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EXCUSE ME?
This chart shows the percentage of companies which have had negative earnings over the last 12 months. If it shocked you, you’re not alone.
There have been certain structural changes in business over the last few decades which account for a large portion of the apparent current excess. Things like R&D and marketing run through the income statement in the current period, and those are very large and broad-based expenses in a software-driven market. This compares to a previous era where, as an example, manufacturing facilities were expensed over the life of those facilities.
Despite the messy accounting, we can’t help but make the assessment that a lot of these firms may not ultimately see the cash flows that would justify prolonged negative earnings, and ultimately, possibly current valuations as well.
Google’s Biggest Moonshot Is Its Search for a Carbon-Free Future
This is a very good article on Google’s efforts in the ESG space, with a particular emphasis on the “E”. The article is worth a read, but the theme is more important. This narrative is pervasive across companies almost regardless of which earnings call you sit on or article you read. The decarbonization theme is one of the largest we have seen in our investing careers, and the acceleration in tangible action since the onset of the pandemic has us paying very close attention.
“I wish we were at this moment a decade earlier,” Pichai admits. “I’m worried and very anxious we’re losing time.”
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How to Get People to Say “Yes” with Robert Cialdini
The rules of Cialdini’s seminal book “Influence” are incredibly important for anyone with even a mild interest in social psychology. He gets through most of the concepts which may save you the read.
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Bill Miller 3Q 2021 Market Letter
Bill Miller’s final investor letter is a quick read but provides some great insights. This one resonated with us:
When I am asked what I worry about in the market, the answer usually is “nothing”, because everyone else in the market seems to spend an inordinate amount of time worrying, and so all of the relevant worries seem to be covered. My worries won’t have any impact except to detract from something much more useful, which is trying to make good long-term investment decisions.
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The Work Required to Have an Opinion
The rapid consumption of content in our digital world seems to have resulted in an environment where a surprising number of people have an opinion about… everything. There is nothing wrong with not knowing enough to have an opinion, or even just not caring enough!
I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do.
- Charlie Munger
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