Black Swan: Nintendo Wii could top record-holding PS2

The success of Nintendo Wii is a "Black Swan" from my own perspective. I didn't expect that Wii could be so successful, out-selling both PS3 and XBox 360. Maybe some of you have expected that, but humbly, I have to admit that I didn't.

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Learning point:

Technology companies are subjected to extreme and fast changes and "Black Swan" events are happening all the time. However, they are very difficult to predict and the extent of the impact would be massive.

Therefore, it would be extremely but not impossible to value a fast-changing technology companies i.e. Nintendo, Sony, etc.

Warren Buffett likes stable and easily predictable companies i.e. Coca Cola as he could project 10 to 20 years out. Other great investors like Glenn Greenberg, Tom Russo, Li Lu, Bill Nygren, Whitney Tilson, Marty Whitman and others are among members of this camp.

For ordinary investors, it is better to stick to "one-foot hurdle" than "10-foot-hurdle". Great investors like Bill Miller and Eddie Lampert, who are successful in dealing with "10-foot-hurdle" problems, are rare.

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Sales of Nintendo's quirky Wii video game machine could top the legendary PlayStation 2, making it the biggest hit in the industry's history, Nintendo President Satoru Iwata said on Thursday.

Nintendo Co. Ltd. sped past Sony Corp. in market capitalization last month to become one of the 10 most valuable companies in Japan.

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Black Swan: Attack of the mutant rice

Black Swan is a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations. Understanding Black Swan event e.g. the attack of mutant rice is crucial for the becoming a better investor.

America's rice farmers didn't want to grow a genetically engineered crop. Their customers in Europe did not want to buy it. So how did it end up in our food?.......

The LSU rice-breeding station is run by a man named Steve Linscombe, one of the most admired men in the U.S. rice industry. Linscombe, who is 52, has devoted his entire career to developing rice-seed varieties that improve yields and resist pests or herbicides. "He has put millions of dollars into the pockets of rice farmers," says Darryl Little, the Arkansas regulator. "He's a premier breeder."

Because Linscombe understood the risks of mixing transgenic rice seed with conventional varieties, he took extra precautions when working with Liberty Link. To prevent pollen or stray kernels of rice from migrating, USDA rules recommend at least a ten-foot buffer zone around transgenic field tests. LSU's contract with Bayer called for a 30-foot isolation zone. Linscombe created buffer zones of at least 120 feet. Until now, no one thought rice pollen could travel that far.

"I did as much isolation as I possibly could," Linscombe said. So what happened? "I have been dealing with this for nine months, and I still can't give you a definitive answer," he said. Wilson, the University of Arkansas rice specialist, says, "I think we've learned some things about rice, biologically, that we didn't know before."

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