Apple, Blacker Berries, & How to Think.

Yo, your humble homie here, posting links you should read if you wanna sound cool in social settings.

Apple, Up to 700 Billion Dead Presidents.

The cream is spilling out the top for everyone's favorite stock. Barry Ritholtz chronicled why it is so easy to miss the boat, on what is now the first company to ever surpass the 700 billion mark in market cap. Of course, the reverse is also true, it is easy to overstate the future fortunes for the Cupertino giant. I'm not gonna break out the financial models for you, this is a family show, but what is important is the sentiment is turning on Apple. While a post earnings drift is very likely, investing is always about the price you pay, so be forewarned. For deep thought on Apple, Ben Thompson at Stratechery is essential reading. Here is one of his first posts on his blog.

Fundamental misses on Apple are prevalent, largely, because people have no idea what they are talking about. Here is Mark Milian explaining how the law of large numbers is incorrectly applied to Apple.

Anyways, other interesting news out of the Apple camp, is their decision to power their mothership with solar panels. I'm talking solar panels in the cafeteria, break room, even to power Jonathon Ive's secret room full of pictures of himself. No, I kid, the partnership is with First Solar¹, and the plan is to build a 2,900-acre² solar farm in Monterey County, California. Shares of First Solar enjoyed quite a day, as investors hope this partnership with an Arizona based company, turns out better than the last Arizona company linked to Apple. 

Mr. Market your on-again/off-again love interest.

Michael Mauboussin released a wonderful white paper on how to think like an investor, you can read the full thing here. It's a must read if you are serious about this finance thing, but, equally compelling if you're a fan of psychology, horse-racing, or civil engineering (architecture for you Costanza buffs). At the risk of you not reading the whole thing, here are some excerpts:

"This leads to the first point worth stressing: to be an active investor, you must believe in both inefficiency and efficiency. In other words, you have to think that both Shiller and Fama are right―just not at the same time. Naturally, if markets are perfectly efficient there’s no reason to try to beat them through active management. But it’s also true that there’s no reason to try to beat the market through active management if you think markets are always inefficient. That’s because even if you are savvy enough to buy a dollar for fifty cents, there’s no reason to believe that the price and value will ever converge in a perpetually inefficient market. "

Simple, articulate, enormously insightful. Independent thinking is only the start, and, doesn't mean anything if you're dead wrong. You have to be incredibly well versed in theory, but, with the good taste to know when to use it. If you think this is easy here's some more:

"Diversity breakdowns are crucial to pushing Mr. Market from healthy to manic or depressed. And herein is the critical point: The very factor that causes market inefficiency—correlated beliefs—makes exploiting that inefficiency difficult. The desire to be part of the crowd is powerful, and being apart from the crowd is scary for most. "

The rest of the paper is equally brilliant, once again cementing Mr. Mauboussin's indispensable voice amongst the daily shouts. 

Daniel Kahneman: Your Financial Advisor's Advisor. 

This couples nicely with Mauboussin's paper, from the man who literally wrote the book on second level thinking. "Thinking Fast & Slow" is one of the most important books on an investor's bookshelf; even though it is the most recently published book on Jason Zweig's list, it is a culmination of Kahneman's life work. 

Sports are the perfect example of complex, adaptive systems and how by definition they are unpredictable. If Russell Wilson completes that pass on 2nd & goal from the 1 yard line, the narrative is how innovative Pete Carroll is and how "clutch" Wilson is. Instead, it's what a bonehead Carroll is and how uncharacteristic of Wilson. Luck plays such a large, yet understated, role in the outcomes of life. Did Malcolm Butler make a terrific break on the ball? Absolutely. Was he lucky the Seahawks were passing in the first place? Again, absolutely. Don't forget what happened two plays before that. Jermaine Kearse made a spectacularly fortunate grab, on a ball that touched everywhere except the ground. Hindsight allows us the illusion of control.

Kendrick Lamar By Michael Chabon.

Kendrick Lamar released a new song entitled "The Blacker the Berry"(the sweeter the juice, you need to get loose, to the heat I produce). Michael Chabon, who has been dubbed the perfect writer for the Obama Age, annotated a portion of the lyrics. The comparison to Common's "I Used to Love H.E.R." is deft, not because "The Blacker the Berry" is an instant classic, that is beside the point, but because both songs beg for deep thought. Things are rarely black & white, and Lamar is doing his part to keep the conversation about race and inequality center stage. If Chabon is the perfect writer for the Obama Age, Lamar is the perfect rapper for the Obama Age.

Jon Stewart Leaving Comedy Central.

A great voice is moving on. No word yet on his plans, but, there are literally tons of media execs chomping at the bit to seduce Stewart. Regardless of how you feel about him, he is how a majority of millennials get their news, and, that is a huge audience moving forward. Here is a nice piece about Stewart's comic family tree.

It's telling, not only looking at the comics birthed by the Daily Show, but how Stewart's Anti-Spin zone approach has wielded him a significant influence. Enough so, to make warranting a full network gig not quite out of the realm probabilities. Here is wishing him the best of luck, and thanking him for the last two decades. 

Follow Wesley Vaughan @backpackbanker

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1 Full disclosure: I own shares of First Solar. 

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2. Tim Cook said 1,300 acres on his webcast with Goldman Sachs, but, the WSJ reported 2,900 acres. Probably somewhere in between.