Curated reads for April 20, 2019
When J.P. Morgan was asked if commercial credit was based primarily upon money or property, he said neither. Instead, he asserted that the first thing that mattered was CHARACTER. From his testimony in 1912 till date, this remains true - after all, a credit rating is also defined as the ability and WILLINGNESS of the borrower to meet its debt obligations in a timely manner. The importance of management cannot be overstated for any form of investment. This article helps in identifying good managements. Read more
Talking about the quality of management, how would you react to the following: "Suppose that two airlines start with an equally high above-average safety but differing levels of profitability. If they both experience a same-size reduction in the safety rating, the low-profit airline would on average increase its aircraft sales by 55% as compared to the high-profit airline, which would only increase its aircraft sales by 29%. And among airlines with relatively high accident rates, financial performance played an even more decisive role: Underperforming carriers disposed of aircraft in a bid to improve safety, but the prosperous ones did not bother. For airlines equally far below the industry average safety record, an airline with low profitability is 50% more likely to sell aircraft than the one with high profitability." Essentially, less profitable airlines tend to replace aircrafts to improve safety faster than their more profitable counter-parts. What does this say of the managements of more profitable aircrafts?
Before you draw a conclusion, we would urge you to not only read the article in its entirety, but also focus on the articles in the next section. Read more
As the final season of 'Game of Thrones' airs, here are a few lessons from it that are relevant to investors: Read more
One of the easiest biases to fall prey to is the CONFIRMATION BIAS - We believe in a certain theory, and look for evidence that confirms with our theory. However, more often than not, the confirming evidence turns out to be a false positive. This narrative elaborates on some real-life examples. Read more
LESSONS FROM HISTORY
What happens when you are desperately looking for solution and can't find one? What if it the problem that you are trying to solve is a life changing one - like scoring a windfall gain, escaping a life-threatening disease etc? Read on to find out. Read more
DID YOU KNOW?
A light bulb, named Centennial Light, hanging in Livermore, California, has been shining for over a century. However, a modern LED bulb cannot seem to boast of the same lifespan despite the leaps in technology we have undertaken. Is there a mystery here or is it deliberate? Read more