Archive for the ‘Uncategorized’ Category
Reminder: The much greater mystery is why people don’t go on shooting sprees or crash planes on purpose ALL THE TIME.
Every so often, I take a trip somewhere a bit off the tourist radar. This last month it was Ecuador. No not the Galapagos, but Quito, the Amazonian rainforest, and Otavalo in the Andes high plateau. A few things I was surprised by:
- Roses, the long-stemmed variety, are a main crop, making Ecuador the #2 exporter of roses to the US after neighboring Columbia. Our local guide said that roses grew so well because at the equator, the sun is always overhead and thus the roses grow straight up. I read that the US eliminated trade tariffs on roses for several SA nations (to the chagrin of domestic growers) in order to encourage a switch from coca production.
- Coffee. They grow it but they do not drink it. A Google-search shows that the nearest Starbucks is in Northern Peru
- The Incas are not the indigenous peoples of Ecuador. They came from Bolivia as conquerors of the Quitus, the local natives. in the early 1500s. The Incas lasted less than 100 years before being wiped out by Pizarro’s Conquistadores.
- The US Dollar is Ecuador’s official currency. having replaced the Sucre, which collapsed some ten years ago. Local ATM’s dispense $20 bills. For the US tourist, this eliminates the problems of having to mentally convert prices. It does however make Ecuador a bit like Greece & the Euro.
Historian Juan Cole was one of my must-reads in the wake of 9/11. Had more of us paid attention to Professor Cole’s line of thought regarding what al Queda was trying to accomplish, the US might have been saved going to war in Iraq.
In response to the gruesome murders in Paris, Cole offers this analysis Sharpening Contradictions. Much as with 9/11, this attack, Cole argues, was less an act of revenge as much as yet another attempt to horrify and to provoke. What could be a better recruitment tool to rally the vast and largely disinterested Muslim world to their cause than goading the West into taking violent and indiscriminate measures against Muslim populations and countries. These are classic agit-prop tactics, employed to great effect by Stalin during the Russian Revolution, and revolutionaries of all stripes since. See the classic film The Battle of Algiers.
Time will tell whether the recent atrocities in Paris provoke a further and violent tilt to the extremist right parties in France and other European nations.
Bloomberg printed a very well-researched article yesterday on the sequence of events that led to September’s surprising departure of “bond king” Bill Gross from the Newport Beach firm he founded.
To anyone who paid close attention, there had been trouble brewing at PIMCO for some time, evidenced by the sudden departure earlier this year of co-CIO Mohamed El-Erian. My own concerns date back to 2010. As an investor whose client accounts were heavily allocated at the time to funds under Gross’s management, I grew concerned by the ballooning of Total Return’s assets and the increasing use of derivatives in PIMCO’s flagship fund. PIMCO’s decision that year to enter the equity business, having been a bond-focused shop since its start, raised yet more red flags for me. And then, performance at Total Return started to lag. As I wrote in this 2011 article for Advisor Perspectives, the under-performance did not appear to be a blip but more likely indicative of the larger systemic problems that had been building over time. We steadily reduced our allocations to PIMCO’s Total Return from a peak of more more than 10% of assets under management in 2009 to less than 3% by the start of 2014.
Bill Gross demonstrated for more than two decades that he is one of the most astute managers of fixed income on the planet. It will be interesting to watch whether he can rediscover his “mojo” at Janus. Given the advantages available when investing with a very small start-up asset base, it would not surprise me to see Gross score big right out of the gate. What is less certain, as assets under management start to grow again, is whether Gross can routinely add “alpha” over the benchmark as he once did. The odds of this, judging from the records of other “star” managers who lost their footings and attempted to start over, is not encouraging.
2014 has been a good year for us and for our clients. I hope that we all remember to share our good fortunes with those in need, or with those who may be less fortunate. For our part, MW Investment Strategy is making our traditional year-end company contributions to food banks serving the following communities where our clients reside:
- San Francisco/Marin
- Alameda County
- Contra Costa County
- Redwood Empire
- Napa County
- Santa Clara County
OUT OF STATE
Zweig, lately at the WSJ, is one of my favorite commentators on investing. A devotee of Benjamin Graham, Jack Bogle and Warren Buffett, Zweig offers up this great basic library for anyone who takes their investing seriously. From the classic Where Are The Customer’s Yachts? by Fred Schwed to my own favorite of the last decade, Daniel Kahneman’s Thinking Fast and Slow, Zweig’s list covers a broad range of personal investing topics, with not a bad selection on it.
Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.
-W. Edwards Deming
see also Ken Blanchard’s Raving Fans, the book that inspired me back in 1997 to start an advisory business that actually put the clients first.