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Newsletter - November 4th, 2023

Dear Reader,


Attached is our latest list of stocks passing value screens (low EV/ebit, high returns on invested capital, etc.), which don’t meet our investment criteria - and our reasoning.


This may help you avoid some ‘value traps’, and stocks that aren’t sufficiently attractive compared to opportunities available today.


For reports of stocks that pass our quantitative and qualitative standards:


 


 

Charlie Munger Podcast


Notes on a recent Charlie Munger chat:


6:00 Be the House


Get the odds in your favor (with a margin of safety), not somebody else's. Be the house, not the punter.



15:45 Betting heavy


Bet heavy on your best bets. You get that conviction by lots of reading and thinking.



17:45 Negative working capital


Negative working capital can signify a good trade position i.e. positive leverage.



30:45 Berkshire's Japanese investments


Borrowing at 0.5%/year for 10 years to invest in entrenched stocks with 5% dividend yields - like the heavens opened.



38:45 Invest independently


Do it with freedom - the point of getting rich is not to need other people.



42:00 Berkshire's Apple purchase


Was at ~10x earnings.



44:00 China


Munger currently has ~18% China exposure and seems happy to keep it that way.



47:00 Evolution


Competition in investing has evolved to be a lot more difficult than 60 years ago - it's harsh on the losers. But it's still possible to exploit the speculative excesses inherent in the market. (Again, you only have to get rich once.)



1:00:00 Newspaper margins


Pre-tax margins were 25-40% for larger newspapers - an excellent business in the past.



1:01:30 Predictability


Most businesses face threats in their future. Berkshire owns specialized industrial companies insulated from "really tough" competition - the competitive advantage is the key qualitative factor to evaluate.


It's hard to predict the future - protect yourself with a margin of safety, which we seek in all the stocks we report on.

 

Wish you an excellent week ahead.

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