BizNews editor Alec Hogg drew upon the great investment guru Howard Marks for inspiration in his address this morning to a packed room of Third Age University members in Hermanus. Among the hallmarks of Marks’ approach to investing (and life) is accepting that rational conclusions require ‘deep, complex and convoluted’ thought. Hogg uses this foundation to delve beyond the ‘First Level’ narrative that dominates so much of the South African discourse, using examples from politics, society and business to support his case.
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Outline of BizNews founder and editor Alec Hogg’s speech ___STEADY_PAYWALL___
A couple of years ago, a longtime friend who manages money suggested that I widen my reading by picking up on the regular memos sent to Howard Marks to the clients of his company, Oaktree Capital Management.
As my pal, Sean Peche, is one of the best in the business, I always take his suggestions seriously. And soon discovered that Howard Marks is a thinker in league of the great Warren Buffett – and that Oaktree, which he started in 1995, manages $170bn worth of assets for clients…that’s pretty close to half the total money spent over a full year in South Africa – what we call our GDP.
One of Marks’ trademarks is what he describes as Second Level Thinking.
He uses it when assessing the shares he wants to buy for the Oaktree portfolios. But I’ve found that the concept can be used in pretty much every aspect of our lives. It is a discipline that encourages is to always look beyond the obvious; to use our peerless computer called the human brain to question. To look deeper.
In his wonderful book called The Most Important Thing, Howard Marks uses company shares traded on the stock market to explain the difference between normal thoughts – or First Level Thinking – and the concept he encourages us to use.
He writes: “First level thinking says – It’s a good company, let’s buy the stock.” Second level-thinking says “It’s a good company, but everyone thinks it’s a GREAT company and it’s not. So the stock’s overrated and overpriced – let’s sell.”
First level thinking is simplistic and superficial and just about everyone can do it. All the first level thinker needs is an opinion about the future…….
Second level thinking is deep, complex and convoluted. It requires the embracing of complexity; the asking of uncomfortable questions.
First level thinkers look for simple formulas and easy answers. They think the same way as other first level thinkers about the same things and they generally reach the same conclusions. Or what we call consensus.
Today I would like to share some thoughts on how Second Level Thinking can enhance your life and society in general.
Let’s start with the 2024 National and Provincial Elections which are just three weeks away…….
I’m indebted to Jared Diamond and his magnificent book Guns, Germs and Steel for this observation. It’s a fantastic book for anyone who seeks knowledge, and has lots of lessons for South Africa, some of which I’ll share later.
But the one that jumped out at me from this 550 page history of mankind in the last 13 000 years comes around two thirds the way in – where Diamond shares how, through history, the elites, what he calls Kleptocrats have managed to grab power and riches for themselves – and ensured they were not relieved of it through popular uprisings.
Disarm the populace and arm the elite. -GUN LAWS
Make the masses happy by redistributing much of the tributes received in popular ways. – SOCIAL GRANTS
Use the monopoly of force to promote happiness by maintaining public order and curbing violence. – KEEPING CELE IN HIS JOB
Consrruct an ideology or religion justifying kleptocracy. – BEE AND BLAMING APARTHEID FOR EVERYTHING AND WARNING THAT WITHOUT THEM IT WILL RETURN.
Second level thinking. One side sticks to this age old script. And uses all kinds of disguises to throw others off the scent.
NHI – UK 66m; SA 60m. UK’s NHI much admired in SA – not so much in the UK.
Costs the UK £230bn a year – R5.3trn. Still has private healthcare – Vitality 1.7m lives
SA total tax revenue – R1.7trn. 1/3 of what the UK spends on NHI
UK spends 20% of its budget of £1.2trn on NHI……SA spends a similar amount of its budget on healthcare…….
Panyaza Lesufi – After May 29…….
Similar with BEE and Estate Agents……Fidelity Fund certificates not issued if not 51% BEE. Unconstitutional…
WESTERN CAPE –
Jared Diamond – archeologists linguists
five of the six ‘peoples” inhabited Africa……..Euroasians north of Sahara – whites; Bantu – blacks; Pygmies; KhoiSan; Asian – Madagascar
Bantu were established in South Africa around the time of Christ – 0 AD…….Met Whites in the late 1700s, first Xhosa War 1779.
Bantu – sorghum and pearl millett
Europeans – Fertile Crescent – wheat, barley, beans, grapes, peas.
History of past 13 000 years also partly explains vast differences in wealth – US and Europe 10% of people, 50% or wealth.
BREXIT……..RWJ 1973 – wrong assumption by UK
SA UNEMPLOYMENT – 4Q 32.1% – highest in the world – above Djibouti 26%; West Bank and Gaza 24%; Yemen 17%…………
USA Great Depression 24.9% 1933
Read also:
🔒 RW Johnson: Macron’s belated effort to reverse defanged, unambitious EU that caused Brexit
Bagraim: ANC’s ‘existential’ threat to estate agents via BEE ownership an election ploy, unconstitutional
🔒 Boardroom Talk – Masterful teacher RW Johnson helps us graduate to second level thinking
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