The KO quote reminded me of a project I worked on many years ago. I worked for a Buffet disciple and recall calculating the amount of blood Chinese women produced during their menstrual cycle, because Tampax was in play and eventually acquired by P&G (mid-late 1990s). If Chinese women started using tampons, then then Tampax had unrealized upside that other investors did not consider. If we played the merger arb, then we needed to know what the target company worth in case the deal falls through. I still don't think tampons caught on in China but it's the type of research I learned to do, because that's how Buffett approached his portfolio.
"if you're deep in the software business, as an investor or as a developer, a number of legacy industries drift out of your circle of competence because modeling how they work gets harder since they have so many human-intensive kludges, and so many load-bearing inefficiencies."
It's interesting to me that Keynes is actually one of the most quoted thinkers in Buffett's field, including by Buffett himself. "The State of Long-Term Expectation" (Ch 12 of the General Theory has all of the ideas about the beauty contest, the fallacy of liquidity, the game of Old Maid, the danger of enterprise becoming a bubble on the whirlpool of speculation - all of it as relevant today as it was when it was written almost a century ago.
> If you do a good enough job, and write persuasively about how you did it, a significant fraction of your acolytes will have no idea they're building on your results.
This is an excellent sentence. I frequently learn about the discovery of some form of current conventional wisdom and find that I had no idea it was discovered so recently and that I'm somewhat shocked it's considered a "discovery", since I don't remember not knowing it.
Can't help but observing that the Tyler Cowan tweet you reference in the footnote contains the usual issue of calling Samuelson et al Keynesians when in fact Samuelson was anything but. The people who had actually worked with Keynes at Cambridge hated Samuelson. On the one hand, in the sense that ideas usually mutate beyond their originator, perhaps this doesn't matter, but, on the other hand, perhaps it is what Friedman was referencing with the follow-up comment about nobody being a Keynesian anymore.
I think Friedman and Keynes were actually very similar. Both are defined by their idealism or naivety. Keynes thought that governments could manage the economy more effectively than private enterprise because it didn't have the incentive to be selfish, but he did not account for the level of rot and incompetence that eat away at intentions and effectiveness over time. Friedman thought free markets are the cure for everything (pretty much), but overestimated people's tendency to treat each other fairly and ignored the truism that markets are never really free.
The KO quote reminded me of a project I worked on many years ago. I worked for a Buffet disciple and recall calculating the amount of blood Chinese women produced during their menstrual cycle, because Tampax was in play and eventually acquired by P&G (mid-late 1990s). If Chinese women started using tampons, then then Tampax had unrealized upside that other investors did not consider. If we played the merger arb, then we needed to know what the target company worth in case the deal falls through. I still don't think tampons caught on in China but it's the type of research I learned to do, because that's how Buffett approached his portfolio.
"if you're deep in the software business, as an investor or as a developer, a number of legacy industries drift out of your circle of competence because modeling how they work gets harder since they have so many human-intensive kludges, and so many load-bearing inefficiencies."
Ha! Damn humans, making everything messier!
It's interesting to me that Keynes is actually one of the most quoted thinkers in Buffett's field, including by Buffett himself. "The State of Long-Term Expectation" (Ch 12 of the General Theory has all of the ideas about the beauty contest, the fallacy of liquidity, the game of Old Maid, the danger of enterprise becoming a bubble on the whirlpool of speculation - all of it as relevant today as it was when it was written almost a century ago.
> If you do a good enough job, and write persuasively about how you did it, a significant fraction of your acolytes will have no idea they're building on your results.
This is an excellent sentence. I frequently learn about the discovery of some form of current conventional wisdom and find that I had no idea it was discovered so recently and that I'm somewhat shocked it's considered a "discovery", since I don't remember not knowing it.
Great piece!
Can't help but observing that the Tyler Cowan tweet you reference in the footnote contains the usual issue of calling Samuelson et al Keynesians when in fact Samuelson was anything but. The people who had actually worked with Keynes at Cambridge hated Samuelson. On the one hand, in the sense that ideas usually mutate beyond their originator, perhaps this doesn't matter, but, on the other hand, perhaps it is what Friedman was referencing with the follow-up comment about nobody being a Keynesian anymore.
I think Friedman and Keynes were actually very similar. Both are defined by their idealism or naivety. Keynes thought that governments could manage the economy more effectively than private enterprise because it didn't have the incentive to be selfish, but he did not account for the level of rot and incompetence that eat away at intentions and effectiveness over time. Friedman thought free markets are the cure for everything (pretty much), but overestimated people's tendency to treat each other fairly and ignored the truism that markets are never really free.
Corollary in the field of intelligence:
https://www.youtube.com/watch?v=hxLJExWk9GE
(http://geer.tinho.net/geer.rsa.28ii14.txt)