Saturday, March 22, 2008
Back from Australia
Essentially the simplified "note to self" was to look for, and take, the really big moves when they show up. This is something from the game of go. You can play go and have every one of your stones be a good move and still lose the game because you missed, at a few key points, very big moves which change the entire direction of the game. Sometimes what seems like a good big move is wrong, but that's ok. Mistakes will happen regardless of whether you're playing it safe or looking for big moves. That is what I saw last night! [ValueClick was a big move, but I treated it like a garden variety investment.]Another observation was that in larger markets, there's a stonger incentive to scale things. This may not seem important, but I've observed more than one highly successful entrepreneur who didn't scale up their business because of a personal choice. I believe that when China and India become part of the global middle class and as the world becomes more of a single market, the incentive will be much stronger for any given local success to scale up to a global level. And there will be specialized businesses whose purpose is to assist others in scaling up like this.
At this point in time, I've had enormous amounts of time to evaluate and shuffle my investments. I believe that I now hold a basket of very big moves, although the market prices are all down.
So many brands in Australia are American: McDonalds, KFC, Krispy Kreme, Calvin Klein (the jeans cost US$120), Safeway, etc. General Motors owns Holden, a big car maker there. I walked through the the stores at a mall and through a Safeway and found a remarkable number of same or similar brands. Even vegemite is sold by Kraft. In spite of this, everything there is a bit different, so it's like an alternate universe directly beneath the feet of Americans.
I saw real signs of inflation in Australia. Housing prices are unsustainable in Melbourne. Products and services are expensive and the costs have been rising.
Of course, out of the blue and without any warning, I stumbled into a black swan.
I have followed this blog for a while...much enjoy it.
Couple of questions:
1) Link to "semi-private" blog? Or, not?
2) I have read everything on this site related to Uranium. I like the Strathmore play. Any update?
In my opinion, now is a good time to apply a Peter Lynch rule that you re-evaluate stocks to see if the "story" is still true. That means do you expect roughly the same things to play out in roughly the same magnitude (or in sufficient magnitude). As far as uranium goes, I see no significant change. Keep in mind that the long term price has been remarkably stable. Also, the price of uranium hasn't dropped all that much. I started buying Strathmore when the spot price was $29!
CVU, which just released numbers for the quarter and had a conference call. Again, I see nothing different. It's been a long wait for CVU and I could have bailed but I don't think staying with it was a mistake.
It seems to me that the Strathmore story has gotten more and more attractive. However, I'm stealing the idea from you on Strathmore and so I wanted to check and see if you felt that the story had changed in a way that I wasn't seeing. IOW, the market (price for Strath) looks to have simply gotten bored since Uranium stopped going vertical. The momentum guys have bailed -- doesn't take much in stock like this.
Meanwhile, all points suggest that if Uranium stays reasonably pricey (as you point out, you thought Strath attractive with the spot @ $29), Strathmore should has improved its chances of effectively being able to develop its major projects.
While I'm tailing your idea here, I'm not tailing your outlook...the situation with worldwide energy demand growth, emissions issues, China's willingness to build nuclear (and I suspect its ability to get it done quickly), etc., etc. all suggest to me that Strath looks like a terrific way to play this long-term trend as its current lack of earnings and visibility means that evaluation is complex.
I'm off to read your trip blog.