One Thing & Another

June 12, 2018 in Blog

Notes From My Journal: How much exercise do you really need? How about 4 minutes?

In a study published in the journal PLUS One, researchers from the Norwegian University of Science and Technology attempted to delineate the minimum amount of exercise required for appreciable gains in health and endurance.

Volunteers were asked to perform high-intensity workouts for 4 minutes, take a 3-minute rest, then repeat three more times.

Their total meaningful exercise, then, was 16 minutes.

A follow-up study by Arnt Erik Tjonna, a postdoctoral fellow at the university, pushed the metric back further. Tjonna gathered 26 overweight and sedentary, but otherwise healthy, middle-aged men and randomly assigned them to one of two groups.

One group performed a supervised exercise routine based on the original study. After briefly warming up, they ran on a treadmill at 90% of their maximal heart rate. (A tiring pace, said Dr. Tjonna, at which “you cannot talk in full sentences, but can use single words.”) They did this for four 4-minute intervals, with 3 minutes of slow walking between, followed by a brief cool-down. The workout was performed three times a week for 10 weeks.

The other group did only one strenuous 4-minute run on the treadmill. They, too, worked out three times a week for 10 weeks.

At the end of the study, both groups had increased their maximal oxygen uptake (endurance capacity) by an average of 10% or more.

Metabolic and cardiovascular health likewise had improved in both groups. Almost all of the men now displayed better blood sugar control and blood pressure profiles, whether they had exercised for 16 or 4 minutes per session.

I’m seeing more and more evidence that the intensity of the effort seems to be the most important factor in achieving any goal. And this substantiates the results I’ve experienced with my own self-improvement program I came up with my program  because I’m always pressed for time and striving to get the most out of every minute. Much to my surprise, it helped me maximize my gains as well as my productivity.


Today’s Word: ursine (adjective)

Ursine (UR-sine) means relating to or characteristic of a bear. As used by journalist Maureen Dowd in a NYT column: “Usually, spring in Washington finds us caught up in the cherry blossoms and the ursine courtship rituals of the pandas.”


 Fun Fact

“Almost” is the longest word in the English language with all the letters in alphabetical order.


From My “Work-in-Progress” Basket

My Dumbass, Chicken-Shit Strategy for Beating the Stock Market

Even a passing acquaintance with investment literature is enough to tell you that it is very difficult to beat the market over time.

There will always be investment “experts” (and analysts) whose portfolios perform spectacularly for several years or even a decade. But studies show that most of them give back all or most of their gains when Mr. Market reverses course or sets off in a new direction.

If the professionals do poorly, amateurs do worse. The typical investor enjoys less than half the net ROI of index funds, which are meant to track the market but return a bit less than that because of charges and fees.

I invest in stocks, but I’ve never had any interest in the stock market. It looks like a fool’s paradise to me. And since I recognize my inclination to act the fool, I developed (with the help of Tom Dyson and other top Agora analysts) a stock portfolio whose goal is to meet (not beat) historic market averages while minimizing risk.

I call it my Legacy Portfolio. And it has worked out very well for me.

And then I heard about Chris Mayer…

About a year ago, I read a report that surprised me. And prompted me to ask my broker, Dominick, to create a second portfolio.

The report listed the yearly and cumulative average gains of all of Agora’s financial analysts – dozens of smart people that have been issuing stock recommendations over dozens of years.

At the top of the heap was an analyst I knew, but only vaguely. Quiet and unassuming, Chris Mayer is not the sort of person that demands a great deal of your attention. Unless, of course, you find out how well he’s done in the stock picking game.

His track record has been fantastic. Not only has he far outpaced the market consistently, he’s done better than all of the index funds and even Berkshire Hathaway.

What are his secrets?

For one thing, he modeled his strategy on none other than Warren Buffett’s legendary fund. And I liked that. In fact, when I asked Tom Dyson to help me develop my Legacy Portfolio, I told him I wanted “a portfolio that Buffett would create today, if he were starting from scratch.”)

Chris wrote about Berkshire Hathaway in 100 Baggers, his study of stocks that returned 100-to-1 from 1962 to 2015.

The stock had risen more than 18,000-fold, which means that $10,000 planted there in 1965 turned into an absurdly high $180 million 50 years later, versus just $1.1 million in the S&P 500 over the same period.

Like Buffett, Chris favors large, stable businesses with durable marketplace advantages, the kind that Buffett calls financial moats.

Also like Buffett, Chrisinvests for the long term. Here’s how he explains the benefit of compounding over time in 100 Baggers:

During a trip to Omaha, I once heard money manager Raffaele Rocco retell an old parable…

There once was a king who wanted to repay a local sage for saving his daughter. The king offered anything the sage wanted. The humble wise man refused.

But the king persisted. So the sage agreed to what seemed like a modest request. He asked to be paid in grains of rice, the amount of which was to double every day. Thus, on the first day, he’d get one grain of rice. On the second day, two. On the third day, four. And so on.

The king agreed… and after a month, the king’s granaries were empty. He owed the sage over one billion grains of rice on the 31st day.

I have heard other versions of this story, but I like it because it shows you two things. The first is obvious: It shows how compounding can turn a little into a whole lot.

But the subtler lesson comes from working backwards. If the king owes one billion grains of rice on the 31st day, how much does he owe on the 30th day?

The answer is half that, or 500 million. And on the 29th day, he pays half again, or 250 million.

So you see that returns are back-end loaded. This is 100-bagger math. The really big returns start to pile up in the later years.

I’ve made this same point many times in my books and essays on building wealth. Twenty years is good. Thirty is great. Forty is amazing.

So far, so good.

But the next thing I discovered about Chris’s strategy was a surprise. My study of Berkshire Hathaway’s amazing success had convinced me that it would be foolish to try to match it. I was better off investing in index funds or the Legacy Portfolio, whose goals are to meet, not beat, historical market averages.

But Chris came away with another impression. Berkshire Hathaway’s track record (along with those of other 100-baggers in his study) had convinced him that “it was indeed possible to beat the market – even to leave it miles behind.”

Chris explains:

First, you have to be concentrated. You have to focus on your best ideas. You can’t own a lot of stocks that just dilute your returns.

Berkshire’s founder Warren Buffett, as is well known, did not hesitate to bet big. His largest positionwould frequently be one-third or more of his portfolio. Often, his portfolio would consist of no more than five positions.

There is, for example, the time he bought American Express in 1964 in the wake of the Salad Oil Scandal, when the stock had been crushed. He made it 40% of his portfolio.

His Berkshire partner, Charlie Munger, is also famous for his views on concentration. He’s had the Munger family wealth in as few as three stocks.

My own inquiries on that subject were just to assume that I could find a few things, say three, each of which had a substantial statistical expectancy of outperforming averages without creating catastrophe. If I could find three of those, what were the chances my pending record wouldn’t be pretty damn good…

How could one man know enough [to] own a flowing portfolio of 150 securities and always outperform the averages? That would be a considerable stump.

The book Concentrated Investing includes profiles of investors who ran such concentrated portfolios. These include Buffett and Munger, along with John Maynard Keynes and lesser-knowns such as Lou Simpson, Claude Shannon, and more.

Lou Simpson ran Geico’s investment portfolio from 1979 to his retirement in 2010. His record is extraordinary: 20% gains annually, compared to 13.5% for the market.

Simpson’s focus increased over time. In 1982, he had 33 stocks in a $280 million portfolio. He kept cutting back the number of stocks he owned, even as the size of his portfolio grew. By 1995, he had just 10 stocks in a $1.1 billion portfolio.

Claude Shannon is another example. He was a brilliant mathematician. He might also be the greatest investor you’ve never heard of. From the late 1950s to 1986, he earned 28% annually with a concentrated portfolio. That’s good enough to turn every $1,000 into $1.6 million.

The point is that many great investors focus on their best ideas. They don’t spread themselves thin. And there is also more formal research in the book that supports the idea that focus is a way to beat the market.

This was, indeed, a very different approach than mine. At one level, it made sense. Knowledge and hard work generally pay. (It has for me in collecting investible art.)

But I wasn’t prepared to do the work it would take to have the level of knowledge Chris has, even about a small portion of the stock market. So what I decided to do was to ask my broker, Dominick, to start a second portfolio with about 10% of the capital I have in my Legacy Portfolio and see what happens.

With my luck, my decision will probably spell the end to Chris’s astonishing run of success. Let’s hope not.

If you’d like to know more about Chris’s ideas and recommendations, go here


Worth Quoting

 “I wish the people who had trouble communicating would just shut up.” – Anonymous


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