8 Fascinating Reads

Disconnect 
Millions of people who use Facebook (NASDAQ: FB  ) don't think they use the Internet: 

Indonesians surveyed by Galpaya told her that they didn't use the Internet. But in focus groups, they would talk enthusiastically about how much time they spent on Facebook. Galpaya, a researcher (and now CEO) with LIRNEasia, a think tank, called Rohan Samarajiva, her boss at the time, to tell him what she had discovered. "It seemed that in their minds, the Internet did not exist; only Facebook," he concluded.

The problem
Here's a great summary of healthcare costs in America by Steven Brill:

Priorities
Most big drug companies spend more on advertising than they do on research and development: 

Odds of success
Ben Carlson writes about one way to beat the market: concentrated portfolios:

Portfolio manager and author Robert Hagstrom performed a study that looked at 12,000 randomly generated portfolios from a universe of 1,200 stocks. He broke the portfolio up by the number of holdings so they looked as follows:

• 3,000 portfolios containing 250 stocks.
• 3,000 portfolios containing 100 stocks.
• 3,000 portfolios containing 50 stocks.
• 3,000 portfolios containing 15 stocks.

... Now take a look at the outperformance rates by portfolio size:

• Out of 3,000 250-stock portfolios, 63 beat the market (2% of portfolios).
• Out of 3,000 100-stock portfolios, 337 beat the market (11% of portfolios).
• Out of 3,000 50-stock portfolios, 549 beat the market (18% of portfolios).
• Out of 3,000 15-stock portfolios, 808 beat the market (27% of portfolios).

Personal life 
More companies are moving from casual Fridays to no-work Fridays:

That's exactly how founder and chief executive Ryan Carson, 37, has been working since 2005. These days, on Fridays, he gets his two young sons off to school and spends the day hanging out with his wife, Gill. "It's like dating again. We go to coffee shops. We read books together. I really feel like I'm involved in my kids' lives and my wife's life," Carson said. "This schedule has been absolutely life-changing for me. I can't imagine anything more valuable."

Just the facts
Josh Brown writes a great list of facts in America. Here are a few: 

The US economy has now added more than a million net new jobs over the last three months. This was the best 90 days' worth of hiring since 1997.

More jobs were created in 2014 than during any year since 1999.

759,000 people just joined the labor force and there was no post-holiday seasonal decline – it may be that temporary workers are sticking.

Average hourly wages rose .5% in January.

The cost of living has only risen .8% over the last year while wage growth has outstripped it, rising by 2.2%.

21 of 50 states put through minimum wage hikes, including populous ones like NY, FL and NJ.

Doing it right
Ronald Read left a surprise for those who knew him:

His khaki denim jacket was held together with a safety pin and his flannel shirt was so old, someone once paid for his breakfast at Friendly's. 

"The man ahead of him had paid for him," Rowell said, "Based on what he looked like and how he dressed."

Perhaps that's why the man known for his extreme frugality and scruffy appearance decided in the years before his death that he'd do a little giving of his own.

"The estate of Robert Read made its first distributions to Brattleboro Memorial Hospital and the Brooks Library in the amounts of $4.8 million and $1.2 million," Read's attorney said in a press release.

Wisdom
Here's a great take on loss aversion from Andre Agassi, tweeted by Ben Carlson: 

Have a good weekend. 

[source: http://www.fool.com/investing/general/2015/02/13/the-extraordinary-story-of-americas-most-successfu.aspx]

It comes down to two factors, both of which are paradoxical and relevant to all investors in all industries.

1. Fear, disgust, hatred, and outrage toward a business is good for shareholders.
A lot of investors (understandably) want nothing to do with tobacco companies. Some pension funds are barred from owning them. And then there's the constant threat of litigation, which has hung over the industry for decades.It adds up to millions of otherwise enterprising investors who won't touch tobacco stocks.

Low investor demand keeps tobacco-stock valuations low. Low valuations lead to high dividend yields. And high dividend yields, compounded over decades, add up to massive returns.

The more hated an investment is, the higher future returns are likely to be. The same is true vice versa. This is one of the most difficult investing concepts to come to terms with, but probably the most powerful.

2. Tobacco companies barely innovate. That keeps them sustainable.
Innovation is exciting because it promises something new. New products. New markets. A new future.

But it's expensive. And even if you're great at it -- like Apple (NASDAQ: AAPL  ) is -- you'll probably stumble one day.

The products Apple made just five years ago are utterly irrelevant today. The company has to reinvest itself every few years, continuously coming up with breakthrough products that blow us away. What are the odds it'll keep innovating consistently at the rate it has for another 20, 30, 50 years? Pretty low, I'd say. Even the best players strike out from time to time, and ruthlessly competitive markets show them no mercy. It's rare that a leader sticks around for more than a decade in industries that undergo constant change.

Companies that make the same product today they did 50 years ago are different. They don't innovate, but they don't have to. It's a boring business, but it can be beautiful for shareholders because it keeps the companies chugging along for decades, if not centuries.

The ridiculously large gains from compound interest occur at long holding periods. They key to building wealthy isn't necessarily high returns, but mediocre returns sustained for the longest period of time. You typically find that in boring companies that don't innovate, and sell the same products today that they did 50 years ago, and will likely be selling 50 years from now. Food, soap, toothpaste and, yes, cigarettes are good examples.