Hello, I'm Jian Yang.

Such a joy to watch videos like this. Ikea’s philosophy reminds me of Costco.

Inside IKEA: The Brilliant Trick That Makes You Buy More

Terravest just bought back 1% of outstanding shares after the fiasco with Charles Pellerin caused a sharp contraction in share prices.

Recall this snippet from Chris Waller’s writeup on TerraVest:

Terravest also buys back stock from time to time, viewing the attractiveness of a buyback as about judging the return from its stock rising to intrinsic value vs the more certain return from making an internal investment. The company has not been afraid to aggressively buy back stock when it is trading well below intrinsic value, buying back 36% of shares outstanding in 2012.

Management has better insight into returns than outside shareholders, and this management will do what it takes to get the highest returns.

DCF valuation with wishful inputs is as good as saying “if I’m able to make a million dollars by year 5, I will be a millionaire.”

Valuation framework by Joel Tillinghast (from Big Money Thinks Small):

1. Determine the Discount Rate (using the Gordon Growth model):

   Discount Rate = FCF Yield + FCF Growth Rate

   Rearranging this gives:

   FCF Yield = Discount Rate - FCF Growth Rate

2. Calculate the Reinvestment Rate: Use Return on Equity (ROE) to identify the portion of earnings that must be reinvested to achieve FCF growth:

   Reinvestment Rate = FCF Growth Rate / ROE

3. Determine the FCF Fraction of Earnings: The remaining portion of earnings that represents free cash flow:

   FCF Fraction = 1 - Reinvestment Rate

4. Calculate Value: Use the FCF Yield derived in step 1 to value the FCF fraction of earnings:

   Value = (Earnings * FCF Fraction) / FCF Yield

   Or expressed as an implied P/E multiple:

   Implied P/E = (1 - Reinvestment Rate) / FCF Yield

Comparison is the thief of joy, yet it is woven into the very fabric of society. Think of rankings at work, in sports, and in advertisements, where we are constantly reminded of what we lack and taught what we should want. It is time we realize that what is valuable to others may not be the same for us. Our unique lived experiences shape our mindsets and determine what holds value. Joy, sorrow, and success are deeply personal and build upon one another. Every one of our actions today can be explained by a causal link to a past memory that has shifted our way of thinking.

The next time social media, our friends, or even our loved ones compare us with others, we ought to take a step back and introspect. We must remind ourselves that they are evaluating us through their own lenses and experiences, not ours. Stop living your life based on what someone else has determined to be a life well-spent. That’s their business, and that’s how they should live their lives if they choose to. We ought to be indifferent. Every decision has a value and a trade-off as we define it.

It’s important that we determine today what is of value to us; knowing our destination will help us make sense of the journey.

This quote beautifully put into words what I had in mind for a while:

“Most people do not think. They repeat. They adopt the opinions of those around them, wear them like borrowed clothes, and call it a worldview. And when you dare to think for yourself, really think, they will not admire you for it. They will resent you. Because your refusal to conform is a mirror they did not ask to look into. The unexamined man does not hate you because you are wrong. He hates you because somewhere beneath the noise, he suspects you might be right.” - Anonymous

P.S. Someone attributed this to Nietzsche, but I can’t seem to find evidence backing it, so I’ll keep it as anonymous.