Snowmobile Skipping

Some awesome snowmobile skipping - yes these guys are riding on water. Flat out. Or you sink !

Here is the URL for those Feedburner subscribers.

“China Isn’t Conquering Russia, It’s Just Leasing It.”

This was said by geopolitical expert Parag Khanna during his spot at TED, July, 2009. Khanna was speaking about sovereign borders and how they evolve.

Now I'm not so sure about the "leasing" theory. Ironically, like the Russians, when the Chinese want something, it's often merely expropriated. I've written before about Russia's dramatic population decline and related headaches with territorial integrity. The Kremlin regularly gets upset about The West not meddling in its so-called Sphere of Influence and having a pathological need for a buffer between it and Europe. But this supposed territorial threat is at least secondary to the one posed by the Chinese in South-East Russia. Putin surely realises now that the Chinese don't play as nice in the sandpit as The West. Alarmingly (for the Russians), Russia desperately lacks the population, (non-nuclear) military, internal infrastructure and other resources to do much about all of this than put on a good show of plugging the holes as they appear. As Khanna says, "independence without infrastructure is futile".

The "lease" he speaks of is much more a very long leasehold. And as any property valuer knows, in practice a very long leasehold is analogous to a freehold.

The Rise & Rise Of Tyler Durden. Now Unmasked:

The financial markets blogosphere has been on fire the last 48hrs - superstar blogger Tyler Durden has been unmasked as a 30yr old Bulgarian immigrant who is an ex-hedge fund employee and who has previously been prosecuted for insider trading.

Durden's posts over at Seeking Alpha and his blog Zero Hedge have long been followed by this one.

New York Magazine has a news breaking piece on Durden, his blog, and how he became so big. It will be interesting to see how the loss of his anonymity affects his blogging. Worth a read.

Investing In Range-Bound Markets: An Interview With Vitaliy Katsenelson

Barron's have just published the delayed release free-access copy of their interview with Katsenelson over at Smart Money.

Katsenelson is becoming rather well known for what he calls his Active Value strategies. He has written a book on his methods (Amazon link) and also writes a blog with plenty of archive material over at ContrarianEdge.

Whilst I'm not a huge believer in being able to beat the market through stock picking (without superior skills and access to information) and certainly not by giving your money to an active manager, his Active Value ideas make good sense.

Katsenelson is convinced we have entered a range-bound market and will remain here for some time. Hence his enthusiasm for Active Value - which he explains in the interview.

He also suggests that some investors are falling into a relative value trap:

In today's environment, investors should favor absolute-valuation tools, like discounted-cash-flow analysis or breakup analysis, as opposed to relative-valuation analysis -- i.e., Wal-Mart is cheap at a P/E of 14, because it used to trade at 45. Relative valuation is a backward-looking tool, and anchors on valuations that we'll not see again for a long time. That will lead investors into a relative-valuation trap, and lead to overpaying for stocks.

Wise words if markets end up remaining stagnant for some time and his range-bound prediction becomes reality.

He also talks about how Margin of Safety has never been more important in stock choices. Something no one should leave home without.

Australian Population Growth To Exceed India's

The SMH published an article yesterday stating that Australia will be the world's fastest growing industrialised nation over the next four decades, with a rate of population growth higher even than India.

Only Saudi Arabia is projected to have higher population growth. And unsurprisingly the two countries with by far the lowest rates are Japan and Russia.

Notably New Zealand does not register a figure on the graphic above. As Australians and New Zealanders are free to live and work in either country, it will be interesting to see how such strong population growth in Australia alters demographics and population in New Zealand, and whether the current open immigration policy between the two nations survives.

As long as education levels, standard of living and decent urban planning are maintained, it can only be a good thing for economic growth. More throughput for most businesses, all things being equal, means asset prices will do fairly nicely from the population increase. A higher critical mass of population will also mean higher levels of internal demand - this is useful when your economy is currently largely predicated on exports and has a volatile commodity driven currency.

BMD and the Post-Post-Cold War World

An old Soviet map of Europe - de ja voodoo ?

Yesterday George Friedman of STRATFOR published an excellent post on Obama's decision to withdraw the planned ballistic missile defense shield installations in Poland and Czech Republic, and what it now means for the US, Russia, CEE, Israel and Iran.

George explains in detail how this decision flows through the geopolitical landscape between these players and how we now exist in a post-post-Cold War era. Of particular interest, he explains the faults in the US thinking on Russia and what motivates the Kremlin. For those regular readers who don't much care for the bent of STRATFOR's analysis, you too may find the piece a worthy and insightful read.

African Trade Links and Poverty - Chicken or Egg ?

A couple of weeks ago AidWatch of NYU posted three interesting graphics depicting the dearth of African trade links with the rest of the globe, then extrapolated causation for African poverty.

Indeed the pinkos would have you believe that if these trade links and infrastructure magically appeared, it would solve the problem. A form of "build it and they will come".

It's easy to see with these propositions that there is certainly positive correlation between trade linkages/ infrastructure and poverty. But there is much less visibility on the causation - and this is what's important.

I posit that the rule of law, an independent judiciary, property rights, lack of corruption and other similar constructs that support an open and free market are: a) the first step in establishing a prosperous society and economy; and b) will result in increased levels of foreign direct investment and trade links - which will both then lead to reducing poverty. Egg before chicken. . . .

The graphics are well worth a look (link at top).

"We should seize whatever opportunity we are given to be racist"

Rob Liddle had another amusing piece published in last week's Spectator magazine, entitled as above. Rob's writing is always worth seeking out and he's never afraid to offend the Pinkos - an admirable trait in its own right. The sub title of the article continues. . . .

Rod Liddle reflects on a recent poll which says that Russians are the world’s worst holidaymakers. Brits are just as bad, he says, leaving a trail of blood and vomit from Biarritz to Dolman.

The article then begins. . . . Who are the worst people in the world, do you suppose, based upon your first-person contact with them? I always assumed it would be nigh on impossible to get any worse than a Somali — until, that is, I met a Saudi. . . .

The whole thing is well worth a read - here (this is the link for the 'print view' so the full text appears on one page - hit 'cancel' on the print dialogue box when it pops up).

XSR Interceptor

Now this would be fun. . . . will hit 85 knots and packs a few .50 cal's to deal with any nasties you come across whilst water skiing. Definitely dishes up some Margin of Safety. It is the XSR Interceptor - currently on show in London, at the Defence & Security Exhibition @ ExCel. Not sure of its claim of the fastest boat ever built, but I'd like one anyway. Check out some pics here.

Friday Tune

Here's a Friday Tune from The Tutts off their debut album Get In The Club. Here's the first single from it - K

The Trouble with New Zealand

The NZ Herald published an article today on the banking inquiry panel and the structural problems of the NZ economy. Worth a read for those interested in NZ. Some choice quotes:

New Zealand is "using the credit card to pay the mortgage" and if it continues we will lose our sovereignty to Australia, politicians were told today.

Commentators told opposition MPs holding an inquiry into bank pricing that New Zealand's obsession with property was the cause of most economic problems.

Bernard Hickey, managing director of interest.co.nz, told the inquiry the New Zealand economy was not an economy but a "housing market with a few other things tacked on".

I've written before on this blog how stupid New Zealanders are and their addiction with residential real estate as an asset class. For those that are interested and missed these, you can find them here, here, here and here - I won't bother reposting the facts. Those New Zealanders invested in residential property who lose their shirts and their pension pots will have no one to blame but themselves and their own ignorance. No doubt they will then vote the Labour party in with an election pledge to bail them out of their misery.

Concentration of Ownership and Correlation Risk

Inside Science published an interesting article last week on recent research revealing shares around the world are owned by relatively few entities.

The article states "A recent analysis of the 2007 financial markets of 48 countries has revealed that the world's finances are in the hands of just a few mutual funds, banks, and corporations. This is the first clear picture of the global concentration of financial power. . ."

As the article mentions, there are fairly scary implications for correlation risk between different (anglo-saxon) exchanges, never mind asset classes. The results of the research also tie in nicely with Soros' theory of reflexivity. Because owners or owners' agents wield such concentration of power, when they act there is the clear potential for reflexivity to become super-charged into a geometrically progressive feedback loop, further perpetuating market disequilibrium which Soros is so fond of talking about. Perhaps this is one of the reasons why markets become so wildly inefficient for shorter periods when momentum gathers quickly in one direction or the other. The research conclusions also sit nicely with Mandelbrot's fractal view of the markets and the power law based self-similar processes that govern his theory.

The results also have implications for the 'wisdom of crowds' theory - when the 'crowd', at least on a ownership/ control basis, is anything but.

(HT GM)