#238: Li Lu in 1998, Norway's Economy, Philip Morris & Addiction, Poetry...
"I have no special talent. I am only passionately curious." - Albert Einstein
Hello! This week is a bit of geopolitical and economic flair. One is a short bit about Norway’s oil-based economy and the government’s long-term vision. The other is the premium piece on Philip Morris and their global domination of the tobacco industry.
An interview depicting Li Lu’s tumultuous journey to becoming one of the legendary investors of his generations is a humbling look at how there is no excuse for not achieving what you desire. It’s also an interview that gave me greater thought towards investing in people who don’t come from upper-middle-class families whilst collecting all the monikers of success.
Continuing down my curiosity with poetry, I wrote one on the best way to be a friend. The beauty of helplessness and how that’s the point. People forget that.
Finally, some thoughts on how wonderfulness of life and how I’m processing learning.
As always, feel free to pick and choose from the categories below and I hope one of the things I wrote is of some value to you.
Business & Investing
Culture & Systems
Introspection & Habits
Business & Investing
A Li Lu Interview
Li Lu is the second investor–after Warren Buffett—Charlie Munger entrusted his capital with. There may be no higher vote of confidence than entrusting the future of the Mungers, making Li Lu a widely followed individual in the investing community.
A well-respected investor, Li Lu’s lectures are worth examining for the unfamiliar. But this isn’t about Lu’s investment style or philosophy.
It’s about a 1998 article sharing details about this fascinating human being. Li Lu escaped China as one of the leaders of the student protest movement in Tiananmen Square. He attended Columbia University and graduated with a Bachelors, JD, and MBA. He managed to invest his student loans and small sums he made from a book deal to come out with ~$200k at the end of school (I think he mentioned this in a past lecture).
Though his investment strategy was well documented, this interview shed further light on Li Lu’s journey. He was separated from his parents when they were sent to work camps during Mao’s cultural cleansing. He was the only survivor of an earthquake that killed his foster family (he had gone through six families in 10 years). He even wrote a book about his experience in China and money from the book was also poured into investing.
Before going out to run his own fund, he worked in corporate law, investment banking and corporate finance. It was through that experience he realized client service was not up his alley.
“It’s very hard for me in the service business… I want to make up a decision and do it. I’m a doer rather than just giving ideas.” - Li Lu
As an investor stewed in the value investing principles, his investing style was considered unfashionable in the 1998 interview. Momentum investing (buying stocks that kept on going up in price to jump out before the price fell) was the preferred strategy in the 1999 dot-com bubble. It’s funny to think how maybe every year the market obsesses over the momentum strategy while the long-term out-performers are shunned during periods of market excitement.
“If you’re right, ultimately it will prove you’re right, but you look stupid for a long time….It is what I’m all about. It’s revolutionary. It is about trusting yourself. It’s about challenging the conventional wisdom. That’s what we did in Tiananmen.” - Li Lu
Norway’s Economy
When I think of Norway, my instincts take me to: all-day sun in the Summer, oil, rich country, and happy citizens. The stereotype appears true in some regard.
Norway ranks second in the Legatum prosperity index behind Denmark. Per IMF estimates, they are also seventh in GDP per capita. It’s the 13th largest producer of oil at 2m barrels of per day—Venezuela is 12th at 2.3m and Canada is 5th at 4.5m with the U.S. leading with 14m.
Of the top 10 countries in the prosperity index, Norway is the only one that would be considered an “oil nation” with the sector contributing to ~18% of their GDP (it was ~10% for Canada). Norway and Qatar were also the only two oil countries that made up the top 10 for GDP per capita.
Like many oil nations, Norway had won the lottery with the large oil reserve under the North Sea. But unlike many of the oil nations who spent their lottery earnings for fun and parties—like Venezuela—Norway reinvested the earnings for the long term.
On the back of the state-owned oil company, Equinor ASA, Norway created a $1.3 trillion pension fund. It’s the second-largest pension fund after Japan’s $1.7 trillion fund. Not bad for a country with 5.4m people. The result is a nice safety net for a country that needs to ween off its reliance on a non-renewable resource.
I thought his video was a fun primer into Norway’s economy:
Last Week’s Premium Newsletter
Philip Morris: Smoking & Human Desire for Addiction
"We certainly do not want our products to be addictive. We want people to use them because they are meaningful." - Mark Zuckerberg
Try out a two-week trial of the premium subscription to read last week’s and dozens of other essays exploring owner-operators and cultures of public companies.
Culture & Systems
To Be There
When you are in the dark corners of your mind
When you are huddled and the sunlight gleans in from the window.
You know it will be bright if you moved toward the window
You know but you don’t.
This isn’t a math problem
This isn’t a limitation on rationality.
So-called friends will tell you they know exactly what you are going through
So-called friends merely lead with their ego’s desire to matter.
The ones who are dying to give advice
The ones who are dying to give you their opinion.
They end up mocking your rationalism
They end up belittling without intending to.
The people that help are those that sit beside you
The people that listen, say nothing and nod along.
The point is for them to feel your helplessness
The point is to experience sitting in darkness with you.
The point isn’t to solve it
The point is to embrace the normalcy of it.
It’s a lot to ask of someone to sit with you
It’s the kind friends—the true friends—who do.
Introspection & Habits
An Ode to Gratitude
Isn’t the washing machine a marvel? I was handwashing my powerlifting knee sleeves and after 15 minutes of wringing it out, I concluded it was good enough.
I wondered how long it must’ve taken my grandparents to wash clothes. Imagine spending a few hours a week hand washing clothes and more hours a day drying it outside.
I couldn’t be grateful enough for the existence of washing machines. It’s as basic an appliance as a stove in most homes. But it amazes me how much time and effort it saves. It’s easy to forget how lucky I am for the generosity of others.
The other day, I got annoyed at my Evernote app freezing on my phone. I lost six seconds restarting the app and finding the note I was typing on.
The passing thought was “I would not pay for this.” Then, I reminded myself I wasn’t paying for it. Five years of my life’s work was enshrined on this free software and I didn’t pay a dime for it.
If that isn’t great, I don’t know what is.
Confessions of a Work in Progress
“They lose the day in expectation of the night, and the night in fear of the dawn.” - Seneca
My girlfriend picked out the above quote from Seneca amid one of our discussions. I forget the context. But I remember narrating a story to her as if I was writing it. Regardless, she liked the quote and asked me who Seneca was.
I informed her he was one of the Roman teachers of Stoicism. Then she asked me what Stoicism was.
I’m sure there is a one-sentence definition of it. I didn’t know it though. Instead, I described to her what my interpretation was from the teachings of Seneca, Epictetus and Marcus Aurelius.
I explained situations and instances where an action might—in my eyes—be Stoic. But there wasn’t to be a succinct definition aside from viewing it as one "way of life".
I tried explaining to her it’s something I felt. It passed the porn test—you know it when you see it. But I wondered if my inability to describe it succinctly indicated a form of self-deception. That I didn’t truly understand.
After all, aren’t people knowledgeable in topics able to cite quotes and passages from what they read? Didn’t I learn that an investment idea wasn’t fully understood until I could describe the core thesis in a few sentences?
My default was to lament my failure at not having memorized all the Stoic teachings I had read and learned. I lamented how much knowledge I must’ve lost from all the books I had read thus far. But, a few days later, I wondered if the effectiveness of learning (i.e. from reading) could also be reflected in the learning sink into my everyday behaviour.
Not to define reading as the surface-level pulling of quotes and passages. But something like an ointment that seeps through the skin’s surface area. It was applied and it did its job by slowly changing my mind and behaviour unconsciously. It wouldn’t be until purposeful reflection that I might see the change over time.
I understand this may sound like the justifying confirmation bias of someone who wants to make himself feel better. But I’m not saying either way is right or wrong. I’m not saying having clear and succinct answers isn’t proof of knowledge or proper learning. I’m saying an inability to do that doesn’t mean a lack of knowledge of a topic either.
I can’t riff off everything Buffett and Munger said. But I know their teachings on investing and life have influenced my thinking. It might be accurate to say I merely cherry-picked the teachings I agreed with. A self-selection resulting from my unique set of experiences. Isn’t that learning in its own way?
Don’t we choose to digest whatever we want? Even if we are looking for information that disproves our present beliefs, it’s only when we are at a state of accepting conflicting views that we are willing to accept it.
Every new bit of learning we embrace is a choice. That gives me greater solace in the value of reading. Not as an act of studying intensely like I would a textbook—though I love the act of speaking with the writer through the notes I take—but as an act of washing myself with ideas and letting whatever I allow to stick. How wonderful is that?
The fool thinks he’s a genius after reading one book. The same could be said of the person who can memorize learnings but never applying them. Isn’t the point of learning to enrich life? Some trips are memorable and some are not. The good shit sticks.