On Taxes

When Howard and Lottie Marcus met in 1942 in New York City, all had been taken from them.

Two of Howard’s three sisters, a niece, and his mother and father were killed in a Lithuanian concentration camp. The Nazis took Lottie’s older brother from her parents’ home in Germany and shot him, and her parents were deported to concentration camps. Her father died at Terezinstadt in Czechoslovakia, and her mother was gassed at Auschwitz in Poland. It was a bleak backdrop for their wedding day, not long after they first met.

On Volatility

The most important part of investing is in the investor’s control: extreme patience.

It is also the hardest part.

The market is ultimately just a collection of people buying and selling securities, and these same people are subject to behavioral biases and personal incentives. This is why patience is a rarity and volatility is in abundance in stock markets. Volatility, to us, is not risk, yet investors act on short-term volatility as if it implies a significant impairment on the fundamentals of a business.

Exploration of GEICO Returns

In early 1948, Ben Graham purchased an approximately 50% interest in Government Employees Insurance Co. (GEICO) through the Graham-Newman partnership. Graham and Newman put $736,000 (20% of their fund’s assets at the time) into GEICO.

As Graham stated in the postscript:

“Ironically enough, the aggregate of profits accruing from this single investment decision far exceeded the sum of all the others realized through…

On Concentration

Diversification is an animal unique to investing.

It’s sold as an antidote to the risks of investing, a salve to help us sleep well at night. But we don’t see diversification in other parts of our lives. How many of us married 500 people to offset the risk of the relationships not working out? Or worked 20 different jobs in case you got fired from a few? Are we advised to buy 10 different homes in case a few depreciate in value? Quite the contrary: for most American homeowners, their one home makes up the vast majority of their net worth. It It would be reasonable to assume that with 500 spouses.