How Much Research and Analysis Are Sufficient?

Seth Klarman, an investor and head of The Baupost Group, shares his take on a question that comes up in all sorts of situations. This is a brief excerpt from his book Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor which is, unfortunately, out of print and very expensive to acquire your own copy of.

Some investors insist on trying to obtain perfect knowledge about their impending investments, researching companies until they think they know everything there is to know about them. They study the industry and the competition, contact former employees, industry consultants, and analysts, and become personally acquainted with top management. They analyze financial statements for the past decade and stock price trends for even longer. This diligence is admirable, but it has two shortcomings. First, no matter how much research is performed, some information always remains elusive; investors have to learn to live with less than complete information. Second, even if an investor could know all the facts about an investment, he or she would not necessarily profit.
This is not to say that fundamental analysis is not useful. It certainly is. But information generally follows the well-known 80/20 rule: the first 80 percent of the available information is gathered in the first 20 percent of the time spent. The value of in-depth fundamental analysis is subject to diminishing marginal returns.


Most investors strive fruitlessly for certainty and precision, avoiding situations in which information is difficult to obtain. Yet high uncertainty is frequently accompanied by low prices. By the time the uncertainty is resolved, prices are likely to have risen. Investors frequently benefit from making investment decisions with less than perfect knowledge and are well rewarded for bearing the risk of uncertainty. The time other investors spend delving into the last unanswered detail may cost them the chance to buy in at prices so low that they offer a margin of safety despite the incomplete information.

While he’s looking at this question from an investor’s perspective, even if you’re not an investor, the piece is thought provoking. especially to anyone involved in knowledge work or who has to make decisions (and who isn’t?)

‘Of course I can. I’m an expert.’

I must admit, I’ve had a few meetings like this (and sat in on others which I suspect were going like this from the expert’s perceptive).

Funny business meeting illustrating how hard it is for an engineer to fit into the corporate world!

I love how he starts catching on and adapting to the situation. Pretty funny.

4 Ways to Make Your Brain Work Better

Chris Mooney for Inquiring Minds, along with the New Yorker’s Maria Konnikova, discuss the science behind why we need to sleep more, waste less time on the internet, and stop multitasking – along with four ways that we can change our lifestyles so as to also improve our brains and how they function.

You’re a busy person. Keeping up with your job, plus your life, has you constantly racing. It doesn’t help that when working, you’re distracted not only by your mobile devices, but also by your computer. You average 10 tabs open in your browser at any one time, and you compulsively click amongst them. One’s your email, which never stops flowing in. At the end of the day, you sleep less than you know you should, but as you tell yourself, there’s just never enough time.


“I feel like I’m fighting a losing battle, but I hope that if there are enough voices out there, someone will finally hear that, ‘Hey, this attempt at hyper- productivity is making us much less productive.’”

Google Replacing AT&T at Starbucks

I missed this when it was first announced. 10x the speed. Sorely needed too. (Sitting at a Starbucks now and still AT&T connectivity, incidentally.)

Circa News reporting (dates mentioned are for 2013 so this is an already in progress upgrade at this point):

Beginning in August, Google will become the official Wi-Fi provider of all company-operated Starbucks stores in the U.S. (More than 7,000 such stores exist.) AT&T had been Starbucks’ official Wi-Fi provider since 2008. Google and Starbucks announced the partnership on July 31. Commercial Internet Service Provider Level 3 Communications will help Google upgrade the stores’ connections. Google says it will take as many as 18 months to upgrade all 7,000+ Starbucks stores. Once upgraded, the stores’ Wi-Fi connections will be about 10 times as fast as the older AT&T-provided ones.

What Do Project Managers Wish For?

The 7 Top Wishes of IT Project Managers, compiled by Jennifer Lonoff Schiff for

Ah, the joys of being a project manager. From being treated like a servant of management and not being included in key decisions, to having priorities, tasks and deadlines constantly changed on them — and then being blamed for delays and slip-ups — IT project managers have a lot to deal with. But what if project managers could change all that? What if a genie could grant IT project managers three (project-related) wishes? What would project managers wish for?

What, indeed.

Free Month of Evernote Premium Available →

I didn’t ‘get’ Evernote at first. I created an account, poked around, and promptly thought to myself meh.

But, months later, I revisited it. Now, I run my life/business out of it. I’ve had the Premium service level for 2.5 years. I take notes on it constantly, stash my research in it, track projects, write copy, draft articles and article ideas, take client notes, archive gift ideas, etc.

What was the tipping point for me?

I installed the app on both my smartphone AND my desktop (well, laptop).

If you use this link to the Premium service level, you’ll get the paid level for free for a month. After that you’ll continue to have access – just at the free level – unless you decide to pay up.

This is How I Feel About My Work Too

I’ve been thinking a lot about the problems that crop up when IT is viewed as something for the technologists. That is why when Amy Sample Ward, the new CEO of Nonprofit Technology Network (NTEN), wrote the following recently it really resonated with me:

Whenever people ask me why NTEN isn’t focused on just one area of work, my answer is simple: All of us are using technology every day, regardless of our job title or organizational mission. To be leaders – either in our department, in our organization, or in our sector – we need to use technology effectively.

Yes, THAT.

Leapfrog Ahead — Seek Out Peers Outside Your Organization

In my consulting work I talk to a lot of CIOs, CTOs, IT directors, and IT managers.

I am routinely amazed at how few of them know their peers at other organizations — let alone regularly interact and discuss issues of substance with them.

I’ve even joked that some of the advice they (my client) pay me for could be eliminated. After all, one of the benefits of a good consultant is that they can share what has worked elsewhere.

(Of course, in the next breadth, I also go out of my way to to remind them that they would not have gotten this idea if they hadn’t made the wise decision to hire me on to begin with. Alas, they get any ideas…)

After pointing this out to several clients, I’ve suggested they do something about it. That is, they start benefiting from the sharing of best practices and commons struggles with their peers at other organizations.

If you want to start brainstorming with a trusted peer — and I suggest you should — here is how to do it: 

How To Protect Your Android Smartphone

Editor’s Note: This post first appeared on March 3, 2011 on Josh’s prior blog. It is being restored and re-published here due to its popularity.

If you haven’t heard, there were a couple dozen Android apps pulled from the market in the last 48 hours because, it turns out, they were not legit and contained malware.

That’s great they were pulled, but there are several hundred thousand Android apps out there. It’s not out of the realm of reasonable thinking to conclude that there probably are more apps out there with malicious intent. If there aren’t now, maybe tomorrow.

Here’s how to protect yourself…

Yes, there are so-called anti-malware tools such as Lookout, which is great, except they don’t prevent as much as react to problems after the fact. Besides, good security, is about defense in depth.

So here’s how to protect yourself. None of these are technical, but more about prudence.

  1. Try not to be an early adopter of a new app. In the Android Market (and in AppBrain), it is easy to see how many folks have downloaded something. Whether accessing the Market from your phone or from your web browser, there is a counter that provides a range labeled either “downloads” or “installs.” A rough rule of thumb is that if there are <50,000 than the application hasn’t had a serious looking into. This doesn’t mean that all apps with low download or install counts are bad — many are simply newer or serve smaller niches — but it does mean you should carefully consider other criteria before installing that application.
  2. Visit the app developer’s web site. If there is one, it is listed in the market entry for the app. Is there even a web site at all? Does it appear reasonable and appropriate for the type of application? Is there a company behind it? If there is just a single developer behind it (which is totally fine and quite common), is that person clearly identified on the web site? Or is the developer missing in action?
  3. Look at the app’s ratings and in-market reviews. While it is quite possible for well rated apps to be malicious, it is less likely. Don’t consider an application safe nor dangerous on this criteria alone, but consider it another indicator when combined with other items on this list.
  4. Who is listed as the publisher/developer? If it is a well known application, does the developer name make sense? Does it match up with the name mentioned on the developer web site?
  5. Check the “Permissions” of the app _before_ installing it. Is the application asking for reasonable permissions? For example, if you install the Metal Detector app, it is a decent sign that it isn’t asking for Internet access (which would be unnecessary for its purposes). Permissions are easily confirmed on the web (via the official Market and prior to attempting to install. Unfortunately the official Market app on the phone itself only displays this information after starting the installation process (though it is still before actual installation takes place so you get the opportunity to review and change your mind). The Appbrain on phone app does list the permissions on the description itself (at the end) which is one reason I suggest installing the Appbrain app.
  6. Use and/or install AppBrain on your phone. The web site in particular makes it easy to track down similar apps. Poke around a bit at similar applications. If you see two apps with the same descriptions and/or screenshots, but from different developers, this is a red flag. The recent (3/1) malware discoveries were in apps that were copies of legit apps. The screen shots were even the same.
  7. Does the description of the application include a list of “Recent changes” also known as a “changelog”? This is a good sign that there is a legit developer, who cares, behind the app.
  8. Can you find a review on a widely-recognized blog or web site? (hint: a site with a large active community and regularly published new, original, and quality content)
  9. Don’t install an app the first time you see it. Make a note of it and come back to it in a few weeks (if it’s no longer there, be happy you waited).
  10. Uninstall apps that you decide not to continue using and that you find yourself no longer using. You can always re-install them later. The fewer apps left around on your phone, the less you have to keep track of.
  11. If it is an option, ask your friendly Android “geek” to give the app you are looking at a “sniff test.”
  12. Finally, back up the critical data on your phone. This is a good idea anyway, in case your phone dies, gets lost, or is stolen. If you suspect your phone has been compromised, change all of your passwords, not just the one for your email. After all, you’ve probably accessed other services, apps, and web sites, with usernames and passwords associated with them, from your phone.

An important thing to remember is that none of the above are a guarantee that an app is good nor bad. They simply, when considered in combination, make it more likely that you’ll avoid installing something malicious. Technically speaking, even an otherwise trusted application from a trustworthy source could contain malicious application code.

Security is not absolute. It is a process not an event. Despite technology such as anti-virus scanners, you can’t simply install a “silver bullet” solution and forget about it. More than anything, security is about diligence, verifying, and treading carefully. Even with technology, it still comes down to us humans choosing to take responsibility for protecting ourselves.

I hope you found this helpful.