The Electric Universe | David Bodanis

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Published in: 2006

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Electric power has existed without interruption for more than 13 billion years. There are almost always equally large positive and negative charges in everything around us. The original electric charges from the Big Bang have long since spread. Many of the individual charges were destroyed as they traveled in the galaxies, but new charges were created instead. No exception has ever been found; the sum of electric charge in the universe has never changed.

ELECTRICITY IS EVERYWHERE. Think GPS navigation: hundreds of miles above, electrons are led back and forth within the transmitters of GPS satellites. The force field extending from these electrons begins to wobble each time the electrons move halfway down to earth. It is a GPS position signal that is sent. The wave that reaches the ground is invisible to us and no one can hear it. Also keep in mind that electrical cables extend into our brains; force fields extend into our cells, even our DNA is controlled by potential electrical forces. Anesthetics flow down to electrical pumps in our nerve cells and numb us; Prozac locks into electrical receiving devices in the brain and keeps our grief in check.

VOLT’S BATTERY. A breakthrough to penetrate this hidden world came in the 1790s when Italian Alessandro Volta realized that if he pressed a coin-shaped copper plate against one side of his tongue and a zinc plate against the other, and then touched the tips of the two coins together, a stinging sensation occurred over his tongue. He had found the world’s first ‘battery’. Volt soon found that all two metals work if separated by some saliva or saline.

MICHEAL FARADAY. Michael Faraday, born in 1791, did most to reveal these invisible force fields. He was born more than a century before the electron was discovered. Faraday respected Newton but had learned to think for himself. But he was not fluent in mathematics and had therefore difficulties to convince those around him of his ideas.

SEEING IS BELIEVING. After many attempts in the 1850s, it was finally possible to send financial news between remote cities via telegraphs, after laying a cable deep under the Atlantic. It was this gigantic technology project that convinced many scientists that our world is permeated by invisible waves. In the 1860s, innovation slowed down in part due to the American Civil War, and in 1875 came the first telephone. The vibrating microphone leads a wire to send an electric current that grows with an exact copy of the uneven pattern.

BELL, EDISON & ARTIFICIAL LIGHT. Bell’s phone threatened to undermine the telegraph industry, so the telegraph man William Orton financed a young Thomas Edison in 1877 with the mission to crush Bell. Edison eventually made the phones much better. Edison also sought to innovate in artificial lamps and to make this practical, he had to create many related inventions.

THE ELECTRIC MOTOR. Small electric motorcycle engines had existed for decades, but Edison sought out to improve these. The engine came to be powerful enough to pull a ton or more lift straight up into a tall building which was crucial for skyscrapers. Electrically powered roller coasters and brightly lit arcades appeared on the outskirts of cities in America and in Western Europe. In 1901, most of the largest American cities had amusement parks. Factories powered by electricity could use the same technology, which meant that it was not necessary to have a steam engine and heavy coal supply on the premises. For the first time in history, glucose was no longer the only source of energy available for tedious activities such as carrying, cleaning, and washing.

QUANTUM ENTERS. In late Victorian times, the vision of electrons as hard little balls led to the technologies of telephones, light bulbs, and electric motors. Faraday’s and Hertz’s understanding of waves had led to radio and radar being central to World War II. But the centuries-long quest to see what was happening inside an electrical line seemed over when. J. J. Thomson received the Nobel Prize and was hailed as the man who explained how Victorian electricity really worked. If they were right, the world was made up of electrons moving in strange teleportation jumps – known as “quantum jumps” – and in sudden stops and starts.

THE COMPUTER. Realization that electrons could “jump” through space and make them start and stop in new places opened the way for the computer. The electric thinking machine, according to Alan Turing, could sort and arrange so many different “thoughts” that it would need thousands, maybe millions, of switches at the same time.

THE SEMICONDUCTOR. Brattain and Bardeen used their knowledge of quantum mechanics and new chemical manufacturing techniques and presented a solution in 1947 – that silicon could act as a conductor and carry electron currents. The semiconductor was invented. They had built the on / off switch at the atomic level that Turing had been looking for. Steam engines, car engines and aircraft jet engines waste enormous energy overcoming friction. But these silicones can move electric currents in one direction or another, and the rock itself does not have to move physically.

SILICON VALLEY WAS BORN. In June 1948, the Transistor was launched consisting entirely of cold, solid substances. Telephones from the Victorian era were clumsy with large wires and switches. They needed many trillions of bouncing electrons to transmit a small whisper. With a transistor inside, it was possible to rely on much smaller batteries, because fewer electrons needed to be moved around. Silicon Valley was born.

SENDING FORCE FIELDS. Electrons does not shoot out of the sockets in your house. When you connect something to a wall outlet and turn it on, the controlled field flies into your home, takes a stand inside any computer or light bulb, and turns on the electrons that have already been waiting there. When you pull a plug out, the force field can no longer enter. When you call someone, all you do is send an invisible force field, which shakes the electrons already waiting in your listener.


Succeeding with what you have | Charles Schwab

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Published in: 1917

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Charles Schwab was an American steel magnate who worked his way up from the floor to top of the country’s leading steel company. The companies he ran often had higher profitability and higher wage levels than their competitors. During his heyday, he had a net worth of $500m-$800m in today’s money, and at the beginning of the 20th century he built the Riverside mansion with 75 rooms on the Upper East Side of Manhattan for $6m ($170m in today’s money value). After an extravagant life combined with the stock market crash of the 1930s, Schwab died poor in 1939, 77 years old.  

LEARNED HIS TRADE AT CARNEGIE. Schwab was born in 1862 into a working class family in Williamsburg, Pennsylvania. In the early 1880s, he began his working life at Andrew Carnegie’s steelworks. By 1897, he had reached the top and at the age of 35 was CEO of the Carnegie Steel Company. In 1901, Carnegie Steel was sold to what later became the U.S. Steel Corporation and Schwab became the Group’s CEO. He then left U.S. Steel in 1903 to run the Bethlehem Steel and Shipbuilding Company, which under his leadership became the world’s largest independent steel producer.

DO MORE THAN WHAT IS EXPECTED. The safest way for young people to qualify for the next level of the career ladder is to work harder than anyone else at their current job. To devote all their time and all energy to work. Only when the intended position is secured can you enjoy the pleasures – you lose nothing by waiting a few years and gain much else in the form of experience and capital.

“He also had a natural willingness to do more than he was paid for. This quality was so pronounced in him that he actually went out of his way to get into the way of work. He not only went the extra mile, but he added two or three extra miles, and went with a smile upon his face and the right attitude in his heart. He also went in a hurry and came back for more when he had finished any task assigned to him.” – Andrew Carnegie on Charles Schwab

SET YOUR OWN PRICE. There is no way to hold back someone who always does more than expected. Whoever does it decides his own price and will be willing to receive it. If an employer is short-term enough to hold back recognition, through adequate compensation, a wiser employer will soon discover the talent and offer a better job.

”The man who fails to give fair service during the hours for which he is paid is dishonest. The man who is not willing to give more than this is foolish.“

THE SMALL THINGS MAKES ALL THE DIFFERENCE. The one who gets attention from the top of the organization is the one who constantly thinks and excels in the small everyday chores. Anyone who tries to impress their employer by doing the spectacular will fail. Being careful and methodical in all things, no matter how small or insignificant they seem, makes a big difference over time.

“If a young man entering industry were to ask me for advice, I would say: Don’t be afraid of imperiling your health by giving a few extra hours to the company that pays your salary! Don’t be reluctant about putting on overalls! Bare hands grip success better than kid gloves. Be thorough in all things, no matter how small or distasteful! The man who counts his hours and kicks about his salary is self-elected failure.“

”STARS” ARE OVERRATED. Schwab thought that “super geniuses” in working life were so unusual that they basically did not exist. His experience was that when “stars” left, they were usually replaced by “ordinary” successors who, through application and self-discipline, learned to use the full capacity of their ordinary brains. He did not choose leaders because they were geniuses, he chose those who day in and day out did the little extra and actively thought about how they could increase their productivity.

BEING A LEADER. A leader who blames his employees for trivial mistakes will undermine their job satisfaction and lower their willingness to try new things. When Schwab noticed mistakes among his employees, he said nothing and when he was pleased with their efforts, he praised them. They felt his silence but it was not insulting. It made them think and work harder.


Murarens son | Staffan Bruun

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Published in: 2019

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Anders Wiklöf is Åland’s most successful entrepreneur. His name has reached the Swedish media, often for his record-breaking speeding fines – speeding in his Bentley has cost him around $350k (in Åland, the fine is set according to how much you pay in taxes). The book is about Wiklöf’s path from the workers’ home on Åland to a billionaire (in SEK).

STARTS OUT AS A CAR SALESMANIn 1970, Wiklöf began his career in the car industry by starting “Bilcenter” as a 23-year-old, which was the first and only one to sell Mercedes on Åland. If was good times in the shipping industry, and many employees had flexible salaries, and those in the cafeteria could earn as much as high-ranking officials. With good incomes, the Ålanders opened their eyes to Mercedes. Buying a car was at that time a major capital investment where the whole family was involved. Therefore, Wiklöf’s store was open in the evening, often until midnight, and he sold more cars after five o’clock than before.

REVENGE ON ÅLANDSBANKEN. When Wiklöf began to make a good profit from the car business in 1972, he bought shares in Ålandsbanken (the bank of Åland). Before he started his car business, he had gone to the bank and asked for start-up capital, but had been abruptly told that he should be grateful they didn’t provide him a loan, since he would lose the money anyhow. The young Wiklöf felt very offended and swore that once the car business was successful, he would accumulate shares in the bank (which is listed on the local stock exchange). In 1979, Wikström had a net worth of FIM 11 million (also around SEK 11 million at the then exchange rate). Over the years, Wiklöf also invested in companies focusing on food and duty-free sales on the Baltic Sea. In 1980, he had bought enough shares in the Bank of Åland to take a seat on the Board.

A PROFITABLE SEJOUR IN BIRKA LINE. In 1986, the same year that he left operational work at Bilcenter, Wiklöf bought into “Birkalinjen” on the Åland Stock Exchange. The whole group was valued lower than what the most recently purchased vessel was worth. Through a bank loan, Wiklöf bought all the shares he came across and quickly became the company’s largest shareholder with a c. 17% of the shares and became chairman of the board. The personal chemistry between the board members did not work, and after a year Wiklöf sold out at a good profit to refocus on the Bank of Åland.

ANDERSUDDE – ART COLLECTION & HOBBY CENTER. Later in life, Wiklöf bought his second summer home on Åland, which he in time would develop into “Andersudde”. There he houses one of the Nordic region’s foremost private art collections, with a focus on Swedish and Finnish turn-of-the-century art. At Andersudde he has also built an arena where he held events and played tennis with Björn Borg.

10 000 BIRTHDAY GUESTS. Wiklöf is a major sponsor of sports as well as culture on Åland. On his birthday, Wiklöf organizes a big party in Mariehamn every year for all the Ålanders and the tourists who happen to be present. He books music artists and has flown in celebrities such as Carola, Björn Borg and Bill Clinton. The birthday party is Åland’s largest event.

ÅLAND 101. Åland is an autonomous part of Finland and the archipelago’s Swedish-language status is protected by international guarantees. There must be no military activity on the islands during peacetime. Åland’s parliament has the right to enact its own provincial laws and Åland has its own flag, its own car registration plates and its own police, but is part of the same tax system as Finland. Åland has 30,000 inhabitants, of which almost 12,000 live in the archipelago’s only city Mariehamn. Finland is Åland’s most important trading partner with 64% of exports and the country also accounts for 40% of the island’s hotel nights.

ÅLAND’S LARGEST CONGLOMERATE. Wiklöf Holding currently comprises of 32 companies operating in the industries logistics, hall construction, helicopter services, property ownership, trade and tourism. In addition, the Group is a large shareholder in the two Åland newspapers and controls 20% of Ålandsbanken. The two Åland newspapers are profitable and only report what is happening on the island. All revenue comes from the paper newspapers and only 2% from the online newspaper. Wiklöf controls 99% of New Åland and together with a business colleague 42% of Tidningen Åland. In 2016, Wiklöf Holding had sales of €346m with an operating profit of €12m. Wiklöf is today 74 years old [2021] and has no plans to step down. He does his business by phone – he does not have a computer or even a calendar. Wiklöf has been married to Rita Wiklöf all her adult life. Anders and Rita does not have any children.


How to get rich | Donald J. Trump

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Published in: 2004

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The book was written in 2004, at a time when Trump was at the height of his real estate career and a well-known for his attandence on the popular TV-show “The apprentice”. The book is about Trump’s recipies for success in business as well as in life.

DEALMAKING 101. Dealmaking is about persuasion, not power. A great negotiator is a chameleon, changing strategy depending on the person on the other side of the table. He or she also understands the counterpart very well. What are their primary goals? How do they usually negotiate? Also keep your cards close to your chest – the less you reveal the more flexibility you will have as you gather information on the potential deal. To speed up a deal, one tactic is to show a lack of interest in it – this will often make the other side put in some effort to get something going.

“If the other party to the transaction wants to acquire something you own, let them convince you that you really don’t want it or need it. In doing so, they’ll convince you of just how badly they want it.”

STAY FOCUSED. In the 1980s magazine headlines read “Everything he touches turns into gold” and Trump believed it. He had gone straight from school to richness and had begun to think it was easy. In the late 80s he lost focus and was traveling to Europe to attend fashion shows. Then the real estate market crashed. Trump lost everything and was $9.2bn in debt with personal guarantees. When he passed a homeless man in the street, Trump realized that that man was $9.2bn richer than himself. With a lot of work and the help of some understanding bankers Trump survived the early 90s and got back on track. But he learned the lesson: stay focused.   

DON’T LOSE MOMENTUMIn the 1950s a man name William Levitt was the king of real estate. In the late 50s he sold his company for $100m and retired. He married what later turned out to be the wrong woman and moved to France. Years later, he got a chance to buy back his old business, after the new owners had run it into huge problems. He got it back cheaply and thought he could easily turn it around – which was not the case, and he ran it into bankruptcy. In 1994, Trump saw Levitt at a party and asked how he was doing; “not good, Donald, not good – I lost my momentum”. “I was out of the world for 20 years, I came back, and I wasn’t the same”. If you lose your momentum, others will pass you, and you might not be able to get it back.

BRAND YOURSELFTrump was originally going to call the Trump Tower “Tiffany Tower”. He asked a friend about the decision and got the answer: “when you change your name to Tiffany, call it Tiffany Tower”. Branding yourself will hurt a bit now and then, but will pay give huge rewards over time.

OPTIMISTIC BUT PREPAREDIn business as well as life, there will be a lot of ups and downs. They are inevitable and part of the game. If you are prepared, you can ride them out and maybe eventually even prosper from them. If you don’t know every aspect of what you’re doing, down to the smallest details, you’re setting yourself up for future problems. Know what is going on in your market and be the most knowledgeable player in your field.

“Can I handle it if it doesn’t go well? Will I be asking myself later, why did I ever do that? What was I thinking? I’m actually a very cautious person, which is different from being a pessimistic person. Call it positive thinking with a lot of reality checks.”

AN EYE FOR AN EYETrump is well-known for his revengefulness. He stays on his guard and says that it often pays to be paranoid. He believes that if someone hurts you, you should go after them as fiercely as you can.

“I know this observation doesn’t make any of us sound very good, but let’s face the fact that it’s possible that even your best friend wants to steal your spouse and your money.”

HAVE AN EGO. Trumps believes that having a well-developed ego is a positive attribute. The ego is the center of our consciousness and gives us a sense of purpose. A person with no ego will seldom get much done. But a person with too big of an ego will often get into problems. So there need to be some balance to get the right force.

GET A PRENUPTIAL AGREEMENTThe statistic of marriage speaks for signing a prenuptial agreement. But signing one does not mean that you do not believe in your relationship. It means that you understand that a relationship is a complicated matter and that a lot can happen in the future. Trump has seen many failed marriages, without prenuptial agreements, leading to disastrous and infected outcomes.


What is meditation? | Osho

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Published in: 1995

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The world is very different from the past. In one day we now receive what corresponds to about six weeks of intellectual impression 600 years ago. Today, meditation is needed more than ever. The author Osho has been described by the English Sunday Times as one of the thousand people who shaped the 20th century and by The Sunday Mid-Day (India) as one of the ten people who – together with Gandhi, Nehru and Buddha – have changed the fate of India.

MEDITATION IS PLAYFULLNESS AND CREATIVE. Meditation is not effort. You have to be very playful; you have to learn that it is fun. You must not take it too seriously. If you are playful, the intellect cannot destroy your meditation. Otherwise, it turns into another ego trip and you can take yourself too seriously. Meditation is also creative – be less effective and more creative. Do not worry too much about utility goals.

MEDITATION IS SILENCE AND REMEMBERING. The intellect is nothing but all the words you have collected; silence is what has always been with you, it is not something you have accumulated. Remembering is the essential part of meditation, remembering that “I am”. While sitting, talking, eating, walking, remember that “I am”.

MEDITATION IS AWAKENING, YOUR TRUE NATURE AND NON-DOING. Whatever you do, do it with a deep alertness; then even small things become sacred. Meditation is beyond the intellect, and the intellect cannot reach meditation. Everything can be accomplished by the intellect except meditation. Meditation is not an achievement – it already exists, it is your true nature. Meditation is to refrain from being occupied. Non-doing is a way of going inward. If the intellect can rest a little, it will rejuvenate. It will strengthen their intelligence, their efficiency, their skill.

MEDITATION IS TO WITNESS. Meditation begins with being separated from the intellect, with being a witness. One can thus say that mediation is another name for observing and witnessing – without evaluating or critically making an assessment. Just by looking, you immediately get distance to the intellect. Through their persistent observation, the flow of thoughts eventually begins to diminish. Thoughts settle down by themselves, you do not have to wrestle with them, you do not have to try to keep them in order.

MEDITATION IS A JUMP OF THOUGHT. Try this: do not think about it, try to witness your own thoughts. Let your thoughts wander around just like pictures on a movie screen. See them, look at them, make them your objects. One thought arises: consider it in-depth. Do not think about it, just look at it. If you start thinking about it, you are no longer a witness. When the intellect is not functioning, you are witnessing, then you are conscious.

MEDITATION IS INTELLIGENCE. When you do something, immediately look for the driving force, because if you miss the underlying motive, the intellect continues to deceive you and say that the motive was different. If you can find the right driving force, the intellect becomes even more incapable of misleading you. Not a single thought in the intellect is ever original, it is always a repetition. As soon as the intellect says something, it leads you back to the routine.

MEDITATION IS FREEDOM. If your joy is dependent on the other, there can never be any freedom in that joy. And a joy that does not contain freedom is not much to joy. If you are dependent on the other, there is a limit. The happiness that comes from love is temporary. Meditation is to be united with life forever.

MEDITATION IS NOT ESCAPISM. Meditation means to leave desires, to leave thoughts, to leave the intellect. Meditation means relaxing in the moment, in the present. Meditation is the only thing in the world that is not escapism, even though it is considered to be just that.

MEDITATION IS AWARENESS AND COOL. Every situation must be an opportunity to meditate. Meditation is to become aware of what you are doing, to become aware of what is happening to you. A lesson is mentioned in the book “my son, when someone insults you, then tell him that you should meditate on it for 24 hours before you answer him”. Temptations never come from outside; it is about repressed desires, repressed energy, repressed anger, repressed sexuality, repressed greed, which creates temptations. These come from within.

MEDITATION IS A SPACE. The moment you become aware of how the intellect works, you are not the intellect. This consciousness in itself means that you have gone beyond the intellect; you have become a prudent observer. The more aware you become, the more you will be able to see the spaces between the experience and the words. A consciousness that is focused only on words is non-meditative while a consciousness that is focused only on the spaces is meditative. Whenever you become unaware of the spaces, the words are lost.


Investing the Templeton Way | Templeton & Phillips

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Published in: 2008

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The book is written by Lauren C. Templeton and Scott Phillips and is about Sir John Templeton’s investment career. Templeton ran the fund company Franklin Templeton Investments and outclassed its comparative indices during its seven decades under Templeton.

A LAISSEZ-FAIRE CHILDHOOD. Templeton was known for his curiosity and optimism. He learned early on that the stubborn one could outwork his opponents – “the doctrine of the extra ounce”. What distinguished the best from the average is often that extra hour of study or work. From childhood he also took an interest in seeing the world.

”Success is a process of continually seeking answers to new questions”

A GLOBAL CITIZEN. Templeton believed that borders were something artificially created by man and nothing that should stop an investor from looking for value in all corners of the world. In addition to better chances of finding value, Templeton also argued that it increased his chances of better returns at lower volatility. He was a diligent traveller and carefully studied the countries he visited. This made him dare to invest where others didn’t.

THE POINT OF MAXIMUM PESSIMISM. In the 1920s, Templeton’s father was a lawyer and from his office window he could see when bankrupt farms were sold in the town square. Most of the time he ignored the auctions, but when there were no buyers out in the town square, he walked downstairs and bought the farms at scrap prices. Much later, and in a better market, the father then sold the farms at a good profit. This theory of buying at maximum pessimism was later on applied by Templeton to the global stock markets.

“People are always asking me where the outlook is good, but that is the wrong question. The right question is: Where is the outlook most miserable?”

TEMPLETON’S SPIKE STRIP. On several occasions during his career, Templeton used the “spike strip approach” in markets that had reached maximum pessimism. He distributed his capital evenly over, for example, all shares traded below $1. The same approach was used when he successfully shorted 84 IT companies just before the IT bubble burst.

A FOCUS ON MICRO RESULTS IN STRONG BETS ON MACRO. Templeton was often praised for his well-timed macro bets, for example both when he went long Japan (50s and 60s) and when he went short Japan (80s and 90s). There was no advanced macro analysis behind the decisions. The focus arose when Japan during the time periods had many low- and high-valued shares. In order to identify and carry out these counter-works, Templeton was a diligent student of historical bubbles.

MINIMIZED THE FX-EXPOSURE. Templeton was careful to avoid countries with unstable economies and stuck to those that had a debt / GNP ratio’s below 25% and a positive current account – i.e. exported more than they imported. He considered that the currency cycles generally lasted several years and could vastly affect an investment’s outcome. He also carefully studied historical devaluations to learn what had gone wrong and what type of properties those countries and currencies had.

MARKET VALUE VS. REPLACEMENT VALUE. Templeton observed many historical periods when market prices for properties far exceeded the replacement value as well as periods when properties were valued below the replacement value. He applied the same way of thinking with great success to all sorts of industries that were currently in crisis.

MORE CLEAR-MINDED WHEN AWAY FROM THE BUZZ. Templeton began his career on Wall Street but later moved to the Bahamas. Templeton’s performance was significantly better when he worked upstairs in a Bahamas police station than when he had a stylish Wall Street office. He was able to behave more rational when he was freed from the daily buzz of Wall Street.


Contagious | Jonah Berger

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Published in: 2016

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Products, ideas, and behaviours start with a small set of individuals or organizations and spread, often from person to person, almost like a virus. The six principles of contagiousness is: (1) products and ideas that contain Social Currency and are Triggered, Emotional, Public, Practically Valuable, and wrapped into Stories.

SOCIAL TRANSMISSION. People share more than 16 000 words per day and every hour there are more than 100 million conversations about brands. Word of mouth is the primary factor behind 20-50% of all purchasing decisions. While traditional advertising is still useful, word of mouth is at least 10x more effective. It’s both more persuasive and it’s also more targeted.

ONLINE WORD OF MOUTH. Just putting up a Facebook page or tweeting doesn’t mean anyone will notice or spread the word. Fifty percent of YouTube videos have fewer than five hundred views. Only one-third of 1% get more than 1 million. Research by Keller Fay Group finds that only 7% of word of mouth happens online. Online conversations could reach a much larger audience, but offline conversations may be more in-depth.  

IMMEDIATE AND ONGOING WOM. Immediate word of mouth occurs when you pass on the details of an experience or new information you acquired soon after it occurs. In contrast, ongoing word of mouth covers the conversations you have in the weeks and months that follow – a vacation you took last year. Both types of word of mouth are valuable, but certain types are more important for certain products (theatres need instant chatter).

SOCIAL CURRENCY – WE SHARE WHAT MAKES US LOOK GOOD. Research finds that more than 40% of what people talk about is their personal experiences or personal relationships. People prefer sharing things that make them seem entertaining rather than boring, clever rather than dumb, and hip rather than dull. They use social currency to achieve desired positive impressions. To get people talking, companies need to mint social currency and give people a way to make themselves look good while promoting their products and ideas along the way. There are three ways to do that: (1) find inner remarkability, (2) leverage game mechanics, i.e., racking up miles, and (3) make people feel like insiders (exclusivity and scarcity).

TRIGGERS – TOP OF MIND MEANS TIP OF TONGUE. Most conversations can be described as small talk, meaning filling conversational space. Think about whether the message will be triggered by the everyday environment of the target audience. Frequency must also be balanced with the strength of the link. The more things a given cue is associated with, the weaker any given association. We also need to create links to prevalent triggers (Kit-Kat and coffee). Social currency gets people talking, but Triggers keep them talking.

EMOTION – WHEN WE CARE, WE SHARE. People share what they find interesting and useful. Sharing to others often makes emotional experiences better. If we get promoted, telling others helps us celebrate. If we get fired, telling others helps us vent. Sharing emotions also helps us connect – it’s like social glue, maintaining and strengthening relationships. For example, awe-inspiring articles were 30% more likely to get shared. Anger and anxiety lead people to share because, like awe, they are high-arousal emotions. Low-arousal emotions, like sadness, decrease sharing. Select high-arousal emotions that drive people to action.

PUBLIC – BUILT TO SHOW, BUILT TO GROW. People imitate, in part, because other’s choices provide information. So, to help resolve our uncertainty, we often look to what other people are doing and following that. Psychologists call this idea social proof. We also have the famous phrase “monkey see, monkey do”.

PRACTICAL VALUE – NEWS YOU CAN USE. People like to pass along practical useful information. News others can use. Helping people do things they want to do or encouraging them to do things they should do. Faster, better, and easier. It does matter how the information is packaged, and what the audience is. We need to make it clear why our product or idea is so useful that people just have to spread the word.   

STORIES – INFORMATION TRAVELS UNDER THE GUISE OF CHATTER. Just like the trojan horse itself, stories are more than they seem. The story grabs your attention and engages your interest, but peel back the exterior, and you’ll usually find something hidden inside. The story gets sharing for many of the above reasons: social currency, emotion, and practical value. The key is not to make something go viral, but also make it valuable to the sponsoring company. Virality is most valuable when the brand or product benefits its integral to the story. When its woven so deeply into the narrative that people can’t tell the story without mentioning it.

THE HUNDRED DOLLAR CHEESESTEAK. Howard Wein started the restaurant Barclay Prime in Philadelphia in 2004. The stats were bad. More than 25 percent of all restaurants fail within twelve months of opening their doors. Sixty percent are gone in the first three years. Wein knew he needed to generate buzz so he launched a hundred-dollar cheesesteak. And the story of this cheesesteak was contagious. People talked about the hundred-dollar cheesesteak because it has them Social Currency, was Triggered (many cheesesteaks in Philadelphia), Emotional (very surprising), Practically Valuable (useful information about high-quality steakhouse), and wrapped in a story.


Dear Chairman | Jeff Gramm

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Published in: 2015

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Dear Chairman is about shareholder activism in the United States over the past century. The book is written by Columbia professor and fund manager Jeff Gramm and consists of eight studies based on investor letters, newspaper clippings and interviews. According to Gramm, the starting point for shareholder activism was Benjamin Graham’s collision with the Northern Pipeline in 1926. As America then became richer and shareholding more widespread, more and more disputes over corporate control broke out.

STARTS OUT IN THE 1920SIn 1926, Benjamin Graham discovered that the profitable Northern Pipeline (NP) had $90/share in bonds while the stock price was $65. NP held its AGM in Oil City, Pennsylvania, far from the company’s headquarters – probably so that the board and management would get work undisturbed. Graham went there but had forgotten to pre-register his case and had to go home unheard. After working with major shareholders and after several rounds with the board, Graham got hold of two of five board positions. He then got the company to distribute the excess capital to the shareholders.

THE SALAD-OIL SCANDAL IN THE 1960S. Buffett started his partnership in 1956, and experimented in the beginning with everything from activism to short selling and pair trades. A classic story is that of American Express’s (AE) salad-oil scandal that erupted in 1963. The share price fell sharply and Buffett realized that the scandal did not damage AE’s highly profitable core business and invested 40% of the partnership’s capital in the company. He then began to persuade management and the board not to fight against the compensation of the swindlers. Legally, AE did not have to pay any compensation and shareholders loudly began to complain that a payment would still take place. Buffett realized that a lack of compensation could damage AE’s good brand and customer confidence and in the long run overthrow the company. If they took a big “one off”, AE would quickly be on the track again – which got to be the case.  

THE RANSOM LETTERS OF THE 1980S. The 1980s were the decade of “corporate raiders” and the big names on Wall Street were Carl Icahn, Michael Milken and T. Boone Pickens. “Bear hug letters” (an unwelcome but generous takeover bid), greenmail (targeted buyouts by individual shareholders), hostile takeovers (takeover attempts without board / management approval) and poison pills (a protection against hostile takeovers – often via the articles of association) were new words used extensively in the financial press. The activist investments of the decade were to a large degree made possible by cheap capital from Michael Milken. He was the “father of junk bonds” (high-yield bonds with little security) and through this built up a fortune. After a too long time in the grey zone, the happy 1980s resulted in 10 years in prison and a $600m fine for Milken. In the end, however, he came out after only two years.    

THE TOWN-HANGINGS OF THE 2000S. In the late 1990s and early 2000s, hedge fund manager Daniel Loeb introduced a new type of activism – public shaming. Loeb’s approach was to take a position of power in problem companies and replace inefficient management to reverse the negative development. To get the attention of key people, he sent out open letters in which he clearly expressed how management exploited the shareholders through passivity, dishonesty, or laziness. The open letters contained everything from personal attacks to curse words and proved to be highly effective. Loeb had found the key point of key people – if there is one thing CEOs and board members care about, it is their reputation.

”Sometimes a town hanging is useful to establish my reputation for future dealings with unscrupulous CEOs”
– Daniel Loeb

ACTIVISM IS NOT ALWAYS A GOOD THING. Studies have shown that activism is generally value-creating. However, not all outcomes will be good. Gramm takes up the example of BKF Capital, where activists ran a marginally profitable fund company into non-existence. The activists felt that earnings were burdened by unusually high staff costs and saw potential for quick gains if wage levels were trimmed. But when wages were reduced, the staff disappeared and with the staff, the investors disappeared. The fund company’s AUM fell rapidly and after only a few years the business was wound up.

ACTIVISM AS AN ASSET CLASS. According to Gramm, activism entered the institutional world in the late 1980s after GM, through greenmail, bought out major owner Ross Perot. The purchase took place at a large premium and Perot’s billion profit was financed at the expense of other shareholders. Thereafter, the major institutional shareholders increasingly began to side with the activists. It was also in connection with this that greenmail was banned. Nowadays, even normally passive institutions are open to follow successful activists.


A Tiger in the Land of Bulls and Bears | Daniel Strachman

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Published in: 2004

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Throughout most of the 1960s and the 1970s, the Jones partnership and a handful of others dominated the hedge fund industry. As Alfred Jones slowed down in the late 1970s, three wise men took the torch: George Soros, Michael Steinhardt, and Julian Robertson. This is the story of Julian Robertson and Tiger Management. By the time Roberson had decided to call it quits, the Tiger organization had grown to more than 2,500 times its original size 18 years earlier. Its assets had grown from $8.8 million to almost $25 billion, or 259 000%. The firm’s compound rate of return to partners during its existance, net of all fees, was 31.7%.

BACKGROUND. Julian Robertson was born in 1932 in Salisbury, North Carolina. In 1955, when he was 23, he entered the Navy as an ensign through the Reserve Officers Training Corps and served on a munitions ship. In 1957 he started his career on Wall Street as a sales trainee at Kidder Peabody & Co and spent 22 years at the firm. When colleagues had a little extra money they would ask Robertson to manage it for them. He earned a reputation as someone who could gather information, process it, and figure out ways to make use for his advantage to make money.

LAUNCHING THE HEDGE FUND. Robertson and his then partner Thorpe McKinsey launched Tiger in May 1980 with $8.8 million under management (McKinsey left Tiger in 1980 for personal and professional reasons). Robertson liked the idea of being compensated based on performance. His strategy was built from value investing and Benjamin Graham and David Dodd.

NETWORK OF INFORMATION. Over the years, Robertson built a Rolodex of thousands of people he had met on his travels around the globe. Although processing numbers is clearly a talent, his ability to gather and process information about a company outside of its financial statements is also uncanny.  

THE KEY BEHIND ALL INVESTMENTS WAS THE STORY. If the story made sense, then the investment made sense. If there was no story or it was not easily understood, then it had no place in the portfolio. When the story changed, the investment had to change as well. If the story remained the same, the position should get bigger.  You also need to have conviction when making investment decisions. Simply put – you must be willing to go for it. If you don’t believe in it or don’t have conviction in the position, you need to forget it and move on. 

LESSONS FROM 1987. When it comes to managing money, the hardest part is not actually managing the money: the hardest part is raising the money to be managed. 35% of the key to any successful money management business sustained solid performance over a significant period. The other 65% is client relationship management. In the wake of serious disruption in the fund’s performance numbers, it is very important that the assets don’t walk out the door.  

LONG/SHORT AND GLOBAL MACRO. Tiger had mastered the long/short game and was in the 1980s looking for new, bigger, and more liquid markets to enter. The answer was global macro. Robertson liked the idea of being a global macro trader/manager because it offered him two things: significant returns with the use of less capital, and more respect from his peers because he was trading in the same markets as George Soros.  

RIGOROUS PROCESS. Once an analyst recommended an investment, Robertson and the rest of the investment team further scrutinized it. Ideas was questioned with rigor and discipline under conditions that could be described as fierce. The investment selection process was a brutal one that relied on incredible amounts of research and conviction, because they knew that idea generation was the firm’s competency.  

A TIGER PERSON. A Tiger person had the following characteristics: (1) smart, bright, and quick with functional intelligence, (2) strong sense of ethics, (3) background in sports and interest in physical fitness, (4) interest in charity and public welfare, (5) sense of humor and fun to be around, (6) a good resume. Many stayed at Tiger even under the less-than-optimal conditions because they were making more money than they could anywhere else on the street.

INTERNET FRENZY. Growth stocks may have a year or two when they suffered, but if they were true growth stocks, they would continue to grow over time. This strategy worked well for much of the 1990s, but in 1998 and 1999 it did not. As the bull raged on within the technology bubble, hot money was dumping old-time names like Gillette, Coca-Cola and Cisco. Companies with no earnings were seeing their stock prices triple and quadruple overnight. People were quitting their jobs to become day traders, the folks at CNBC became minor celebrities and a cab driver or hot dog vendor could make a fortune in stocks. The fund was down over 19% in 1999, and money was pouring out of the fund.

CALLING IT QUITS. By March 2000, as the Nasdaq headed for the 5,000 level, Roberson had decided it was better to close the fund than to sell it (for which he had tried). The pain had grown to great, and he was no longer willing to try to navigate a market that he did not understand. The market, and the Nasdaq in particular, fell apart a few weeks and months after he decided to close. The problem was that while Robertson believed in the value philosophy, his investors had given up hope. He knew that the strategy would eventually pay off, but he didn’t know when.

LOST THE HUNGER. One analyst described the early years as “none of us knew what we were doing so we took risks, not because we were gamblers but because we did not know any better. This led us to significant rewards – if I or any of us knew any better we would have been scared out of our minds, but back then it was simply par for the course. By the time I left, the firm was filled with Wall Street lifers who looked at going to Tiger as the last stop of the career. They were not hungry; they were not interested in taking risks”.

THE USE OF LEVERAGE. Through the use of leverage, Tiger was able to commit capital aggressively to the best long and short investment situations. Leverage allowed the firm to increase exposure to the best opportunities available while reducing overall market directional exposure. While the use of leverage contributed significantly to the firm’s success over the years, Roberson’s ability to understand risk was what allowed it to post such significant profits. The team was active in finding company-specific risks because it believed that its ability to analyze those risks was one of the firm’s greatest strengths.

THE TIGER CUBS. There is a group of 30-40 managers that Roberson invests with and counsels and seek counsel from. At one point or another, all have worked with him or for him. They have been dubbed “the Tiger Cubs” by the press. There is another group of managers, the second generation of Tiger Cubs, that work in what used to be Tiger Management offices. Robertson is helping these managers along by providing them with back-office support and other tertiary money management services. He is also working with these managers to develop their organizations. Some hedge fund industry observers estimates that almost all of the 35 to 40 managers who have gone out on their own after leaving Tiger have hit the ball out of the park in terms of assets raised and performance numbers.  


Market Cycles | Howard Marks

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Published in: 2018

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Howard Marks, co-founder of Oaktree Capital Management, sums up his 28 years in his current role and 22 years before that as an asset manager: the trick is not to be the hottest stock picker. The trick is to survive. We will be wrong more often than we expect. The future is not ours to know. Being wrong comes with an activity whose outcome depends on an unknown future. However, we can calibrate the portfolio after the cycle – and thereby improve our odds.

THE PILLARS OF LONG-TERM GROWTH. Output of an economy is the product of hours worked and output per hour. As the population grows, hours worked tend to grow, and so does GDP. The growth in the population means that there are more people working every year to manufacture and sell products (as well as more people to buy and consume them). Productivity changes occur gradually and require long periods to take effect. They stem mainly from advances in the production process. Long-term growth is determined by fundamental factors such as the birth rate and increase in productivity (but also by other changes in society and the environment). These factors usually change relatively little from year to year, and only gradually from decade to decade.

SHARE OF INCOME FOR CONSUMPTION. Consumption fluctuates more than employment and income. Residents can choose to spend a higher proportion of their income on consumption when: (1) the daily headlines are favorable, (2) they believe that the election result supports a stronger economy, (3) higher income or lower taxes, (4) consumer credit has become more accessible, (5) an increase in asset prices has made them feel richer, or (5) their team won the World Cup.

2-3% IS THE NORMAL GROWTH RATE. The normal growth rate of US GDP appears to be around 2-3% per year. Growth can be 1% or hit 4-5% (during boom times or during a recovery from a slowdown). The annual growth rate can be negative by a few percent and if it remains negative for two quarters in a row, it is called a recession.

PRODUCTIVITY. Population growth and productivity have declined in the United States and other developed countries. This indicates a slower growth in the coming years than in the years after the Second World War. Emerging markets – and China in particular – have been growing rapidly in recent decades, and although their growth is slower at the moment, they may well outgrow the developed world in the coming decades.

OPERATIONAL LEVERAGE. A company’s profit is often far from stable from year to year. Profits are significantly more volatile than GDP. Sales and costs vary for many reasons, and different types of costs vary in different ways, especially in response to changes in sales. If a company’s revenue increases by 20%, its rental costs will not increase initially, its expenses for machinery will probably not increase initially and its expenses for purchasing goods will increase immediately and proportionately. Thus, total costs may increase less than revenues. The second form of leverage is from debt financing. Companies vary in operational and financial leverage.

VALUATION PENDULUM. Markets rarely go from “underpriced” to “fairly priced”. Usually, it continues from “fairly priced” to “overpriced”. For the 47 years from 1970 to 2016, the average annual return was 10%. Only 3 out of 47 years, however, the stock market closed + -2% from normal, ie between 8-12%. In 13 of the 47 years, the stock market closed more than 20 percentage points from normal – either up more than 30% or down more than 10%.

BUY WHEN PRICE < VALUE. All you need is (a) an estimate of value, (b) emotional strength to continue, and (c) eventually your estimate of value will prove to be correct. However, asset classes move in a pendulum. Risky assets outperform when valuations are penalized too much. Then they underperform until they again have adequate risk premiums. Not only are good times followed sooner or later by bad times, but often good times give bad times (unwise debt issuance or over-expansion).

IT’S ALL PERSPECTIVES, NO FULL PICTURE. There is a story about a group of blind men who walk on the road and meet an elephant. Everyone touches different parts of the elephant and has different explanations for what they have encountered. We are the blind men. Although we have a good understanding of events we have witnessed, we do not get the overall perception we need.

PROBABILITY DISTRIBUTION. The future is not a single fixed outcome that is intended to happen, but a series of possibilities. At best, we have insight into the respective probability of the outcome. Investment success is like choosing a lottery winner: a lottery ticket (outcome) is drawn from a bowl (the whole opportunity set). A result is chosen from many possibilities. To win this game more often than you lose, you must have a knowledge advantage. The ball selector who knows the 70:30 ratio has an advantage. It is only if we know more than others (whether it consists of having better data, doing a superior job of interpreting the data we have, knowing what actions we should take) that our forecast will lead to our excess return.