A Lesson On Elementary Wordly Wisdom- speech given by Charlie Munger in 1994
“The great lesson in microeconomics is to discriminate between when technology is going to help you and when it’s going to kill you”
“The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t. It’s just that simple”
The Big Long - series of blog posts arguing for strength (or at least, not as much weakness as people think) in US residential real estate. Worthwhile, parts 1 through 5. The point that I found the most thought-provoking:
“Net migration within the US represents a form of shifting demand for housing, not necessarily new demand creation overall. Some people will look at the U.S. as a whole and say there’s 130 million households and 142 million housing units, we’re over built and don’t need new homes. But the overall numbers don’t tell the full story, as the common refrain in real estate goes, “location, location, location.” For example, if there are 50 people living in 50 homes in California and 25 people living in 25 homes in Texas then there is equilibrium with 75 people total in 75 homes. However, when 25 of the people in California people move to Texas, it doesn't matter that cumulatively you have 75 homes for 75 people. You now need to build 25 more housing units in Texas. In other words, demand has shifted geographically, and supply needs to follow. While a simplistic example, the numbers bear this out”
US Mobile Home Rents - Washington Post article about skyrocketing rents for mobile homes in the US (home to ~20m Americans). My side note is that this has been a big play for private capital (PE firms and Private Credit firms) because of the effective security you get by being the landowner, and having virtually locked-in above-inflation rent growth capacity. But, most of the residents are poor, or on a fixed income, or both. Another data point that makes me think that private markets are going to be the biggest pain point for institutional investors over the next few years….
“In interviews with a dozen mobile home residents around the country, all said their rents had risen this year. Most reported increases of 10 to 25 percent, although some said monthly payments had doubled or tripled. Their options were increasingly limited, too: Many said they had bought trailers after being priced out of apartments, homes and condominiums and were now unsure of where to go next. They had used up their savings or taken on high-interest loans to buy manufactured homes with little resale value”
“Private-equity firms including Stockbridge Capital, Carlyle Group and Apollo Global Management have been rapidly buying up mobile home parks over the last decade, often using funding from government-sponsored lenders Fannie Mae and Freddie Mac”
African VC - QZ commenting on how African VC funding has accelerated into 2022, notable given the slowdown in developed markets
“Africa was the only region to record three-digit growth in the first quarter of 2022, with venture funding up 150% to hit a record $1.8 billion compared to $730 million in the same period in 2021”
This. Ugh.
Short History of George Peabody - great blog post about the life of financier George Peabody, who founded what would become J.P. Morgan, and was regarded as a key figure in the history of philanthropy. Great blog in general, can recommend
“Two of Peabody’s partners at George Peabody & Co. were Junius Spencer Morgan and his son, the future preeminent American banker John Pierpont Morgan. The Morgans did not leave Peabody to start their own firm but rather took over its management and changed its name to J.S. Morgan & Co. upon Peabody’s retirement. George Peabody & Co. is the origin of today’s JPMorgan Chase & Co. At George Peabody & Co., the elder Morgan found his partner’s frugality perplexing. Peabody did not own a carriage but took a public horsecar to work. Morgan recounted seeing Peabody waiting in the rain for a penny bus, having allowed at least one twopenny bus pass him by, too costly for the very rich George Peabody”
Drill More US Oil - characteristically thoughtful blog post from Matt Yglesias, arguing
“My suspicion is that environmentalists actually do think American production impacts the global oil price and therefore there is an environmental purpose to constrained production. But I want to argue that to the extent this is true, it is an extremely costly way of reducing emissions in terms of human welfare and we should reject it. The price impact of U.S. domestic oil production is hard to predict because OPEC behavior is hard to predict. Increased American output could bring prices down a lot or not, and there’s no real way of knowing for sure. What’s true, though, is that to the extent the price impacts are small, so are the environmental impacts. Whereas to the extent the environmental impacts are meaningful, the economic costs are large and regressively distributed. Either way, it’s a bad deal”
John Cochrane, being right
“I am reminded of centuries of central banks defending currency pegs with resolute promises, word salads about market disfunction and so on, resolutely promising to do whatever it takes...all right up to the moment that they cave in and the actual "fundamentals" take hold”
Stupidity vs. SpaceX - some comedy gold from regulators (where else?), h/t Marginal Revolution
“Before Space X can launch its Starship in support of NASA, the Department of Defense, and the greater goal of bringing humanity to the stars, the FAA has required that SpaceX must…. make an annual contribution of $5,000 to the Friends of Laguna Atascosa National Wildlife Refuge Adopt‐an‐Ocelot Program… Funds donated to the program are intended to pay for…Special events to raise awareness about the ocelot”
Marginal Revolution on Direct Instruction - an education technique being successfully employed at scale to improve educational outcomes
“children in the Bridge programs learnt approximately three years worth of material in just two years”
Death, Taxes and Short-Term Underperformance - blog post from The Brandes Institute from 2009
“While the top 59 funds outdistanced the S&P 500 Index for the 10-year period as a whole, all of them underperformed the Index substantially during shorter periods within the decade. For instance, in their worst 1-year periods, the top 59 funds underperformed the S&P 500 Index by margins ranging from 6.49% to 44.09%, as the table below shows. On average, these funds trailed the Index by 19.54% in their worst 1-year period. Underperformance versus the S&P 500 Index was also significant in each fund’s worst 3-year period”