My portfolio

Security	Weighting
Berkshire Hathaway	13.3%
Short Term Treasury Bonds	12.6%
National Western Life Insurance	10.1%
Cash	9.3%
Norfolk Southern	8.1%
Wells Fargo	7.7%
W.R. Berkeley	7.3%
Gazprom	6.0%
Lukoil	5.9%
Melcor Developments	5.2%
General Motors	5.0%
John Bean Technologies	4.1%
Nicholas Financial	2.1%
ADF Group	1.9%
J. Smart & Co.	1.4%

Here is my portfolio at the end of the year. A couple of trading days remain, but the return on my U.S. brokerage account year to date is 3.42%. 

This is the first year since 2008 (the year I opened my first brokerage account) when the stock market looks likely to finish with a negative result. It doesn't seem to affect me. I think I feel about the same as I did at the end of any other year. 

Overall, my view is that stock market valuations are reasonable and 2019 offers the prospect of decent returns. I expect to reduce my cash and bond positions somewhat as the year progresses.

What I have been reading lately

Home Game by Michael Lewis: Hilarious anecdotes about being a dad. I love Michael Lewis.

The Fifth Risk by Michael Lewis: Profiles of the administrative side of the Federal Government, trying to highlight the importance of competent nonpolitical actors and the damage done by the partisan and unprepared Trump administration. Interesting but not Lewis' best work. I didn't finish.

Them by Ben Sasse: I don't think I would agree with Ben Sasse on too many political issues, but I'm glad there are thoughtful and capable people like him serving in the U.S. government. This book, however, is not especially interesting. I didn't finish.

Winner Takes All: The Race to Own Las Vegas by Christina Binkley. A history of the 1990s and early 2000s building boom in Vegas. Relatively light on business content and not that interesting to me. I didn't finish.

Book Notes: The Unified Theory of Life by Robert Kierlin

I read this book because I am an admirer of Fastenal. I had heard about the founder and CEO Bob Kierlin in an old Inc. Magazine article on the cheapest CEOs in America and wanted to know more about him. I have really enjoyed many books written by these kind of guys. Earlier this year I read Willis Johnson's (founder of Copart) book and thought it was fantastic.

While I'm sure that Bob is a fantastic guy, he is not a fantastic writer. As the title suggests, this book focuses mainly on Bob's thoughts on morality and public policy topics, which I would characterize as well intended but full of sweeping generalizations with absolutely no data to back them up. As much as I wanted to like this book, I could not. I made it page 97 of 128 and gave up.

Book notes: Factfulness by Hans Rosling

I loved this book. I heard about it on Bill Gates' blog. I think this should be some kind of required reading for everyone, everywhere. It does a great job of combining data and simple mental models to illustrate how to think about the world.  America would be a a better place if everyone adopted this thinking style.

As much as I enjoyed the book, one small portion really bugged me. In Chapter 8, he talks about the danger of using simple ideas or ideology to try to explain everything about the world. Every global problem cannot be solved by "free markets" or some such other panacea. This is all well and good, until he starts talking about the U.S. health care system, where he points out with a nifty graph that the U.S. spends almost twice as much per capita as any other country but still has lower life expectancy that many countries.

I'm sure that is true. It was his proposed solution that I found unbelievably at odds with the entire rest of the book. He writes, "The answer is not difficult, by the way: it is the absence of the basic public health insurance that citizens of most other [rich] countries take for granted." WHAT!? Like... where is the data to back this up, in this book that is all about using data to inform your worldview? Maybe it exists somewhere, and for all I know, he might actually be right on this point. But he presents no evidence at all. I felt like this was some sort of unacknowledged test to see if you actually absorbed any of the content he has just presented.

I mean, without doing any research, I can think of several reasons why this might not be accurate (not saying these are actually true, I don't know):

•  U.S. might have a sicker population from things like obesity that a public health system would be challenged to address
•  Life expectancy is not the only measure of the effectiveness of a healthcare system. Maybe on other measures the U.S. does better
• Expensive U.S. medical research could actually be subsidizing health care in other countries 

It just seemed absurd for a Swede to write a whole chapter on how people try to force ideological solutions onto complex problems and then, right in the middle of it, proclaim that socialized medicine would fix U.S. healthcare.

Book Notes: 12 Rules for Life

I read this book to see what all the hype was about. I had seen some of Jordan Peterson's Youtube lectures and thought they were interesting.

This books is 368 pages long but it would have been better if it was shorter. It has some great practical life advice, and it has some really good discussion of the importance of culture and why communism and socialism are terrible systems. But it also has lots of mythological and Freudian content that I did not find very interesting.

Overall, I thought this was an interesting and different perspective compared to much of what I perceive as being produced in academia today. 

Book Notes: The Prize: Who's in Charge of America's Schools?

I picked this book up because I work in Newark and I wondered about the results of the Zuckerberg gift of $100 million (plus $100 million of additional matching donations) to the Newark public school system in 2010.

My understanding from reading this book is that the Newark district has suffered from serious problems for a long time. The high school graduation rate was around 50%. There was strong agreement that the existing system was failing students. Because of the combination of Zuckerberg money and (at the time) the star power of Corey Booker and Chris Christie, the district was able to recruit some of the top people working in education reform to head up a plan for comprehensive change.

I think this book does a good job of highlighting how difficult things like education reform really are. This is a case where you had 1) complete agreement that the existing system was failing, plus 2) a lot of money to throw at the problem, plus 3) "smart" leaders to design and implement a plan, and what you end up with is a very mixed bag of results. My understanding is that between 2010 and now, Newark has significantly grown the enrollment of some successful charter schools, but that the district schools, which continue to serve the majority of students, have not shown any clear overall improvement. A lot of the Zuckerberg money was basically appropriated by the teacher's and principal's unions as part of contract negotiations and did little to improve teacher quality or provide incentives to good teachers.

There are also some difficult questions of morality. If you can enroll 40% of students in high performing charter schools, but this makes conditions in the other 60% of the district schools even worse, do you do it? If Newark has effectively been using its school budget as a supplement to welfare programs by giving low level jobs like janitorial work to people who otherwise couldn't find work, is that a glitch or a feature of the system? How do you confidently decide that the community disruption caused by firing all those people going to be outweighed by improved student outcomes?

The reforms put in place seem to have been extremely unpopular with the citizens of Newark, and led to the election of Ras Baraka as mayor on a platform that was strongly anti-school reform. Shavar Jeffries, chair of the school board, is quoted as saying "Education reform comes across as colonial to people who've been here for decades. It's very missionary, imposed, done to people rather than in cooperation with people." That is completely understandable and to some degree makes me question the entire premise of school reform.

On the other hand, however, Chris Cerf, one of the architects of the reforms, says "You have no chance of giving these kids the lives they deserve if you don't essentially override the local political infrastructure. There's no chance the political culture would have been able to rise above the question of who gets what. They had their chance." That also makes a lot of sense to me - at some point you have to take away the keys.