On writing

Recently, a client said to me, "Writing is thinking."

Brilliant.

Writing is thinking.

Writing is clarification.

Writing is action.

And few documents are more potent than a well-crafted and well-executed shareholder letter.

Lawrence Cunningham has long recognized the value of a shareholder letter. Cunningham is an authority on corporate governance, corporate culture, and corporate law, and teaches business-related courses at George Washington University that span these fields.

He has written dozens of books and scores of articles on a wide range of subjects in law and business. These include the leading textbook on accounting used in law schools, a popular narrative on contracts, and best-selling books on Berkshire Hathaway and Warren Buffett (The Essays of Warren Buffett: Lessons for Corporate America and Berkshire Beyond Buffett: The Enduring Value of Values).

When individual investors ask what resources to consult when searching for great companies, Cunningham advises them to read the shareholder letter that the company sends out annually.

Next to the financial figures, it is probably the most important and most accessible source of valuable information. These communications reveal a lot about a company and its CEO. In a well-written and purposeful shareholder letter, the CEO's commitment, desires, goals, and long-term visions are all visible.

Some CEOs use their shareholder to obfuscate, others patronize, and many appear to be ghostwritten, but the best ones share business insights that help readers understand a company.

Use these clues as filters, just as you would the company's financial statements. Many companies post such letters on their websites, typically as part of their annual reports.

The gold standard of the genre is Warren Buffett, whose pithy statement from his 1997 letter to shareholders of Berkshire Hathaway sums it up:

"When you receive a communication from us, it will come from the fellow you are paying to run the business. Your Chairman firmly believes that owners are entitled to hear directly from the CEO regarding the current state of the business and its prospective outlook. You would demand that in a private company; you should expect no less in a public company."

In "Dear Shareholder," Cunningham's latest book features letters from more than 20 different leaders from 16 companies - several of my favorite companies, including Amazon, Google, Coca-Cola, and Pepsi.

This book is a powerful go-to for inspiration, creativity, and patience. Written to be consumed more like an encyclopedia, you can quickly jump to topics, companies, and leaders, and read for 30 minutes or three minutes.

Cunningham's collection of the best-in-class shareholder letters provides valuable insights, whether it be better company management or improved communication.

-Marc

Is Wall Street ignoring the next recession?

Wall Street’s calm is striking.

Investors keep betting the US will dodge a recession, but the signals tell a different story. Warnings are everywhere, yet hope is the primary strategy in play. If leaders in Washington keep brushing off these signs, voters will certainly remind them in the next mid-term election.

Let’s talk labor.

Unemployment is low, but job growth has slowed to a crawl. The Bureau of Labor Statistics said there were only 150,000 new jobs in July. For months, payroll gains have lagged. That’s not the kind of trend you want when trying to avoid a downturn. Worse, the government recently admitted it overstated job growth by almost a million last year. When numbers get revised down, it means the ground is shakier than we thought.

The leading economic indicators back this up.

The Conference Board’s Leading Economic Index, which tracks things like new orders, jobless claims, and what people expect, dropped 0.5% in August. Over the last half year, it fell even faster. The index’s “recession signal” is now flashing red, warning that a downturn could be near. Stock prices and easy credit have kept the index from dropping further, but those can turn fast.

Why does this matter?

These indicators have a strong track record. When the labor market cools, job openings shrink, and wage growth slows, a slump often follows. The Kansas City Fed and other regional banks see the same pattern: hiring continues, but more slowly, and layoffs are creeping up. These are not the marks of a healthy, growing economy.

So what’s fueling the risk?

Tariffs and trade fights have already trimmed growth this year. Businesses face higher costs and more doubt about where to invest. The Conference Board names tariffs as a significant drag, and the International Monetary Fund warns that trade fights and policy swings could tip us into recession. When companies can’t plan, they stop hiring and spending.

Regulatory confusion adds another layer.

When rules and taxes change without warning, businesses freeze. Both Brookings and Harvard Business Review find that policy swings are a top worry for CEOs. If Washington keeps sending mixed signals, companies will keep their wallets closed and hiring plans on hold.

Market power is part of the problem.

As a handful of big firms dominate key sectors, the economy grows more fragile. The Financial Times notes that this can exacerbate shocks and prolong recovery. When fewer players control the market, one misstep can ripple through the whole system.

Some on Wall Street claim recession odds have dropped.

Recent surveys put the risk at about one in three for the next year, down from almost half earlier this spring. But one-in-three is not a reason to relax. The Conference Board points out that the depth and spread of weakness across key indicators now meet recession warning criteria.

Hope is not a plan.

Leaders in Congress, the White House, and business must face the facts. The risks are real, and the signals are clear. Tariffs, policy swings, and market power add fuel to the fire. Ignoring these signals means sleepwalking into a downturn that could have been avoided—with more realistic moves.

It’s time to stop betting on luck and start planning for what’s next. The US has weathered storms before, but only when leaders paid attention to the signs and acted before it was too late.

-Marc

Carr speaks. Jimmy sits.

A comedian makes social commentary. A government official threatens action. A network pulls the plug. This isn’t a story from Moscow or Beijing—it’s what just happened to Jimmy Kimmel, right here in the United States.

ABC took Kimmel off the air after Brendan Carr, chair of the Federal Communications Commission (FCC), floated the idea that the network could be punished for Kimmel’s remarks. Carr, on a conservative podcast, said Kimmel’s comments were part of a “concerted effort to lie to the American people.” Hours later, ABC folded. The Walt Disney Company, which owns ABC, put keeping a regulator happy ahead of protecting free speech.

This kind of quick surrender should set off alarms for anyone who cares about open debate and free speech.

When government threats can silence comedians, we cross a line that the First Amendment was built to stop. The First Amendment, which protects free speech, exists to keep government intimidation out of the public square.

But the story doesn’t stop there.

Nexstar, which owns local TV stations across the country, joined in. Nexstar announced it would drop Kimmel’s show from its ABC-affiliated stations. Why would Nexstar back government censorship? The answer is simple: money.

Nexstar wants to merge with Tegna, another big media company. That deal needs the FCC’s sign-off. By pulling Kimmel, Nexstar sent a clear signal to Carr: We’ll play ball if you approve our merger. This is what happens when regulatory power warps the market for ideas.

Let’s break this down.

A comedian is commenting on the state of affairs. A government official doesn’t like them. Companies that need government approval silence the comedian. This chain of events would fit right in with strongman politics overseas. It should outrage Americans.

The danger here is bigger than any one show.

If the FCC can shut down speech it doesn’t like, who draws the line? Today it’s Kimmel. Tomorrow it could be any journalist, commentator, or critic. When we let government officials punish speech they dislike, we lose what makes America different from less free countries.

Business leaders should take note. Companies that bow to pressure on speech turn into tools for censorship. They trade their backbone for a shot at regulatory favors. This kind of deal poisons both business and democracy.

Look at the timing. Carr speaks. Companies scramble. Shows vanish. This isn’t how free markets or free speech work. This is fear in action. When business decisions turn on regulatory threats, not audience choice or company values, the market breaks down.

We’ve seen this before in other countries. Officials target critics. Businesses fall in line to protect deals or licenses. Independent voices go quiet. Democracy weakens. America is supposed to be different. The Constitution is supposed to stop this. Yet we’re watching it play out.

The answer is simple, but not easy: courage.

Media companies must stand up to regulatory threats. Business leaders must call out government censorship, even if it’s risky. Citizens must demand that regulators focus on their real jobs, not policing late-night jokes. Most of all, we must protect the speech we dislike, not just the speech we agree with.

Once government gets to decide which jokes are allowed, we’ve already lost the bigger fight for freedom.

-Marc