Join Jeremy Kokemor, founder of Right Tail Capital, as he dives deep into the art of quality investing. He unpacks the psychological factors behind investment choices and the significance of understanding management teams. Discover how NVR's innovative land ownership strategy sets it apart in home building, plus insights into the overlooked US convenience store landscape. Kokemor reveals the hidden gems in investment, emphasizing strong management and balance sheets, all while sharing the importance of emotional detachment in portfolio management.
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insights INSIGHT
NVR's Land Optioning Model
NVR's optioning model reduces risk by avoiding direct land ownership, improving capital efficiency.
This differs from traditional homebuilders who buy and develop land, increasing risk.
question_answer ANECDOTE
100% Land Options
NVR and Dream Finders Homes succeeded with 100% land options, likely due to necessity.
Other homebuilders haven't fully adopted this model despite NVR's success.
insights INSIGHT
US Convenience Store Industry
US convenience stores benefit from selling various products alongside fuel, unlike European counterparts.
Historically, large oil companies divested locations, increasing profit focus.
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Uncover the Secret Hiding Places of Stock Market Profits
Joel Greenblatt
This book provides a highly accessible guide to the stock market, focusing on special situations that portfolio managers and investment experts often miss. It includes case studies, important background information, and tools for individual investors to exploit opportunities in areas like spin-offs, restructurings, merger securities, rights offerings, recapitalizations, bankruptcies, and risk arbitrage. Greenblatt, who has been beating the Dow with returns of 50 percent a year for over a decade, shares his expertise to help readers become successful stock market investors.
The Psychology of Money
Timeless Lessons on Wealth, Greed, and Happiness
Morgan Housel
In 'The Psychology of Money,' Morgan Housel delves into the psychological and emotional aspects of financial decisions. The book consists of 19 short stories that illustrate how personal history, worldview, emotions, and biases influence financial outcomes. Housel emphasizes the importance of behavior over knowledge in managing money, highlighting the power of compounding, the dangers of greed, and the pursuit of happiness beyond mere wealth accumulation. He advocates for a frugal lifestyle, long-term perspective, and a balanced approach to investing, stressing that financial success is more about mindset and discipline than about technical financial knowledge[2][3][4].
What I Learned about Investing from Darwin
Pulak Prasad
In this book, Pulak Prasad offers a unique approach to investing by leveraging principles from evolutionary biology. He argues that the investment profession is in crisis, with most equity fund managers unable to beat the market over the long term. Prasad draws lessons from Darwinian concepts, using examples such as bumblebees' survival strategies, experiments in breeding tame foxes, and a small frog’s mimicry of a larger rival to illustrate investment principles. He outlines three key mantras for investing: avoid big risks, buy high quality at a fair price, and don’t be lazy—be very lazy. The book advocates for permanently owning high-quality businesses and provides practical insights into how evolutionary strategies can improve investment decisions.
The Inner Game of Tennis
Timothy Gallwey
This book, first published in 1974, focuses on the 'Inner Game' played within the mind of the player, against obstacles such as self-doubt, nervousness, and lapses in concentration. Gallwey introduces the concept of two selves: Self 1, the thinking brain that analyzes and judges, and Self 2, the 'feeling and doing' brain that can master skills naturally if not interfered with by Self 1. The book provides strategies for achieving 'relaxed concentration' and overcoming internal mental and emotional obstacles, making it relevant not only to tennis but also to other areas of life such as music, writing, work, and personal relationships.
In this week’s episode I was joined by Jeremy Kokemor, founder of Right Tail Capital. We remained true to the essence of this podcast and talked about quality, but in a rather special way.
Disclaimer: Nothing in this podcast constitutes investment advice or recommendation.
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