Author Archives: QOW

The Circle of Life

It all started with a walk after the first snow.  A tall towering beech tree was like a rushing waterfall.  Melting snow rushing down the trunk.  It was alive.  I couldn’t get it out of my mind.

The circle of life

The Circle of Life

Enter the oak tree by the lake.  Look at the green circle of melting snow which surrounds it.   I call this the circle of life.   Life from the oak tree flows in a circle and gains momentum with everything it touches.  We are all connected and our circles intertwine.



Economic Jump Start

Evidently there is so much cash slushing around the system that banks are charging for the privilege of safety.   BNY Mellon announced yesterday that they would charge short term depositors, with assets in excess of 50 million, 13 basis points or .13% for the privilege.

If there is too much cash, and evidently the M2 expansion has exceeded 250 billion in the last 8 weeks, why not loan that cash to every U.S. taxpayer at a rate of 1%?   That would amount to 1,860 dollars of purchasing power (2005 taxpayer level)  per taxpayer.   Maybe the consumer can then jump start this economy after all.   Flooding the banks with cash has done nothing substantial to date.


The Common of Human Capital

Jeremy Grantham posted an analysis last week that purported to show commodities in a permanent new relevant range as a virtuous rising trend.   A couple of days later I met with an investment advisor who discussed commodities and investment opportunities in a market which is clearly trying to find direction.   A day later, I had a conversation with another money manager who talked about the absolute grim news which everyone seems to be dispensing at the moment.   There was talk of default on government debt and the disconnect between the economy, the market and quantitative easing.

Then on Monday night a documentary (part 1)   shown on BBC2 came up with a bold new theory.  We can lay all the problems of the last few decades at the feet of Ayn Rand and her philosophy of objectivism that supposedly permeated Silicon Valley and included Alan Greenspan as a supporter.  The philosophy of individualism and self interest clearly failed.

Surely I am not the only one observing such a mix of signals in this world.   I am sitting here on the shores of Coniston Water and across from the village of circa 1000 people.   If I am hearing this, what of the souls elsewhere, in booming boroughs and cities, and in Japan a couple hours north of Tokyo, and in the American midwest and in Afghanistan and in Egypt, Syria and Libya.

The truth is that we live in a vast common.   We share the common of earth, air, and water.   We are so interconnected that whatever we do, whatever action we take, will surely filter through to either the betterment or destruction of that common of earth, air and water.

This week we’re seeing the aftermath of terrible tornadoes in Missouri and the Icelandic ash cloud is once again grounding flights in Northern European air space.   Tomorrow there will be another hit to the common, we just don’t know where.

We don’t like our lives being disrupted.  We have agendas.  We are after all living in a world of self interest, say the objectivists.  Ah, there is a missing ingredient here.  Each person’s own self interest, being interconnected, is actually dependent on everyone else.

We depend on the farmer to do his job and to be successful.  When he is successful, we can buy his produce and eat better food.  We depend on weavers who depend on industry and farmers to produce the materials they weave.  We depend on designers and engineers to produce solutions to the problems of this world and to produce products that make our lives better.  We rely on doctors and nurses to be properly trained and to do their jobs well.  Their success means our success.  We rely on good teachers to teach our children so that mankind has a future on this earth.  Their success means the success of our children and the success of mankind.

It is ridiculous to discount the triumph of the human spirit and the great ingenuity and power of human capital.  But there is only one way we will find our way through.  We have to tap into the divine power that put us and this planet together.

Have you never wondered at the ingenuity of our programming?  Is it not awesome that a seed, with a little sunshine, earth and water, manages to produce a tall towering beech tree?   Are we even remotely necessary to this process?   This earth and the devices taken for granted by man, run on principles which have been sewn into the heavens.   Meditate on this for a time, and you’ll surely find the source of power which drives and will continue to drive everything in the known and unknown world for all time.


Where are the Buyers?

How extraordinary it is.  Now that efficient market theory is officially dead.  Now that we have had endless days of black swans.  The new black swan is the .0229% change day.

Not that long ago, people were fighting for a piece of the action.  Driving oil ever higher, we heard endless talk of how the days of cheap oil were over.  Today oil hit a target price not seen for 5 years.  Some analysts are projecting something even lower for the future.  Where is demand they say?

Dow still seems intent on doing a deal, at an outrageously high price that was considered high when the market was strong.  What kind of management would continue to support such a plan?  Will the shareholders get a chance to weigh in with their views?

There are some incredibly good buys out there.  If I were intent on buying a piece of America, a bit of oil for instance, I would choose this time to buy.  Why does no-one think of buying when the price is low?  Even if the price goes down from here, it has less far to fall than the drop from the previous lofty heights that put so many assets in play.

This correction has been far harder and far faster than the rocketing market that lulled so many to sleep.  That hedge funds, who for some unexplained reason have been able to perfect their craft outside of the normal scrutiny of the SEC, have been unloading at fire sale prices is part of the problem. Shame on us all for letting them get away with their closed shop model after the LTCM debacle.

There are risks now that we will lose our way.  We need to look through the carnage around us and set a course for the future.  Cheap oil will not encourage the search for alternatives even though not all of them come with a high cost.

How do we want to relate to the wider world?  How do we want them to relate to us?  How can these ideas filter down to the everyday lives of Americans?  In a world where the production of more stuff creates more environmental damage, are our current pricing strategies creating the world we want to live in?

These are big questions.  If the market really is telling us something, it is that there are a lot of unanswered questions about who we are and where we are going.  In the meantime, where are the buyers?  When my husband and I stayed at the Grand Hotel on Mackinaw Island this past summer, we learned that the current family ownership dates from a purchase by an employee during the depression.  The day will come, when everyone will be kicking themselves over the markdowns of America’s finest institutions.  These companies represent years of history, years of good honest labor for and by Americans and many other citizens around the world.  What does it say when we shun what we have spent a lifetime and our heritage building?  This is our family.  This is our history.  It is time to stand by it or we will lose it all.


A New Vision

In the middle of this battle for financial confidence, all hands are on deck fighting to preserve capital.  Now that the battle is being waged, rather than spending all our capital trying to eke out a return, it may just be time to dream.

What kind of a world do we want to live in and what will it take to make it happen?  Beyond the mark-downs, beyond the lay-offs, beyond the bursting of this over leveraged bubble, how do we really want to live?

On the BBC web-site today came the following announcement:

Mammals facing extinction threat

By Richard Black
Environment correspondent, BBC News website, Barcelona

Caspian seal (Simon Goodman/Leeds University/Caspian International Seal Survey)
The seas are one of the ecosystems threatened by human activities

At least 25% of the world’s mammal species are at risk of extinction, according to the first assessment of their status for a decade.

Whilst we are all impacted by the events taking place around the globe in the financial markets, we could be in an even worse position.  Do we want to create real lasting wealth or do we want to create ilth? 

Rather than strangling business with more regulation and taxation, now is the time to increase rewards to those who create real, lasting value.  Which ever candidate wins the White House, this should be the real focus of the platform – wealth and value creation – in people, in education, in health, in the environment, in art, and in science.  Rather than creating hostile forces that punish companies for the business they are in, create incentives for transforming each and every business.  Rather than relying on government to clean up every mess, let the private sector take the risk and reap the reward. 

The deal between WB and Wells should be allowed to fly and it should be allowed to take place at speed.  Dithering only reduces the value of both institutions.  Together, they will be able to set an example for others to follow.

In fact, this may be the beginning of new co-operation around the globe.  It is clear more than ever before that we are all interconnected.  If we work together, there will be no end to what we can achieve.  Forget the talk about the coming recession.  This is the time to sow the seeds of a new beginning.  Americans cannot live in a world without hope.  They don’t need more talk about reality which is staring them clearly in the face.

As I look out my window, the mountain beckons from across the lake. A mist is rising to meet the clear blue holes poking through the clouds.  Sheep are grazing below in a green field peacefully.  The oak tree stands tall beside the water with its limbs seeking to touch the sky.  Contrary to all the evidence in our financial markets, the sky is not falling.  The earth is full of God’s glory.  Perhaps it’s time we sat back and took stock of the vast wealth that resides in our backyards.  Every journey starts with a single step.  Take off the black hat of doom and breath the air while you still can. 

This is not 1929 and we will not be down for long.  We have a golden opportunity to dream a new dream and each and every person on this planet is part of the story.  Let America start the ball rolling.  And when we dream, let us follow through and help everyone we meet along the way realise their dreams too.


A Sharp Merchandiser Could Cure SHLD

SHLD is a languishing star and needs a good kick up the backside.  No yard sale can cure its ills. It has strong core assets – Lands End, Craftsman Tools and Kenmore Appliances are stalwarts.  The problem is lack of investment in people, property and merchandising.

Go into a Sears store and you will not find anyone to help you and those souls stuck at the till are forced to do nothing but ring up the sale.  No knowledge is being deployed on the floor or off. I tried to find infant clothes for a one year old child while shopping this Christmas.  Other than seasonal garments, I found the organisation of apparel appalling.  It was impossible to find light cotton clothing in an infant size 1.  What I wouldn’t have given for a properly organised display and some help on the floor.  The sales floor was completely empty.

Properly trained and motivated staff on the floor could go a long way to stem the bleeding.  Add a touch of merchandising and a little spit and polish and SHLD will sparkle brightly again.


Time for Galt’s Gulch? European Vultures Feast on MSFT

Europe is hungry, hungry for cold hard cash.  MSFT has just the dope.  No, they haven’t committed a crime.  Is anyone forced to buy MSFT?  Have they hurt the consumer?  The last time I looked, prices for new PC’s had cratered to all time lows.  I walked into PC world to pick up a portable hard drive the other night and there were systems marked down in boxes stacked three deep by the till for £230.

The cash generated by MSFT is being used for Africa.  This charity bandwagon was clearly resented by the snubbed noses of the European Commission who said, ” We have poor fellows too.” Aid not trade has backfired.  Too much aid and not enough trade in Africa and now even the nouveau riche want aid.   

Where are those cigarettes with dollar signs?  Where is John Galt?  Certainly not in the bleeding EC.



What do you do when it has rained for days with no sign of stopping?  I was on the phone with a friend from across the water when I heard a bleating sheep pass my window.  Not so unusual for the Lakes BUT not in front of my window.  I looked out and there was a whole herd running down the road.  Sally, our Estate Manager, quickly reined them into a holding bay.  HELP!  They were eating the trees and literally taking whole cleavers and sucking them down.  I raced downstairs.  A local farmer just happened to drive by.  We walked them back to their field in the pouring rain – me with a stick looking stern at the back, Sally bravely opening the gate, and Bill leading the gang in the car.  Three fields down there was a two meter gash in the wall.  A couple of pallets were found to fill in the gaps…. Onto the real story – Crag Head, part of the Brantwood Estate, is total heaven.  The path is a feast for the eyes – every colour of green sparkling in the wet cloud.  The terraced landscape and earthen rock paths (it is solid rock beneath) make each step a treat.  The higher one goes, the more varied the landscape.  The closer to Crag Head the more open the moorland.  Right now the bog asphodel is bright yellow, there are a few pink flowers on the heather, the orchids are tall and bold in their pale purple splendour and the juniper trees look wild in the wind.  The glacial erratic at the top reveals a 360 view of all the mountains surrounding.  Now I know why Ruskin said, “There’s no such thing as bad weather only different kinds of good weather.” Brantwood, Coniston, 7 July 2007

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