Second Acts

Fri, 2015/06/12 - 12:31pm | Your editor

There is news of two comeback kids today. First up is James Murdoch, now again the designated heir of his father, Rupert, not even 4 years after the UK hacking scandal at News of the World threatened his role.

The second is Dominique Straus-Kahn, found innocent in a French court of being a pimp. A sex fiend, yes, but not a pimp. This may open DSK's way to a renewed roll in French or international economic policy, as his Socialist Party successor (who also has an unconventional sex life, François Hollande), tacks sharply to the right to boost French economic growth.

There is a famous wrong quotation attributed to Pres. George W. Bush: “the trouble with the French is that they don't have a word for entrepreneur.” Actually they invented our English word and France has plenty of active entrepreneurs today. But for a highly-rated over-educated civil servant like DSK, attempting to work with an Israeli partner in private enterprise after he had to exit government proved a disaster. He may have saved the world economy during the global financial crisis but he could not make a go of business after the scandal.

Which brings me to the US background of financially successful people. One of my readers, a former fund manager, responded to my paean to the High Bridge and Washington Heights by revealing that in 1964-5 he worked as a taxi driver taking German Jewish vacationers from my old neighborhood to the Catskill Mountains near NYC. He never let on that he understood German. He wrote:

“I prematurely dropped my mountain taxi experience from my CV after my first office job. “Unbeknownst to me at the time, I was preparing to become a portfolio manager. 

“I was the only driver for Lawrence's Taxi who never suffered a blowout. Decades later, I proved good at avoiding blowups (hence my portfolios tended to outperform). I was also a very gentle driver, which reassured the passengers, just as my relatively low volatility and small drawdowns was pleasing the money management clients.

“I also tended to use different routes from most drivers. This sometimes saved time and usually enhanced the tips. Being different certainly pays off in portfolio management.

“I used to explore abandoned railroads, one of my favorites the Ulster & Delaware, which paralleled Route 28 from Kingston to Oneonta. It was abandoned in 1976. The U&D was family-owned. The company treasury swelled after receipt of funds from NYC for a reservoir condemnation prior to the Great War.

“In the following decades, the U&D's business trended downhill. The company paid the interest on its bonds from the reservoir cash because it was no longer able to earn the interest from railroading. In the Depression, the controlling family--which owned the stock--declared the U&D's first and last dividend...and defaulted! (Akin to a leveraged buyout gone wrong, perhaps?) I understand the bondholders eventually received some sort of settlement. More preparation for me as a portfolio manager who tried to avoid defaults.”

I cannot imagine a French or European portfolio manager having experience driving a taxi.


My access to the E-trade community has been changed and I can participate again. Meanwhile my ACATS is allegedly being held up again by Interactive Brokers because of a margin trade, although I doon't have an open margin trades.


More for paid subscribers follows, mostly about politics, from India, Canada, Germany, The Netherlands, Switzerland, Ireland, Spain, Britain, Hong Kong, Brazil, Panama, and Guernsey.

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My Bridge Is High Bridge

Thu, 2015/06/11 - 1:33pm | Your editor

My bridge is High Bridge.

Today I am celebrating the re-opening of the pedestrian High Bridge across the Harlem River between Kingsbridge in The Bronx (on the US mainland) and Washington Heights on Manhattan Island. The two boroughs were connected in my childhood living in northern Manhattan's German-Jewish refugee haven, often called The 4th Reich, but it was shut down while I lived in Paris.

Northern Manhattan then was full of former Germans, not all Jewish, just mostly. My parents who met and married on West End Avenue, which was a kind of first home for many, moved uptown for more room and greenery when their family started to arrive. Others did the same, resulting in a host of local German-Jewish centers: synagogues reflecting every possible trend in Judaism, initially all living up to German traditions with a great choir and a rabbi holding forth in German language sermons. The were social clubs, political clubs (Zionist, anti-Zionist, Republican, Democrat, Socialist, Trotskyist, and even Communist), senior clubs, garden clubs, an old-age home, and sports clubs for skiers and tennis players. There was even a football team (actually soccer, where my father was a goalie.) The Germans played against Irish and British teams on a field near the Hudson River lighthouse.

People fished in the Hudson, or played pool, or joined German language libraries. There were grocers selling the German yeast their recipes from home required, and 4711 cologne. They played Mah Jong, not yet in the US mainstream, or yodeled, ditto.

The neighborhood benefited from the huge public Fort Tryon Park, graced with a reconstructed medieval monastery holding collections of art, sculpture, jewelry and religious objects from the Middle Ages, also used as a site for fairs and public events like May Day and a Christmas Market. The park also boasted a flower garden with benches overlooking the Hudson River where the refugees strolled on Sabbath afternoon to mingle. During the week the mingling was only for oldsters as the working age population used the very convenient and fast A train to head for jobs downtown near Wall Street or in the garment district.

You could also stroll along the Harlem River from Dyckman Street southward. Or from the Yeshiva University campus (or my friend Ronnie's home), walk to the High Bridge over the river to the Bronx. Both were used to cast your sins into the waters on the Jewish New Year. The High Bridge was built over the vital main over the river which brought good clean upstate water to our neighborhood and the rest of Manhattan. It is far more interesting than the High Line, a recent conversion of a former west Downtown railroad line (with extensions) in my locally biased opinion.

Our refugee community had its celebrities like Prof. Kissinger, not the former Secy of State, but his father, who worked at Columbia University; Henry Kaufman, the first economist to be styled Dr. Doom; and Dr Ruth Westheimer, the sexologist. Lesser lights went back to academia at the New School for Social Research on 14th St., either as teachers or students.

One Sabbath afternoon I remember my mother cracking up on viewing Dr Ruth's husband on crutches as a friend remarked that she had required that he hang from the ceiling to test a new position for sex and he had fallen breaking his leg. (Actually it was a ski accident.) There were plenty of other scandals as well, notably something called “partouze” which I heard about but could not define until years later, which was what the granddaughter of the most Orthodox rabbi in the neighborhood, Rabbi Breuer, engaged in with her best friend's husband every morning while her husband went to morning prayers.

It was not the 1950s USA, that's for sure.

More for paid subscribers from India, Switzerland (our exclusive story), Singapore, South Korea, Germany, Israel, The Netherlands, France, China, and Britain.

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China Left Out

Wed, 2015/06/10 - 12:54pm | Your editor

MSCI opted against index entry by PRC A shares. This translates to saying that the developer of performance stock indexes for stock picking, Morgan Stanley Capital International, decided it was premature to allow locally-traded Chinese shares to become part of its main widely-tracked index. This means exchange-traded funds will not have to add Chinese stocks to their pile and boost Shanghai and Shenzhen stock prices beyond the current bubble. While limitations on foreign investment apply in Chinese markets the benchmark would only have put Chinese stocks at 5% of the MSCI index.

To soften the blow, MSCI stated that “it expects to include China A‐shares in its global benchmarks after a few important remaining issues related to market accessibility have been resolved." The means that if foreign investment ceilings are raised, China could eventually account for 40%+ of the MSCI emerging markets index.


My account is slowly wending its way out of E-trade and over to Interactive Brokers. I am banned for talking about it to other E-trade customers according to a communique I just received which reads:

Dear E*TRADE Customer:

The E*TRADE Community ID below has been restricted per the Terms and Conditions of Use of the E*TRADE Community you agreed to as a member. As a result, you will no longer be able to post content to the E*TRADE Community, though you can still view content posted by others.

Community ID: globalinvesting


Of course this is censorship to stop complaints on-line against the brokerage's decision to halt its global trading system which I have used for a dozen years and recommended to readers.


More for paid subscribers from Brazil, India, Britain, Israel, Mexico, Germany, Belgium, and South Africa. We start with the developed countries, mostly drug companies, and follow with the emerging ones, mostly makers of stuff or ideas.

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Whither Gold?

Tue, 2015/06/09 - 1:31pm | Your editor

The office is now back on-line, inshallah, thanks to Gamal, a US black Muslim techie who replaced the second Time-Warner Cable coaxial cord link. The TWC guy last week refused to consider that the other end was also worn out, mainly because I have a very old desktop computer to keeping track of my company records dating back a couple of decades, despite the software no longer being updated by Microsoft. To move it would require reformating accounts in software which also dates back a couple of decades and is incomptible with new MS offerings. So he blamed the owner and the computer but the much newer cable link was at fault.

It will be another 5 years or so before homes will be linked to cable by a single entry box, after which it will be wireless inside them, Gamal told me.

Writing for, our advertiser, Adrian Ash comments on the outlook for gold prices: “What would the US Fed finally raising interest rates from 0% do to gold or silver prices, for instance?
“That might depend on what it does to US Treasury bonds, the Dollar, and especially emerging market economies, source of gold and silver's heaviest consumer demand. For precious metal analysts, each of those other variables will matter, but they already come under the scrutiny and forecasts of specialist fixed-income, forex, and equity analysts.
“So, trying to square your view with the rest might mean accepting a broader macro view which you don't share.
“More to the point, however, maybe the much-touted Fed rate hike now due in September (if not June, or maybe 2016) is important to future gold or silver prices because of what it says is already happening to the global economy. Put another way, "Forget deflation, inflation fears are warming up," as French bank (and London bullion market-maker) Société Générale says in a new multi-asset report today.
“You might think rising inflation fears should prove good for gold. But no, says SocGen. "Gold tends to be considered as a defensive asset," the report explains, "as it generally outperforms in times of uncertainty." So with the return of gentle but steady inflation, SocGen reckons, gold will likely drop as other commodities rise, notably oil prices.
“It's one opinion amongst many, and one built as much by committee, I would guess, as by conviction. Runaway inflation would be another forecast, with the Fed way behind the curve. Or wipe-out deflation, spurred by China's credit and equity bubble crashing just as the MSCI [investment indexes] benchmarks make owning Shanghai shares mandatory for many fund managers worldwide.
“No doubt there will be plenty more views for you and me to choose from over the next few weeks, as bank analysts look at 2015 playing through to the back nine.”

Adrian winds up quoting a remark he attributes to Niels Bohr: “It's difficult to predict, particularly about the future.” Bohr was a Danish physicist. He means US baseball pundit Yogi Berra.

The low May Chinese inflation rate figures showed that growth is sputtering. Asia's largest economy may get new stimulus as PRC CPI rose a mere 1.2% from a year before, below forecasts and under April's 1.5% rise. Producer prices are in deflation, falling for the 38th month in a row.

More for paid subscribers follows from India, Sri Lanka, Brazil, China, Britain, Mexico, Colombia, Peru, Spain, Portugal, Canada, Belgium, Denmark, Britain, Africa, and Australia.

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A Bad Day

Mon, 2015/06/08 - 12:03pm | Your editor

My husband used to be an officer of the NYC Oxford Club, through which he is connected, if vaguely, to Warren Buffett. An Oxford man, also a Harvard Business School grad in the club, Guy Spier, famously shared a bid to have lunch with the Oracle of Omaha back in 2007. Spier, a Briton, then lived in a NY suburb where he was raising a family, while managing family money supplied mostly by his father, in something called the Aquamarine Fund, named after his father's original business. Guy had begun his career as a broker with the schlocky firm, D.H. Blair.

I am not sure what Spier learned from Buffett, although he wrote a book published last year about this experience which had cost him $325,500. It did encourage him to solicit outside investors in Aquamarine, which included my husband. Shortly thereafter, Guy decamped from New York for Zurich in Switzerland, and created an offshore version of Aquamarine, although as a US resident my husband is still in the original variant, despite also having a British passport. Read more »

Tables Posted

Sun, 2015/06/07 - 6:44pm | Your editor

Visit to view our model portfolios. The Internet is down in my office and my desktop is being repaired, so the tables are more ad hoc than usual, for which apologies. You can read the ones you are qualified to see, like the closed-positions table for all to see. Because my brokerage account is being moved there have been no trades for two weeks.

For paid subscribers I have updated prices as usual but the investment advice is not given because your editor cannot trade. I hope it all clears up next week.


Where Is John Malone When I Need Him?

Fri, 2015/06/05 - 1:03pm | Your editor

Where is John Malone when I need him?

After the supposed repair of my office internet system by Time Warner Cable yesterday, it crashed again. I sure hope Malone realizes what he gotten into.

The big news today is that the International Monetary Fund has suggested that the US recovery is not strong enough for the Fed to raise interest rates at all during 2015. The IMF, in its report on the US economy suggests waiting till next year.

As the Chinese stock bubble inflates again, The Economic Times of India examined the outlook for that country a year after Narendra Modi took office. India may be ahead of China in growth terms, depending on whose database you trust more, but it is still a long way from the triple digit price/earnings ratios, blind speculative buying, and initial public offering boom of the Chinese markets.

In the first year of Modi, the SEBI market regulator was send 32 ipo filings. So far, 7 have been approved, but none have yet been launched. The level is modest but definitely up from the prior year period, when only 13 SEBI filings were made.

What will it take to get Indian market players more excited about stocks, particularly the mid-sized firms which have done most of the filing of preliminary prospectuses (officially calle dred herrings in India as in the USA)? Better earnings would do it for sure, And if the prognostications of TET are correct, that will happen in the latter half of this year as earnings start to rise in the Fiscal Q2 (which starts July 1).


More for paid subscribers in another truncated blog because of my internet issues, from Canada, Guernesey, Switzerland, Ireland, India , South Africa, Britain, and Japan.

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Lots On Pipeliines

Thu, 2015/06/04 - 12:34pm | Your editor

My Internet connection is down, possibly the fault of Con Edison working under my street on some gas lines. I do want to make sure the gas doesn't blow up but I wish they would spare the cable. The landline phones are cackly too.

So today's blog is essentials only. We have news from France, Hong Kong, and Luxembourg (about a single company), Japan, Britain, Israel, Canada, Australia, and Mexico, including fund updates and a company annual report. Read more »

M&A to the Barnyard

Wed, 2015/06/03 - 1:20pm | Your editor


Moo. The latest battle of the titans has been joined down at the farm. BASF AG, BASFY, the German chemical giant plans to outbid Monsanto for the Swiss crop protection firm Syngenta. The Basel firm makes insecticides, pesticides, herbicides, and seed protection and seeds.

MON offered SwFr445/sh for the Swiss stock, SYNN (each share equal to 5 ADRs, traded as SYT.) However, Monstanto only want to buy just over half the shares outstanding for cash, a classic way to buy Swiss companies on the cheap. This trick was in the past used against us with our Alcon, ACL. This time the acquired its a US firm using Swiss methods.

If BASF comes into the game, it may opt to buy the Swiss firm outright. Both potential acquirers face anti-trust oversight, but BASF is a more diversified chemical producer.

Deal making on Wall Street is contagious. After May's all-time monthly record of $243 bn in new merger and acquisition, the lure of cheap money for company shopping is going global.

And new sectors are coming on beyond the focus to date on cable, telcos, and Internet firms, formerly TTM, the biggest M&A sector; healthcare (drugs, biotechs, and ancillary firms in health insurance and drugstores); and energy.

We have a bid for one of our holdings in a crop-related stock and a former holding in another. More news today from the Channel Islands, Cyprus, Britain, Switzerland, Canada, Ireland, Ethiopia, and Israel.

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Currencies Count

Tue, 2015/06/02 - 12:54pm | Your editor

What is most striking about the newly female progenitor of the Kadashians is that her name is spelled Caitlyn Jenner with a C, not a K. She also looks extremely good for a 65-year-old.

Today's blog is late because of various personal problems: a construction all-nighter outside my bedroom window, a light fixture repair in the office, and another, successful, round with e-trade to get all my shares into the same account for the (I hope) transfer to a new brokerage. I think it outrageous that after ending its global trading facility, E-trade touts its brokerage with this slogan: “Welcome back to the world of opportunity”. That translates into ADRs and ETFs only, and no coverage of stocks traded even in Canada, to say nothing of other major stock centers like Britain, Hong Kong, Japan, or Europe.
And new rules now that Paypal is separate from eBay meant I had to contact my global contributors whom I had paid via Paypal over future higher fees or—in India—end of service. All in all, a true pileup of delays. So today's blog is short and focused.


Today India followed China with a third interest rate cut. The repo rate from the Reserve Bank of India (central bank) is now 7.25% vs 8% at the start of this year. Growth of the Indian economy continues and it now probably is increasing its GDP faster than China.

I suspect CB dovishness will have one key impact on the rest of the world: increasing demand for gold. Gold famously earns no interest and may incur costs. But if the bank is paying less for deposits, the lost return on the yellow stuff is reduced and India can engage in its favorite way of saving for a rainy day.

The perverse effects of negative interest rates apparently now include a mounting use of safe deposit banks stuffed with currency cash in countries like Switzerland and Norway.

Optimism over Greek debt talks has boosted the oversold euro sharply against the dollar. A currency that suffered in the Greenback's wake is the Norwegian kroner, currency of some of our favorite investments, buying Europe without the euro.

More on Norway, Denmark Canada, Israel, Ireland, The Netherlands, Switzerland, Britain, Brazil, Spain, Portugal, and Sweden.

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