CW on RM: A Big-Cap to Buy When There's Blood in the Streets

A Big-Cap to Buy When There's Blood in the Streets
5/22/2007 1:38 PM EDT

Last week, I mentioned starting a "Blood in the Streets, LP" fund to invest in war-torn areas like Darfur, and I'm quite serious about the idea.

As I outlined in that prior piece, some misguided activists are pressuring investors to sell their assets in these countries. But I argue that smart investors want to be on the buying side of pressured liquidations. Besides, if these areas are vacated by the capitalists, they'll only become more isolated.

To build on this, I've started to dig up ideas for some big-cap ways to invest in the concept. With a nod to Baron Rothschild's famous saying of "Buy when there's blood in the streets," the thesis is to buy when things are horrible (much like when I launched my tech hedge fund in October 2002) and then invest in those places as they improve. The best way to drive improvement in impoverished and war-torn areas is to make people care about them.

Getting citizens and corporations to risk their capital and look for returns in these troubled places will ensure that we in the private (nongovernmental) developed world have a vested interest in helping these areas create sustainable economies of private ownership and trade. (I refuse to use the word "free" to describe "trade" because, by definition, if two parties engaging in an exchange aren't "free," then it's not really a "trade," is it?)

Certainly, there are huge risks when investing in war-torn places. That's why there's so much upside potential, too.

Today's edition of The Wall Street Journal featured an article about Total, which underscored why this company based in, yes, France is one name on my list.

France has a long history of colonization in Africa, and Total, which bought its French competitor Elf in 2000, has long invested in oil discovery in Africa. Indeed, the article nails exactly why investing in, say, Darfur -- where civil war and genocide run rampant -- carries so much potential upside: "But the real boost [for Elf/Total] came with the company's decision two decades later [the 1980s] to step into Angola's offshore concessions in the midst of a civil war [Italics mine] ."

Total expects to get most of its new production from Africa over the next few years. The stock is up more than tenfold since the 1980s. I do believe those are exactly the types of returns that Rothschild was talking about.

While many activist groups continue to push for divestment from Darfur, I'd be loading up on any company with the guts to step into Sudan/Darfur in the midst of a civil war. Total is not aggressive in Sudan just yet; these well-intentioned but wrong activist groups that are trying to stop private investment in Sudan are impacting all the major oil companies' thought processes about investing there. But the company is actively investing in other places in Africa.

In addition, a rush of private investment dollars flooding into such a situation would create all kinds of new pressures -- including political, media and capitalist -- that would drive improvement to the living conditions for those suffering there. All economies are only self-sustaining when they're profitable. And therefore, profit-driven investment is the best way to drive these economies forward.

How's that for some virtuous cycles that we, as private citizens, can kick off?

More information about Total as well as more ideas for good companies actively investing in war-torn areas are welcome on the StockPickr Answer board.

The Cody News Returns (May 23, 2006)

The Cody News is back:

New Domain Name -- .Mobi -- Could Spur Wireless Web

Surfing the Web on a cellphone can be as difficult as surfing the ocean on a tiny board. Now, a company founded by Microsoft Corp., Google Inc., Vodafone Group PLC, Nokia Corp., and several other companies, aims to make it easier to browse the Internet on wireless devices such as cellphones or BlackBerries.

While that Treo of mine with Verizon National Broadband is darn nearly, as I told Larry during a commercial break the other night, a god-device, there's nothing worse than randomly surfing the web on that thing.  A web designed for wireless from the ground up, especially one founded by a consortium of mostly capitalistic, private enterprises, is squarely a wheel in the revolution process.  (PS. How bad is that Google default technology for wireless?  I mean, most of the functionalities that make Google such a joy to use, including LOCAL search FOR CRYING OUT LOUD!, are turned off for some unfathomable reason.  Hello, Google!  I'll be hosting a Cali Google-ite at my office tomorrow night, I think I'll complain to him about it as if there'd be something he could do.   Poor guy.)

Judge Steps In for Poor Inmates Without Justice

NEW ORLEANS — Hurricane Katrina took his house, his courtroom and, Judge Arthur L. Hunter Jr. says, his faith in the way his city treats poor people facing criminal charges.

What a tough position to be in.  But Constitutional rights aren't negotiable.

Intel Pushes Chip Production Deep Into China's Hinterlands

CHENGDU, China -- When Intel Corp. began setting up shop on the outskirts of this sprawling city in China's mountainous outback three years ago, Chengdu had a panda sanctuary, some of China's spiciest food and a collection of aging heavy industry.

You just have to read this story because it's so beautiful how capitalistic forces are bringing a high-tech revolution to the poor masses in the remote China.   Schools, training -- an entire "ecosystem" of education and prosperity...all in the name of profit!

Finding Hate in a Whack on the Head

New York's latest attempt to punish impure thought got under way yesterday in the Queens County Criminal Court building.

I couldn't keep reading after the fourth or fifth paragraph when the author somehow seemed to, as I read it, imply that a white dude calling a black dude the n word as the white dude's hitting the black dude across the side of the head with a frickin' aluminum baseball bat is somehow SOMEHOW got some sort of parallel with a slang reference in the streets...

Those Unwatchable Oscars

I tried for about the 11th time in my life to watch the Oscars.  You'd think with me having been at the Sundance award ceremony I'd have had more interest.  Alas, after George Clooney's funny acceptance speech "We should all dress up like Batman and compete" (or something like that...) I had to put it on mute.   And after the usually beautiful Naomi Watts came out in that tissue-wrapping-paper-homeless outfit thingee (didn't listen to whatever she said...) and then Charlize Theron came out looking not-quite orange-ish but the friend I was watching the show with commented that she'd had a "run in with Charlize a while ago"....

Well, damitall, I was just bored.  I've been increasingly exposed to some of the Hollywood machinations that result in the silly commercialized, sold out, mindless award ceremony, and I just couldn't make it.   Reminded me a lot of trying to watch it back in high school.

And, while I'm going to have to actually read through the awards for the sake of trying to stay (get?) "current", I have to say, I couldn't care less about the specifics. 

Hell, I only made it to the movie theatre like ten times last year.  Once for Star Wars, of course (James Altucher and I met up with Stephen Dubner and others and gave away some tickets to readers...that was fun!), and then I watched "Crash" like three times on my own (I love the "flip it" aspect throughout the movie and the important messages about the end of racism --- hmm, speaking of race, what race are we supposed to categorize "orange" in anyway?-- and the smile on Ludacris' face when he smiles to himself in satisfaction for having done something good for the first time in the movie as the movie ends...) and dragged friends to it another four times...and I don't remember what the other movie I sat through last year was.

Here's hoping "Crash" swept the Oscars.

On Protectionism as Racism Redux

Great article in WSJ today reminding everyone how un-American and racist in roots (and, though the article didn't make the point, how unproductive, un-virtuous and harmful to the economy) the anti-immigration laws in this country are.

Let people who want to come to this country in. Any of 'em. The more, the merrier, the better for our economy, the better for each of us. And it's constitutional. It's what this country is all about. Yet another red-taped-filled, morally corrupt bureaucracy for us free-thinkers to take down!

For more on my take of how protectionism is simply this generation's racism read this post from the past:

Protectionism is the New Racism

...Today a black woman is a likely front runner for the Presidency of the most powerful country in the history of the planet and a black man is a front runner for the Pope! The end of mass racism is nigh.

If you look back at how racists used to rationalize their beliefs, they often centered around economics. “Those niggers take our jobs,” so said the white supremists for oh so many years. Of course, the reality is that widespread upward mobility allows for economies to grow, which in turn creates value and wealth for everyone who’s willing to partake in the economy. It’s not a sum zero game. It’s a virtuous cycle of growth and value...

Annan Continues to Push for Poverty and Starvation

We really do have to fight the UN to stop hunger. Through their central destruction of any self-sustaining capitalistic enterprises, including, say, farming, plumbing, food distribution, etc etc -- the UN and its many bureaucratic/crony agencies are undermining the prosperity that would otherwise flourish in places like, say, Zinder, Niger.

Africa cannot grow or be free on empty stomach
By Kofi Annan

Some sample quotes from the article (and I can't pass up the lede either, which somehow is supposed to make us feel like this bureaucrat who's pocketed millions of dollars while "serving the public" is really out there to help these people):

"With a look I will never forget, she pleaded with the world to respond to her cry for help, not just today but in the months and years ahead."

Early on in his rambling,  he underscores how helpless the UN is, though he's wrong that there's no silver bullet:

"We must address the problem of food security at its earliest stages, before suffering escalates. There is no silver bullet but there is much we can do."

There is a silver bullet. And it's called property rights. And capitalism. Fight for this, and fight against the destruction and death of the UN bureaucracies.

But, oh no, here's this "leader's" solution:

"First, better early warning analysis."

Whatever the hell that is. Most all of Africa is poverty-stricken and full of misery and death. Constantly. What warning?! It's been like this for my whole lifetime!

"Second, enough advance funding to allow governments, the UN and non-governmental organisations to take adequate preparatory measures and deploy personnel with greater speed."

Yeah, that's the ticket. Those crony UN and NGO and goverments need more power -- not less. I mean, clearly their track record speaks for itself, right? Sure. Millions needlessly die in Africa every year -- despite trillions in "aid" which flows into these bureaucratic and most often corrupt entities.

"Third, greater emphasis on prevention. Debt relief, increased aid and measures to make the international and regional trade systems more favourable to the poor can all help encourage local agricultural production."

Debt relief and increased aid? How in the hell does more debt relief and increased aid encourage local agricultural production. Property rights and capitalism encourage local production. Flooding a market and thereby undercutting any self-sustaining capitalist has the exact opposite effect. FLIP IT!!

"Fourth, a build-up of the region’s existing strengths and structures."

Uh, yeah.  And the only way to do that is to allow the people who live there to thrive.

"Fifth, we must look in the mirror instead of pointing fingers."

Well, 1 out of 5 ain't bad, I guess.

For the sake of all the world's people -- let's stop these vicious cycles.

Private Property Is Always Key To Prosperity and Peace

Fascinating Op Ed in the WSJ this week by George Melloan which underscores so many of the points I try to make about private property's ramifications on societies.

Some of the highlights:

Individual Jews and Arabs [in the Middle East] have one common bond: For years they have been pawns in a political chess match, with only limited rights to what U.S. founding fathers held most dear, the ownership of property.

The Arabs of Gaza have even fewer rights. They are 1.3 million souls packed into this tiny enclave on the Mediterranean, with Israel on the north and east and Egypt to the south. Only a privileged few own land. Most of the others are trapped in a squalid welfare state operated by the United Nations.

The U.N. took on the Mideast as one of its first big projects after World War II and, unfortunately, has never left. After granting Israel statehood in 1948, the U.N. turned to the Arabs the Israelis had defeated in battle. Under Resolution 302, the General Assembly in 1949 created the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). Today, it is the largest U.N. bureaucracy, with 25,000 employees providing health care, schooling and social services to some 4 million Palestinians in 59 refugee camps in Jordan, Lebanon, Syria, the West Bank and Gaza.

Indeed, it can be argued that the Israeli kibbutzim were the only form of communism that ever achieved economic success for any sustained period.

The ambiguities of property rights have been a source of strife in the Mideast for decades. Everyone fights over land, but nobody actually owns it.

Aside from the brilliant analysis of how the lack of private property laws are creating wars and death and destruction and horror and terror....

How about that fact that the single largest UN bureaucracy is the socialist provider to 59 refugee camps in the Middle East. Uh, you think the UN's incented to end the wars, the poverty and create self-sustaining capitalist infrastructure? NO THEY'RE NOT. The UN bureaucracies have a vested interest in keeping these people in poverty and dependent upon the UN.

Extrapolated Punishment

A thought-provoking debate is going on in my "Theft of Irony" post.  The debate started when I received an email directly from a reader who took issue with my statement that "About the same ratio of bad guys there as there are at the courts you used to play at in Iowa."  As the real topic here wasn't a regional thing, but a racial thing, the emailer correctly told me that there are a plethora of verifiable stats refuting such a "same ratio".

I'm thankful to the reader for posting those comments on this site itself per my request.  As he told me in his follow up email:  "You're always talking about little brother watching; well, you just got fact checked."  Exactly! Which is why I asked him to post it.

My statement about ratios is simply wrong. Mea culpa. 

Of course, the point itself, that just because, according to the stats, a slightly higher percentage of blacks commit crimes than whites do, doesn't make it right for people to allow race to color their judgment and their actions to the point where one would rather take their ball and go home than share it while playing pick up.

If one would share with a white kid, but not a black kid because of those stats that show there are statistically significant differences among races in things like crime....if you extrapolate those statistics out from race to individuals, that black kid on that court is going to effectively be punished something he had absolutely nothing to do with.  And that’s just wrong – you know it and I know it.

By the way,  I trademarked "Little Brother Is Watching You."

The Theft of Irony

Last night, after a 16 hour day on 3 hours sleep, I had to get some exercise. Obviously, I was in no shape to play hardcore pick up ball at the courts I usually play at, so I went over to the smaller courts by my apartment just to shoot. Some pretty good guys were playing pick up and needed a sixth, so they talked me into playing, despite my exhaustion.

I played a game with them, and my team won pretty handily. After the game, the tall lanky white kid who'd been trying to cover me says something and I pick up a midwest accent from him.

Me:  "Where you from, man?"
Him: "Small town in Iowa."
Me:  "Ah, how long have you been in NYC?"
Him: "Three weeks. I'm an editor at a Christian magazine," he said, with what I found to be suprising obvious embarrassment and expectation of catching shit for that job.
Me:  "Ah, how'd you find this place to play?"
Him: "I live across the street, and I don't want to play over at the other courts," which by the way, he was good enough to play at. "Those guys over there are like future criminals and drug dealers. Some kids wanted to borrow my ball, so I just went home."
Me, realizing of course what this kid is actually talking about is the fact that those hardcore courts are populated with probably 80% black guys: "Whoa. You do realize that 'those guys' are just like everyone you know in Iowa. About the same ratio of bad guys there as there are at the courts you used to play at in Iowa." And to drive my point home, "And wouldn't God say the same?"
Him:  "Yeah, I guess."
Me: "Listen, I have asked kids on the side of the court to hold my $1500 Breitling watch while I play. And everytime I've gotten it back."

So we played one more game. Some goof ass on my team tried to block a shot and came flying out of nowhere to hit me in the face, and I now have a fat lip. The goof lands wrong and limps off. I was so pissed. I was already exhuasted and ready to just go home, so I look around for my ball.

You guessed it: Someone had stolen my ball!

I can't decide if the fact that someone stole my ball after me having said that the Iowa kid shouldn't worry about such things is the ironic part.

Or if the fact that my ball was stolen on the non-hardcore courts where this kid felt safer is the ironic part.

I do know that this theft is ironic.  And that now I need a new basketball.

The Supreme F and Avoiding Confrontation Thru Respect

So I'd put in a 65 hour work week by last Friday night, and I was beat. I went out for a workout and then stopped at my favorite Mexican food restaurant in NYC on the way home for a take out order. I go there all the time and the owner is from New Mexico, so I've gotten to be friends with her. She pours me a big ol' classic margarita (rocks, no salt) and I'm sitting at the bar waiting for my food when some ridiculously drunk dude sitting next to me taps my shoulder.

He slurs something out about the size of the margarita and we chat a little bit when I mention that I'm from New Mexico. He's like, "You must have had a tough time being raised there."

Me, realizing where this is going: "Uh, gotcha." And I turn away hoping to stop the conversation.

Him:  "I'm saying, bro.  You know all the Mexicans.  That must have been tough. I've been to New Mexico, man.  I know."

Me:  "Listen, dude, let's drop this.  I've had a long week, I just want to chill with my tequila."  And I turn away again.

Him:  "Look, man, I'm not trying to be racist, you know?  And if you don't get that you're stupid."

Oh yeah, the "you're stupid" comment.

Me:  "Excuse me?"

Him:  "You're stupid."

Ever notice how final and aggressive it sounds when you put "the" in front of "F#*k"?  It's not just any adjective that way.  Not when you put "the" in front of it and make it noun.  This ain't no gerand.  This is the supreme F.  The one and only F.  As in...

Me:  "You better just shut the F up.   Just back the F up and let's drop this."

Him, now a little nervous (you know, mainly cuz I put "the" in front of F, meaning that we're not messing around anymore): "Dude, can't you see I'm just trying to play with you a little bit?"

Me (feeling nervous myself and feeling adrenalin flowing through my veins): "Can't you see I don't want to be played with? And can't you respect that?"

Ah, the respect term. Amazing how powerful asking someone to respect your wishes can be. This guy immediately said, "Yeah, you're right." and turned away, leaving me alone. I finished my drink, got my food and tapped him on the shoulder giving him a friendly nod as I walked out and went home.

Coulda been worse -- coulda ended up in a physical fight.

Coulda been better -- I didn't have the energy to fight for what was right at that moment (discussing the nuances of racism and what not), which probably would have been a waste anyway, as the guy really was hammered.

Another White Pope

I'm disappointed that the Church chose a white pope again.  I really thought there was a good chance at those rich, old, virgin, white guys deciding that it was time to make a strong anti-racism statement. 

Sigh.  Maybe this particular dude they chose really was the best choice for the job.