Classic Cocktails: The Last Word

The Last Word is a gin based cocktail that began at the Detroit Athletic Club in the 1920's.  After WWII, however, the Last Word slipped into obscurity in the cocktail universe for reasons unknown.  In the early 2000's, the drink began to make a resurgence starting in the Seattle area, and it's popularity continues to grow.

The Last Word consists of Gin, Green Chartreuse, Maraschino Liqueur, and Lime Juice all in equal parts.  The drink is a nice mix of sweet, sour, and pungent.  It's crisp and complex and is deceptively strong, mostly in part to the Green Chartreuse which weighs in with a 55% alcohol content.  It's a great cocktail that challenges and refreshes the pallet.  Enjoy!

Having the Last Word at the house

The Last Word 
1oz. Gin
1oz. Green Chartreuse
1oz. Maraschino Liqueur
1oz. Fresh squeezed and strained Lime Juice












Here is Robert Hess making the Last Word.

Hugh Hendry and David Einhorn

The video below is a recent one of Hugh Hendry followed by David Einhorn at the Buttonwood gathering in New York City.  The topics discussed are the topics that everyone is discussing ad nauseum, eg., Europe's 'Theatre of the Absurd', questions about China's flailing role as the global engine of growth, The US recession and of course the Federal Reserve.  If all this has been discussed ad nauseam, then why post a lengthy video of it here?

Two reasons:
1.  Hugh Hendry's macro views are well thought out, challenge conventional wisdom, and take into 2nd, 3rd, and 4th level affects.  I think he is on par with Ray Dalio as far as one of the few macro opinions worth considering.  As Howard Marks has correctly stated, it is impossible to predict these global outcomes.  In light of that, it is important to be prepared, and part of doing that is to listen to someone like Hendry as he presents multiple plausible outcomes and the collateral damage associated.

2.  Around the 55 minute mark David Einhorn takes the stage (after Hendry, I skipped straight to the Einhorn section, so I can't vouch for what's in between).  Einhorn doesn't discuss specific securities, but what he does do is give a thorough rebuttal as to why the Fed's ZIRP is not working and will continue to not work.  He feels that by punishing savers, you also punish consumption, which punishes sales, which punishes business growth.  He explains in much more detail.

FYI: Unfortunately, the video host (not Me!) is asking for your email to watch the video.  It didn't do that last night when I watched it on my phone... 

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East Coast Asset Management Q3 Letter - Inventing a Flying Machine

I've thought for some time now that Christopher Begg at East Coast writes one of the more interesting quarterly commentaries.  Begg always finds a unique way to tie a seemingly unrelated idea or concept to investing, underscoring Munger's philosophy of taking from all discipline's to form one's lattice work of mental models. 

Begg writes about East Coast's investment process and their use of checklists to fully understand how they see an investment and why they believe a margin of safety exists.  He also writes about the types of investments that East Coast seeks (Compounders, Transformations, and Work-Outs) and where they look to find their ideas.  East Coast prospects among the usual value suspects: spin-offs, post bankruptcy re-orgs, irrational sellers, political and economic clouds.

Embedded below is the letter in full.

East Coast 3Q 2012 Letter_Inventing a Flying Machine

Warren Buffett on CNBC

Warren Buffett discusses a range of topics this morning on CNBC with his favorite reporter, Becky Quick.


Buffett on US Housing Recovery
Buffett: Global Economy Slowing Buffett: Instincts go against QE3 Buffett: We Mostly Buy Stocks for Future Earnings Buffett: We will add 8,000 jobs organically Buffett: We Buy on an all Equity Basis GE's Immelt: Trend is still positive with volatility Where Buffett is Investing Now Buffett: Election comes down to who has a better Ground Game Buffett: Eurozone Banking Problems Cloud Recovery Buffett's Final Word: Hold

NCAT: Don't fear the FOMO

Much attention has been brought to the area of behavioral economics in the past decade, and rightfully so.  To paraphrase Charlie Munger, "If economics isn't behavioral, then what the hell is it?"  Benjamin Graham had this to say long before behavioral economics was widely considered as relevant as it is today: “The investor’s chief problem — and even his worst enemy — is likely to be himself.”

Shooting one's self in one's foot while investing frequently happens when an investor's emotions override and suppress clear and logical thought.  These emotions span a broad range of fear, euphoria, greed, envy, information overload, uninformed decision making, thumbsucking, confirmation bias, and on and on.  (For the definitive guide on emotional bias in decision making see Munger's "The Psychgology of Human Misjudgement" found in Poor Charlie's Almanack.)

In adhering to Munger's advice of taking main ideas from other disciplines and applying them across other mental models, I lifted the NCAT technique from the discipline of clinical psychology.  NCAT is an acronym representing a method for handling and addressing internal conflicts, biases, and unruly emotions.  Warren Buffett's comments on his Dale Carnegie classes come to mind: “I did not take the course to prevent my knees from shaking when public speaking . . . but to do public speaking while my knees were knocking.” NCAT reminds me of just that - not crushing or suppressing feelings of anxiety or fear or sadness or uncertainty or anger or disappointment, but rather to competently move forward with the task at hand while those feelings are present.
What does NCAT stand for?


Name it: What are the emotions that I am feeling?  It is always best to stop and recognize what is happening internally.  By naming the emotion, you bring consciousness to it.  With that awareness comes more control over yourself and your actions.  Clearly outlining internal motivations is a significant aid in rational decision making.    

Claim it: Claim responsibility for those feelings.  Often times, anxiety & fear are created in one's own mind.  A particular action is only scary because that is how you feel about it.  Just because you are afraid of roller coasters or soliciting business from strangers does not mean that these are inherently scary undertakings. They are scary to you because that is the story your mind has built around the experience.  By recognizing that our own minds and stories are often responsible for irrational extrapolations of emotion, we can look at a 'scary' situation from a different angle, in a new light, with a different perspective.  

Accept it: Accept that you feel the way you do.  If it's anxiety that you feel, remind yourself that it is normal to feel anxious at times.  "Yes, I feel nervous right now."  Everyone feels it whether it shows or not.  Stop, take a deep breath and let the anxiety flow through your body and disperse.  That harder you try to suppress those feelings, the more concentrated they become, causing more internal tension.  By accepting your feelings, you can redirect the energy that it would take to fight how you feel, and channel the energy into more worthwhile endeavors. 

Tame it: After going through the previous 3 steps, you should be closer to "taming" what ails you.  Move forward and do whatever it is that you originally intended to.  By stepping into the unfamiliar, its unfamiliarity ends right then and there.  By bringing awareness, responsibility, and acceptance to the unpleasant or unfamiliar you shift your efforts towards achievement rather than defense.  

NCAT is something that I use to tone down the emotions inherent when making investment decisions.  By using NCAT and seeing a situation with logic, awareness, and consciousness, I can greatly reduce the occurrence of an emotionally charged, short-sighted reaction that I may later regret. 


Ex. 1

The Hot Seat

"This stock has tanked.  I am pretty scared at the sight of all that red on my screen.  I might have made a poor investment decision.  I should just bail."   

Ex. 2

"This stock has been a bottle-rocket and I've been sitting on my hands.  There are 15 'buy' ratings on it, and I've seen it mentioned about 50 times on a major business news channel.  I don't want to be the only one missing out.



In both examples, naming the feelings (anxiety or fear of missing out) brings consciousness and awareness to those emotions.  Are those good influencers of decision making?  No!  Claim those emotions and recognize what is happening inside.  Accept that you do feel a strong internal sense of urgency to act on those feelings, even if it is not in your best interest.  Tame those emotions by recognizing them, and realizing that the investments should be reexamined and based on fundamental merit rather than the unconscious compulsion to act swiftly and alleviate the near term pain.


Slowing down the process leads to better self examination.

Ex. 1 Revisited 
"If I sell this stock, is it because the price is way down and I can't take the pain, or has the story fundamentally changed and permanently impaired the company's future earnings power?"

Ex. 2 Revisited 
"If I'm chasing the price upwards, will I still have an adequate margin of safety - even at higher prices?  If everyone is already bullish on this stock and expectations are extremely high, what advantage do I have?"

Name It.
Claim It.
Accept It.
Tame It.

Steve Romick of FPA on Wealthtrack

See where the Internet lives

Charlie Munger was quoted at a Berkshire shareholder meeting a couple of years back saying that he thought Google had one of the widest economic moats he had ever encountered after reading In The Plex.

This inside look at their data centers is visual support to that claim.  I also remember in the Columbia Business School Class presentations Glenn Greenberg citing Google's tremendous infrastructure and world class talent pool/attraction as competitive advantages.  All investment pontifications aside, a look under the hood at Google is quite impressive! 

Check out this Wired.com story on the data centers as well as Google's own photo gallery linked just below.

Where the Internet Lives: Google Data Center Photo Gallery