Jae Jun Blog | Old School Value Nugget Fest | Talkmarkets
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Founder of Old School Value (www.oldschoolvalue.com).

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Old School Value Nugget Fest

Date: Sunday, November 17, 2019 4:32 PM EDT

Some good reads this week. My favorites were the ones on Buffett’s hurdle rate and the two in the “Company & Strategy” section.

If you want to hone your financial statement analysis, I’d recommend Einhorn’s Netflix Short thesis, which dives into GAAP financials and makes you think about why they are misleading for NFLX.


Buffett’s 10% Hurdle – GuruFocus.com [GuruFocus]

This is the best description of Buffett’s back-of-the-envelope math on valuation and hurdle rates I’ve seen.

“We don’t want to buy equities where our real expectancy is below 10 percent. That’s true whether short rates are 6 percent or whether short rates are 1 percent. We just feel that it would get very sloppy to start dipping below that.”

Why You Shouldn’t Bet Against Warren Buffett [Forbes]

You read a lot about how Buffett is underperforming the market YTD, but you really should expect that. Historically, Buffett bounces back strongly.

“Short-term underperformance should be expected once in a while, even by the top-rated managers, according to the prevailing research.”

Markets & Investing

The World Has Gone Mad and the System Is Broken​ [Ray Dalio]

This came out a couple weeks ago but I got around to reading it this week. It’s kind of doom-and-gloom, but it’s also worth thinking about the macro picture, too.

How to Use Occam’s Razor Without Getting Cut [Farnam Street]

Occam’s razor is not intended to be a substitute for critical thinking. It is merely a tool to help make that thinking more efficient. The point is to keep things as simple as they can be.

Cash Back [HumbleDollar]

“We look around us and imagine that today’s largest corporations will always be with us, but that simply isn’t the case. That brings me to my second key point: We should want companies to return cash to shareholders—and preferably lots of it.”

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