Book: 20191005 to 20191220，"Business Adventures" by John Brooks

20191005，chapter 1. "The fluctuation: the little crash in '1962"

This chapter described the full fluctuation in stock market in 1962.

It seems no reason. It just happened.

Millions of random events happens everyday. Someday, somehow, they would cause such terrifying event.

No doubt, when it happen next time, it would be more drastically, thanks for the computers and internet.

How about the human history? Is there something going to happen which removes, let's say, 20% of population?

How to avoid it? How to gain from it? What can I do now?

20191025，chapter 2. "The fate of the Edsel: a cautionary tale"

"To act in a way that defeats one's purpose."(南辕北辙)

This is what I can think of after reading this chapter.

The First Principle is the most important rule we need to follow, or else, it's going to be like gambling, and the winning chance is slim.

Google has so many X Projects, and which one succeeded? So far, none. Search engine and AD is still the only source of income to Google.

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The sky is not falling, not matter how bad it looks like (except WWI, WWII, the Black Death, etc.). So, don't panic!

The people who made the mistakes didn't think it's their fault, and they still live well after that. This reminds me of the movie "The Big Short". Even the company Ford lived well after the huge loss.

People are stronger than we thought. Large companies are larger than we thought!

20191101，chapter 3. "The federal income tax: its history and peculiarities"

"1954 Code, which  he  declared  had  led  to  “hardships, complexities, and opportunities for tax
avoidance.” Shortly after Caplin left office, he explained in detail what his ideal tax law would be
like. Compared to the present tax law, it would be heroically simple, with loopholes eliminated, and
most personal deductions and exemptions eliminated, too, and with a rate scale ranging from 10 to 50
per cent."

I cannot agree more. Tax law doesn't need to be absolute fair, and the complexity of tax law itself is not fair to those who cannot afford to hire accountant. So, it's better to get accountant to claim tax annually.

Capital gain tax disount and work expense exemptions are the two major categories of loophole in tax system. Holding some assets while their value are growing is the best way to avoid "compound" capital gain tax.

The pursuit of justice in tax system, caused the root of injustice in tax system.

My ideal tax system = land tax + inheritance tax + GST + tariff + "inflation" tax

Cancel all personal income tax and corporate tax!

20191103，chapter 4. "A reasonable amount of time: insiders at Texas Gulf Sulphur"

How did the stock investors survive before 1968? The share market must be full of insider trading!

What is a reasonable amount of time? It's emotion vs rationality.

Law only give investors most basic protection, and it's investors' responsibility to look after themselves.

But the most basic protection is extremely important.

20191108，chapter 5. "Xerox Xerox Xerox Xerox"

So, Tesla is not like Apple or Amazon. It's more like Xerox in 1959, but had given up the relevant patents. Tesla relys on "creativity".

Xerox is great! The only problem is, their goal is too low.

C. Peter McColough: "“dream  of  a  system  whereby  you’d  write  stuff  in  Connecticut  and  within  hours  reprint  it  in classrooms all over the country,” I got the feeling that some of Xerox’s educational dreams could easily become nightmares. But then he added, “The danger in ingenious hardware is that it distracts attention from education. What good is a wonderful machine if you don’t know what to put on it?”"

This conversation happened in 1968, which perfectly predicted what happened with iPad and laptop, to kids.

Google has much larger ambition, why still failed? They don't have enough courage, and deep understanding about the world. X-Lab is more like a place for gambling. They are keep putting up stakes at different targets, but don't know which one may win.

20191113，chapter 6. "Making the customers whole: the death of a president"

Amazing story.

Almost everyone in this story love this world, love their country, love their people. They really want to help each other, and the decent institution made the miracle possible.

It's impressive that they could make the deal in two or three days, which avoided a financial disaster.

This is the root cause that USA could grow so quickly, and got so much support from all over the world.

Could similar thing happen in China? No. China would do it through totally different way: sacrifice someone to save the rest. Highly efficient, but no justice. For long term, the western world will win.

Then how about Donald Trump? I guess he still follows the existing rules of the western culture.

20191117，chapter 7. "The impacted philosophers: non-communication at GE"

Communication? This is not communication problem at all!

There are two ways to fix a problem. The easy way and the correct way.

If a company don't mind which way you choose to fix the problem, then most of people would choose the easy way.

Unless the CEO and other senior managers insist to do things the right way, no matter what policy is there, it's not going to turn on well.

For those senior managers, the easy way is to not get involved with any price-fixing issues. That's why they didn't ask for answers actively.

It's not about communication. It's about attitude.

20191121，chapter 8. "The last great corner: a company called Piggly Wiggly"

Clarence Saunders is a bit like Elon Musk. Not so talented, but he was also honest, work hard and smart.

So what I learned from this story?

1. Don't take too much risk.

Money is money. It doesn't worth that much.

2. Make money through the right way.

If Clarence Saunders ignored the stock price shorting, he could be the most successful business man in the world. He may set up something similar to Walmart but 40 years earlier.

3. There is always some ridiculous unexpected issue.

Plan B and even plan C are always needed. I am glad that Tesla has so much cash in hand now.

4. Be cautious in an area that you are not familar with.

Clarence Saunders didn't have much experience in stock market. He definitely should not put so much stake on it, even if it seems so simple and easy.

20191129，chapter 9. "A second sort of life: David E. Lilienthal, businessman"

David Eli Lilienthal is great, but I think his experience/miracle with Development & Resources Corporation is not convincing.

Private companies can be morally good and make decent profit. But, sooner or later, "profit" and "moral" conflict. When conflict appears, what should the company do? I don't the those companies have choice.

I am curious about SpaceX. Mars migration consumes a lot of money. It will bring in huge profit in the faraway future, but stakeholders normally only care about short term profit. What will Elon Musk do when most of the shareholders ask him to give up the crazy Mars migration, and focus on Starlink?

Maybe SpaceX can split into two parts, and let the governemnt takes over the Mars migration part.

PS: The crying of the Iran woman ( in 1960s ) is impressive. Why all these help from USA is forgot by Iranian? How easy it is to manipulate people?

20191201，chapter 10. "Stockholder season: annual meetings and corporate power"

The author John Brooks believes that non-professional stockholders didn't help much in annual stockholder meetings.

I agree with him. So, what should they do? Passive investment. Only invest index fund.

For the professional investors, they focus on important factors, and only ask critical questions. I can see that from Tesla quarterly earning report meetings.

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Instead of complaining that directors got too much pay from attending the annual stockholder meeting, we can ask, "why the payment is so much higher this year than last year."

From this point of view, democracy has huge, critical drawbacks. Normal people don't understand what is important and what is not.

What they can do, is voting with their feet. They can migrate to other country, or invest in another country.

20191202，chapter 11. "One free bite: a man, his knowledge, and his job"

This is not a problem anymore these days. At least for big companies. Inventions are always completed by a large group of people. No one knows all details, and no one can memorize all details.

Valueable work are protected by patents. Other stuff are just normal, common, nice work.

It's still interesting to know how judge thinking about the difference between people (knowledge) and their work.

From other point of view, it's hard to sue anyone selling "trade secrets". The safest way, maybe, is what Tesla did: fast evolving. Other companies just cannot catch up.

20191220，chapter 12. "In defense of sterling: the bankers, the pound, and the dollar"

What is the correct currency exchange rate?

After reading "Homo sapiens", this is no a problem anymore.

The social productivity is growing so fast, there is no way making a credit system based on gold.

Currency Exchange rate has to be based on the "productivity" of a country. When export larger than import, the value of its currency should go up. If the government rejects that currency appreciation, they have to print a lot of cash. These cash will push the economy boom and at the same time avoid deflation. This is exactly what China did in the past 30 years.

The only trap is "wealth gap". If the poor is still poor, then they don't have the capability to purchase goods in domestic market. If the international trading has huge surplus, then it's all right. But if this surplus stopped, many assembly lines would stop running. So, many people will lose their jobs, and the rich will try their best to deliver their "fortune" to other countries, which would cause currency depreciation.