium Wars, Japan pre-WWII). So the Party needed to remain sacrosanct as a place where issues could be worked out. Even if it meant using force to quell rebellion at Tiannanmen Square.

Overall, the big lesson from this book is how intensely consensual governance in China is. Yes there is a firm center, but it always exists in dialogue with its constituent elements, if not the true periphery (Tibet, Xinjiang). Deng mastered the process, because he sought to guide and channel it prudently, and at certain moments, like his final Southern Tour in 1992, where he challenged the post-Tiannanmen conservative consensus in Beijing to push for further reform and openness, he gave it a kick in the ass to get it going again.

As ever, the picture is complex.

Service-focused Impact Investing

Before I drift off into my next book, the most important idea to come out of Kai Fu Lee's AI Superpowers, to my mind, is "service-focused impact investing." Impact Investing is the emerging discipline of allocating money with a view to effecting not just economic but non-economic goods: social equity, the environment, gender equity, etc. Service-focused impact investing, in Lee's formulation, involves investing in businesses or other enterprises that specifically seek to employ people in a way that benefits them as well as those they serve. Investing to encourage volunteerism, caregiving, education, etc. Really without explicit aims of economic return to the investor, or at least without that being the primary goal. To broadly encourage love in society.

He gets to this position after fighting off cancer. It was an unexpected turn in the book, but he's the , first person I've read to really take this issue on in a direct way and try to think it through, and the first with the weight and visibility to push it at high levels. Worth watching. Because he is on to something.

Mixing it up

As my business has matured, I find myself a little too tethered to my desk sometimes, dealing with internal and administrative matters (this person has money coming in, that one has money going out, etc.)  I am not getting out in the streets and seeing more people and things as often as I would like to. First and foremost I know that this means I need to be sure we upgrade and upskill someone to whom I can delegate more of this stuff. Such is life.

It nets out that I am not being exposed to as diverse a stream of new people as would be ideal, which in some ways deprives me of the social, intellectual and -- dare I say it -- spiritual oxygen that comes from encountering and engaging with new souls and situations. Even as I write this I recognize that the challenge this presents me with is to learn to draw more strength and interest from those I know and deepening my engagement with them. For example, the client with whom I went to a Smart Recovery meeting the other night (essentially this is AA for people who don't cotton to the idea of a Higher Power, powerlessness, etc.).

A particular challenge here is that I am doing this as I am also making a conscious effort to fly and even drive less, for carbon reasons, so I'm not getting as much geographic diversity.

It also means that I am increasingly dependent on the things I read, listen to, watch, etc, to mix it up. So that if I am captive to the recommendation engines of Amazon, Netflix, etc, there will be a natural narrowing process. Particularly if I keep getting suckered into watching the best goals of Messi, Zlatan, etc., on YouTube.

At least yesterday I did talk on the phone for 15 minutes to a new Board member, and I started watching Eddy Murphy's Dolemite is My Name on Netflix, which is pretty good. And I am grinding to the end of the Deng Xiaopeng bio I've been intermittently reading for months now, and just finished listening to Kai Fu Lee's AI Superpowers in the car, a very intelligent and thoughtful book about the AI arms race between US and China, the disappearance of work as everything gets automated, and how humanity should manage that transition. There were surprises. I'm also enjoying Marcus Aurelius and Charlie Munger in the mornings.

Puzzling

Mary, Natalie and I were working on a puzzle until about 11:15 last night, and then we all got to bed late and had some difficulty falling asleep because our minds were racing a little. We all now recognize the need to put down our puzzles a little earlier, to tone down our puzzle partying. Getting old and learning to accept limitations is hard sometimes.

The souls of my things

Looking around my study, I see that a large plurality if not outright majority of the larger objects (I don't want to quibble over definitions, because nobody is auditing my blog for accuracy) have origin stories: Mary's old futon, George's old guitar, my great-great uncle's (or whoever he was)* old cane, the library table Mary and I bought in Somerville, the armchair I bought in early '95 for my room at Columbia, which occasioned Mary's first trip to High Point (you would think I might have learned something from that trip), the plastic Ritalin man pencil-holder I bought at a yard sale at the Lowenthals in '74 or so, and so on. They have been with me or Mary for decades, some have been in the family for centuries.

So when I say I don't like things, it's not entirely true. I just don't like things without histories, without souls, as it were. That is, things that are not extensions of my soul.

But I would not mind getting rid of Mary's old futon and getting a couch on which I could nap, read, and watch TV in the evenings. I just need to get that done.



*Given to Reverend JC Troy by the stewards of the Riverside Church in 1892, apparently

Learning restraint

Yesterday, like most Sundays, was a super-full day, but a good one. After breakfast, I got Graham behind the wheel and out on the road early. We went west of Jordan Lake, down to Pittsboro, then back through Carrboro to pick up some of the walnut-raisin bread Mary likes at Weaver Street. Graham did well, but I did even better. I need to learn to sit on my hands better, to correct him when necessary but otherwise let him just get comfortable and confident behind the wheel, which isn't always easy. He still has little surprises for me, like when we were pulling in to the driveway last week after a long and successful drive and he drove off the edge of it while turning in, not far from the ditch. "What happened there?" I asked. "I saw that the flag was up and was thinking that I didn't need to come back out to get the mail, so I was distracted."

That was a bit of a surprise, given that he had been out on the interstate going 65 feeling fine and doing a whole host of other more complicated stuff. It never occurred to me that one could drive off of the driveway because of a distraction that small.

This incident is fairly emblematic of the challenges of being the dad of a kid on the autism spectrum, but the very high end of it. Mary has focused considerably on the autism part of Graham's behavior and being in the world, whereas I am focused primarily on him as a kid/boy/young man. I think about his development first and foremost by analogy with my own, because there's a lot in common for damned sure. Lots of dads are in flat out denial of their kid's special needs conditions. I don't think I'm quite there, but Mary might not always agree with that statement.

But sometimes that blinds me to the sides of him that are consistent with his diagnosis. He really does have difficulty splitting attention, so for example pulling into a driveway or both driving and monitoring his speed (often he drifts towards a slow speed, sometimes he goes too fast). So I have to keep this mind and guide him accordingly, but gently, and not excessively. Which ain't always easy.

Batuman

So I pushed through to the end of Elif Batuman's The Possessed. The simple fact that I did so is, of course, a vote of confidence in the book. In many ways, its strengths and weaknesses are one and the same. In chapters on Lazhechnikov's The Ice House and the historical incident it was based on (an actual ice house created in the mid 1700s by the somewhat crazed Empress Anna Ioanovna, in which she forced a couple of members of her court to marry and spend their wedding night, just cuz) and on her studies of Uzbek literature in a summer in Samarkand, she sometimes overindulges in digression and detail.

But then again, it is Batuman's tremendous enthusiasm, curiosity and stamina in ingesting texts and experience which allow her to have some pretty unique and deep thoughts. Sadly, I can't synopsize them quickly. The idea of doing so reminds of the story of when someone asked either Wittgenstein or Tolstoi what their book was about, and whoever it was responded by saying that the only way they could answer the question was to read the book aloud from the start. So there.

In many ways, the book testifies to the enduring power of scholarship and experience, when channeled through a pen of talent. Natalie espied a copy of Batuman's second book, The Idiot, in the little free library out by the lake (let the record show that having one there was my idea). I went and snagged it, replacing it with a Henning Mankell novel that I once read most of a second time by accident. I won't be repeating that mistake.

Vroom

At the intersection of North and South Lakeshore, etc, while running, I came upon a small Toyota, pretty sure it was a mighty Yaris. It was helmed, I am almost sure, by a valiant young lad, because he gunned that little engine to announce to the world that he was there as he pulled away from the stop sign that seemed perhaps to offend him. A Yaris, I tell you.

The instinct runs deep, this drive towards protruberance. Even the smallest of cars cannot efface it entirely, because it derives ultimately from a perception of one's puniness and inadequacy, such as infuses the Trump and Brexit electorate, who have felt collectively powerless and castrated for so long but feel that they have been offered their penises back in the form of these two men and their absurdities. The paradox and the terrible thing is that to bring them back into the fold of reason, we ourselves may have to let them feel somehow empowered within our world view.

Lady Bird

The whole family watched 2017 Oscar nominee Lady Bird the other night -- Natalie for the second time. Mom and I loved it, Graham not so much. He was focused on a few specific points in which it was "unrealistic" -- specifically the ages of the actors and acrtresses, stuff like that. Frankly, they seemed pretty young to me, I hadn't even thought about it. He also pointed out that if someone threw themselves out of a car going at highway speeds, as Lady Bird did at the beginning, that they would get more than a cast on a forearm. I had to give him that.

Mary and Graham were discussing it as I was trying to go to bed Wednesday night, which was a moment when I had zero interest in hearing about it, so I closed my door. But I brought it back up at dinner, and the discussion got interesting. Natalie dug in her heels and bemoaned the fact that resistance to personal, intimate narratives like Lady Bird was reflected in the fact that only one female director had ever won an Oscar (she failed to mention that it was Kathryn Bigelow's The Hurt Locker that won it, as male a picture as you are likely to see).

I was initially a little annoyed at Natalie's slightly knee-jerky adherence to a somewhat simplistic party line she was learning on campus, but it did make me wonder about some of the stupid stuff I said when I was in college, and it took me back specifically many years to one argument I had with mom around then in which we raised our voices and I was saying basically that Capitalism is Evil and she was saying that Socialism is Evil and I remember even as it was coming out of my mouth I knew it was kinda bs but I said it anyway because I was in the mood and getting in an argument would give me a fine excuse to go out and party that night).

But Natalie's argument has a good deal more validity than the one I was espousing all those many years ago. We do prize the big dramatic stories more than the little personal ones, and to our detriment. We are a long way from the days of Norman Lear, Ordinary People, and On Golden Pond.