The last two weeks have been…well…work has taken more time than usual recently. And I guess that’s going to be the new usual. Plus, traffic has been awful. Awful. I don’t know if I’m making a note to myself here or if I’m speaking to you, reader. But stuff is gettin’ real.
I have been fascinated reading and savoring Adventure Capitalist by Jim Rogers. What is this book about? Really. Is this a book about investing around the world? Is this a book about the state of morality around the world? Is he taking a vacation or making a case against global intervention?
Yes. Especially the morality part. Because why would you invest with immoral people?
I mean moral here, not religious. Moral. There are few investment opportunities when you are marketing time with impoverished women but he comments on market availability and price wherever he goes. I’m not kidding, man. Every chapter there is something about prostitution. Why? Because in some places there are no jobs. There is no opportunity. There is only one thing to sell. Women in eastern Siberia could sell it to tourists from the far east for a higher price than the ladies a little to the west who lacked access to tourists. But before you get your hackles up about male Japanese tourists taking advantage of underprivileged women in Siberia, flip ahead to the trip to Africa and the detail of single, young women from Europe traveling to Gambia for the same purpose. This is not an issue of race nor of sex.
But why is there no opportunity when there are so many Mercedes driving around? Because they are stolen in Brazil and shipped to Siberia. And because of aid programs that are only aiding those strong enough to muscle to the front of the line.
“I have called ahead,” he said. “You won’t have any problems.”
He had called his people two or three cities down the line to smooth our passage.
“If you do have problems, let me know,” he said, “and whoever it is, we will have them killed.”
He was serious. This was not bravado. (For the price of a decent night out in the United States, you can have somebody killed in Siberia, and in Siberia these days, the latter seems to be the more common practice.) So we had the mafia’s protection…
So this is a book about morality.
Capital has its own laws as inexorable as those of gravity. Until Russia comes to respect capital, to provide for its safety and nourishment, capital will not come to its aid. Intelligent capital does not aid thieves.
But it is also a book about investing. Last week a reader was hoping for some insight into how the author’s predictions have turned out all these years later. While in Japan in 1999 Jim wrote this:
I am convinced that the Japanese economy has hit a temporary bottom and that a prosperous time – call it a rebound – is coming. I am looking for stocks to buy for the medium term. Furthermore, the Bank of Japan – in time-honored, economically blundering fashion – has made it pretty clear that it is going to start printing money. And when governments print money, one of the first places the money winds up is the stock market. I believe that in the short term the yen will rise against the even more fundamentally weak dollar, so not only will certain stocks do well, but the currency will also advance along with stocks, doubling the impact of my purchases. Again, I am speaking of the short or medium term. The Nikkei is not a place I expect to have money for the next ten or twenty years. Japan is sailing into the wind…
Welcome to my blog about our family farm. Let’s talk about investing in the Yen 15 years ago, shall we? It may seem like a stretch but this fits the blog very well. We have to make the most of our available resources so the next generation will have the chance to do the same. I could screw this all up. I could be the generation that breaks the family legacy. I have to make the most of my opportunity to position the land, people and resources to have a positive impact on our community and our ecology far into the future. Or we should just pack it up and move back to town. SO I, Chris Jordan, in real life, away from the blog, hidden from view, read at least as many financial publications as I do farming publications. Probably more. And you know what I have learned over the years?
Popular financial “experts” are clowns and are unworthy of my trust.
But let’s look into what may have been for the claims Jim made above. Let’s go back to 1999. I don’t know when he arrived in Japan. It might be in the book but if so I missed it. Let’s say he drove across Europe and Asia in four months…as he was in Russia during the summer. OK. That puts us in April of 1999. On April 1 the Yen was, apparently worth $0.0083. By 2007 it had not changed much…$0.0085. Maybe that’s a bigger change than it appears. Maybe I missed some major fluctuations in there along the way. But that’s the window of time I’m going to stick with. Less than 10 years, right?
So what about Japanese stocks? He makes no individual recommendations. I’m sure we could cherry pick the stars out of any bunch if we wanted but let’s just stick with the index. If he had bought the Nikkei 225 on April 1, 1999 it would have been 16,701. On April 1, 2007 it would have been 17,400. Not much happenin’ there. I guess he could have operated on a shorter window of time and done better. Of course, the book wasn’t written in 1999. He was driving then. So maybe he looked back at his notes from Japan in 2002 or 2003 and decided to buy at that time. In April of 2003 the Nekkei was at 7,831. He could have sold it at any time after that and come out ahead.
It’s not clear. It’s not our business either. But what is our business is understanding that there is no clear, straight line to riches especially when following advice written by some stranger 15 years ago.
But I do agree with his statement that equities tend to rise when money gets cheap. Apple doesn’t know what to do with their $300 billion in cash so they are buying back their own stock. They have enough cash laying around to build two copies of the international space station and they are buying apple stock as if that’s the best option.
I don’t understand. It probably is the best option. It puts money in the pockets of the executives. But it weakens the company’s financial position. If you are interested in this topic you might read this essay.
I’m not a financial adviser. I’m not an investor. I don’t own apple stock. I don’t own any part of the Nikkei. I don’t own Jim Rogers. I own cows. When I have more cash available I put it into more cows. The plan is simple. Over time, by reinvesting a portion of my profits (keeping heifers) my investment grows. That makes sense to my limited intellect. The stock market makes no sense to me whatsoever. I guess if I had no other option and had no idea what to do with a mountain of surplus cash I might consider handing it over to someone else to help build their business. But right now I have my own business to build. Mind your own business.
But I digress.
I wouldn’t look at this book for investment insight. The little it offers is neither specific enough nor timely enough to act on. But the discussions surrounding each mention are worthy of your time. We live in a complex world. Humans tend to exaggerate that complexity. It’s a level of complexity that confounds the efforts of world-improvers everywhere.
I was told that there were more top-of-the-line Mercedes in Moscow than in any city in the world…Where does this money come from? It pours in from the IMF and the World Bank, which are funded by the world’s taxpayers. In 1998 I testified before Congress, which, following the collapse of the ruble, was planning yet another Russian bailout. I said then that both the IMF and the World Bank should be abolished.
Self-perpetuation and ever-growing bureaucracies founded after the Second World War, these institutions have long since diverged from their original mandates. Their analyses are hopeless, and their prescriptions are worse. There are no external, independent audits to determine the long-term efficacy of their projects. The greatest beneficiaries of their programs are the twelve thousand bureaucrats who work for them and their well-funded and well-protected pensions. I have made a career of analyzing financial statements, and I have yet to see a financial statement of either the World Bank or the IMF that I can understand, nor have I ever met anyone who could explain them. Whenever I have found this to be true of corporations, it has always been a sign of serious problems.
At this point I’m only sharing quotes from the first third of the book. Wait till you read about his trip through Africa. And I think you should. I really enjoyed this book. I’m not reading it for ideas on where to park or invest surplus cash. There is no surplus cash and no shortage of ideas on how to “invest” any that comes my way. But the book is fascinating in other ways. The crossroads of desperation and morality. When you have nothing left to sell, apparently you sell time with your daughter.
Maybe I have been too sheltered. Maybe my upbringing was too perfect. Too protected by my parents who did too good of a job making sure we learned the value of work, brushed our teeth, ate our dinner, did our homework, stayed active in sports and went to bed on time.
This Week in Other Printed Media
Our insurance company markets to specifically to farmers. We pay for membership to their little organization, they pay lobbyists to influence legislation and that’s how it goes. They write a weekly propaganda letter to send out to subscribers. There is no intention of impartiality nor of journalism. It’s all propaganda. And it’s truly amazing. Truly.
I rarely read it. When I do it’s because something caught my eye as I am crumpling the newspaper up to help start a fire. And I want to point out, whatever paper they print this on doesn’t burn well.
This week, as I was starting the fire with an empty paper feed sack and a little of the propaganda paper in question I noticed an article, “Chipotle CFO claims no fear intended.”
In short, Chipotle made some advertisements that implied that current conventional agriculture was..well, maybe not what we want to do with our resources. And Chipotle proposed itself to be the solution.
The Illinois Farm Bureau hopes to talk to Chipotle about the sustainable practices of Illinois farmers. Chipotle doesn’t want to talk to them. So IFB says they are doody-heads. And, just taking a stab in the dark here, Chipotle says the IFB are doody-heads because they are an extension of Monsanto…more doody-heads. And that summarizes the article neatly.
I’m not taking sides here. But the discussion can’t focus on bureaucrats vs. mega-corporations. If you want to help farming families grow and prosper, why not help them identify niches they can fill to achieve a higher profit margin? You can still grow corn if you want. You just have to do things a little differently to make a little more money. But I don’t think our policy-makers are truly concerned about helping farming families grow and prosper.
I’m also not entirely sure that Chipotle is interested in helping farming families grow and prosper. But at least we didn’t elect Chipotle to help farming families. The good news about businesses is that they can go out of business. Bureaucracies are harder to get rid of.
So it went into the wood stove.
So this silly goal of mine to start and finish a book a week in 2015…it hasn’t held up. And I’m not sure it should. The pattern is fairly simple, I get busy throughout the week. Work, farm, family, Minecraft. Then the weekend arrives. Friday night I cram in a couple of chapters. Saturday I try to read a little bit throughout the day. Saturday night I stay up late turning pages. Sunday morning I get up about 4:00 and read and write and flip back through looking for memorable quotes to share. That’s tough.
I’m not saying it’s impossible. I’m not saying it’s going to stop. I’m just saying it’s wearing on me. I enjoy reading. But I’m not sure I enjoy this pace. It is nice to be finishing so many books though.