Laser Eye Surgery

 

I feel like I’m going through metamorphosis as I enter the third decade of my life. I had surgery on my nose 4 months ago and just 5 days ago, I went through laser eye surgery. Before the nose surgery, the last time I was in the hospital for any length of time was two and a half decades prior – it really does pour when it rains. The nose has recovered nicely and I think I’m at 99% recovery on the nose. Anyways, I’m in the 5th day of recovery from the laser eye surgery. This is more for a personal account of what the first five days felt like as I want to remember what it felt like post-op as I seemed to have already erased the memory of what the pain felt like during my nose surgery recovery. I have this fantastic ability to literally erase memories of things I don’t like, which is both extremely useful and sometimes a hindrance.

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Li Lu’s Foreword to Poor Charlie’s Almanack

First, the series on Valuation will fire back up shortly: I ended up going to NYC for 5 days last week and the wheels fell off the study wagon… meaning I fell rapidly behind on my actual homework in the Valuation course so I’ve been frantically trying to catch up, thus no update since the last post on the Risk Free Rate. I came across this English translation of the foreword to the Chinese version of Poor Charlie’s Almanack by Li Lu. You can find it on this link through the internet archives, but I thought I’d post it here in case it ends up disappearing. Everything below is a copy and paste from the original article. Enjoy!

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Valuation: The Risk Free Rate

Now that we’ve introduced ourselves to the concept of Valuation and reviewed the idea of Intrinsic Valuation yesterday, we’re finally at the point we move into deriving a discount rate. Just like the term “Intrinsic Value” the concept of the “Discount Rate” is tossed around in finance/investing circles like a hot potato: everyone seems to mention how important it is, but are opaque about just how you go about deriving one. You’ve heard Warren Buffett proclaim that the intrinsic value of an asset is the cash flow that an asset will generate between now and Judgement Day, discounted back to the present at an appropriate discount rate. While this is all fine and dandy, it’s never revealed to us mere mortals what the discount rate is. I think these next few sections on Valuation in the coming days might shed light on that for you. Today, we focus on one component of the discount rate: the Risk Free Rate.

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Valuation: Intrinsic Value

Now that we have the introduction to valuation out of the way (and the random thoughts on mean reversion and R&D capitalization), it’s time to move onto the concept of intrinsic value. Intrinsic value is a concept that is thrown around a lot in finance, especially the value investing niche. However, while the concept is thrown around like a frat bro yelling out YOLO every 5 minutes, it’s never clearly defined for those who are new to the game. Hopefully this session clarifies it a little bit and gives you an idea of what intrinsic value means and how you start going about calculating it. The actual calculating will come in later sessions and this one will just give you an idea of how to go about setting up the framework to estimating intrinsic value later on.

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Valuation: Random Musings on Mean Reversion and Capitalizing R&D

So the way the Valuation course works is that all materials are available online – lecture videos and slides – and it’s an entirely self-driven process. Every couple weeks, however, we are able to get an hour of one-on-one with Professor Damodaran and ask him any questions that might be on our minds regarding the course. This week, there were 2 interesting points that caught my attention: the notion of mean reversion in the markets and why you should capitalize R&D expenses.

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Valuation: An Introduction to Valuation

I told you guys last month that I signed up and paid money like a sucker to do a semester long Valuation course through NYU with Aswath Damodaran. Why a sucker? Because Damodaran provides all of this courses and materials through his website for anyone to take for free. Honestly, follow the link and you can take any course he teaches entirely for free. It’s an incredible resource. However, like most people, I never got around to doing the Valuation course available for free because… it’s free. When things are free, they tend to constantly get shifted down in the priority list of things to do because you reason that you can do it anytime because… it’s free. That’s a recipe for never doing anything. So I paid up to motivate myself to actually go through with learning this material. Since my first quiz is coming up, I figured I would do a brain dump of the topics covered so far for my own review. If you find it interesting, great.

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Mental Model: The Precarity of Reputation

For many of you, this quote is nothing new. You may even be rolling your eyes at the image and quote above. Yes, you have probably heard this more times than your mother telling you she loves you. I still want to reinforce the message with a few examples that creatively unpack that sentence to make it really vivid. What drives you to lose a reputation you built up over decades in under a few minutes (sometimes seconds)? It has a lot to do with the Amygdala Hijack. We will look at examples involving a headbutt, some cannibalism, and illegal injections as our case studies.

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