The Real Impact of High Fees in Investing

Charlie Munger at the Daily Journal Meeting 2019:

If you make 5% and pay two of it to your advisors, you’re not losing 40% of your future. You’re losing 90%. Because over a long period of time, that little difference causes a 90% disadvantage to you. So it’s hugely important for somebody who’s a long term holder not to be paying a big annual toll out of the performance.

Ryanair’s Michael O’Leary on Lufthansa and Virgin Atlantic Seeking Government Aid

Travel blogger Ben Schlappig, of One Mile at a Time, notes comments by Michael O’Leary, the outrageously funny and candid CEO of Ryanair.

On Lufthansa applying for state aid, O’Leary said:

Lufthansa is like a crack cocaine junkie looking for state aid. They’re already getting huge payroll support from the Germany government. What do you need more state aid for? We don’t have many other costs at the moment because we’re all grounded. They see this as an opportunity to get one last huge quantity of state aid so they can go around and buy up everyone when this is all over.

On Virgin Atlantic’s bailout request made by Richard Branson, O’Leary said:

Virgin Atlantic is ridiculous. This is Branson’s second go at trying to fleece the British taxpayer for state aid. He tried this with Flybe. Now you have Virgin Atlantic, owned by Delta and a Caribbean island based non-resident billionaire. Frankly if he’s worried about Virgin he should write the check himself. It’s not like he’s short of money. Sitting in the Virgin Islands as a tax exile asking the British government to bail you out when you have more than sufficient resources to bail out Virgin Atlantic yourself isn’t something that should be considered.

Companies Seeking COVID-19 Bailouts Had Piles of Cash

The New York Times notes that several companies, including Boeing and YUM! Brands, poured years of cash piles into stock buybacks and dividends:

These companies had been highly profitable in recent years, yet they were seeking help from the federal government. Where had all their money gone? Like much of corporate America, the restaurant chains had spent a large chunk on buying back their own stock, a practice aimed at bolstering its price. Some were even more vulnerable to the economic shock because they had previously increased their borrowing—including to fund buybacks or pay dividends—and strained their credit in the process.

Still, the crisis has exposed the potential failings of a strategy embraced by many big companies: aligning their priorities with the interests of shareholders, many of whom are narrowly focused on the performance of a company’s shares. Shareholders, wanting stock prices to go higher, pushed management to use up cash on buybacks and dividends. And senior executives, paid largely in stock and on the basis of how the stock performed, were happy to oblige. The result was that companies often didn’t have much spare cash, leaving them even more exposed to economic downturns.

Raising Successful Children

Madeline Levine writes about the dangers of overparenting in The New York Times:

Their research confirms what I’ve seen in more than 25 years of clinical work, treating children in Marin County, an affluent suburb of San Francisco. The happiest, most successful children have parents who do not do for them what they are capable of doing, or almost capable of doing; and their parents do not do things for them that satisfy their own needs rather than the needs of the child.

The central task of growing up is to develop a sense of self that is autonomous, confident and generally in accord with reality. If you treat your walking toddler as if she can’t walk, you diminish her confidence and distort reality.

The Delusion of the Consciousness

In response to a grief-stricken father who reported that he’d lost a eleven-year-old son to polio, Albert Einstein wrote,

A human being is part of the whole world, called by us “Universe,” a part limited in time and space. He experiences himself, his thoughts and feelings as something separate from the rest—a kind of optical delusion of his consciousness. The striving to free oneself from this delusion is the one issue of true religion. Not to nourish the delusion but to try to overcome it is the way to reach the attainable measure of peace of mind.

From Dear Professor Einstein: Albert Einstein’s Letters to and from Children (2002.)

Famous High School Dropouts

The Futility Closet notes,

  • Cary Grant
  • George Carlin
  • Groucho Marx
  • Hank Williams
  • Herman Melville
  • Humphrey Bogart
  • Joe DiMaggio
  • John Travolta
  • Johnny Depp
  • Keanu Reeves
  • Kid Rock
  • Kiefer Sutherland
  • Neil Young
  • Orville and Wilbur Wright
  • Prince
  • Quentin Tarantino
  • Ray Charles
  • Roy Rogers
  • Tom Cruise
  • William Faulkner
  • Woody Guthrie

“Desks Made Out of Doors:” Jeff Bezos’s Frugality

Amazon is frugal to an extreme. Amazon is obsessed with reducing waste. Ben Horowitz of venture capital firm Andreesen Horowitz writes,

Very early on, Jeff Bezos, founder and CEO of, envisioned a company that made money by delivering value to rather than extracting value from its customers. In order to do that, he wanted to be both the price and customer service leader for the long run. You can’t do that if you waste a lot of money. Jeff could have spent years auditing every expense and raining hell on anybody who overspent, but he decided to build frugality into his culture. He did it with an incredibly simple mechanism: all desks at for all time would be built by buying cheap doors from The Home Depot and nailing legs to them. These door desks are not great ergonomically nor do they fit with’s $100+ billion market capitalization, but when a shocked new employee asks why she must work on a makeshift desk constructed out of random Home Depot parts, the answer comes back with withering consistency: “We look for every opportunity to save money so that we can deliver the best products for the lowest cost.” If you don’t like sitting at a door, then you won’t last long at Amazon.

Digitized Manuscripts v the Real Thing

Naomi Appleton, scholar of ancient Buddhist texts at the Divinity School at the University of Edinburgh, recognizes the value of the “real thing.” Notwithstanding the advantages of digitized manuscripts, Appleton writes, “to see a manuscript in the flesh—to touch it and hold it and appreciate its overall presence—still holds a certain magic.”

My visits to research libraries … connected me in to a network of other scholars, and gave me the confidence to believe in myself as a proper researcher. Being amongst the rare books, and chuckling at the marginalia on the palm leaf pages of the text, conferred something that it is not quite possible to describe, and something that is certainly impossible to replicate in the digital world. … The physical form of these experiences is important to me. The magic of working with a physical book or manuscript will always be worth preserving, but we should also celebrate the growing opportunities of the online world.

Deng Xiaoping on Mao Zedong

British journalist Michael Rank, who served in China in the 1980s, wrote in the Guardian:

Italian journalist Oriana Fallaci’s interview with Deng Xiaoping was one of the revealing ever of any Chinese leader by any western journalist (apart from Mao Zedong and Edgar Snow in the 1930s.)

Deng told Fallaci how Mao “did not readily listen to differing opinions,” “increasingly lost touch with reality” in his later years, that the cultural revolution was a mistake, that “any [form of] capitalism is superior to feudalism,” that Mao’s mausoleum in Tiananmen square should never have been built (though it should not now be demolished,) etc.

These were amazing admissions: practically all western interviews with Chinese leaders before and since have been bland and dull, but Fallaci got Deng to speak extraordinarily frankly by Chinese standards. She deserves to be remembered for that.

COVID-19: The Airline Industry Will Shrink

Emirates Airline’s Sir Tim Clark, in an interview with The National, Abu Dhabi, opines that that COVID-19 pandemic is upsetting the airline industry, with airlines facing significant risk despite government intervention. He feels that the airline industry will shrink 20%—30% and carriers should write off the summer,

“We have just got to accept that in the next year or two, perhaps a bit longer, demand for air travel is going to be tempered in many respects,” he said. “What emerges from this will be in my view almost perhaps 20 or 30 per cent less than what we were experiencing prior to the coronavirus kicking in.”

“It’s anybody’s guess as to what is going to happen, what people will do this summer,” he said. “Frankly if it was me, I’d write it off, and if you get anything good for you, that’s great. But don’t think it’s going to come back like a tsunami because I don’t think it will.”