“Courage isn’t doing the easy thing; it’s doing the hard thing.”

Jason Zweig at the Wall Street Journal published a smart piece this week with the apropos title of “The Secret to Braving a Wild Market.” (Spoiler alert: The secret is courage, more often than not, to do nothing when prices are bouncing around.) Zweig recounts the story of a little-known investor who started his career in 1939 by borrowing $10,000 (or $200,000 adjusted for inflation) to buy beaten up stocks in the midst of a market correction. This was a time when Hitler was invading Poland—and fear was invading the stock market—reaching a point of “maximum pessimism,” as the investor later recalled. “The way he positioned his portfolio for a world at war,” Zweig writes, “is a reminder that great investors possess seven cardinal virtues: curiosity, skepticism, discipline, independence, humility, patience and—above all—courage.” That investor, by the way, was John Templeton—one of the best global stock pickers of the 20th century.

“If it feels brave to you to rush out and buy energy stocks, you’re kidding yourself; that would have been courageous in April 2020, when oil prices hit their all-time low. Now, it’s a consensus trade. Courage isn’t doing the easy thing; it’s doing the hard thing. Making a courageous investment ‘gives you that awful feeling you get in the pit of the stomach when you’re afraid you’re throwing good money after bad,’ says investor and financial historian William Bernstein of Efficient Frontier Advisors in Eastford, Conn.”

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Supergrids are a mind-bending vision of the future of energy

If you covered Lake Michigan with solar panels, you’d generate enough electricity to power the entire United States. It’s a fun fact, but, well, meaningless. Right now, there’s just no feasible system to actually distribute that energy across long distances, making it a moot point. That’s where the idea of “supergrids” come in: global power networks capable of shipping energy across long distances—even across oceans and continents. To me, the idea of supergrids have always been spectacularly audacious—and spectacularly expensive. One Chinese project, for instance, detailed plans in 2016 for a $50 trillion supergrid that would harness Arctic winds and equatorial sunlight.

And yet, there’s some renewed optimism: A convergence of more efficient technologies—and declining costs—are making supergrids more feasible. “The grand idea has been around for decades—and has always run up against daunting technical, economic and political barriers,” writes Phred Dvorak this week in the WSJ. “Nevertheless, many energy experts argue supergrids’ time is coming, driven by technological advancement, declining costs and the growing determination of governments to shift from fossil fuels to renewable energy in their quest to curb global warming.” (H/T Andy Parker)

“The ability to send electricity long distances is also important for tapping resources in the often-remote areas where renewable energy is best produced—like uninhabited, windy plains that can host acres of windmills or scorching deserts that can be sites for solar panels. Countries with that type of topography and small populations, like Mongolia, see the growing global demand for green power as an export opportunity. Places with big energy appetites and no space for solar sprawl, like Singapore, are looking to import.”

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If Buffett retired at 60, he wouldn’t be a household name

Morgan Housel, the investor and writer, made an insightful remark on a recent podcast discussion with Tim Ferriss: If Buffett retired at 60, you’d probably never had heard of him. In other words, all outperformance comes in the out years—time and patience are an investor’s best advantage. The entire podcast is worth a listen, but this section below I found particularly resonant. “All compounding is never intuitive,” he says. He continues:

“And that’s why, if we look at someone like Buffett, we in the financial industry have spent so much time trying to answer the question: how has he done it? And we go into all this detail about how he thinks about moats and business models and market cycles and valuations, which are all important topics. But we know that literally 99 percent of the answer to the question, how has he accumulated this much wealth, is just that he’s been a good investor for 80 years. It’s just the time. And if Buffett had retired at age 60, like a normal person might, no one would’ve ever heard of him. He would’ve been like one of hundreds of people who retired with a couple hundred million bucks and like moved to Florida to play golf.”

A few more links I enjoyed: 

Reality Crash – via Pirate Wires
“We are presently at the beginning stages of an epistemological splintering in the west. We are seeing the rise of ever more reality entrepreneurs alongside critical searching for the real truth. The people of the U.S, having gone through their own woo explosions in the past, are perhaps more immune, but this changes only the duration, not the outcome. Reality entrepreneurs, like all entrepreneurs, will listen for what the market wants and eagerly supply it.”
Volatility & Portfolio Construction – The Science of Hitting
“At a high level, my thoughts on the current market environment won’t surprise you: I remain focused on the long-term. For the kind of companies I aspire to own – an attractive underlying business with high-quality management and a strong balance sheet – these trying times can actually be a net positive. For example, it opens the door to opportunities that are typically unavailable when there’s tranquility in the air.”
Dan McMurtrie: Resilience, Recovery, and Longevity in Investing – via Insecurity Analysis
“One of the things that I’ve talked to you about is when I studied really great investors people who have outside track records of 20 or 30 or 40 years plus there is a habit of, I’d be slightly hyperbolic to call it laziness, but I think about it as a certain sort of tactical laziness. So it’s really more an economy, an economy of motion where a lot of them have this ability to sort of calmly sit and observe and not expend very much energy for long periods of time. And then strike very aggressively at a certain point in time. It’s not that they’re doing nothing during the observation periods. They’re just slowly accumulating information and observations and they’re gaming things out in their head, but really, really low sort of metabolic clip. And it reminds me a lot of looking at any real large, physically large predator in the animal kingdom. They all like just don’t move for a lot of time.”

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