Jeff John Roberts on the role of Sam Bankman-Fried's parents in the FTX scandal

A question that has come up repeatedly in the FTX scandal has been the role of Sam Bankman-Fried's parents. Namely, how could such respectable people—Stanford law professors famous for their sense of ethics—have raised a sociopath who stole billions of dollars under the guise of altruism? As it turns out, they were Bankman-Fried's primary accomplices. 

As a scorching cover story in BusinessWeek reveals, Barbara Fried and Joseph Bankman didn't just raise a criminal, but actively took part in running FTX and enjoying the spoils of the fraud. They regularly turned up in the company's offices and were included on important emails, and, most critically, flexed their prestige to open doors in Silicon Valley and Democratic power circles for their son. Meanwhile, these two advocates for the poor helped themselves to a $16 million luxury villa in the Bahamas and $10 million in cash—paid for by FTX customers.

~ Jeff John Roberts, "How Sam Bankman-Fried's parents enabled his criminal empire," Yahoo Finance, September 15, 2023

September 14, 2023

Sam Walton on bureaucracy

A lot of bureaucracy is really the product of some empire builder's ego.

~ Sam Walton

Chris Mayer on avoiding effort justification

Q: How do you avoid doing too much work on an idea & losing objectivity? Is there a tradeoff between going wide & going deep? 

A: I’ve spent lots of time researching ideas that I never bought.  I’ve flown to foreign countries, met with CEOs and not bought the stock.  It’s just the way investing works.  You have to enjoy looking at businesses, just for the sake of learning.  It’s part of the adventure.  It’s fun.  And go into it with the idea that whatever knowledge you gain may not pay off for years - maybe never! 

But what about an idea I already own?  Can I lose objectivity?  Probably!  I think you have to keep testing it against your thesis.  It’s a tricky problem.  And yes, I think there is a tradeoff between going wide and going deep.  I’m a one-man band.  There are only so many hours in a day.  So, I have to pick and choose my projects.  I am more on the deep side of things than wide.  But it works for me, because I only need 10-12 names.  And I’m not turning over my portfolio much. (So far this year, turnover is zero).

~ Chris Mayer, "Q&A," Woodlock House Family Capital Blog, September 12, 2023

Chris Mayer on competitive advantage

Q: How do you know you have a business with a long term competitive advantage? 

A: You never know for sure.  Clues would include stubbornly high returns on capital over a number of years, which indicate the business has something that resists competition.  Market share gains are another clue.  I’d say these are two big ones.

~ Chris Mayer, "Q&A," Woodlock House Family Capital Blog, September 12, 2023

Chris Mayer on his perfect work day

Q: What is your perfect work day?

A: A perfect work day one where I have plenty of time to read and think, get outdoors, learn something new, eat a good meal, talk with a friend and laugh.  That's pretty much a perfect day, work or not.

~ Chris Mayer, "Q&A," Woodlock House Family Capital Blog, September 12, 2023

John Hempton on hotspots for fraudsters

Q: I hear you have a database of dodgy people, listing their actions and associations.  How helpful is this for a short seller?

A: Our database is enormously helpful.

There are also certain hotspots for bad people.  The biggest hotspot is Vancouver, then Toronto.  In the U.S., there's Salt Lake City and Boca Raton.  In Australia, there's Perth and the Gold Coast, in that order.  In the UK there's the AIM market and in Hong Kong there's all sorts.

They all have a reason.

~ John Hempton, "Crisis Talk: John Hempton, CIO of Bronte Capital: 'good things happen to bad people'," GlobalCapital, June 12, 2020

John Hempton on risk management and position sizing

The size of the position has to be determined by what you can lose because it's the fat ugly tails that kill you in this business.  It's not that I don't like to win.  It's that I hate losing.  "Hate losing" is necessary for survival.  I do like to win.  Believe me, I like to win.  The business is built around taking care of the losses.

~ John Hempton, interview, HedgeD, With A Capital "D", March 22, 2023

Chris Cerrone on the sell discipline

Of our most costly mistakes over the years, almost all have been sell decisions. 

The mistake, in virtually every instance, has been selling too soon. Reflecting on these mistakes gave rise to this letter, and its title, “The Art of (Not) Selling.”

Taking a step back, our investment philosophy involves concentrating our capital in a small number of what we believe to be growing and competitively advantaged businesses. These kinds of businesses are rare and are only periodically available for purchase at attractive valuations. With that in mind, we do our best to hold on for the long term, so that our capital may compound as the businesses grow.

Holding on means resisting the temptations to sell — and there are many. We tune out politics and macroeconomics. To the surprise of many, neither valuation nor price targets play a role in our sell decisions.

To be clear, there may be times when we believe it is appropriate to sell. In these instances, it is typically because of an adverse change in the business itself.

This determination to hold on is a critically important, and not always well understood, aspect of our investment philosophy. At its core, it relates to the power of compounding. We believe these two ideas — (not) selling and compounding — are inextricably linked. Getting the first wrong makes the second impossible.

~ Chris Cerrone, “The Art of (Not) Selling,” Akre Capital Management

Climate protesters on why they disrupted the U.S. Open

There is no tennis on a dead planet.  There is no art on a dead planet, everything that we take for granted as our way of life will cease to exist.

~ Sayak Mukhopadhyay

I understand the discomfort that the audience felt.  But we can no longer feel comfortable at a time like this.  We need the wake up calls.  It's only a matter of time before things get much worse.  So I protested because I'm terrified.

~ Lindiwe Priscilla Krasin

"Climate Protesters Get Taste of Justice After Pulling Stunt at US Open," The Western Journal, September 9, 2023

Alberto Brandolini on the bullshit asym­metry principle

The amount of energy needed to refute bullshit is an order of magnitude bigger than to produce it.

~ Alberto Brandolini, Italian programmer, 2013

Chinese proverb on blame

He who blames others has a long way to go on his journey. He who blames himself is halfway there. He who blames no one has arrived. 

~ Chinese Proverb

Kevin Duffy on investing in despised industries

Defending the undefendable may make us better humans, but will it make us better investors?  Will we find value rummaging through the garbage bin of corporate lowlifes?  I believe these stocks are not cheap simply because they are hated.  These are often durable, profitable businesses, in large part because social stigma acts as a barrier to entry.  The industries in which they operate exist for good reason, though not always apparent to their detractors.  Identifying the benefits of these pariahs to society may require a bit of effort and imagination.

~ Kevin Duffy, "Investing in the Undefendable," The Coffee Can Portfolio, September 5, 2023

Jimmy Buffett on positive attitude

When life gives you limes, make margaritas.

~ Jimmy Buffett

Donald Trump on a new wave of Covid mandates

To every COVID tyrant who wants to take away our freedom, hear these words: we will not comply.  So don't even think about it.  We will not shut down our schools, we will not accept your lockdowns, we will not abide by your mask mandates, and we will not tolerage your vaccine mandates.

~ Donald Trump, video address on Twitter X, August 30, 2023

Jimmy Buffett on business

If you're an artist, if you want to have control of your life... then you gotta be a businessman, like it or not.  So the businessman part evolved out of being an artist.

~ Jimmy Buffett, 1946-2023