What I've learned since moving to D.C. (some of which should be obvious): 0158

7851.  Goats can eat poison ivy and poison oak. . . . Who knew?

7852.  A superior cost structure is often fundamental to a business’ sustainable advantage;

7853.  For an airline, first-class pilots are essential so costs are very people-intensive;

7854.  In the carpet business, only 15% of costs relate to employees.  The big cost is the raw materials, the fibers;

7855.  In the insurance business, the big cost is future claims, which involves a lot of estimating because claims might be paid 5, 10 or 20 years later;

7856.  In retail, the big cost is rent with labor being a significant secondary cost;

7857.  The big cost can vary enormously by the type of business you’re in;

7858.  The key to investing is to understand a company’s costs and why it’s got a sustainable edge against its competitors;

7859.  The big problem with airlines is not so much aggregate revenue, but whether your average costs are out of line with your competitors.  Since the airline travel is pretty much a commodity business, costs are the key factors.  The biggest cost is labor;

7860.  The figure to look for with airlines is cost per available seat mile and the cost per occupied seat mile;

7861.  In airlines, as with many other industries in a capitalistic society, business will eventually gravitate to the low-cost player;

7862.  Warren Buffett suggested that for those who believe U.S. businesses will do well over time, dollar-cost-averaging into a broad-based index is a reasonable approach;

7863.  Charlie Munger noted that many corporations have large mergers and acquisitions departments spending huge amounts of time to do huge amounts of due diligence.  Yet at least two-thirds of acquisitions are duds;

7864.  It is helpful to list the qualities you would want in a friend and then seek to instill those qualities in yourself;

7865.  It’s a matter of choice (and) not DNA.  Anyone can develop good character and quality lifetime habits;

7866.  Warren Buffett recommended realism in defining one’s circle of competence and discipline to stay within the circle.  It helps to insulate yourself from popular opinions.  You’re better off sitting and thinking;

7867.  Read a lot of annual reports.  Learn accounting by reading good business articles especially those on accounting scandals.  Try to know how the numbers are put together.  If you cannot understand it, it is probably because management doesn’t want you to understand it.  Management always obfuscates the facts for a reason;

7868.  Warren Buffett warned investors if management refuses to expense options or has fanciful pension assumptions they will likely take the low road on other matters as well;

7869.  Charlie Munger advocates developing a temperament of owning securities without fretting.  If you focus on the price, you are really saying that you believe the market knows more than you do.  If you think of the value of the business instead of the price, you will sleep better;

7870.  Investing should be more like pari-mutuel betting, where you need only be right a few times as long as you don’t take a big loss;

7871.  Don’t poke Elizabeth in the cheek when she’s sleeping;

7872.  Anything I’ve ever done that ultimately was worthwhile initially scared me to death;

7873.  Sports are the main way in which people in the modern world actually achieve altered states of consciousness;

7874.  It’s a professional who shows up and does the work.  It’s an amateur who waits to be inspired or waits until they feel like it;

7875.  Life hack: At Starbucks, order a café misto for 50 stars instead of a handcrafted drink.  Make it a venti and add as many add-ons (including espresso shots) as you like.  Once you checkout, all of the additional charges are removed and it’ll only be 50 stars (for brewed hot coffee v. 150 stars for a handcrafted drink);

7876.  Elizabeth played a lot of Pac-Man growing up;

7877.  For inflation strategies, Warren Buffett suggested, as a first line of defense, one increase his/her earning power.  If you’re the best surgeon or the best plumber in town, your wages will more likely be indexed to inflation;

7878.  As a second strategy, (Warren) Buffet recommended owning businesses that can price through inflation and have low capital expenditures to maintain the business;

7879.  The worst sorts of businesses to own in an inflationary environment are ones that require a lot of capital to stay in the game and provide no real return;

7880.  While gold may be a refuge from a declining currency, (Warren) Buffett observed that is true for any physical asset;

7881.  Charlie Munger noted that Berkshire Hathaway does no asset allocation.  They merely go where the opportunities are regardless of categories and that is totally out of step with modern investment theory;

7882.  Regarding modern asset allocation, (Charlie) Munger noted, “If a thing is not worth doing at all, it’s not worth doing well;”

7883.  Apparently, state inspections are free if you bought your car at Brown’s Alexandria Mazda;

7884.  It is hard to fail, but it is worse to never have tried to succeed;

7885.  On Thursdays, Dave & Buster’s (DaveAndBusters.com) has unlimited wings and video game play for $19.99 from open to close;

7886.  (Out of all of the concerts I’ve been to) who has the oldest fans (by far)?  The answer is: “The Rolling Stones;”

7887.  I can say (that) I’ve seen “The Rolling Stones” live (again);

7888.  Warren Buffett has asserted that to a large extent gambling is a tax on ignorance.  You allow gambling and it ends up taxing many that are least able to pay while relieving taxes on those who don’t gamble;

7889.  (Warren) Buffett favors great businesses, which he defines as those having a high return on capital for a long period of time, where he thinks management will treat shareholders right;

7890.  Ideally, (Warren) Buffett buys businesses for $.40 on the dollar, but he’ll pay closer to a dollar for a really great business;

7891.  (Warren) Buffett claims that his best ideas haven’t done better than others’ best ideas, but he’s lost less on his worst ideas;

7892.  In modern portfolio theory, beta is a measure of volatility, which, in turn, is seen as a measure of risk.  The higher the beta, the higher the risk.  (Warren) Buffett begs to differ asserting volatility does not measure risk.  For example, a couple decades ago, farmland in Nebraska went from $2,000.00 to $600.00 per acre.  The theory would say the “beta” of farms went way up, so you would be taking far more risk buying it at $600.00 than at $2,000.00;

7893.  (Warren) Buffett believes that real risk comes from the nature of certain kinds of businesses by the simple economics of the business and from not knowing what you’re doing.  If you understand the economics and you know the people then you’re not taking much risk;

7894.  The “newspaper” standard: Behave as if your actions will be on the front page of the local newspaper;

7895.  Berkshire Hathaway has no budgets or earnings goals;

7896.  It takes about 2 seconds for a party popper to hit the ground when it’s (been) thrown from the 17^th floor (of a building);

7897.  Electric scooters can go pretty fast;

7898.  Truths about romantic relationships: 1.  Monogamy does not equal a healthy relationship; 2.  Another person cannot “complete” you; 3.  Romantic relationships are unconscious reenactments of what we witnessed in childhood; 4.  A healthy relationship can feel boring especially if you have a history of chaos and instability; 5.  People don’t change for other people; 6.  Love is rooted in accountability, honesty and vulnerability; 7.  Without doing re-parenting work, you’ll always have “communication problems;” and 8.  We pick partners with traits similar to a parent whose love we wanted the most and did not receive;

7899.  Refuse to allow yourself to have low expectations about what you’re capable of creating.  As Michelangelo suggested, the greater danger is not that your hopes are too high and you fail to reach them; it’s that they’re too low and you do;

7900.  A mind that’s open to everything means being peaceful, radiating love, practicing forgiveness, being generous, respecting all life and, most important, visualizing yourself as capable of doing anything that you can conceive of in your mind and heart;

What I've learned since moving to D.C. (some of which should be obvious): 0157

7801.  Buying experiences as gifts for others (i.e., tickets to a baseball game or spa day) versus material things also delivers more happiness for those receiving the gift which is something to consider when buying gifts for loved ones for birthdays and special occasions;

7802.  If somebody has told you they really want a new pair of shoes and you say, “No, I am going to buy you an experience.”  That’s probably a bad call because it turns out people really like getting the things they asked for.  If somebody has told you what they want X just get them that;

7803.  Almost everything about modern society pushes us to consume right away and (often) pay for it much later.  People are better off doing just the opposite.  You’re more likely to get happiness from your spending if you can pay upfront and actually delay consumption.  For example, if you’re planning a trip and you can either pay for it a month in advance or put it on your credit card and pay for it after the trip, by paying in advance, you get the pain of paying out of the way and you get to enjoy the pleasure of anticipation.  It is good to separate payment from the experience itself;

7804.  Having our favorite things a little less often can enhance our ability to enjoy them.  The more we have of something the more we tend to get used to it and lose the same sort of intense pleasure we got when we first experienced it;

7805.  Taking a break from the things you enjoy can renew your capacity for pleasure.  It can also save you some money;

7806.  When people spend money on others, they actually get more happiness than from spending it on themselves;

7807.  Donating to a charity can especially lead to happiness.  People who donate to charity are happier than those who don’t even after taking into account things like their level of wealth;

7808.  “Auto giving,” where you automatically contribute monthly or yearly to a charity, may not lead to increased happiness.  The “set-it-and-forget it” mentality means you are probably not getting much of a burst of happiness when that $100.00 disappears from your bank account every month;

7809.  Warren Buffett notes that book value is seldom meaningful in analyzing the value of a business.  Book value simply records what was put into the business.  The key to calculating value is determining what will come out of the business;

7810.  Warren Buffett believes that buying a business is much like buying a bond with no maturity and with a blank coupon.  You must write in the coupon and the accuracy of that coupon is the essence of intelligent investing.  If you cannot guess the coupon with any accuracy then do not invest in the business;

7811.  A corporation’s return on equity approximates its equity coupon;

7812.  In a 1977 Fortune article, Warren Buffett noted that the average return on equity was then 12%.  Charlie Munger started to chip away at that noting the following: 1.  Post-retirement medical benefits amount to a huge liability for corporate America that has been accruing for 20 years, but is only now beginning to be reported on balance sheet.  Deduct 1/4 to 3/8 of a point; 2.  Stock options and other executive compensation that goes unreported by GAAP accounting.  There is another 1/4 to 3/8; and 3.  Overfunded pensions that have led to faithfully recorded prepaid pension costs, which are not what they would call earnings;

7813.  Signs of emotional dysfunction in families: 1.  Emotions of one member changes the emotions of all members; 2.  Parent shares marital issues with children; 3.  Messages are passed through other family members (i.e., Can you ask mom why she’s made at me?); 4.  Repression of certain unaccepted emotions; 5.  A felt need to be secretive or to hide parts of oneself; 6.  A felt responsibility to change or care for the emotions of parents or siblings; 7.  Parent being “best friends” with the child; 8.  Parent deeply involved in the activities/relationships of the child; 9.  Feeling guilty when spending time outside of the home; and 10.  Afraid or feeling ashamed to say “no” to a request;

7814.  Signs of emotional dysfunction modeled in childhood: 1.  Inability to set boundaries: feelings of fear, shame or being “wrong” in setting them; 2.  The belief that they are responsible for the emotions of others; 3.  The belief that someone can (or should) change for them; 4.  A desire to control situations: a fear of unfamiliarity; 5.  Unhealthy marriages/relationships; and 6.  Viewing children as an extension of oneself;

7815.  Few people understand that they have a right to their own thoughts, feelings and a life that they choose;

7816.  I’ve been asked to be a sperm donor;

7817.  Warren Buffett believes the long-term government bond rate (plus a point or two if interest rates are low) is the appropriate discount rate for most assets;

7818.  True investing is really more like betting against a pari-mutuel system trying to find a 2-to-1 shot that pays 3-to-1.  Value investing is looking for a “mispriced gamble;”

7819.  The danger of relying on historical statistics or formulas (in investing) is that you end up betting on a 14 year-old horse with a great record, but is now ready for the glue factory;

7820.  When investing, to think about what will happen versus when is a far more efficient way to behave;

7821.  It is Wall Street nonsense to say that something that earns a lumpy 20% to 80% is “riskier” than something that earns a predictable 5% year after year;

7822.  Peach wine and hard cider are good substitutes for peach schnapps in white sangria;

7823.  Something with a lousy past record and a bright future should be an opportunity you’re going to miss;

7824.  Warren Buffett noted that you do not have to make money back the way you lost it;

7825.  A stock does not know you own it, the price you paid, who recommended it, the prices someone else paid, the stock does not give a damn;

7826.  Charlie Munger said the ideal business has a wide and long-lasting moat around a terrific castle with an honest lord.  The moat represents a barrier to competition and could be low production costs, a trademark or an advantage of scale or technology;

7827.  Warren Buffett noted it is important to differentiate between a business where you have to be smart once versus one where you have to stay smart;

7828.  Warren Buffett said when accounting appears confusing, avoid the company.  The confusion may well be intentional and reveal the character of the management;

7829.  Things to keep in mind when setting boundaries: 1.  An emotionally healthy person will always respect a boundary; 2.  You are not responsible for the emotional response of another person; 3.  We can’t stop others from crossing our boundaries, but we can choose our response; 4.  Silence sends a message; 5.  You have a right to say “no” or change your mind; 6.  A person’s reaction to a boundary has nothing to do with you and everything to do with their internal environment; and 7.  It’s unfair to expect someone who has no boundaries in their own life to understand yours;

7830.  Key business risks: 1.  Capital structure – A company with a ton of debt could be a candidate for foreclosure; 2.  Nature of the business and its capital requirements – For example, commercial airlines require tons of upfront capital and competition is intense; and 3.  Commodity businesses – Unless you’re the low-cost producer, these are poor businesses to own;

7831.  If the business is sound, there remains the risk of paying too much.  The risk is time versus loss of principal.  If you overpay, it will take time for the business value to catch up to the price paid;

7832.  Charlie Munger noted people underrate the importance of a few big ideas.  Filters simplify the decision-making process.  Filters work really well because they are so simple;

7833.  Filters: 1.  Opportunity cost – For any corporate stock, a bond is an alternative.  You must choose the best opportunity you can understand; 2.  Quality people – Warrant Buffett said he looks for a manager who bats .400 and loves it.  Charlie Munger noted there are many wonderful people and many awful people.  Avoid the awful people.  Stick to those who take their promises seriously; and 3.  Good businesses – Go with those that are understandable with a sustainable edge.  The pond you choose is far more important than how well you swim;

7834.  Executive stock options should reflect the business’ intrinsic value and not simply the market price;

7835.  It is essential to learn from both the mistakes of others as well as your own;

7836.  It’s an honor to die for your country.  Make sure the other guys get the honor;

7837.  Even if you’re living overseas, you still have to pay U.S. taxes;

7838.  Dorm(itory) room . . . check;

7839.  You are your greatest asset.  Put your time, effort and money into training, grooming and encouraging your greatest asset;

7840.  Just like attraction is not a choice; catching feelings for someone is also not a choice;

7841.  If you see a girl over a long time, one of 4 things will (eventually) happen: 1.  You both fall in love with each other; 2.  One person falls in love, but the other one doesn’t; 3.  She gets into a relationship with a different guy and you might remain friends with her; and 4.  You part ways for different reasons;

7842.  Apparently, I’m in the 45^th district for the (Virginia) House (of Delegates) and the 30^th (district) for the (Virginia State) Senate;

7843.  Apparently, I’m in the “(0)105: Lee Center” precinct;

7844.  If you’re abundant on the inside then you’re much more likely to experience abundance on the outside;

7845.  Cynics and fools are twins on opposite sides of reality and possibility.  A fool will believe any far-fetched scheme and a cynic will criticize anything outside his/her reality.  A cynic’s reality does not let anything new in and a fool’s reality does not have the ability to keep foolish ideas out.  If you want to be abundant and rich, you need to have an open mind, a flexible reality and the skills to turn new ideas into real and profitable ventures;

7846.  If you want a faster way to get rich, you need to have a mind open to new ideas and have the skills to take on possibilities greater than your current abilities.  You must have a reality that can change, expand and grow quickly.  To try to get rich with a poor person’s reality or a reality that comes from lack and limitation is impossible;

7847.  The hush puppies at Willie’s (WilliesSportsBarDC.com) in D.C. are tasty;

7848.  Investors need only to have a sensible way to keep wealth growing (especially if they are already rich).  If someone else is getting rich so what?  Someone else will always be doing better;

7849.  The notion that an investor or investment manager should be “required” to beat everyone else is nonsense.  The real key is to know what you really want to avoid and give those things a wide berth (such as a bad marriage, an early death and so on).  Do this and life will go much better;

7850.  Dating advice: If they like you, you’ll know it.  If they don’t, you’ll be confused;