nauset

investor | seeking asymmetry in markets & life

[Jay Alto @theJayAlto]

it's really that simple

[Bill Ackman @BillAckman]

How to destroy a city.

Win an election by promising half the tenants frozen rents paid for by increased rents on the rest of the city’s tenants who often live in the same buildings with their subsidized neighbors. Pit neighbor against neighbor.

Create a city hostile to developers of apartments eliminating the potential for new supply.

Freeze rents so it is cheaper not to rent the apartment than to spend the capital required to renovate and rent it, shrinking the supply further.

Place all of the increased burden on the unregulated, market-rate tenants and the owners of buildings with no market rate apartments that can’t raise rents forcing them into foreclosure and the buildings into disrepair.

That’s all you need to do.

[Dimitry Nakhla | Babylon Capital® @DimitryNakhla]

In 2009, Nick Sleep wrote a passage about Walmart that should permanently influence how you think about valuation.

He showed that an investor in 1972 could have paid over 150x the prevailing share price — a P/E above 1,500 — and still earned a 10% annual return through to the time he wrote the letter. Even buying ten years later at over 200x earnings would have delivered the same result.

𝐒𝐥𝐞𝐞𝐩 𝐭𝐡𝐞𝐧 𝐚𝐬𝐤𝐞𝐝 𝐭𝐡𝐞 𝐪𝐮𝐞𝐬𝐭𝐢𝐨𝐧 𝐭𝐡𝐚𝐭 𝐦𝐚𝐭𝐭𝐞𝐫𝐬 𝐦𝐨𝐬𝐭:

“𝐓𝐡𝐞 𝐦𝐚𝐫𝐤𝐞𝐭 𝐬𝐭𝐫𝐮𝐠𝐠𝐥𝐞𝐝 𝐭𝐨 𝐚𝐩𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐞 𝐭𝐡𝐞 𝐦𝐚𝐠𝐧𝐢𝐭𝐮𝐝𝐞 𝐚𝐧𝐝 𝐥𝐨𝐧𝐠𝐞𝐯𝐢𝐭𝐲 𝐨𝐟 𝐭𝐡𝐞 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬’ 𝐬𝐮𝐜𝐜𝐞𝐬𝐬. 𝐁𝐮𝐭 𝐰𝐡𝐲?”
___

𝐋𝐞𝐬𝐬𝐨𝐧 ��𝐧𝐞: 𝐈𝐭 𝐢𝐬 𝐛𝐞𝐭𝐭𝐞𝐫 𝐭𝐨 𝐛𝐞 𝐚𝐩𝐩𝐫𝐨𝐱𝐢𝐦𝐚𝐭𝐞𝐥𝐲 𝐫𝐢𝐠𝐡𝐭 𝐭𝐡𝐚𝐧 𝐩𝐫𝐞𝐜𝐢𝐬𝐞𝐥𝐲 𝐰𝐫𝐨𝐧𝐠 (John Maynard Keynes).

The investors who passed on Walmart because it looked “too expensive” were precisely wrong. The ones who paid up — even substantially — and focused on the 𝘲𝘶𝘢𝘭𝘪𝘵𝘺 𝘢𝘯𝘥 𝘭𝘰𝘯𝘨𝘦𝘷𝘪𝘵𝘺 of the business were approximately right.

When you own a truly exceptional business with decades of runway, whether you overpaid by 5% or 10% barely registers over a 10- or 20-year holding period.

The catastrophic mistake is not slightly overpaying for greatness. It is refusing greatness because the price wasn’t perfect — and deploying that capital into something mediocre instead.

𝐋𝐞𝐬𝐬𝐨𝐧 𝐓𝐰𝐨: 𝐅𝐨𝐜𝐮𝐬 𝐨𝐧 𝐭𝐡𝐞 𝐦𝐨𝐬𝐭 𝐢𝐦𝐩𝐚𝐜𝐭𝐟𝐮𝐥 ���𝐫𝐢𝐯𝐞𝐫𝐬, 𝐧𝐨𝐭 𝐣𝐮𝐬𝐭 𝐭𝐡𝐞 𝐬𝐮𝐫𝐟𝐚𝐜𝐞-𝐥𝐞𝐯𝐞�� 𝐝𝐚𝐭𝐚.

Sleep’s answer was clear. 𝘛𝘩𝘦 𝘤𝘦𝘯𝘵𝘳𝘢𝘭 𝘦𝘯𝘨𝘪𝘯𝘦 𝘰𝘧 𝘞𝘢𝘭𝘮𝘢𝘳𝘵’𝘴 𝘴𝘶𝘤𝘤𝘦𝘴𝘴 was a thrift orientation that fueled growth by consistently sharing savings with customers. The culture reinforced this behavior, creating a self-reinforcing loop. This was the deep, permanent reality of the business.

𝘠𝘦𝘵 𝘪𝘯𝘷𝘦𝘴𝘵𝘰𝘳𝘴 𝘱𝘭𝘢𝘤𝘦𝘥 𝘵𝘰𝘰 𝘮𝘶𝘤𝘩 𝘦𝘮𝘱𝘩𝘢𝘴𝘪𝘴 𝘰𝘯 𝘵𝘳𝘢𝘯𝘴𝘪𝘵𝘰𝘳𝘺 𝘧𝘢𝘤𝘵𝘰𝘳𝘴 — valuation heuristics, margin trends, and incremental growth rates — while underweighting the engine that actually mattered. These surface-level metrics are anecdotal and short-lived.

The deep reality of how a business truly compounds is what deserves the greatest weight in the minds of long-term investors.

𝐋𝐞𝐬𝐬𝐨𝐧 𝐓𝐡𝐫𝐞𝐞: 𝐓𝐡𝐞𝐬𝐞 𝐛���𝐬𝐢𝐧𝐞𝐬𝐬 𝐦𝐨𝐝𝐞𝐥𝐬 𝐚𝐫𝐞 𝐞𝐱𝐭𝐫𝐞𝐦𝐞𝐥𝐲 𝐫𝐚𝐫𝐞 — 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐭𝐚𝐤𝐞𝐧 𝐟𝐨𝐫 ��𝐫𝐚𝐧𝐭𝐞𝐝.

There are very few business models where growth begets growth in the way Walmart (or Amazon / Costco) has grown. In many companies, size eventually becomes a burden.

𝘉𝘶𝘵 𝘪𝘯 𝘴𝘰𝘮𝘦 𝘤𝘢𝘴𝘦𝘴, 𝘴𝘤𝘢𝘭𝘦 𝘵𝘶𝘳𝘯𝘴 𝘪𝘯𝘵𝘰 𝘢𝘯 𝘢𝘴𝘴𝘦𝘵. 𝘌𝘷𝘦𝘳𝘺 𝘪𝘯𝘤𝘳𝘦𝘮𝘦𝘯𝘵 𝘰𝘧 𝘨𝘳𝘰𝘸𝘵𝘩 𝘴𝘵𝘳𝘦𝘯𝘨𝘵𝘩𝘦𝘯𝘴 𝘵𝘩𝘦 𝘤𝘶𝘴𝘵𝘰𝘮𝘦𝘳 𝘱𝘳𝘰𝘱𝘰𝘴𝘪𝘵𝘪𝘰𝘯, 𝘸𝘩𝘪𝘤𝘩 𝘥𝘳𝘪𝘷𝘦𝘴 𝘮𝘰𝘳𝘦 𝘴𝘤𝘢𝘭𝘦, 𝘸𝘩𝘪𝘤𝘩 𝘴𝘵𝘳𝘦𝘯𝘨𝘵𝘩𝘦𝘯𝘴 𝘪𝘵 𝘧𝘶𝘳𝘵𝘩𝘦𝘳.

MercadoLibre is one of the clearest modern examples. Its five-pillar flywheel — marketplace, advertising, payments, logistics, and credit — reinforces itself daily. More buyers attract more sellers. More transactions generate better data. Better data improves credit decisions. Superior logistics deepens loyalty. A larger audience and decades of rich data makes advertising more valuable. This is scale economies shared in action with magnitude and longevity.

That engine is why MercadoLibre has grown revenue more than 30% year-over-year for 29 consecutive quarters. A business model where growth begets growth — a rate and valuable structure in investing.
___

$MELI $AMZN $WMT

*This post is not to say that valuation doesn’t matter at all. Severely overpaying can undo years of strong business performance. However, the greater mistake is placing 𝘵𝘰𝘰 𝘮𝘶𝘤𝘩 weight on near-term metrics and entry price while underweighting the quality and durability of the business itself. It’s important to see the forest, not just the trees.

[Jay Alto @theJayAlto]

if it ain't hard, you ain't learning

https://t.co/gYZioyBOAU

[Huberman Lab Clips @HLPClips]

Cal Newport says that the only way to learn new things is using "active recall":

"Replicating the information from scratch as if teaching a class without looking at your notes, that is the only way to learn."

"It's efficient, doesn't take much time, but it's incredibly mentally taxing. This is why students often avoid it."

"Not only do you learn very quickly, you don't forget. It's almost like you have a pseudo-photographic memory when you study this way."

"Active recall is how you prepare, and it's going to take four hours and it's going to be tough, so do it in the morning when you have energy, and then you're done."

"It's really hard, but it is the way to learn new things."

@hubermanlab

[Blake Burge @blakeaburge]

Underrated life advice: Be fully where your feet are. When you're at work, work. When you're with family, be with family. When you're resting, rest. Most people are physically present and mentally everywhere else.

[Blake Burge @blakeaburge]

Underrated life skill: Letting today be today. Stop dragging yesterday into it and stop borrowing stress from tomorrow. Handle what's in front of you. You'll be surprised how much lighter life feels when you carry one day at a time.

[Bill Ackman @BillAckman]

Important read on time and life.

[Finding Compounders @F_Compounders]

Charlie Munger on Focus

“I think people who multi- task pay a huge price”

[Jay Yang @Jayyanginspires]

I revisit this Sam Altman post nearly every month:

[Boring_Business @BoringBiz_]

Cannot tell you how many CIMs and DD response lists are being created purely using Claude

At this point, bankers are not even trying to hide it anymore

Excels contain comments that specifically say that the author was Claude, and decks that are all left in the typical Claude format

Literally just Claude creating materials that will be reviewed by Claude and presented in front of an IC that will use Claude to summarize the memo created by Claude

Unbelievable stuff

[Jay Yang @Jayyanginspires]

POV: the moment you realize you can just do things.

[jay plemons @jayplemons]

The great lie is that society is divided between rich and poor.
The great truth, as David Friedberg puts it, is makers vs takers.

Makers build, create, and deliver real value: houses, software, art, businesses, and everything that moves civilization forward.

Takers watch, criticize, analyze, and politic. They push the lie that the rich hoard unfairly so the poor must seize it… all while positioning themselves to rule the chaos.

As @friedberg tells his kids: “At the end of the day, if you made something and someone else valued it, you were a maker. That was an amazing achievement. That is a great day.”

Takers thrive on division. Makers drive progress.

Time to choose your side.

[Brian Armstrong @brian_armstrong]

I think it’s time to revisit the accredited investor laws in the US.

Companies are staying private longer, where only accredited investors (aka rich people!) can invest. Retail investors can only come in after IPO, when much of the upside has already been captured.

These rules were created with the best of intentions, to protect regular people from scams - a noble idea. Unfortunately, in practice they've often made it illegal to get richer, unless you're already rich. A regressive tax!

We have to judge policies based on their outcomes, not on their intentions.

These are two possible routes I see:

1) Replace the rule with something merit-based, like a financial literacy test. Pass it and you're accredited. Having a qualification based on competency rather than your bank balance or income seems far more fair.

2) Remove the rule entirely. Let consenting adults assess their own risk. Disclosure requirements stay and fraud enforcement stays to punish bad actors.

[signüll @signulll]

ppl now tend to plan so so much esp in nyc but i find that the best parts of life are usually truly emergent.

walks that become drinks.

drinks that become dinner.

dinner that becomes 2 a.m. somewhere you didn’t even expect.

nyc has endless possibility, but somehow everyone has converted it into logistics. a city built for serendipity but kinda ruined by calendar invites.

[The Wise Investor 🧠 @TheWiseIC]

If I had to boil my $UBER thesis down to one post it would be this.

Try creating your own 1P network that gets sufficient utilization while carrying expensive robots on your balance sheet.

Utilization is the bottleneck. Not the technology. Not the data.

[hdf @PaikCapital]

love or hate the man, he went all in.

and won.

bet on yourself.

[Robert Sterling @RobertMSterling]

> you’ll never start a rocket company
> you’ll never build your own engines
> you’ll never be able to use off-the-shelf parts
> you’ll never survive three launch failures
> you’ll never reach orbit
> you’ll never win NASA’s trust
> you’ll never launch cargo to the ISS
> you’ll never compete with Boeing
> you’ll never compete with Lockheed
> you’ll never make rockets reusable
> you’ll never land a rocket vertically
> you’ll never land one on a drone ship
> you’ll never reuse a booster
> you’ll never fly the same booster 10 times
> you’ll never fly the same booster 20 times
> you’ll never fly the same booster 30 times
> you’ll never recover and reuse the fairing
> you’ll never lower launch costs
> you’ll never launch every month
> you’ll never launch every week
> you’ll never launch multiple times a week
> you’ll never carry astronauts
> you’ll never replace Roscosmos
> you’ll never fly civilians to orbit
> you’ll never manufacture satellites at scale
> you’ll never build the biggest constellation ever
> you’ll never make satellite internet work
> you’ll never make satellite internet fast
> you’ll never make satellite internet affordable
> you’ll never serve rural customers
> you’ll never serve aircraft and ships
> you’ll never build a methane rocket engine
> you’ll never make full-flow staged combustion work
> you’ll never build the most powerful rocket ever
> you’ll never build a rocket bigger than Saturn V
> you’ll never build it out of stainless steel
> you’ll never launch Starship
> you’ll never separate Super Heavy and Starship
> you’ll never relight Raptor in space
> you’ll never bring Super Heavy back
> you’ll never catch a booster with Mechazilla tower arms
> you’ll never launch 85% of mass to orbit worldwide
> you’ll never change the economics of space
> you’ll never force the entire industry to copy you
> you’ll never win
> you’ll never IPO

Congratulations to @elonmusk and the SpaceX team. You did what countless people said was impossible, and you did it time and time again.

Today is your day. You deserve this. May it be a glorious one.

[Karan🧋 @kmeanskaran]

BE DELUSIONAL.

[SMB Attorney @SMB_Attorney]

The government should seize Outlook from Microsoft and turn it over to a serious tech company. The US GDP would 10x if it actually worked like it's supposed to.