On this episode:
We have our second QAV Club subscriber guest, Paul, a criminal lawyer from Sydney, who calls himself “a disastrous investor”.
Paul asked Tony a bunch of great questions about the checklist, including drilling down on why Tony doesn’t try to understand a business deeply before he invests in it (like Warren Buffett and Peter Lynch), and about understanding how to factor in shorting.
Cameron reads out some quotes from “Winning The Loser’s Game” by Charles D Ellis and gets Tony’s comments on them.
Our stock deep dive of the week is MRC – Mineral Commodities
Killer Clowns & Terror Drones
The oligarchs have worked out the model for getting people to vote for “killer clowns”. The Democrats gave Trump $738 billion to buy weapons. And America is using drones to terrorize the world.
On 15 August 1929, a rowdy group of Jewish Revisionist activists marched to the Western Wall proclaiming “The Wall is ours”. They insulted the Prophet, Islam, and the Muslim community at large. It lead to large scale riots and violence. The British were powerless to stop it. This lead a band of Haganah officers set up their own group, called “Haganah Bet” or “Haganah B.” It would later be called Irgun and described as a terrorist organization by the United Nations, British, and United States governments.
According to Suetonius, Caligula was quite proud of his “adiatrepsia” – shamelessness. He lived in habitual incest with all his sisters and was especially fond of Drusilla. He made her divorce her first husband and marry his friend and lover Marcus Aemilius Lepidus. In 37 he interrupted the wedding of Livia Orestilla so he could marry her himself – and then kicked her to the curb 24 hours later. Then he made Lollia Paulina divorce her husband and marry him – but he tired of her in six months. Then he married Caesonia, “a woman of reckless extravagance and wantonness”. Six months into his rule, Caligula fell seriously ill. While he was sick in bed, Macro and Silanus apparently prepared for the worst. They started the wheels in motion for Gemellus to be declared the successor.
From 1921 – 29, there was mostly peace in Palestine. But the Zionist immigration continued unabated. And the larger they got, the more politically aggressive they became. In 1925, a new Jewish right-wing political party, Betar, was created, aligning itself with Mussolini – making them fascist Jews. They urged the Palestine Jews to demand full control of the Temple Mount, the site of the old Jewish temple and called by Arabs al-Haram al-Sharif (the noble compound or sanctuary), the third-holiest site in Islam.
Piero de Medici engineers a commercial coup for the Medici family that makes up for all of their recent losses. He takes over the Pope’s alum business. Alum was the mineral salts derived from volcanic deposits that were used to make dyes for cloth. Essential for the Florentine textile business.
Meanwhile Piero continues to extend Medici patronage to Florence’s artists, including Antonio di Jacobo Benci and Fra Filippo Lippi, one of the craziest and ballsiest guys ever to hold a brush.
On this episode:
* We have our first QAV Club subscriber guest – Murray Bruce from Bruce Insurance in Perth, one of our first subscribers. He asks Tony a question about whether or not he is comfortable purchasing any share that rates well, or does he do additional research on the company before making a buy.
* We discuss how much attention you should pay to stockbroker / investment banker ‘buy’ recommendations, based on an email I got this week about Scentre Group.
* We talk about Melbourne investment management firm Six Park and whether or not they should be proud of underperforming the All Ords.
* In our analysis section, we go deep on Tribune Resources (TBR)
In the early 1920s, violence between Muslims and the Jews continued to escalate. Because they didn’t trust the British to defend their interests, the newly formed (and illegal) Jewish self-defense organization, the Haganah, was formed. Churchill came to visit Palestine – and made things worse. Without a doubt, the British military continued to favor the Arabs. General Sir Walter Congreve, commander of British forces in the Middle East, said in October 1921: “In the case of Palestine [the sympathies of the Army] are rather obviously with the Arabs,… the victim[s] of the unjust policy forced upon them by the British Government.”
How does a 24 year old kid, who’s never even been on a battlefield, let alone lead an army to victory, get declared “imperator”?
How would you handle it if you were granted ius arbitriumque omnium rerum (‘power and authority over all things’) and declared princeps legibus solutus (a princeps not bound by the laws)? Would you be able to handle it?
We know we wouldn’t. Who would we have killed? Find out on this episode.
Finally, in 2002, a poor, uneducated farmer and union leader, Evo Morales, ran for the Presidency, coming third, despite the US ambassador warning Bolivians that they would be punished if Morales won. Then, in the general election of December 2005, Morales did win, becoming the first indigenous President in a country where 62% of the population identified as indigenous. The US, of course, were furious and immediately tried to get him thrown out.
The Pitti faction get Soderini elected gonfaloniere and install an anti-Medici signoria but they can’t get the guilds, who remember the troubles of the pre-Cosimo years, to agree to banishing the Medici. So the Pitti party decide to try an armed revolution, calling in support from Venice and Ferrara. In the middle of all this, Francesco Sforza dies in Milan and his house is taken over by his craaaazy son, Galeazzo Sforza, who liked to rape noblemen’s wives and tear his enemies limb from limb.
This week we talk about why our portfolio outperformed the index by 1300%, the wisdom of Peter Lynch, why Howard Marks wants to stay in the middle, and our stock analysis of the week is Universal Coal.
When the British finally captured the Middle East from the Ottomans in October 1918, under the command of General Edmund Allenby, with the support of TE Lawrence and his Sharifians, Hussein and Faisal, the British immediately tried to walk back on the Sykes-Picot agreement. They figured they did all the hard work, so fuck the French. Most British officials believed that the Arabs could be persuaded to live with Zionism. As Lawrence put it: “There would be no difficulty in reconciling Zionists and Arabs in Palestine and Syria, provided that the administration of Palestine remained in British hands.” In April 1918 Allenby established the Occupied Enemy Territory Administration (OETA), headed by Major-General Sir Arthur Money, with Brigadier G. F. Clayton as chief political officer. As you’d expect, they looked down on both Jews and Arabs. Money, for one, said the Jews of Jerusalem were “bringing up the rising generation in their schools to be dirty, idle wasters.… Their men turn out more idle wasters and their women more prostitutes than the rest of the population put together.” And he regarded the Jews “as a class inferior morally and intellectually to the bulk of the Muslim and Christian inhabitants of the country.”
We pick up our series on the political history of Bolivia in 1943 with the government of Major Gualberto Villarroel López, which ended in violence and his assassination a few years later. The country continued to have coup after coup. In 1967, Che Guevara tried to start a revolution in the country, which ended up with his execution by the CIA.
Outrage at Che’s execution lead to a leftist coup in Bolivia under General Juan José Torres – but that was overthrown when Henry Kissinger urged the CIA to “crank up an operation, post-haste.” This resulted a new right-wing military coup, lead by Colonel Hugo Banzer. Torres was arrested, tortured and executed as part of Operation Condor, the U.S.-supported campaign of political repression by South American right-wing dictators, and which ran during the Johnson, Nixon, Ford, Carter, and the Reagan administrations, resulting in the deaths of an estimated 60,000 people.
In 1464, with the death of Cosimo, his only surviving son, Piero di Cosimo de’ Medici – or Piero the Gouty, ‘il Gottoso’, as he came to be called – took over. He was 48 years old. He would survive – and rule – Florence for just five years. Piero was perceived to be so weak and ineffectual that long-standing friends and allies of the Medici turned against him and the family. It was a decision they would live to regret.
Tony talks about rights issues and some of the complexities involved in knowing whether to take them up or not. I know, right? Sounds boring! It wasn’t actually, I learned a lot. We also discussed a few recent news articles about value investing, Tony reveals his wine of the week, and in our analysis section we breakdown the financials of Horizon Oil.
As I’m posting this late in the day on 2019-12-04, our portfolio is out-performing the All Ords by 1300%!
I know that won’t last, but it’s a nice number to see, even if it’s just for a single day. The ASX had a bad couple of days, down 3.5% since Monday, thanks, so I’ve been told, to Trump’s intention to impose a 25% tariff on steel and a 10% tariff on aluminum imports from Brazil and Argentina. Our portfolio hasn’t moved much though. Perhaps because we’re already buying the stock at a discount to their intrinsic value?
Still, of course the ASX will pick back up and we’ll be back on track for our 200% benchmark at some point. I wonder how many companies just went QAV positive today?