Good Reading — August 2019
10th Anniversary Edition
Philip C. Ordway
I started sending these “good reading” emails in August 2009 and wow, time flies! To mark the occasion I’m sending my favorite books, articles, quotes, and facts & figures from prior editions of Good Reading. It was a lot of fun to go back and re-read over 100 of these collections to find the best stuff. A few things stood out.
- Things can change very quickly.
- Predictions are hard, especially about the future.
- We all need more humility.
- Most of the materials that consume our attention — reading materials included — are noise and won’t matter in six months, let alone six years. Focus on what’s good and important.
- There is a lot more good stuff that I want to read
This is all shown in no particular order. My heartfelt thanks to all of the authors whose work has contributed so much. I hope you enjoy.
“What would I eliminate if I had a magic wand? Overconfidence.” — Danny Kahneman
“Freedom is being disliked by other people. It is proof that you are exercising your freedom and living in freedom, and a sign that you are living in accordance with your own principles. Conducting yourself in such a way as not be disliked by anyone is an extremely unfree way of living.” — Ichiro Kishimi and Fumitake Koga in ‘The Courage to be Disliked” (2013)
“Not all readers are leaders, but all leaders are readers.” — Harry S. Truman
“The problem with being too busy to read is that you learn by experience (or by your men’s experience), i.e. the hard way. Thanks to my reading, I have never been caught flat- footed by any situation, never at a loss for how any problem has been addressed (successfully or unsuccessfully) before. It doesn’t give me all the answers, but it lights what is often a dark path ahead.” — James N. Mattis
“Turn every page. Never assume anything. Turn every goddam page.”
- The Secrets of Lyndon Johnson’s Archives: On a Presidential Paper Trail — Robert Caro is one of the best historians and writers in the world, and this article is one of the best things I’ve read in a long, long time. It looks at some behind-the-scenes details of his research on Lyndon Johnson, but it’s about a lot more than that.
“At GM, if you see a snake, the first thing you do is go hire a consultant on snakes. Then you get a committee on snakes, and then you discuss it for a couple of years. The most likely course of action is — nothing. You figure, the snake hasn’t bitten anybody yet, so you just let him crawl around on the factory floor. We need to build an environment where the first guy who sees the snake kills it.” — Ross Perot, with a classic soundbite on management. Perot recently passed at age 89. (Source, among others, is this excellent article featuring Jeff Gramm’s excellent book, Dear Chairman.)
Chess master and tutor Bruce Pandolfini “is teaching [his students] how to think. ‘My goal,’ he says, ‘is to help them develop what I consider to be two of the most important forms of intelligence: the ability to read other people, and the ability to understand oneself.’”
Li Lu on Charlie Munger: “When Charlie thinks about things, he starts by inverting. To understand how to be happy in life, Charlie will study how to make life miserable; to examine how business[es] become big and strong, Charlie first studies how businesses decline and die; most people care more about how to succeed in the stock market, Charlie is most concerned about why most have failed in the stock market. Charlie constantly collects and researches the notable failures in each and every type of people, business, government, and academia, and arranges the causes of failures into a decision-making checklist for making the right decisions. Because of this, he has avoided major mistakes in his decision making in his life and in his career. The importance of this on the performance of Buffett and Berkshire Hathaway over the past 50 years cannot be emphasized enough.”
“Generally speaking, I believe Costco does more for civilization than the Rockefeller Foundation. I think it’s a better place. … I’ve seen so much good in the world by people who really created better systems, and I’ve seen so much folly and stupidity on the part of our major philanthropic groups, including the World Bank, that I really have more confidence in building up the more capitalistic ventures like Costco.” — Charlie Munger
“Culture is not the most important thing. It’s the only thing.” — Jim Sinegal
- “You look at a traditional retailer, and he’ll say, ‘I’m getting $29 for this item,’” says Sinegal. “‘I’d like to get $35 for it.’ We look at it and say, ‘I’m getting $90 for it. I’d like to get it down to $18 or $17.’ And that’s got to be the MO of running your business. You have to constantly think, How can we bring goods and services to market at a lower price?”
“General Electric’s annual report was downloaded from its website only 800 times in 2013, according the company.” — Hard to believe but apparently true, as noted in a typically good column from Jason Zweig and this earlier article about annual report readership (or lack thereof).
“Countrywide was one of the greatest companies in the history of this country,” Mr. Mozilo maintained, “and probably made more difference to society, to the integrity of our society, than any company in the history of America.”
“[A] plane crash or a terrorist attack is news, but slow and steady progress is not. Even 50 million people rising out of poverty in a single year is not news. But this happens to be the most important story of our time: poverty, as we know it, is disappearing from our planet.” — Johan Norberg
“When I work I have no sunk costs. I like changing my mind. Some people really don’t like it but for me changing my mind is a thrill. It’s an indication that I’m learning something. So I have no sunk costs in the sense that I can walk away from an idea that I’ve worked on for a year if I can see a better idea. It’s a good attitude for a researcher. The main track that young researchers fall into is sunk costs. They get to work on a project that doesn’t work and that is not promising but they keep at it. I think too much persistence can be bad for you in the intellectual world.” — Danny Kahneman
“‘Just leave people alone and let them do their work, at their own desks’ does not get you a Harvard Business School case study.” — Matt Levine
“The essence is simplicity.” — Lou Simpson
“Will the last person leaving SEATTLE turn off the lights” — A billboard on the highway near Sea-Tac airport in Seattle, 1971. That billboard was referenced by former Boeing CEO Phil Condit in an interview about the “Boeing Bust” of the late ’60s and early ’70s during which ~2/3 Boeing engineers quit or were laid off.
“The business schools used to pose it as a conundrum. They would say, `Well, who comes first? Your employees, your shareholders, or your customers?’ But it’s not a conundrum. Your employees come first. And if you treat your employees right, guess what? Your customers come back, and that makes your shareholders happy. Start with employees and the rest follows from that.” — Herb Kelleher
“What is good for our customers is also, in the long run, good for us.” — Ingvar Kamprad, December 1976 (see below)
- “Wasting resources is a mortal sin at IKEA [and it] is one of the greatest diseases of mankind.”
- “Exaggerated planning is the most common cause of corporate death.”
- “Time is your most important resource. You can do so much in 10 minutes. Ten minutes, once gone, are gone for good. You can never get them back.”
“How can we help our brains to realize that things are getting better when everything is screaming at us that things are getting worse? The solution is not to balance out all the negative news with more positive news…A solution that works for me to persuade myself to keep two thoughts in my head at the same time. It seems that when we hear someone say things are getting better, we think they are also saying ‘don’t worry, relax’ or even ‘look away.’ But I am not saying those things at all….I am saying that things can be both bad and [getting] better.” — Hans Rosling, Factfulness
- “Resist blaming any one individual or group of individuals for anything. Because the problem is that when we identify the bad guy, we are done thinking. And it’s almost always more complicated than that. It’s almost always about multiple interacting causes — a system. If you really want to change the world, you have to understand how it actually works and forget about punching anyone in the face.” — Hans Rosling, Factfulness
Facts and Figures
In a study of the world’s 100 largest market cap companies in 1912, only half were still in existence by 1995; only 20 were still in the top 100; and adjusted for inflation, 60% of the companies shrank in value. (Source: Leslie Hannah)
Money managers (as opposed to individuals) held less than 10% of all shares of American corporations in the 1950s. By 2011, they held 70%. (Source: John C. Bogle)
The global population was ~1.6 billion in 1900, ~6.1 billion in 2000, and ~7.6 billion in 2018.
- Life expectancy at birth went from ~30 years in 1900 to 65 in 2000 and ~72 in 2018.
As things [stood in 2011], a couple of 56-year-olds with average earnings will contribute about $140,000 in dedicated Medicare taxes over their lifetimes, and they will receive about $430,000 in Medicare benefits.
975 — the number of people employed by GE’s tax department [as of 2011]; by sheer coincidence, GE’s effective tax rate in the U.S. has recently been zero.
The average office worker [in 2012], researchers have found, enjoys no more than three minutes at a time at his or her desk without interruption.
China used almost 50% more cement (6.6 gigatons) in the three years of 2011, 2012, and 2013 than the U.S. used in the entire 20th century (4.5 gigatons from 1901–2000). (Source: Vaclav Smil via Bill Gates)
>99% of Warren Buffett’s net worth was earned after he turned 50.
By this calculation* the British pound experienced a greater than “12-sigma move” on June 24, 2016, following the release of the Brexit result. 12 sigmas is…a lot. (Source: BAML; * And yes, this stretches an already useless concept to the extreme by using the 100-day standard deviation of daily returns.)
In 2005, passive funds managed by Vanguard controlled more than 5% of shares in just three companies in the S&P 500. In 2017, Vanguard controlled more than 5% of shares in 491 companies in the S&P 500. (Source: WSJ/Morningstar)
28% of U.S. households — comprised of 35.7 million people — consist of a single person living alone in 2019. In 1980 only 23% of Americans lived alone, and in 1960 only 13% did. (Source: U.S. Census Bureau)
In 1900, American farmers needed an average of three hours of labor to produce 1 kg of wheat. In 2000, they needed 1–2 seconds.
- In 1900, about 40% of the American labor force was employed in agriculture. In 2000, the share had fallen to less than 2%. (Source: Vaclav Smil)
(Note: These books are only those I happened to read and feature in a prior edition of “good reading.” I have a longer but out-of-date list of investment-related books and articles. I also have a shorter “Hall of Fame” list and an even shorter Mount Rushmore list. The eminent financial writer Jason Zweig has a great list as well . I think the best writing with >90% of the knowledge on a subject can be found in a relative handful of books and articles, but I also think it still makes sense to read as often and as broadly as possible.)
- On the Psychology of Prediction — A related article that Kahneman says is his favorite.
The Lessons of History — This little book is a gem. I should have read it a long time ago and I need to read it again.
The Tiger: A True Story of Vengeance and Survival — This is a strangely compelling story about the remote, bizarre, and fascinating wilderness of far southeastern Russia. I don’t know many books that combine biology, ecology, geography, sociology, economics, and history in a package that resembles a well-written crime novel.
Titan: The Life of John D. Rockefeller, Sr. — This is one of the best biographies I’ve ever read.
The Most Important Thing Illuminated — Howard Marks’s investment classic with added comments and annotations by other great investors.
The Wizard and the Prophet: Two Remarkable Scientists and Their Dueling Visions to Shape Tomorrow’s World — Charles Mann has written some other great books but this one really stood out to me.
The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success — Will Thorndike’s great book spawned a movement.
The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War — Professor Robert Gordon’s magnum opus on American economic development, which sparked the famous and important debate about what the future rate of productivity growth will be.
The Fish That Ate the Whale: The Life and Times of America’s Banana King — This is a fascinating book. It is part engrossing biography of a business titan and part folk history that covers a huge arc of world events (American business and corporations in the 20th century, the development of Central America and “banana republics,” WWII and the creation of Israel, the Bay of Pigs, etc.). Other than a bizarre assertion by the author that the equator crosses Honduras, I really liked this book.
Getting There: A Book of Mentors — I got an autographed copy of this book at the Berkshire meeting — I didn’t know much about it but the author seemed very nice and the premise was appealing (it is a collection of short biographical essays). I didn’t have any expectations, but this book is awesome. I found it to be full of wisdom and inspiration, and I can’t recommend it enough.
Working: Researching, Interviewing, Writing — I read Robert Caro’s short new book in two sittings, and I’ll read it again. It is excellent, and even though some of the material has been published elsewhere, it’s worth having it all put together in this format.
Bad Blood: Secrets and Lies in a Silicon Valley Startup — This is an excellent book that combines superb journalism and an incredible time capsule of the era. The shear audacity and duration of the story never cease to amaze across 299 pages that read like a well-written business thriller. The irony is also unspeakable.
Americana and/or business biographies
- Sam Walton: Made in America — The gold standard of business autobiographies.
- Shoe Dog: A Memoir by the Creator of Nike — I can’t put my finger on the exact reason, but this is a really compelling book and I couldn’t put it down. If you like biographies, business or sports — let alone all three — I think you will love this book.
- Les Schwab — Pride in Performance: Keep It Going! — I doubt many non-West-Coasters are familiar with Les Schwab and the tire stores that bear his name. But Charlie Munger once compared Les Schwab to Sam Walton, and after reading this book you’ll see why.
- Built from Scratch: How a Couple of Regular Guys Grew The Home Depot from Nothing to $30 Billion — This book is more than 20 year old, but it well worth the time to re-read it if you first went through it a decade ago like I did. I’d put this in my top 10 business biographies, especially for pattern-recognition — the overlap with other great businesses is impossible to miss.
- Half Luck and Half Brains: The Kemmons Wilson Holiday Inn Story — Everyone knows Holiday Inn, but since this book was self-published and is long since out of print, I don’t think it’s received the attention it deserves. This is an incredibly impressive story and a great read.
- Sol Price: Retail Revolutionary and Social Innovator — This book was written by Sol’s son, Robert. The subject and the business lessons more than make up for any shortcomings. Sam Walton says he “stole as many ideas from Sol Price as from anybody else.”
- Grinding It Out: The Making of McDonald’s — This is a short and exceptional book. Ray Kroc had a fascinating life and a very clear, unique business philosophy, ethical compromises notwithstanding.
- In-N-Out Burger: A Behind the Counter Look at the Fast-Food Chain That Breaks All the Rules — A different playbook from the same industry and era. The story itself is fascinating, the business lessons are timeless, and the food may be better — a lot better in my opinion — even if the book isn’t quite as good as “Grinding It Out.”
- Out of the Dog House — Dick Portillo is the founder of an eponymous restaurant chain based in Chicago, and this is his excellent autobiography.
- Iacocca: An Autobiography — This book is obviously 30+ years old, but it has aged well. It is above average in its candor and insight across Iacocca’s fascinating life. The historical parallels are interesting too — there is even a chapter titled “Making America Great Again.” The politics and proposed solutions are different, but the economic complaints will sound familiar: America is being killed by free trade and better/smarter competition from Asia (Japan), healthcare costs, a lack of investment, a shrinking middle class, an eroding industrial base, crumbling infrastructure, high taxes and entitlements, an overactive Fed and distortions from goofy interest rates, expectations of a lower standard of living for the next generation, etc. etc.
- Glory, Lost and Found: How Delta Climbed from Despair to Dominance in the Post-9–11 Era — This book is an excellent “business biography” of Delta Airlines, but it’s also far more than that. It’s also an interesting examination of the industry, its structure, and its participants, and the implications and applications are much broader. It’s long, but I finished it wishing it were even longer.
William Langewiesche — Perhaps the best writer of long-form stories I’ve ever read.
- The Human Factor — An absolutely gripping read about the crash of Air France 447 that has even bigger implications considering the Boeing 737 MAX tragedies.
- What Really Happened to Malaysia’s Missing Airplane — The latest from Langewiesche, covering the disappearance of Malaysia 370.
- “‘The Clock is Ticking’: Inside the Worst U.S. Maritime Disaster in Decades” — A riveting look at the tragedy of El Faro, a freighter that sailed to demise in a hurricane.
- An Extraordinarily Expensive Way to Defeat ISIS — A look at the B2 bomber’s usage in a stealth bombing raid.
- The Crash of EgyptAir990 — The story that started them all.
Michael Mauboussin — I have learned as much about business and investing from Mauboussin’s books and articles as I have from any other source. Among his excellent books Think Twice and The Success Equation are my favorites.
- “The Base Rate Book” and his work on calculating return on invested capital and his analysis of moats should be required reading.
Atul Gawande — The Cost Conundrum was so good Charlie Munger wrote the author a check for $20,000 as a thank-you gift.
- The Checklist Manifesto — A very practical and insightful book.
Bethany McLean — The Smartest Guys in the Room launched her writing career, but it hasn’t slowed down since then. I’d recommend all of her books, and her longform investigative articles might be even better.
- The Empire Reboots (Microsoft), The Valeant Meltdown and Wall Street’s Major Drug Problem, The Hunt for Steve Cohen, Mr. Warren’s Confession (Buffett), “He’s Full of Sh*t” (Elon Musk and Solar City),
Jason Zweig — His weekly “Intelligent Investor” column in the Wall Street Journal is pure gold. His personal archives could be a business education unto itself.
- The Best Investor You’ve Never Heard Of — This 2000 profile of Joe Rosenfield is a classic.
Roger Lowenstein — I still think “Buffett: The Making of an American Capitalist” is the best biography and among the best business books I’ve ever read. Lowenstein is a very talented writer who also has a deep understanding of business, a combination that is almost impossible to find. Two favorites among his many excellent articles:
John Mihaljevic — “The Manual of Ideas” is among a handful of books I recommend to people who are interested in learning more about investing. His newsletters and conferences at MOI Global and his Talks at Google are also exceptional.
Howard Marks — His memos are investment classics.
Carol Loomis — Everything she’s written is exceptional in its clarity and craftsmanship. This list could be much, much longer, but here are a few favorites.
- David Rockefeller profile by Fortune’s Carol Loomis — After the recent news of David Rockefeller’s passing, Fortune reposted this July 1977 profile.
- Be sure to click through to the other article for a retrospective on her career (from more than 10 years ago!) Amazing historical perspective about her career and many important business leaders and topics over the years. Does anyone know if a compilation of all her Fortune articles exists?
- Blackrock: The $4.3 trillion force — Her last feature-length article.
- Surprise! Warren Buffett turns out to be more prescient about stocks than politics — Loomis with a 2016 article looking back at Buffett’s 1999 stock market analysis and his 2016 election forecast.
Matt Levine — “Moneystuff” is a daily Bloomberg column, and it is equal parts brilliant and hilarious.
On the topic of writing…
- On Writing Better — Jason Zweig’s three-part series on writing should be required reading for anyone in business. Good writing isn’t just important and rare in business; it’s crucial and almost impossible to find. I read things every day that make me want to laugh, cry, or throw up on my desk. The time you spend with Zweig’s series will be well rewarded.
- So You Want to Be the Next Warren Buffett? How’s Your Writing? — A transcript of a 2007 talk by former fund manager Mark Sellers.
- A Bull Market in Bluff: Why Guff and Baloney are on the Rise — This is a great article that highlights not only a funny topic, but a serious and pervasive problem. Make sure to also read the related prior article by Lucy Kellaway How I lost my 25-year battle against corporate claptrap and the original masterpiece by Harry Frankfurt On Bullsh*t.
- Eats, Shoots & Leaves: The Zero Tolerance Approach to Punctuation — A wonderful book by Lynne Truss about the importance of clear, quality writing.
- I Won’t Hire People Who Use Poor Grammar. Here’s Why. — “[J]ust like good writing and good grammar…the devil’s in the details. Applicants who don’t think writing is important are likely to think lots of other (important) things also aren’t important.”
Have You Ever Tried to Sell a Diamond? — This was written in 1982 but it’s aging better than most diamonds.
Advising the Sage: The Man Who Taught Warren Buffett How to Manage a Company — This is an excellent profile of Tom Murphy. I also recommend this long interview.
- “Chiseled into our heads every year at the our management meeting was [Tom] Murphy’s reminder that we could make honest mistakes, or miss our budgets, but if we put the company, or ourselves, in disrepute, there was no second chance at Capital Cities. Those words were the bible. [sic] ‘Do the right thing was our personal road map. We were taught to avoid the quick-fix solution and when faced with a tough decision, favor the best long-term interest of the station, person or community.” — Alan Nesbitt writing to Phil Bleuth in Limping on Water
“The Really Big One” — The Cascadia subduction zone in the Pacific Northwest is no joke. To quote this 2015 article, “An earthquake will destroy a sizable portion of the coastal Northwest. The question is when. The next full-margin rupture of the Cascadia subduction zone will spell the worst natural disaster in the history of the continent…Our operating assumption is that everything west of Interstate 5 will be toast.”
- The Big Ones: How Natural Disasters Have Shaped Us (and What We Can Do About Them) — Lucy Jones is a seismologist and local celebrity in Southern California. This book is fascinating and relevant to more than just earthquakes or natural disasters. Be worried about the quake — and the flood is a synopsis of the book.
- Here’s another about construction trends and risk: San Francisco’s Big Seismic Gamble.
When Evidence Says No, But Doctors Say Yes — David Epstein wrote this in 2017 about unnecessary and unhelpful medical treatments. It’s an awesome combination of thoughtfulness, research, and writing quality. I’m currently reading his books “The Sports Gene” and “Range,” and I’d highly recommend them both.
- Hospitals really believe bad things happen on a full moon — On a frightening related note…
Matt Rose: “Less is NOT better” — A great interview in Railway Age with the retiring CEO of BNSF. Several interesting nuggets about returns on investment, interactions with Wall Street, his relationship with Buffett and Munger, and his model for corporate leadership, among many other topics. Highly recommended.
“You’re Too Busy. You Need a ‘Schultz Hour.’” — ($) Good food for thought: “Shultz, who’s now 96, told me that his hour of solitude was the only way he could find time to think about the strategic aspects of his job. Otherwise, he would be constantly pulled into moment-to-moment tactical issues, never able to focus on larger questions of the national interest. And the only way to do great work, in any field, is to find time to consider the larger questions.”
- The psychologist Amos Tversky had his own version of this point. “The secret to doing good research is always to be a little underemployed,” Tversky said (as Michael Lewis describes in his latest book). “You waste years by not being able to waste hours.”
A Lifetime of Systems Thinking — This essay by Russell Ackoff is excellent. I read this twice, and I’ll read it again.
“Carlos Kaiser” — Here is a brief article (and here is another) about “the greatest footballer who never lived.” The man known as Carlos Kaiser used an attractive facade and social proof to completely fabricate a two-decade career in professional soccer despite no demonstrated ability to actually play the game.
Michelin restaurants and fabulous wines: Inside the secret team dinners that have built the Spurs’ dynasty — This is a great article on many, many levels. It’s also a great reminder that talent and numbers matter, but people and culture matter too. About teambuilding “Popovich says the key is to take people out of their element, have them experience new things, and learn from it together.” The result? Players who play better (“Dinners help us have a better understanding of each individual person, which brings us closer to each other — and, on the court, understand each other better.”); players who might have otherwise gone elsewhere (Manu Ginobli); and multiple people whose lives are changed through simple acts (the coach who gets his first job, the sommelier who gets a huge promotion, the restaurateur who says, “I cannot possibly express the respect that I have for that man.”)
Southwest’s Herb Kelleher: Still Crazy After All These Years — A classic from the archives. It feels like a bygone era, but this interview is only five years old.
- Herb: “I’ve always tried to look a little bit ahead, at least when I’m sober — and when I’m not, I look way ahead. [Laughter]” Reporter: “Are you sober now?” Herb: “Yeah, but not for long.”
The Computer That Almost Started a Nuclear War, and the Man Who Stopped It — Petrov has to be one of the most consequential men of the 20th century who never got any attention for it. To the contrary, he was quietly reassigned and then he retired to anonymity. Every time I read about his story I get a chill down my spine.
General Electric Powered the American Century — Then It Burned Out — Make this article a priority. Yes, it is more than 10,000 words, but it is one of the better business “books” you’ll read this decade. It is hard to find a topic in management, corporate governance, corporate finance, investing, strategy, leadership, or any other business-related topic that isn’t featured here. This is a first-ballot Hall-of-Famer from a “psychology of human misjudgment” perspective.
The I in We: How did WeWork’s Adam Neumann turn office space with ‘community’ into a $47 billion company? Not by sharing — This article might capture the investment zeitgeist of the past decade better than anything else I’ve read.
The Epic Hunt for a Lost World War II Aircraft Carrier — This might be the best article I’ve read in the past few years.