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Family Fortunes: How to Build Family Wealth and Hold on to It for 100 Years; Why family money should NOT be invested in “safe, conservative” investments; Why you can’t trust wealth “professionals” and why you should never entrust your money to money managers; why most celebrity CEOs are a threat to the businesses they run; Why giving your children as much education as possible is NOT a good idea

Family Fortunes: How to Build Family Wealth and Hold on to It for 100 Years (Agora Series) [Hardcover]

Bill Bonner (Author), Will Bonner (Contributor) Read more of this post

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Robert Hagstrom: What Is the Difference between Investing and Speculation?

Investing is the relentless process of translating and refining tacit knowledge into a distinctive and unique investment framework or mental model that is scalable beyond one single person and adaptable in different relevant contextual situation, particularly in dealing with what we do not know. Investors write with a framework as the north star to guide and navigate the marketplace jungle where dangerous animals, poisonous creatures and alluring sirens lurk at the corner. Speculators never bother to write. Investors care deeply about ideas and research. Speculators care solely about “making money”. Writing, research, ideas, knowledge – these are frivolous/useless pursuits with no immediate or short-term profits to Speculators. Investors have an instinctive longing to weave outside our own skin some reflection of our mind. Investors uphold the notion of responsibility, which emphasizes the active nature of the agent/knower, as well as the element of choice involved in the activity of the agent/knower, who can be assessed to be responsible or irresponsible as having fulfilled his obligations to fellow enquirers as part of membership in a community. Getting closer to the truth as a result of one’s virtues is more valuable for Investors than getting it on the cheap for Speculators.

KB

What Is the Difference between Investing and Speculation?

Robert Hagstrom, CFA

27 February 2013

Editor’s note: Today, we are doing something different. Robert approached us with a question that we found interesting, so we decided to pose it to some professional investors. In addition to our regular coverage, we are pleased to feature his framing of an interesting debate. We will be publishing select responses to the question over the next few days. If you are compelled, we invite you to comment below, tweet us @cfainvestored, or reach out to us via email.

What is the difference between investing and speculation? At first, you think the answer is simple because the distinction is obvious — that is, until you actually put pen to paper and try to answer the question.

Go ahead; take a few seconds and think about it. Write down “investing.” Now write the definition. Do the same for “speculation.” If you are like me, frustration quickly builds because the answers do not come quickly or easily, and they should. After all, these terms have been a part of the financial lexicon since Joseph de la Vega wroteConfusion of Confusions in 1688, the oldest book ever written on the stock exchange business. In his famous dialogues, de la Vega observed three classes of men. The princes of business, called “financial lords,” were the wealthy investors. The merchants, the occasional speculators, were the second class. The last class was called the “persistent speculators” or the “gamblers.” Read more of this post

If you had listened to Warren Buffett on gold a year ago you would have made a lot of money; The great thing about Warren Buffett is that all of his writing stands the test of time

If you had listened to Warren Buffett on gold a year ago you would have made a lot of money

Joe Weisenthal, Business Insider | Mar 1, 2013 10:05 AM ET
Warren Buffett‘s annual must-read shareholder letter is supposed to come out today, according to reports.

But the great thing about Buffett is that all of his writing stands the test of time.

Last year in his letter he made a great call on gold, explaining famously that for $9.6 trillion, you could buy all the gold in the world, and it would fit into a nice cube inside of a baseball field diamond.

Or for that money, you could buy all US cropland (400 million acres) + 16 ExxonMobils, and still have another $1 trillion in pocket money left over. Read more of this post

Breakfast with AQR’s Billionaire Hedge Fund Manager Cliff Asness; AQR could not be the success it is if David Kabiller did not have skills that complement the acute personality and thinking of Asness. Turning ideas into a money-making reality requires a partnership

Breakfast with AQR’s Cliff Asness

Posted By AMANDA WHITE On 01/03/2013 @ 1:37 pm In IN CONVERSATION

Having a breakfast meeting with Cliff Asness is a wake-up call. He will let you know if you’re late – something he holds in very little regard. He admits he has to constantly remind himself that just because he’s 20 minutes early to everything that others are not automatically then 20 minutes late. Asness is open, he’s entertaining, even funny. And he also possesses the rare combination, at least in this industry, of intellectual genius and social libertarianism. It’s very engaging and you quickly get the feeling that you’re only scratching the surface of his intellect as he changes from political activist to quantitative mathematician to social philosopher.

Social justice is also good business

Having two sets of twins is an almost perfect justice for a man who revels in the competitive game of statistics – he’s clearly an overachiever. But while he boasts about the competitive achievements particular to quantitative investment managers, his intellectual reach doesn’t stop there. His social and political interests include gay marriage and tax.

“I believe in all forms of small government, not just economic. Read more of this post

David Brooks: The Learning Virtues; A book on education cultures finds that the Chinese tend to define learning morally while Westerns define it cognitively

February 28, 2013

The Learning Virtues

By DAVID BROOKS

Jin Li grew up in China during the Cultural Revolution. When the madness was over, the Chinese awoke to discover that far from overleaping the West, they were “economically destitute and culturally barren.” This inspired an arduous catch-up campaign. Students were recruited to learn what the West had to offer. Li was one of the students. In university, she abandoned Confucian values, which were then blamed for Chinese backwardness, and embraced German culture. In her book, “Cultural Foundations of Learning: East and West,” she writes that Chinese students at that time were aflame — excited by the sudden openness and the desire to catch up. Li wound up marrying an American, moved to the States and became a teacher. She was stunned. American high school students had great facilities but didn’t seem much interested in learning. They giggled in class and goofed around.

This contrast between the Chinese superstudent and the American slacker could be described with the usual tired stereotypes. The Chinese are robots who unimaginatively memorize facts to score well on tests. The Americans are spoiled brats who love TV but don’t know how to work. But Li wasn’t satisfied with those clichés. She has spent her career, first at Harvard and now at Brown, trying to understand how Asians and Westerners think about learning. The simplest way to summarize her findings is that Westerners tend to define learning cognitively while Asians tend to define it morally. Westerners tend to see learning as something people do in order to understand and master the external world. Asians tend to see learning as an arduous process they undertake in order to cultivate virtues inside the self. Read more of this post

Jonah Berger On The Power Of Scarcity; Contagious: Why Things Catch On

Jonah Berger On The Power Of Scarcity

BY JONAH BERGER

MARCH 1, 2013

In Fast Company’s April issue, we’ll profile Jonah Berger, the 32-year-old Wharton professor who has become one of the world’s foremost experts on what goes viral and why. It’s easy to find examples of products or ideas that have spread and become popular, but as he writes, “It’s much harder to actually get something to catch on. Even with all the money poured into marketing and advertising, few products become popular.” His new book Contagious: Why Things Catch On, being published next week by Simon & Schuster, tries to answer the question, Why do some products, ideas, and behaviors succeed when others fail? In this exclusive excerpt, which will be serialized in five parts, he explores the concept of social currency, one of the six elements Berger says helps unravel the mysteries of virality.

In 2005, Ben Fischman became CEO of the discount shopping website SmartBargains.com. The business model was straightforward: companies wanting to offload clearance items or extra merchandise would sell them cheap to SmartBargains, and SmartBargains would pass the deals on to the consumer. There was a broad variety of merchandise, and prices were often up to 75% lower than retail. But by 2007 the website was floundering. Margins had always been low, but excitement about the brand had dissipated, and momentum was slowing. A year later Fischman started a new website called Rue La La. It carried high-end designer goods but focused on “flash sales” in which the deals were available for only a limited time–24 hours or a couple of days at most. And the site followed the same model as sample sales in the fashion industry. Access was by invitation only. Sales took off, and the site did extremely well. So well, in fact, that in 2009 Ben sold both websites for $350 million.

Rue La La’s success is particularly noteworthy, given one tiny detail. It sold the exact same products as SmartBargains. How come Rue La La was so much more successful? Because it made people feel like insiders.

Read more of this post

Maker’s Schedule, Manager’s Schedule; Most powerful people are on the manager’s schedule. It’s the schedule of command

Maker’s Schedule, Manager’s Schedule

Paul Graham

July 2009
One reason programmers dislike meetings so much is that they’re on a different type of schedule from other people. Meetings cost them more.

There are two types of schedule, which I’ll call the manager’s schedule and the maker’s schedule. The manager’s schedule is for bosses. It’s embodied in the traditional appointment book, with each day cut into one hour intervals. You can block off several hours for a single task if you need to, but by default you change what you’re doing every hour. When you use time that way, it’s merely a practical problem to meet with someone. Find an open slot in your schedule, book them, and you’re done.

Most powerful people are on the manager’s schedule. It’s the schedule of command. But there’s another way of using time that’s common among people who make things, like programmers and writers. They generally prefer to use time in units of half a day at least. You can’t write or program well in units of an hour. That’s barely enough time to get started.

When you’re operating on the maker’s schedule, meetings are a disaster. A single meeting can blow a whole afternoon, by breaking it into two pieces each too small to do anything hard in. Plus you have to remember to go to the meeting. That’s no problem for someone on the manager’s schedule. There’s always something coming on the next hour; the only question is what. But when someone on the maker’s schedule has a meeting, they have to think about it. Read more of this post

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