Charlie Munger once read a single magazine article, spent ninety minutes thinking about it, and made $80 million investing in the idea. The company looked like a disaster. It had a ton of debt after five spinoffs in six years, and its revenues shrunk because of the 2001 recession. Principal payments on its debt were coming due that the company couldn't make. I spent weeks reconstructing what Munger actually saw, down to finding the exact article he likely read in 2001. New series at The Owner's Memo. open.substack.com/pub/theown…

I've been thinking about these Baupost posts. I don't know exactly why the firm has underperformed these past several years. But they've been in business for 44 years. And in order to put up stellar returns for that long, a fund manager needs to be superhuman. He or she must: 1⃣ adapt over time as assets grow and as prior strategies fail to work at higher dollar amounts. This means understanding how to do well with a smaller opportunity set, learning about new asset classes, and being a great manager as new employees come in and start managing a portion of the book. (I suppose one alternative is to deliberately stay small and religiously return capital to limited partners.) 2⃣ love the game so much that they continue playing with ferocity and curiosity decade after decade as one's interests naturally drift, particularly after you have more than enough money for several lifetimes, 3⃣ do all this through life's many changes (inexperience at first, having kids, family crises, deaths, health issues, etc.). x.com/rubicon59/status/20649…

Very nice summary showing that (1) individual LLM models perform better when they are allowed more test-time compute, (2) because of this, it is difficult or impossible to see the ceiling on performance for any given model, and (3) as long as ceilings are unknown, AI spending will likely continue.

I was 26 years old when Peter Lynch handed me this. April 28, 1983. I was the auto and retail analyst at Fidelity. Peter was in his prime, on his way to building the greatest mutual fund track record in history: 29.2% annual returns for 13 YEARS STRAIGHT, growing Magellan from $18 million to $14 billion. The Babe Ruth of investing. I'm looking at the principles he had typed up on a single sheet of paper that I've kept in my files for 42 years and I believe now is the perfect time to revisit them again. Let me walk you through a few: Rule 1B: "You need an edge to make money. Do not rely on a combination of hope and good luck." Today's retail investor has no edge. He has Reddit, Robinhood, zero-DTE options and a TikTok algorithm pushing him into whatever stock just ripped 200% the day before. That's hope and good luck wearing a fancy costume. Rule 1E: "Purchase stocks like one would purchase a business." Tesla trades at over 360 times earnings on a business deteriorating in real time, Oracle has $206 billion in liabilities against $39 billion in equity, MicroStrategy is a leveraged Bitcoin holding company priced like a software firm, and don't even get me started on SpaceX, that piece of garbage you'll be able to trade tomorrow... Nobody in their right mind would buy these as actual businesses. They buy them as stories, narratives, and lottery tickets. Peter would have called it the same way I do - these are not investments. They are speculations. GAMBLING. Rule 1G: "Study the balance sheet and cash flow statement." The hyperscalers spent over $380 billion on AI capex in 2025. Goldman says the measurable productivity payoff does not arrive until 2027 at the earliest. Oracle just reported NEGATIVE $23.7 billion in free cash flow for fiscal 2026 while borrowing at a pace that would make a leveraged buyout firm nervous. The cash flow statements are screaming but nobody is reading them. Rule 1I: "Avoid the long shot." This one cuts the deepest. The entire market has become a long shot. OpenAI is projected to post roughly $74 billion in operating losses in 2028 ALONE while priced for transformation tomorrow. Bitcoin treasury companies are multiplying off thin air. The retail investor of 2026 is making one long-shot bet after another and calling it a portfolio. Rule 3A: "When the fundamentals change, sell your mistakes." Tesla's fundamentals have changed. California registrations are down 24% year over year and inventory days went from 10 to 27. Musk himself admitted on the last earnings call that Hardware 3 cannot achieve unsupervised FSD, breaking a promise made to 4 million customers. The fundamentals have screamed change. But the stock is still at $385. The mistakes are not being sold. They are literally being doubled down on with leverage. Rule 3I: "A 30-50% profit in 12 months is great. Mediocre in three years." Today's retail crowd expects 30-50% in a WEEK. Then they wonder why they get wiped out the second the hype stops. And my favorite - Rule 3J: "Develop your own style and stick to it." That is the entire game right there. I developed mine sitting across the hall from Peter Lynch in 1983, watching him work, reading his notes, getting my own research handed back to me covered in his pencil marks. Then in 1984, my first full year managing money, I ran the #1 mutual fund in America. The Fidelity Overseas Fund was top 2 for the next six years running. I did not get there by chasing narratives. I got there by following the sheet of paper you are looking at right now. 42 years later, this single page contains more wisdom than every Fintwit thread, CNBC segment, and Wall Street price target combined. Peter retired in 1990 with the greatest mutual fund record in history. Then he sat down and wrote books explaining exactly how he did it. Only a few "investors" these days read them. And almost nobody is reading the balance sheets, the cash flow statements, or studying actual businesses today either. They are chasing AI, crypto, and whatever pumped yesterday. The wisdom on this page is timeless and it's more important than ever.

I asked Fable 5 why people should still read books in the age of AI. Here's what it said:

If you’re interested in the investment Munger is talking about here, I wrote a deep dive study of it here: x.com/timisgro/status/205921…

What @adamshuaib says here (and in many other tweets) is fascinating. I need to consider it more. Recommend following him.

Most of the time, I’m in awe of what the LLM’s can do and excited for the future. Sometimes, I find a little, vague, AI anxiety creep up. I’ve found a great way to quell that is to use the models more. Over the past few months, I’ve vibe coded about six or seven pieces of custom software and I use three or four almost every day. Makes me feel empowered to know I can now spin up and deploy any simple software I can think of.

“The Jevon's paradox kicks in and I feel my own demand for software growing substantially.” It is now within reach of almost anyone to create and deploy their own custom software.

Druckenmiller on the IQ needed (or not) to be a great investor and the work ethic and passion…

Seth Klarman on evaluating money managers: "How do you begin to evaluate stockbrokers and money managers? There are several important areas of inquiry, and one or more personal interviews are absolutely essential. There is no better place to begin one’s investigation than with personal ethics. Do they “eat home cooking” - managing their own money in parallel with their clients? I can think of no more important test of the integrity of a manager and the likelihood of investment success than his or her own confidence in the approach pursued on behalf of clients. It is interesting to note that few, if any, junk-bond managers invested theirown money in junk bonds. In other words, they ate out." Source: Do They Eat At Home?, Barron's, 1991.

“I have found that you have to take that one step toward the gods, and they will then take ten steps toward you.  That step, the heroic first step of the journey, is out of, or over the edge of, your boundaries and it often must be taken before you know that you will be supported.” - Joseph Campbell