The Widow Clicquot: The Story Of A Champagne Empire And The Woman Who Ruled It by Tilar J. Mazzeo
The Widow Clicquot is the story of Barbe-Nicole Clicquot Ponsardin. Widowed at 27 and with no formal business training or first-hand experience, Barbe-Nicole transformed her family’s struggling wine-brokerage business into one of the world’s best-known champagne houses in just over a decade.
Barbe-Nicole’s story is set against the backdrop of the French Revolution and Napoleonic Wars. Given current events, it was timely to see how past generations of business owners contended with war in Europe, closed borders, and abrupt de-globalization. It offers a reminder that, like it or not, the world’s current troubles are nothing new. I often learn more about the modern world from history than the news.
Barbe-Nicole lived near Reims, which was the site of back and forth fighting between Napoleon and the Russians. During the Russian occupation, soldiers discovered champagne and helped themselves to it. Barbe-Nicole declared, “Today they drink, tomorrow they pay!” which turned out to be prescient.
When Napoleon abdicated the throne, Barbe-Nicole intuited that the first champagne into Russia would have a momentary monopoly. She conspired to smuggle her legendary 1811 vintage to Russia before the blockades were formally removed and international trade restored. It was a bet-the-farm moment for Veuve Clicquot.
Barbe-Nicole ran the blockades and delivered her champagne to modern-day Kaliningrad. The moment the Russian Czar removed the import ban on French Champagne, she moved her wine into St. Petersburg and Moscow.
Veuve Clicquot was the first to the market. It was the only champagne available amidst the jovial post-war celebrations. Russian officers who had tried her champagne in Reims were prepared to pay whatever it took for a second taste. Veuve Clicquot’s first-mover advantage solidified it as one of the world’s premier champagne, which persists to this day.
— Matt
Fallen Leaves: Last Words on Life, Love, War, and God by Will Durant
Will Durant is best known for his 11-volume work, The Story Of Civilization, which he published with his wife Ariel between 1935 and 1975. In 1968 Durant condensed what he learned studying world history into a slender 128 page synopsis called The Lessons Of History. It is a wonderful book filled with elegant prose that ought to be required reading. That same year the Durants won the Nobel Prize.
Over the course of Durant’s career, fans often asked him to speak my mind on the timeless questions of human life and fate. In Fallen Leaves, Durant indulges them. In 22 short chapters, Durant opines on everything from youth and old age to religion, morals, sex, war, politics, and art.
Below are some of my favorite quotes from Fallen Leaves.
On children:
For the rest he learns by imitation, though his parents think he learns by sermons. They teach him gentleness, and beat him; they teach him mildness of speech, and shout at him; they teach him a Stoic apathy to finance, and quarrel before him about the division of their income; they teach him honesty, and answer his most profound questions with lies. Our children bring us up by showing us, through imitation, what we really are.
On youth:
Childhood may be defined as the age of play; therefore some children are never young, and some adults are never old.
A man is as young as the risks he takes.
On health:
Health lies in action, and so it graces youth. To be busy is the secret of grace, and half the secret of content. Let us ask the gods not for possessions, but for things to do; happiness is in making things rather than in consuming them.
Here, Durant reminds me of Tony Robbins’ dictum: “Progress equals happiness.”
On education:
Nothing learned from a book is worth anything until it is used and verified in life; only then does it begin to affect behavior and desire. It is Life that educates, and perhaps love more than anything else in life.
On art:
Art without science is poverty, and science without art is barbarism.
On history:
We must not imagine that past generations were much more moral than our own; the historian does not find them so, and the elders in every one of them thought them abandoned to Satan.
If anything is clear in the experience of mankind it is that successful revolutionists soon behave like the men they have overthrown: Robespierre imitates the Bourbons, and Stalin imitates the czars.
Other studies may tell us how we might behave, or how we should behave; history tells us how we have behaved for six thousand years. One who knows that record is in large measure protected in advance against the delusions and disillusionments of his times. He has learned the limitations of human nature, and bears with equanimity the faults of his neighbors and the imperfections of states. He shares hopefully in the reforming enterprises of his age and people; but his heart does not break, nor his faith in life fade out, when he perceives how modest are the results, and how persistently man remains what he has been for sixty centuries, perhaps for a thousand generations.
— Matt
Stocks for the Long Run by Jeremy Siegel
Stocks for the Long Run is an excellent overview of how equities have performed over the last several hundred years compared to other asset classes. That equities have been, by far, the best performing asset class - both in nominal and real (after inflation) terms - should be no surprise. The enormity of the different over long stretches still surprises me when I confront the numbers.
Perhaps the most jarring chart in the book is shown below. Siegel compiled historical returns data back to 1802 for different asset classes. Through 2012 (the most recent revision of the book) stocks have returned $13.48M for every $1 invested. That is an 8.1% nominal annual return compounded over more than 200 years. It’s hard to even comprehend that type of return (if only we could go back in time and convince our great-great-grand parents to invest a few dollars across American businesses!).
This annual return is actually less than equity investors have enjoyed in modern times, where annual returns have been closer to 9%-10%. Over the same time period, inflation has reduced purchasing power 19 for 1, and gold has returned a measly $86.4 for every $1 invested.
Additionally, Siegal runs through an excellent summary of previous financial bubbles along with various sectors and countries within the equity markets. Siegal also provides a helpful overview of many famous human biases that impact investors and which are the chief reason most people fail to realize the awesome potential of holding stocks for long periods of time.
The general themes of the book are:
Common stocks offer superior returns over almost every time horizon or macro environment compared to bonds or other popular asset classes; and
The longer your time horizon, the less likely stocks are to underperform other asset classes.
Anything can happen over the course of one or two years, but much longer than that and it’s dangerous to bet against equities. In fact, since 1802 there has never been a 20 year period in which U.S. equities produced a negative annual return even after inflation.
Keeping Siegal’s charts in mind will help the next time you’re anxious about a temporary portfolio drawdown. I highly recommend the book to any investor of any skill or experience level.
— Dan
Thinking in Bets by Annie Duke
Annie Duke is formerly one of the most successful female poker players in the world and is presently a leading expert in decision making theory. Duke wrote Thinking in Bets in 2018 to help business professionals, investors, and individuals improve their decision making process by applying what she learned playing poker.
The main theme of the book revolves around the importance of separating outcomes from the decision making process. In other words, avoid “resulting”, or judging the quality of a decision based solely on an outcome instead of by how the decision was made. Luck plays a role in just about every decision that we make in life and in business, and all we can do is make the best decision with the given information to maximize the expected value of our decisions.
As Duke puts it:
Decisions are bets on the future, and they aren’t “right” or “wrong” based on whether they turn out well on any particular iteration. An unwanted result doesn’t make our decision wrong if we thought about the alternatives and probabilities in advance and allocated our resources accordingly
Investors so often fall victim to “resulting” and applaud themselves for great outcomes when in reality they were just lucky. Alternatively, they’re equally likely to bemoan investments that turn out poorly even when the investment was a good decision based on the probability of earning an attractive return at the time the investment was made. Investing is not chess, where there is always a clear correct move and no hidden information, it is much more like poker.
Duke offers a few strategies to help counteract the habit of resulting and improve quality of decisions.
First, conduct a “pre-mortem” before we make an important decision (moving to a new city, buying a stock, taking a new job, etc.). What could cause this decision to have a bad outcome and how likely are those things to occur? Next, mentally transport yourself into the future and imagine the decision worked out perfectly. What transpired in the meantime to allow such a favorable outcome and how likely are those favorable events to occur? Finally, make a habit of identifying mistakes and/or the role of luck in outcomes that worked instead and have a group around you that helps you challenge your beliefs both in success and failures.
— Dan
The Best Of The Rest
BRK Daily — 2021: How Does GEICO Compare With Progressive? “Five years from now, it’s very likely that the top two will be GEICO and Progressive, and in which order we’ll see. But both companies are going to do very well, in my opinion.”
Chris Mayer — Real Estate As An Inflation Hedge. “Companies that own their own real estate have a natural inflation hedge over competitors that do not. And this real estate, accumulated over decades, also makes it extremely difficult for competitors to replicate it today – if it is possible at all.”
Jamie Dimon — Letter To Shareholders. “We normally don’t worry about — or even try to predict — normal fluctuations of the economy. In all times, we are prepared for difficult markets and severe recessions, as well as for unpredictable events, not only so we will survive them but also so we can be there for our clients when they need us the most.”
Nick Maggiulli — The Yield Curve Just Inverted… Now What? “We can’t move to bonds because, as the data above suggests, U.S. Treasuries are likely to grow even more slowly than stocks in the intervening period. We can’t move to cash because cash won’t grow at all. So we just have to accept it.”
Paul Graham — Heresy. “There are an ever-increasing number of opinions you can be fired for. Those doing the firing don't use the word "heresy" to describe them, but structurally they're equivalent.”
Jason Zweig on The Investor’s Podcast. “The key is structure. A money management firm that isn’t structured from the start to optimize for a long term out performance is never going to be able to do it, never going to be able to sustain it. One of the keys is having a mental and economic alignment between the manager and the clients. If you have the wrong clients, it doesn’t matter whether you have the right portfolio.”
Jason Zweig — The Stock Market’s Future Ain’t What It Used to Be. “Mr. Ilmanen’s math indicates that U.S. stocks could return less than 3% annually, after inflation, over the next five years or more—among its lowest estimates ever. Although you can’t use such data to tell exactly when stocks are overpriced, says Mr. Ilmanen, ‘the message is that the prospect of low expected returns should be taken seriously.’”
Scuttleblurb — Interview with Mirakle. “In investing, writing is very often a tool of persuasion. An analyst does their research, determines the stock is a BUY, and crafts a narrative consistent with that rating, which often leads them to diminish contrary views. I write to understand, not to persuade.”
Institutional Investor — In Active Management, Alpha Comes Down to One Thing. “The results signify that ‘elite managers are highly adept at deciding what to own through the research process,’ according to the study. But unfortunately, ‘all the effort that then goes into deciding how much to own’ is not as effective in generating outsized returns.”
Morgan Housel — The Rich And The Wealthy. “Average household incomes adjusted for inflation have more than doubled in the last 70 years, but it doesn’t feel that way because expectations have more than doubled.”
The Halo Effect by Phil Rosenzweig. A great complement to “The Outsiders” as Rosenzweig tells the opposite side of the story of great corporate managers and outlines a number of delusions that deceive managers.
If you would like to invest or connect with Eagle Point Capital please email info@eaglepointcap.com. Thank you for reading!
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Just added several of these books to my queue. Thinking in Bets helped reinforce the fact that process is much more important than outcome. Some may think "thankfully I didn't buy ___ since it dropped so much" but that's an incomplete and flawed way to approach the investment process. After a thorough analysis, if an investment has a high expected value it's important to size properly and let the odds play out. For anyone that enjoyed Thinking in Bets, I'd also recommend The Wisdom of Crowds by James Surowiecki.