Invest like the best → With Brad Jacobs

Good podcast with several useful takeaways for the investor and for the corporate world.

Really like the:

- ROIC concept as a north star for every business decision (i prefer the FCFF, however at the end if both done right would lead to the same results) - due its simplicity and common-sense,

- as important as to find a good business opportunity what you pay for it is paramount (IC of ROIC),

- create the environment so people can strive in their role,

- the extreme importance to have the right persons in the right places and,

- invest only when you have an industry and technology tailwind!

Invest like the best

Enjoy!

ps - book added to the wish list. 

My guest today is Brad Jacobs. Brad’s resumé is remarkable. He has founded seven companies, all of which are billion-dollar or multibillion-dollar businesses. He has done 500 M&A transactions and raised $30 billion dollars of debt and equity capital. Currently, he is the Executive Chairman of XPO, a commercial trucking company that he started in 2011 and has grown into one of the largest logistics businesses in the world. He has also written a book that will be out in January, titled “How to Make a Few Billion Dollars”. Brad’s energy is infectious and our conversation unpacks his strategies for M&A, his propensity for speed, and methods for earning team buy-in. Please enjoy my conversation with Brad Jacobs.

Book - The Signal and the noise - Silver → Quotes & Ideas

 3 types of Uncertainty in Forecasts - using Global Warming as an example.

First, there is what Schmidt calls initial condition uncertainty-the short-term factors that compete with the greenhouse signal and impact the way we experience the climate. The greenhouse effect is a long-term phenomenon, and it may be obscured by all types of events on a day-to-day or year-to-year basis.

 -----------------------------------------------------------------------------------------------------

Another type of uncertainty, however-what Schmidt calls scenario uncertainty- increases with time. This concerns the level of CO, and other greenhouse gases in the atmosphere. At near time horizons, atmospheric composition is quite predictable. The level of industrial activity is fairly constant, but CO, circulates quickly into the atmosphere and remains there for a long time. (Its chemical half-life has been estimated at about thirty years)

--------------------------------------------------------------------------------

Last, there is the structural uncertainty in the models. This is the type of uncertainty that both climate scientists and their critics are rightly most worried about, because it is the most challenging to quantify. It concerns how well we understand the dynamics of the climate system and how well we can represent them mathematically. Structural uncertainty might increase slightly over time, and errors can be self-reinforcing in a model of a dynamic system like the climate.

 

Book - The Signal and the noise - Silver → Quotes & Ideas

 On economic forecasting and pure statistical forecasts vs. modeling/simulation forecasts

The goal of any predictive model is to capture as much signal as and as little noise as possible. Striking the right balance is not always and our ability to do so will be dictated by the strength of the theory quality and quantity of the data. In economic forecasting, the data is and the theory is weak, hence Armstrong's argument that "the more you make the model the worse the forecast gets." 

In fact, up until about thirty years ago, purely statistical models were the primary way that the weather service forecasted hurricane trajectories. 

Such techniques, however, are subject to diminishing returns. Hurricanes are not exactly rare, but severe storms hit the United States perhaps once every year on average. Whenever you have a large number of candidate variables applied to a rarely occurring phenomenon, there is the risk of overfitting your model and mistaking the noise in the past data for a signal.  

This second type of model essentially creates a simulation of the physical mechanics of some portion of the universe. It takes much more work to build than a purely statistical method and requires a more solid understanding of the root causes of the phenomenon.

 

What is your life's expectancy?

 Interesting site and good insights! It seems i’m expected to live up to my 84th birthday (April 22, 2059)

worlddata.io, brought to you by worlddata.io, aims to make demography – the study of human populations – accessible to a wider audience. We believe that demographic data plays an important role in understanding the social and economic developments of our time. Our hope is that people from all walks of life, of all ages and across all countries will explore a new perspective of their own life and find their own place in the world of today and tomorrow.For more information, reach out to us at worlddata.io

Documentary - The Genius of George Boole

 Great documentary about George Boole and its impact on everyone’s lives.

Really insightful and a must see! On top of everything, it really made me think that the environment where on his has a huge impact on the outcome of your work (added to your natural skills and traits).

Most probably if we would have gone to Cambridge University instead of Corke in Ireland, he would not have the degrees of freedom to develop knowledge completely outside the academic mainstream.

Additionally, the serendipitous path that made the Claude Shannon MIT engineer, 80 years after An Investigation of the Laws of Thought being published to stumbled upon it and use it to create the transistors and from there on all that was possible to achieve.

Every time i will came across a Boolean formula i will look at it differently!

Enjoy!

El Genio, George Boole

Narrated by Oscar-winning actor Jeremy Irons, The Genius of George Boole assembles academics and industry leaders from across the globe to explore the life and importance of one of the world's greatest mathematicians and unsung heroes. This film shines new light on the legacy of George Boole, now recognized as the forefather of the information age.

 

How to be a better boss - Economist webinar with Amy Edmondson and Claire Hughes (highly recommend it)

My takeaways from this great webinar:

a. Most common mistakes made by managers/leaders:

1. Double down on outcomes/performance in turbulent times (when experimentation and innovation are paramount to improve)
2. Lack of honest and direct feedback

b. Conflict management:

1. Problems do not age well

c. While hiring:

1. search for learners
2. make the same interview process to all candidates so it can be comparable (make it a thoughtful process).

d. on meetings:

1. clarity of objectives.
2. time bounded,
3. should be led (by inquiry),
4. if you are there is because you are needed, thus 100% of focus is required,
5. should be heavy on inquiry,
6. should be disciplined.
7. you should feel that by attending the meeting you are getting smarter and not older.

 

How to be a better boss

Book added to the wish list - Right Kind of Wrong: Why Learning to Fail Can Teach Us to Thrive

 Shortlisted for the Financial Times Business Book of the Year Award

'A masterclass in navigating, and even seeking out, the inevitable failures that pave the way to success . . . A must-read.' Angela Duckworth, author of Grit

Forget 'fail fast, fail often'. This revolutionary book reveals how we get failure wrong - and how to get it right.

We used to think of failure as a problem, to be avoided at all costs. Now, we're often told that failure is desirable - that we must 'fail fast, fail often'. The trouble is, neither approach distinguishes the good failures from the bad. As a result, we miss the opportunity to fail well.

Here, Amy Edmondson - the world's most influential organisational psychologist - reveals how we get failure wrong, and how to get it right. She draws on a lifetime's research into the science of 'psychological safety' to show that the most successful cultures are those in which you can fail openly, without your mistakes being held against you. She introduces the three archetypes of failure - simple, complex and intelligent - and explains how to harness the revolutionary potential of the good ones (and eliminate the bad).

And she tells vivid stories ranging from the history of open heart surgery to the Columbia Space Shuttle disaster, all to ask a simple, provocative question: What if it is only by learning to fail that we can hope to truly succeed?

_

'Great clarity and insight . . . Right Kind of Wrong will inspire you to do your boldest work.' Ed Catmull, co-founder of Pixar and author of Creativity, Inc.

'No skill is more important than learning from failure - and no one on earth knows more about it than Amy Edmondson.' Adam Grant, author of Think Again

Relevant quotes - The signal and the noise →Silver

On overall market irrationality, efficient market hypothesis, and fallibility of our predictions / forecasts.

"...John Maynard Keynes said, "The market can stay irrational longer than ye can stay solvent." ..."

"..First, there is the weak form of efficient-market hypothesis. What this claim is that stock-market prices cannot be predicted from analyzing past statistical patterns alone. In other words, the chartist's techniques are bound to fail.

 The semi strong form of efficient-market hypothesis takes things a step further. It argues that fundamental analysis- meaning, actually looking at publicly available information on a company's financial statements, its business model, macroeconomic conditions and so forth-is also bound to fail and will also not produce returns that consistently beat the market.

Finally, there is the strong form of efficient-market hypothesis, which claims that even private information - insider secrets -will quickly be incorporated into market prices and will not produce above average returns. The version of efficient-market hypothesis is meant more as the logical extreme of the theory and is not believed literally by most proponents of efficient markets including Fama.") There is fairly unambiguous evidence, instead, that insiders make above-average returns...."

"...a central premise of this book is that we must accept the fallibility of our judgment if we want to come to more accurate predictions. To the extent that markets are reflections of our collective judgment, they are fallible too. In fact, a market that makes perfect predictions is a logical impossibility...."