Devin Haran

@BQInvstTraining Then that person is purely an agent. The principal-agent problem will continue to exist until that person is willing and able to convert to being a principal - in a very substantial way.

@DevinHaran One doesn't have to invest one's entire post-tax salary in the shares of one's company, to fully align interests. Most managers who earn their livelihood from a salary, will anyway not be able to invest 100% of the salary in shares.

This is the right way to approach executive comp/incentives. Doesn’t have to be all of their take-home pay, but it should be a big % of the after-tax amount each year. Only way to truly align interests w principals is for agents to actually BECOME principals of their own accord.

Warren Buffett retires today, most likely in his mind at the closing bell, just minutes from now. Congratulations to the greatest investor the world will ever know. The returns speak for themselves - Berkshire earned 6,118,651% or 19.9% annually over his 60 years running the company. The S&P 500 returned 46,491%, or 10.4%. Berkshire’s shares could decline by 99.2% and still have outperformed the market. The record is even greater when including the partnerships he ran through 1969. However, it is not the returns but the way Warren did it that matters most; with integrity and morality - and with humility and humor. He didn’t have to teach, but he did. On behalf of so many of us, thank you, sir.

“All of us - fellow investors and business executives, but also the wider public - are fortunate to have lived in the time of Buffett, to have soaked in his wisdom, and to have been inspired by his example…” (Seth Klarman)

“In a world alarmingly short of proper role models, Buffett is departing the scene. His voice and example will be deeply missed.” Seth Klarman hits the nail on the head when describing Warren Buffett and what he means to America:

Recently @Inv_Ecosystem wrote an excellent post on the limitations (and pitfalls) of due diligence. In short, we’re often mislead. Yet, we inevitably become more confident about our assessments in the process. Included is the following admonition from anthropologist Michael Agar:

“It takes 43 start-ups to end up with just one company that employs anyone other than the founder after 10 years.” @Jonathanaknee @RobAtkinsonITIF

“Results tend to accumulate to the person who enjoys the lifestyle that precedes the result." Great observation from @JamesClear . Reminds me of this Novak Djokovic interview:

“People are not rational. They are rationalizing. Once you understand this simple fact, all the oddest human behavior will suddenly make way more sense.” @BillyM2k via @farnamstreet

"It's 100x harder to unlearn than to learn." - @jackbutcher

“I have found people willing to tolerate ANY level of chronic pain in order to avoid acute pain. People would much rather lose slowly over 5 years than have the conversation that involves a dramatic change to stop losing…I’ve seen that over and over again.” @pmarca

“Removing what shouldn't exist creates more value than any addition could.” And yet… “We never subtract. Why? Because everything that already exists has a champion…someone fought for it and they'll fight you if you try to remove it.” @farnamstreet

@gordocap18 Do you mind sharing the name of the report or a link to it? I have a Morningstar account, but can’t seem to find it on their site. Thanks.

Morningstar estimates that $MCO and $SPGI have raised prices by 3–4% annually over the past few decades. The pricing power of CRAs stems from strong network effects, the interest savings they enable, and the relatively low cost of ratings compared to total underwriting expenses.

“When you truly understand something, you can express it at any level of detail while maintaining coherence. The master can provide the one-sentence version, the paragraph version, and the chapter version - all of which tell the same story at different resolutions. The novice can only repeat what they've memorized at one resolution.” - @farnamstreet

“When you have a sudden, urgent need for cash, good luck selling your alternative assets.” @jasonzweigwsj wsj.com/finance/invest…

Hype erodes. Quality persists.

Some sobering thoughts on insurance float: “Float, per se, is not a blessing. We can show you many insurance co’s that thought it was wonderful to generate float, but they’ve lost so much money in underwriting that they’d be better off if they’d never heard of the insurance business… The ordinary insurance business is not a good business… We’re not interested in the typical insurance business because we think the float will end up costing too much. We’d rather borrow money with an explicit cost attached to it rather than have the implicit costs of an underwriting loss.” (Buffett, 1996 BRK Shareholder Meeting)