“If everyone likes it, it’s probably because it has been doing well. Most people seem to think that outstanding performance to dates presages outstanding future performance. Actually, it’s more likely that outstanding future performance to date has borrowed from the future and thus presages subpar performance from her on out.”
– Howard Marks

Featured article

Measuring the Moat: Assessing the Magnitude and Sustainability of Value Creation
The most important thing to me is figuring out how big a moat there is around the business. What I love, of course, is a big castle and a big moat with piranhas and crocodiles. Warren E. Buffett

Companies

John Laing results for the twelve months to 31 December 2014
John Laing has produced strong results after listing earlier this year, with NAV up 23% to 210p/share. The company’s share price is currently 205p, and management is confident of continued growth. This looks like one to watch, with its strong investment returns and expertise in the large (and growing) international infrastructure market.

The GM Buyback: Beyond the Hysteria!
“…
given GM’s history and current standing, do you really want to make it the basis for your case against buybacks? Looking at the picture, I can see why activist investors were pushing GM to return more cash. It is a middling company in a bad business, where even the very best companies struggle to earn their costs of capital. Since it is possible that I am blinded by my stockholder-focus, I considered what GM could have done with the $5 billion, instead of buying back stock.” The alternatives to buybacks include: 1. Invest the cash 2. Hold cash or pay down debt 3. Return the cash to other stakeholders (labor or government) Given the nature of GM;s business and management, which would you prefer as a shareholder?

America’s biggest airlines are accusing Persian Gulf carriers of cheating
Three of America’s four largest airlines — American, United, and Delta — have teamed up with the labor unions representing their workers to form a coalition called Americans for Fair Skies, which is demanding US government action against three major airlines based in the Persian Gulf that are cheating on existing international agreements.

Citymapper on Apple Watch
“Why would people check transit info on a fancy smartphone?”- the naysayers
But they did.

Markets

This Very Expensive Bull Is Fueling America’s Prime Steak Boom
It’s consumers that have thrown their dollars, and their preferences have created market signals to go back to improve the herd,” said Mark McCully, vice president of production at Wooster, Ohio-based Certified Angus Beef. “Consumers have had more access to prime today when they hadn’t before, and realized they like it and want more.

The opportunity in tackling the affordable housing challenge
“Experts in housing and urban development weigh in on ways that countries are addressing or plan to take on the $650 billion affordable housing gap.

Horizon Kinetics 4th Quarter Commentary
“… diversification benefits are being eroded. When, next, the market declines sharply, the traditionally diversified portfolio—some large-cap, some value, growth, et al—will not provide the protections that are expected. There has been developing another form of bubble: a correlation bubble among equity classes. Peruse the table at right, and, statistically, the various equity ETF building blocks—mid-cap value, large growth, etc.—are hardly differentiable. Because the marginal dollar of demand is now in the hands of indexes, the active manager of old who might have determined that a certain stock was overvalued and elected to sell it has ever less im-act upon share prices. There is no longer a central mechanism for investors to vote with their feet on an individual stock.”

Costa Rica is now running completely on renewable energy
Costa Rica is running without having to burn a single fossil fuel, and it’s been doing so for 75 straight days.

Related:

Denmark produces 40% of its power from wind—more than any other country on earth

Investing

Measuring the Moat: Assessing the Magnitude and Sustainability of Value Creation
The most important thing to me is figuring out how big a moat there is around the business. What I love, of course, is a big castle and a big moat with piranhas and crocodiles. Warren E. Buffett

Gresham’s Law — Why Bad Behavior Drives Out the Good
Gresham’s law is commonly stated as “Bad money drives out good.” More broadly, however, the concept can apply to many things.

Long reads

Why We Sign Up For Gym Memberships But Never Go To The Gym
Our brains want to be locked into annual contracts with gyms.

How to Be a Better Spouse
“Being nice, paying attention and praising a partner’s strengths all pay off in a long-term relationship.

Graph of the week

Map: The strange things people Google in every state

map-google

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