11/17/20 Power Five

1. What Obama Fears For Our Democracy – Today’s the day. Make sure to grab your copy of President Obama’s newest book, A Promised Land. “America as an experiment is genuinely important to the world not because of the accidents of history that made us the most powerful nation on Earth, but because America is the first real experiment in building a large, multiethnic, multicultural democracy. And we don’t know yet if that can hold. There haven’t been enough of them around for long enough to say for certain that it’s going to work.”

2. Electric Car Prices Keep Dropping – Thanks to incredible innovations in battery technology, prices dropped 13% in 2019. From 2010 – 2019, the price of a lithium-ion battery dropped 87%. Analysts suggest by 2023, we’ll reach the coveted $100/kwh threshold.

3. Lessons in Losing“Napoleon planned to disappear to America, and had already picked out his linen, his hunting guns and a pseudonym: Colonel Muiron. Might George, he wondered, be willing to ease him into a respectable retirement? He wasn’t. Instead Napoleon was obliged to accept a kind invitation to die in exile on a rock 1,200 miles off the west coast of Africa. Waterloo’s winner showed more quiet wisdom: “I am wretched even at the moment of victory,” wrote the Duke of Wellington, “and I always say that next to a battle lost the greatest misery is a battle gained.”

4. Value Investing Struggles to Remain Relevant – The old paradigm: “Underpinning it all is an important distinction—between the price and value of a stock. Price is a creature of fickle sentiment, of greed and fear. Intrinsic value, by contrast, depends on a firm’s earnings power. This in turn derives from the capital assets on its books: its factories, machines, office buildings and so on.The approach leans heavily on company accounts. The valuation of a stock should be based on a conservative multiple of future profits, which are themselves based on a sober projection of recent trends. The book value of the firm’s assets provides a cross-check. The past might be a crude guide to the future. But as Graham argued, it is a “more reliable basis of valuation than some other future plucked out of the air of either optimism or pessimism”. As an extra precaution, investors should seek a margin of safety between the price paid for a stock and its intrinsic value, to allow for any errors in the reckoning. The tenets of value investing were thus established. Be conservative. Seek shares with a low price-earnings or price-to-book ratio.

5. Michelangelo – The Renaissance Banksy? – Did the great Michelangelo graffiti the Palazzo Vecchio in Florence by engraving his face into a building? “We like discoveries because they remind us that history isn’t a closed book…There’s more to learn.”

You be the judge.