My goal for these blog posts is to provide useful information so that you can make more accurate decisions.
- Noise includes facts/data/news that cannot be processed into useful information (<— WHAT MOST STUFF IS)
- Useful information can be used to make more accurate decisions (<— WHAT I’M TRYING TO PROVIDE)
Since there is an endless and ever-growing amount of things to learn, I hope that these posts are helpful in summarizing important topics related to investing.
Here are three of my most recent learnings from the content I’ve been consuming (books, podcasts, articles, newsletters, company call/presentation transcripts).
#1
Quote: “Nevertheless, I am a fan of Warren Buffett’s take on the issue: ‘Leave the children enough so that they can do anything, but not enough that they can do nothing.’ While ‘enough’ is open to interpretation, the ideal level of financial support should help your children thrive without jeopardizing their independence.” — Nick Maggiulli
Determining the appropriate level of wealth to pass on to future generations is a topic we discuss a lot at Birchwood. As the quote above suggests, there is a delicate balance between “enough” and “too much” when structuring generational wealth transfers. Thoughtful estate planning and intentional wealth transfer strategies should aim to empower children and grandchildren without diminishing their drive, independence, or sense of purpose.
#2
Quote: “One of the biggest risks is what professionals call “manager selection”: the ability to pick top-performing managers. This access, incredibly hard to come by, is absolutely critical to the success of endowments like Yale and Harvard, given the dispersion of returns between the top-performing managers of illiquid strategies and the bottom-performing ones.” — Ashvin Chhabra
The importance of manager selection in alternative assets is another topic we’ve emphasized in recent podcast episodes. In our experience, this nuance is often underappreciated by many wealthy families.
While top-performing private equity and venture capital funds generate headlines, benchmark data from Cambridge Associates consistently shows significant dispersion of returns. In many cases, private strategies lag public market equivalents – likely due to higher fee structures and the challenges of accessing top-tier managers.
#3
Lewis, Michael. Panic: The Story of Modern Financial Insanity. W.W. Norton, 2009.
Quote: “Another strange thing about the Internet boom was the role played by journalists, many of whom were trying to get rich in their own Internet start-ups. After the fact, the Wall Street analysts who plugged Internet stocks were identified and strung up… but the truth is that in many cases they were more cautious in their assessments than journalists. If there is one rule in life it is: don’t depend on the loyalty of journalists.” — Michael Lewis
The warning above regarding journalistic integrity feels even more relevant in today’s investment landscape with more and more voices vying for our attention. Also, with many of the biggest companies in the world choosing to say privately owned for longer periods of time, critical information (such as updated projections for revenues and cash flows) is only disclosed or leaked selectively and related articles often include varying amounts of “spin” as well. Above all, we must maintain a balanced view by seeking multiple perspectives and avoid letting any single article or story lead us to hasty action.
