Tag Archives: Peter Bevelin

My 2014 reading list

In this post I wanted to share the list of books I read along the year with a small comment for each one, the link to a post about the book in the blog (when applicable), links to Amazon (in case you want to get them) and to the authors. I have also included a small rating from one to three “+” depending on how much do I recommend its reading:

  1. Seeking Wisdom: From Darwin to Munger(by Peter Bevelin) (++): this book is an interesting guide into how to improve our thinking process. It starts with reviewing what influences our thinking, then analyses misjudgments and provides some guidelines for better thinking. It draws heavily on quotations and passages from other authors such as Confucius, Charlie Munger, Charles Darwin, Warren Buffett, Cialdini, Kahneman… therefore if one has read one or several of their books (Thinking Fast and Slow, Influence, letters to the shareholders of Berkshire Hathaway, On the Origin of Species, Poor Charlie’s Almanack…) this book may seem redundant. One thing I liked about the book was the offering of key concepts after each chapter and its appendix on checklists.
  2. What management is (by Joan Magretta) (++): a brief book covering the different aspects of management (from value creation to managing people, business models, strategy, execution) in a very concise way though full of very vivid examples from different companies. While reading the book I marked dozens of passages, and I included one post in the blog about one of the anecdotes related to the Ford Pinto.
  3. The Early History of the Airplane (by Orville and Wilbur Wright) (++): it is a short book or rather a compilation of 3 articles by the brothers (30 pages in the e-reader version I used). The 3 articles are: The Wright Brothers’ Aeroplane (by Orville and Wilbur Wright), How We Made the First Flight (by Orville Wright) and Some Aeronautical Experiments (by Wilbur Wright). In these articles they provide some insight into how they became attracted to the problem of heavier-than-air self-powered controlled flight, what were the difficulties they faced, what schools of thought there were at the moment, who influenced them, what results and experiments from others they relied upon, the experiments they performed, the results at which they arrived… and, yes, they describe their first and subsequent flights. I wrote a post review the book, find it here.
  4. The Racketeer (by John Grisham) (++): in this novel the author has Malcolm Bannister, an attorney half way through his 10-year prison term for racketeering, maneuvering his way out of prison by negotiating with the FBI and helping to solve a crime investigation gone nowhere.
  5. Micro (by Michael Crichton and completed by Richard Preston) (+): the novel is about a group of graduate students seduced by Nanigen, scientific research company, to join them in Hawaii. The story develops in to a hunt of the students in the jungle as they had been miniaturized by the latest technology developed by the company. To my taste, a bit too much on the fantasy side.
  6. Hot, Flat, and Crowded(by Thomas Friedman ) (+++):  In this book, Friedman claims that as we are entering the “Energy-Climate Era” the world is getting hot (global warming), flat and crowded (soaring population growth), and clear action needs to be taken to address these issues. Government need to establish a clear regulatory framework, clear price signals to establish a market in which companies can innovate to solve the problems at hand. The author included in the book dozens of references, quotes from conversations, excerpts of speeches from leading figures, and several examples. I wrote a post review the book, find it here.
  7. The Roaring Nineties(by Joseph E. Stiglitz ) (+++): Stiglitz wrote The Roaring Nineties in 2003 to offer an insider’s view of economic policy making and the economic boom and bust of the nineties. Stiglitz is frank in admitting that all the focus that the Clinton administration had at the beginning of the term in passing laws to improve the living of the disfavored ones was suddenly put aside due to the mantra of deficit reduction. He openly regrets it several times throughout the book and offers some criticism on the administration he took part in and others before and after. Especially Reagan’s and Bush II’s. I wrote a post review the book, find it here.
  8. El amor en los tiempos del cólera (by Gabriel García Márquez) (+++): the author was inspired to write this book by the story of his parents and other old couple who had to keep their relationship in secret all their lives. The novel describes the relationships along all their lives between mainly three characters: Fermina Daza, her husband, Juvenal Urbino, and her ever love from childhood and ever a candidate, Florentino Ariza. I have to say that I liked more this book than “One Hundred Years of Solitude”. I wrote a post review the book, find it here (in Spanish).
  9. Crime and Punishment (by Fyodor Dostoyevsky) (++): the book narrates the story of Rodion Raskolnikov, an poor student in Saint Petersburg who kills an unscrupulous pawnbroker for her cash. Raskolnikov had written an article in which he discussed how some crimes could be seen as acceptable in the name of a greater good by leading individuals. He convinces himself to be one of them. The story gets ever more complicated as his family comes to town for the marriage of his sister, the investigations by the police, the interrogatories, his errors due the constant illness he suffers from malnutrition, etc.
  10. Sycamore Row”  (by John Grisham) (+++): in this book the author writes a kind of sequel to his all time best seller “A Time To Kill” with the appearance of the main characters of the former book: Jake Brigance, Judge Atlee, Harry Rex Vonner, Lucien Wilbanks… this time the case is about a will that is contested. A will from a white businessman leaving all his estate to his black maid, cutting his family out; a tough decision for Ford County, Mississippi.

Note: You can find here my 2012 reading list, and here, embedded in my summary of 2013, the list of that year.



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Weapons of mass miscommunication

With the advent of the Internet, the email has become one of the main ways of communication both in personal and professional environments. I won’t deny the simplicity of conveying ideas, instructions, files, etc., in an email. However, I have often referred to emails as weapons of mass miscommunication.

What do I have in mind when I state that? Emails that need several clarifications, wrong interpretation of emails either or both in the spirit and the letter, emails that go unnoticed, emails that waste reading time of too many people, etc.

While reading “Seeking Wisdom: From Darwin to Munger”, by Peter Bevelin, I thought of another good weak point of emails when reflecting on the following passage on the disadvantages of scale in large institutions:

[…] as you get big, you get the bureaucracy. And with the bureaucracy comes the territoriality which is again grounded in human nature. And the incentives are perverse. For example, if you worked in AT&T in my day, it was a great bureaucracy. Who in the hell was really thinking about the shareholder or anything else? And in a bureaucracy, you think the work is done when it goes out of your in-basket into somebody else’s in-basket. But, of course, it isn’t. It’s not done until AT&T delivers what it’s supposed to deliver. […]

(excerpt from the Lecture by Charles T. Munger to the students of Professor Guilford Babcock at the University of Southern California School of Business on April 14, 1994)

SendThink back of emails and how often we may think that some piece of work is completed when we have clicked on the “Send” button. But it’s not. Not only the work might not be done, but the communication might not even have taken place even if we think so. And it will not happen until the receiver at the other end of the channel has gotten the message and gone through it. Then, the above-mentioned criticism to emails apply (unclear message, clarifications, wrong interpretations…). Thus, no matter how much effort it costs to us breaking the inertia and comfort of our quiet work place, it is much better to accompany an email with a quick immediate follow-up phone call ensuring that the communication actually happens and explaining what is expected from the receiver.

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Time Value of Money

In courses about finance in the past, as part of job-related investment projections, for personal investments and as part of exercises related to posts in this blog I have discounted cash flows several times. Discounted? To those not initiated: it is about the time value of money.

Many course of finance start with the explanation of time value of money. You can find Wikipedia’s article here.

I recently came across the most descriptive and ancient (to my knowledge) explanation of the concept.

A bird in a hand is worth two in the bush”, Aesop, 600 B.C.

Seeking Wisdom: From Darwin to Munger, Peter Bevelin.

Seeking Wisdom: From Darwin to Munger, Peter Bevelin.

I found it while reading “Seeking Wisdom: From Darwin to Munger”, by Peter Bevelin, in which the author retrieved a passage from Warren Buffett’s 2000 Letter to the Shareholders of Berkshire Hathaway [PDF, 93KB, pg. 13]

Leaving aside tax factors, the formula we use for evaluating stocks and businesses is identical. Indeed, the formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn’t smart enough to know it was 600 B.C.).

The oracle was Aesop and his enduring, though somewhat incomplete, investment insight was “a bird in the hand is worth two in the bush.” To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? What is the risk-free interest rate (which we consider to be the yield on long-term U.S. bonds)? If you can answer these three questions, you will know the maximum value of the bush ¾ and the maximum number of the birds you now possess that should be offered for it. And, of course, don’t literally think birds. Think dollars.

Aesop’s investment axiom, thus expanded and converted into dollars, is immutable. It applies to outlays for farms, oil royalties, bonds, stocks, lottery tickets, and manufacturing plants. And neither the advent of the steam engine, the harnessing of electricity nor the creation of the automobile changed the formula one iota — nor will the Internet. Just insert the correct numbers, and you can rank the attractiveness of all possible uses of capital throughout the universe.

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