Jay, I was just sitting comfy, pondering on a blustery but sunny spring day. Reading your thoughts and those of The Daily Reckoning the comment by Warren Buffett [reported in there] that if an investment doesn't have a moat around it, the margins will be eroded to cost of capital competitive returns.
Also that various asset classes have their day and that the best time to move to the next fashionable asset class is after the last one has ended [1990s Biotelecosmictechdot.com, Dow and S&P] and vast swirling trillions of money is wondering what the heck to do next.
I mentally scanned the planet for such mother lode [which is not a subliminal reference to Au of Aztec form]. It then popped into my head that I am sitting right here with a very large moat around me. The next piece of serious land is Australia, which also has a decent sort of moat.
Perhaps, given the dangers around the world, the original reasons for my descendants going on arduous journeys to the most distant shores might get a replay. Maybe I should invest in a few things here, ready for the desperate refugees from global mayhem who wish to buy in for a princely sum.
Meanwhile, the QUALCOMM moat seems increasingly robust. Texas Instruments, Motorola, Nokia and other giants are failing to make cdma2000 sing - only QUALCOMM is zooming ahead with successful implementations.
<The Bank of Japan soon will begin purchasing depreciated stock holdings from dysfunctional banks in an attempt to prevent the sector's collapse. Most observers agree the move is economically unwise, but they have missed the bigger point: The BOJ's governor has given up hope for saving Japan's banking sector. >
That little quote makes me feel a little queasy. It doesn't worry me too much, because this is all deja vu from 1980s New Zealand - eerily similar but on a 6 billion person scale instead of a 3 million person scale.
Bank of New Zealand was going bust in the late 1980s, for the same reason that Japanese banks are failing. The government got the heebie jeebies about the fallout from such a failure and rescued the situation with lots of citizen money. I had thought they should simply wait until the shares went to $1 market cap, then buy the thing, inject a bunch more money taking over the assets. But they gave money to the shareholders instead.
They did a similar thing recently with Air New Zealand which was on its way out. The government put in $800 million or so for 80% of the shares. They also put in an ace CEO [Ralph Norris who is one of the admirable people on the planet].
The woeful news items about war etc doesn't worry me too much. There have always been wars and stuff. Now it's a big drama if 3 civilians who chose to get in the way are killed in Jenin and a wedding party, which I suppose celebrated by firing a few rounds at a passing USAF jet, is obliterated. While that isn't necessarily ideal for any innocent bystanders, keep in mind that B52s used to fly in large formations killing millions in Vietnam, Hiroshima involved a nuclear bomb attack on 100s of thousands of civilians, Pol Pot murdered millions, Srebenica involved about 7000 males, Rwanda, the Gulf War, Iran vs Iraq, Korea and China and USSR vs USA, etc, etc and even WWII overall, with vast mayhem and destruction and murder, barely dented progress.
The world seems able to cope with very large scale mayhem at times and people go about their business as normally as they can.
Some UN pontificating and USA sabre rattling and Saddam Statesmanship aren't really much to worry about. Afghanistan is back to normal. Al Qaeda is in a shambles despite claims to the contrary - sure they might blow up the America's Cup village and a few buildings here and there. Big deal.
I'll start to worry about fiat money printing stuck at 'on' when some inflation starts to happen. At present, deflation is still what worry warts go on about. Governments can just cut taxes and print themselves some more money to spend on bombs, regulatory suffocation, meals, travel and salaries.
Wars of a pre-emptive nature or for self-defence both involve a lot noise, commotion, death and destruction, so Pakistan is unlikely to pre-empt an attack by India by nuking Madras, China is unlikely to repossess Taiwan, Syria is unlikely to pre-empt an Israeli attack by blowing up Tel Aviv. That's because the mess and retaliation wouldn't be worth it.
The USA can preempt Saddam with little consequence. The worst he could do is cut off Iraq's oil, which would have USA and other oil companies snickering up their sleeves and wouldn't distress Dick Cheney, GeorgeW and their oil buddies at all. If one could only judge matters by who benefits, one could imagine that cutting off Iraq's oil is the aim - stopping competition has been a time-honored way of improving sales and profits.
Naive but patriotic Americans think that America is a unitary mass with common interests. However, Exxon does not have the same interests as an SUV driver. Exxon has high production cost North Slope oil and Iraq has very low cost oil. If oil is $30 a barrel instead of $10 a barrel, that is very good for Exxon, BP, Shell, French, Canadian and Japanese nuclear power producers, Russian oil fields.
Heck, even Chinese coal producers would find $10 a barrel oil putting them out of business. Hu Jintao would have a bunch of irate coal miners on his hands if oil was too cheap. Never mind that China's coal mining methods still leave a lot of dead miners and that they'd be better working in cdma2000 phragmented photon phactories, assembling pixelated cyberphones.
I still have half my Mighty Q! stock.
Companies with money in the bank, profits on the bottom line, growth rates like cdma2000, markets of 6 billion, technological trajectories to the future and moats will separate increasingly from those with debts, depleting cash, no profits, poor growth, limited markets, obsolescent technology and breached moats.
I am sitting on my hands. I will watch GE, JPM, Citi, Ford and other biggie graphs which are a couple of years behind those who sagged down, down and down over the last 2.6 years.
I am being patient.
Mqurice |
