# Thought Bubble



## Dona Ferentes (11 May 2020)

An occasional log of random ideas, oft provoked by comments from others in threads

*Thought Bubble #1
*
This one has come about along these lines:
1. A contributor to a thread mentioned mentioned he bought into CSL at the float (forget who, but well done!) AND HASN'T SOLD
2. He then raised questions about where/ how to invest now.
3. We're in a time of Capital being raised/ allocated because Covid-19 is changing all the rules

Here goes;
1. Assuming 3,000 CSL picked up for 63c a share = $2K; now with a market value close to $900K. There's a pretty fair whack of CGT if sold, and why would you want to? But a  bit of diversification wouldn't go astray. What about a Margin Loan, because the LVR on CSL is >70%. Wouldn't advocate going that high, but say about $400K borrowed, staying under 50% and a suitable buffer. (I'd actually go for less, keeping no more than 30% because *Margin Calls* are to be avoided at all costs.)

2. On 07 April, the ASX introduced temporary changes to its rules to facilitate emergency capital raisings against the current backdrop of the COVID-19 pandemic including:

increasing the placement capacity for listed companies to 25% of their share capital, subject to the placement being fully paid ordinary shares and there being a follow-on accelerated pro rata entitlement offer or share purchase plan offer (*SPP*). Where small or mid-cap companies already have an additional 10% capacity approved under Listing Rule 7.1A, the aggregate maximum remains at 25%, but companies can choose to use the Listing Rule 7.1A capacity or the new increased Listing Rule 7.1 capacity
waiving Share Purchase Plan requirements for the number of shares issued to be limited to 30% of the issued capital and the issue price to be at least 80% of VWAP which are replaced with a requirement that: for follow on SPPs, the issue price must be equal to or lower than the placement price; and for stand-alone SPPs the issue price may be determined by the Board
a waiver of the one for one cap on non-renounceable entitlement offers
permitting back to back trading halts whereby a listed entity may request two consecutive trading halts allowing in total up to four trading days in halt, to consider, plan for and execute a capital raising.
These temporary measures will expire on 31 July 2020 unless ASX decides to remove or extend them.

3. The reality is that most raised Capital recently has gone through institutions and the retail component is an afterthought, mostly offers of SPP but with upper limits and scale back of applications. Only a few have been _pro rata_ entitlements and even fewer have been renounceable.

4. But there is some upside for most, or at least a put option in the form of the VWAP calculation

5. These capital raises are coming fast and furious.

6. So, why not hold a *few hundred companies* out of the 2000+ on the ASX and scalp a bit as each comes along. It's not surefire, but I saw similar opportunities line up in GFC and there are quite a few around right now (possibly too late)

7. Of course, a good relationship with a Margin Lender would help, to fund the SPPs as they come along.

8. As noted, many of the Plans are only allocating a percentage of the offer. Sadly most offers contain clauses like this:







> Company reserves the right (in its absolute discretion) to scale-back applications if demand exceeds A$ xxx,000. If the Company chooses to scale back applications it will do so on a pro-rata basis (determined either by the number of shareholders participating, and/or the size of the Eligible Shareholder’s shareholding at the Record Date, and/or the number of shares an Eligible Shareholder has applied for under the SPP).


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## Country Lad (11 May 2020)

Dona Ferentes said:


> *Thought Bubble #1*
> This one has come about along these lines:
> 
> 1 A contributor to a thread mentioned mentioned he bought into CSL at the float (forget who, but well done!) AND HASN'T SOLD………………..
> …………….. There's a pretty fair whack of CGT if sold




Not sure if you are referring to me, but I did mention I held CSL and some others from listing and yes, although it is all structured as best I can, tax is still a bit of an issue the kids will need to deal with.



Dona Ferentes said:


> ……. What about a Margin Loan, because the LVR on CSL is >70%....
> ……..6. So, why not hold a few hundred companies out of the 2000+ on the ASX and scalp a bit as each comes along. It's not surefire, but I saw similar opportunities line up in GFC and there are quite a few around right now (possibly too late)…………




I did use a similar strategy in 1998/99 and 2003 to good effect by using margin but not as many shares as you suggest.  It was a bit risky as I had my own business then, taking up most of my time.  Fortunately, my broker (as I mentioned in that post) did most of the buying/selling – I simply set the prices for him to act on.
The other benefit of using the full service broker was access to raisings and new floats. Far more scarce these days without such a broker.

Would I do it in this market?  
Remembering 2003, if I was at that stage of life, yes I would probably use the same strategy as then and maybe try your suggestions hunting for placements or other entitlements.  The only hesitation would be the different market we are in which could collapse in any day or two.  A proviso for anybody doing something like this is to be fully familiar with the risks associated with using margin.

Mind you, Country Lass may have other ideas anyway– too many other activities and she would remind me I don’t need to trade and watch the market that extensively.


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## Dona Ferentes (13 June 2020)

*Thought Bubble #2
*
This one is provoked by an article in the _AFR _today.
https://www.afr.com/wealth/personal-finance/meet-the-sharemarket-s-corona-generation-20200610-p551dz

_*Meet the sharemarket’s corona generation*_

Basically, in the last few months there has been a surge of retail punters both 'playing the market' and also inhabiting chatrooms. It's a perfect cocktail.
... Stuck at home
... Access to money (some using the $10k from super)
... Technology. Everyone can do it.
... Low brokerage models (though Commsec ain't cheap)
... Rapid falls then rapid rises. 10% days a frequent occurrence, and that can be in the big caps. Minnows and speccies, even more.
... and a bit of FOMO
... And a sense of missing out. Can't afford home ownership, see Super going nowhere (or tediously incremental in its risk management squashing returns)

to which I say; _First hubris, then nemesis._

These 'players' have fired up other sites; I presume HC has had an influx (how do they know to call themselves 'newbies'?) and Facebook and other Social Media have active though probably evanescent pages, such as mentioned in the article: _ASX Stock Tips_ group, ASX_bets Reddit site and probably many more.

But somehow, these  participants aren't appearing here at ASF, or, if they are, not finding it to their taste and moving on in the eternal quest for confirmation and acceptance (self=biasing).

On ASF, the narratives have moved away from stocks and towards social commentary and opinion-making. Some of the market stuff is good (I'm "macro picture first, then drill down" in my approach so that's needed) but I get a sense of exasperation from many that the whole thrust of the site has been away from ASX shares to grandstanding, and this is offputting to many and corrosive for this site.


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## Country Lad (13 June 2020)

Well said @Dona Ferentes.  I have put  people on my ignore list lately - the ones who want the last word regardless of how long it takes


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## Joe Blow (14 June 2020)

Dona Ferentes said:


> On ASF, the narratives have moved away from stocks and towards social commentary and opinion-making. Some of the market stuff is good (I'm "macro picture first, then drill down" in my approach so that's needed) but I get a sense of exasperation from many that the whole thrust of the site has been away from ASX shares to grandstanding, and this is offputting to many and corrosive for this site.




It's easy to post an opinion about a topical issue such as Black Lives Matter or whatever political issue is currently clogging up the airwaves. It's a little harder to post some analysis or a considered opinion on a stock.

What the General Chat forum used to be (and was always intended to be) is a place for forum members who, after chatting about stocks, trading and investing, could unwind with a bit of off-topic banter. It was never intended to be anything other than a small off-topic corner of an online community that is primarily built around financial markets, trading and investing.

I, for one, am growing very weary of toxic political discussion. Not just here, but everywhere. I am also getting tired of the unpleasantness that goes along with it. The labelling, the accusations, the insults, the name calling, the relentless dogmatism. I've tried to be tolerant because - let's face it - none of us can ever really get away from politics. But it needs to take a backseat here at ASF and it needs to become far less unpleasant.

If not, then I will have to show the door to those who make it unpleasant.


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## Smurf1976 (14 June 2020)

Dona Ferentes said:


> On ASF, the narratives have moved away from stocks and towards social commentary and opinion-making. Some of the market stuff is good (I'm "macro picture first, then drill down" in my approach so that's needed) but I get a sense of exasperation from many that the whole thrust of the site has been away from ASX shares to grandstanding, and this is offputting to many and corrosive for this site.




Agreed with your point. 

Attempting to explain it though, well I think it's fair to say that for those who've made a profit over the past 4 months, it likely was more due to the macro situation than to picking the right stocks.

If someone bought BEAR on 20 February and switched to VAS on 23 March well then they're sitting on an 87% gain at the moment.

How many can say they picked stocks which have gained more than 87% over the past 4 months?

Understanding the macro picture and trading it has been a profitable strategy in recent times but it's one that those who weren't following the news about the virus may well have missed. 

I do think though that if we're going to look at these other issues then the real value is in their market implications but I do perceive there's not too much interest in that here, perhaps due to views about morality and so on. It's what I'm doing personally though, just compiling the data and seeing what it tells me but I do get the impression that there's not too much enthusiasm to openly discuss "painful" subjects as a market timing indicator.

For me personally, the most valuable comments I read on ASF are those in threads such as "Trading the Bounce" by the likes of gartley, ducati916 and others. Ultimately that's the most useful stuff on the forum in my personal view. Note that I've only named that thread and those individuals for example, any other thread or individual of a similar nature is included so no offence intended to those I haven't named etc. 

The worst thing I see on ASF is rudeness. There's never any excuse for that in my view. Never. It's most unhelpful to the forum and indeed to anyone. Even if the question is silly, there's a polite way to answer it always. 

As for threads about racism and so on, on one hand I'm vehemently opposed to the very concept and I think the forum would be best off without discussing such subjects which can only cause division. On the other hand, I think it's fair to say the situation overseas, US in particular, is such that the issue could potentially have real market implications. It wouldn't need to escalate too much further to become a major cost imposition to business and to impact consumer sentiment, political stability and so on. It would be unwise to ignore it in my view unless your trading strategy is a 100% chart based one.


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## Smurf1976 (14 June 2020)

Joe Blow said:


> What the General Chat forum used to be (and was always intended to be) is a place for forum members who, after chatting about stocks, trading and investing, could unwind with a bit of off-topic banter. It was never intended to be anything other than a small off-topic corner of an online community that is primarily built around financial markets, trading and investing.




*I'm highlighting this to remind everyone, myself included, to note the point and act accordingly.*



Joe Blow said:


> I, for one, am growing very weary of toxic political discussion.




I suspect you are in the silent majority on that one. 

The problem for ASF as I see it is a double edged sword. On one hand ASF is one of the very few places where sensible discussion on such matters can take place in a calm manner. On the other hand it is not the intended purpose of the forum and an excess of such posts is unhelpful to keeping the focus on stocks.

It is not my place or job to do so but I'll give it a shot anyway and as a first step suggest that posts using foul language, insults and so on be deleted without further discussion.


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## Knobby22 (14 June 2020)

I decided last week to not comment on international  politics, especially USA politics,  and after my last post just now Covid also.

I just feel  I am reading toxic propaganda a lot of the time and am tired of it also.

I probably won't be able to resist a sarcastic comment at some stage though.


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## qldfrog (14 June 2020)

Knobby22 said:


> I decided last week to not comment on international  politics, especially USA politics,  and after my last post just now Covid also.
> 
> I just feel  I am reading toxic propaganda a lot of the time and am tired of it also.
> 
> I probably won't be able to resist a sarcastic comment at some stage though.



As long as we all agree that this toxic propaganda that you see can been seen as truth and your views as propaganda by that others.there is no lack of fake news and figures right and left.
I overall do not see the drama there as if you want, you can put people on ignore and that's it.
Covid-19 is the obvious field where market and debate is interlinked.
I am mostly system trading but by January, all my supers were in capital garanteed and masks were ordered.anyone not ignoring me could have done the same and save themselves 30pc fall.
That is bloody big.
i have now an opposite view optimistic economically.this is being debated hotly.
My view on gold is medium term bearish this is also debated hotly, is influenced by the blm and riots
Anything outside my system trading is influenced by news etc.

ASF gives me a good view of the positions of relatively educated financially people.we are not HC or daily mirror/guardian readers ..even if .
Out of that whether i agree or not, i can have an idea of people reactions and, to be honest, use it on the market.
unless major drama ahead, my fy will see some profits and these would not be there without this forum.
It is not a matter of being right, anyone seasoned in the market knows that 
And ignore button is always there


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## Smurf1976 (16 June 2020)

Attempting to prompt some more financially useful thinking here, I'll put forward the following question:

Are we at present seeing a blow off top in race-based protests?

If not, is it at stage 1 or 2 of the bull market in protests?

Or are protests merely an indication of something else and it's that something else which needs to be on the chart not the actual protests? That is, in the same manner that the price of shares in an iron ore mining company might really just be a proxy for the iron ore price and it's the ore price, not the shares, that's really driving it?

I say that in all seriousness and without disrespecting the cause but if you look at these things well then yes, they do tend to follow the same basic patterns that we see in the stock market. As I've previously mentioned, you can find much the same in anything else involving herd behaviour - fashion, pop music, etc.

My point isn't to start a discussion on protests but to say that if you're already focused on that well then you potentially have knowledge which has application in the markets. This is a stock market forum after all so put that knowledge to use......


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## wayneL (16 June 2020)

Good thinking @Smurf1976, I was thinking about those same patterns, but never thought of markets as an allegory.

*Although clearly work remains to be done*, the fundamentals on the race front are weak, never have rights and conditions for been POC been better and continue to improve.

I'm of the thinking that there are other macro factors underlying it all... the thing ain't about the thing.... in which case this is a strong trend where the underlying fundamentals  might make it go parabolic.


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## wayneL (16 June 2020)

wayneL said:


> I'm of the thinking that there are other macro factors underlying it all... the thing ain't about the thing.... in which case this is a strong trend where the underlying fundamentals  might make it go parabolic.



Eg


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## SirRumpole (16 June 2020)

Smurf1976 said:


> Attempting to prompt some more financially useful thinking here, I'll put forward the following question:
> 
> Are we at present seeing a blow off top in race-based protests?
> 
> ...




The race based protests are a reaction to a couple of horrific events overseas that hopefully won't be repeated, but tensions continue to simmer below the surface here in Australia, although I doubt if its enough to cause serious concern here given the low level of population of indigenous people. That's not to say that their condition does not need addressing by governments, but in the light of other matters I think most people have other things on their minds.

The main problem will come when the job keeper allowances are removed and job seeker goes back to its previous levels, a lot of money will suddenly be taken out of the economy and will be slow to come back as businesses will crank back slowly, those that are able to that is.

Jobseeker and Jobkeeper should be slowly reduced imo inline with the economic recovery that we all hope will come, but the shock of these being reduced overnight might make things worse.

As for the stock market, well where else is there to put money that would provide a reasonable return ?

Property prices are depressed and likely to remain so until borders reopen, and the return on fixed deposits is almost zero.

Maybe governments should embark on a bond selling campaign similar to wartime because this is as close as we will get to war without actual fighting. Social spending to keep the economy breathing repaid down the track when things pick up. And maybe more government investment in things like resources instead of having most of the profits going overseas.

But I doubt if Slomo and Fried Burger have the foresight for that sort of thing.


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## Smurf1976 (18 June 2020)

wayneL said:


> Good thinking @Smurf1976, I was thinking about those same patterns, but never thought of markets as an allegory.




Some will find this information completely useless but personally one of the more significant learnings I've had about markets is to realise that the same basic patterns exist far more widely.

3 stage bull markets ending in a mania don't just happen in the stock market. They also occur with the popularity of TV programs, in pop music, fashion, toys and even interior decorating. It doesn't happen always, not every TV program or every singer goes that way, but it certainly does occur and it's not uncommon.

As a TV program example I'll cite Top Gear, that is the UK version in its era presented by the well known trio of Jeremy Clarkson, Richard Hammond and James May.

The show had a niche following and in Australia and ran on SBS for quite some time (stage 1). It then gained mainstream popularity and in due course one of the commercial stations offered enough money to buy the rights to run it (stage 2). Before long there was Top Gear merchandise being sold in shops, public awareness of the show was mainstream even among those who didn't watch it, there was an entire area dedicated to it in at least one department store, they even went as far doing a live show, as distinct from the TV show itself, and local TV spin offs ensued including an Australian version (stage 3, the mania). 

It's reported that when they first started producing Top Gear, they literally had to pay the studio audience to get anyone to stand there. By the time the show reached its mania stage the opposite was true and being in that audience was something money simply couldn't buy, demand vastly exceeded supply. Bull market indeed.

Next step - the BBC sacked Jeremy Clarkson following an incident, the other two also left and that was it, game over. As with most manias, it all came crashing down real quick. Top Gear still exists as such today with new hosts but is very much diminished in terms of audience and public interest compared to its peak. It has a lot in common with a stock market after the bubble burst. 

Now go and pick a few random pop music groups, so boy bands or girl bands or whatever, and you'll find the same pattern over and over. A point comes where they are _everywhere_ and their music is pretty much inescapable to anyone who listens to radio. In some cases it goes as far as merchandise being sold, pretty much anything that can be branded with the group's name, people copying their fashion and so on plus of course the obligatory tour. Then not long after that someone leaves or there's a huge fight or whatever and the whole thing falls apart usually quite dramatically and that's it, the bubble's burst and the game's over. The odd one carries on for the next 30 years with very much diminished popularity but most quit there and then.

Now look at kids toys or fashion and every now and then the same pattern unfolds. Something becomes popular to the point that even adults without children know the toy exists and even your grandma knows that wearing whatever is the latest fashion. The craze is _everywhere_ but not long after that you won't find one for sale in any shop and the whole thing's well and truly over, now it's _nowhere._

Plot any of that on a chart and what you get is a 3 stage bull market which ends in a mania and a bubble burst. In some cases it's complete with the echo bubble as well - a replacement member in the music group, a variant on the original design of the toy, etc.

For some well I've just wasted the past 2 minutes reading that. For me, well I found it rather useful to understand that what goes on in the markets is by no means unique and that the same basic concepts also occur with lots of things which involve herd behaviour. Once a mania occurs, once there's that huge frenzy and it's everywhere, collapse is the usual result with a "soft landing" being something few have achieved in practice be it in TV, music or the markets.

In the back of your mind you probably always sort-of knew that. You knew that fashion and pop music and the latest toys all tend to be rather disposable and that once it's _everywhere_ the next step is it's _nowhere. _You've spotted a few manias without even realising it at the time but ultimately markets do display that characteristic too.

Ultimately we're all here to make a profit (it's a stock market forum, right?) so my real point is that if there's something else you already understand the basic concept of which can be applied to trading or investing then that may well help you to understand it far better. If technical charts and spreadsheets are causing your eyes to glaze over, well being able to relate that to something else in the world may help in getting your mind around the concept of what's going on. 

If it doesn't help well then now I owe you for your wasted time reading.


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## Smurf1976 (18 June 2020)

Adding to the previous post - there's more than one operating system for the human mind.

With something involving uncertainty, and the stock market is an example of that, different people will approach it differently and there's more than one method that works (and more than one that doesn't).

If T/A is working then keep doing it. If fundamentals are working for you then likewise keep doing it. 

But if it's not working and you find it easier to understand by relating it to weather cycles or farming or crowd behaviour or whatever, and you make that work, well then you may as well do so.

For those on the politics, well I see a mania going on with certain subjects and it'll end in the predictable manner with the only real difficulty being with the timing but manias ultimately collapse. Spotting these has wider application to all sorts of things.


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## wayneL (18 June 2020)

Smurf1976 said:


> Some will find this information completely useless but personally one of the more significant learnings I've had about markets is to realise that the same basic patterns exist far more widely.
> 
> 3 stage bull markets ending in a mania don't just happen in the stock market. They also occur with the popularity of TV programs, in pop music, fashion, toys and even interior decorating. It doesn't happen always, not every TV program or every singer goes that way, but it certainly does occur and it's not uncommon.
> 
> ...



No I think you're spot on. I guess Prechter et al were on to that, socionomics etc. Even some of his predictions didn't come off, it's a useful way to look at the world.

It's funny, you can even plot the popularity of practitioners in my field the same way.


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## SirRumpole (18 June 2020)

Very sage post Smurf, the tech bubble is a pretty good stock market example of mania as was the Poseidon episode of some years ago (probably a lot of insider trading going on in both those cases).

I comes down to the two fundamentals of the stock market, fear and greed, and those two emotions aren't going away any time soon.


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## Dona Ferentes (28 June 2020)

Dona Ferentes said:


> *Thought Bubble #2
> *
> This one is provoked by an article in the _AFR _today.
> https://www.afr.com/wealth/personal-finance/meet-the-sharemarket-s-corona-generation-20200610-p551dz
> ...





> ...On ASF, the narratives have moved away from stocks and towards social commentary and opinion-making. Some of the market stuff is good (I'm "macro picture first, then drill down" in my approach so that's needed) but I get a sense of exasperation from many that the whole thrust of the site has been away from ASX shares to grandstanding, and this is offputting to many and corrosive for this site.



Interesting how my 'bubble' expanded on the last paragraph, and away from the main thrust intended, which was how the Covid conniption brought a lot of new punters to the market (even if they didn't make it to ASF) because of the *perfect cocktail as outlined:*


> ... Stuck at home
> ... Access to money (some using the $10k from super)
> ... Technology. Everyone can do it.
> ... Low brokerage models (though Commsec ain't cheap)
> ... Rapid falls then rapid rises on the market




Keeping with this theme, I posted a follow-up somewhere of a _Firstlinks _article
https://www.firstlinks.com.au/article/easy-money--download-robinhood--buy-stonks--bro-down
that explores the wacky world of investing.
_"The result is a bunch of new players day-trading and laughing at the world of fund managers and experts. Sure, they are inexperienced, but they work on the theory that stocks only go up, and if it’s a terrible stock that just fell 50%, then that’s even better. It has so much potential._

_It sounds crazy to anyone taught to value a company based on the net present value of its expected future cash flows, but in this world, none of that matters. The new traders drove up the price of Hertz after it declared bankruptcy with massive debts and no revenue, and the share price rose so rapidly that Hertz planned a new capital raising._

_Where are these communities hanging out?_

_*TikTok* is a massive global success story with a billion members who post short dance moves, lip sync routines, cooking sessions or whatever. It’s also dominated by young people and millennials, and Robinhood advertises heavily to this market. The chat function on TikTok includes stories of quick daily market gains with videos on ‘How to Trade’ and 'Financial Advice', some of which are agonisingly naive._

_*Reddit* is a large collection of online public forums where people share information and comment on posts by other people. It has become a global feedback site on almost any subject and one Robinhood section has 300,000 members. A popular Australian site is ASX_bets with 8,300 members. Reddit claims to be the number one resource for traders under 30, and they can legitimately collude._

_And what of *Robinhood*? This is now a serious business. It has increased its user base by millions each month since March and embarked on a new share issue valuing the company at US$8 billion. It is privately held, and the app is not available in Australia. Robinhood makes money by selling data to high-frequency traders, which may translate into other activity by large players_."

.... the article is worth a read, for the giggle.


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## Dona Ferentes (28 June 2020)

*Thought Bubble #3*​
I have mentioned elsewhere that, in my opinion, the _*perfect stock *_to own is a
"Ten Bagger that pays a dividend". ​
It's got to be the case, of having income that increases, with built-in gains on the initial invested capital. 

Though of course, nothing can be assured or assumed over the longer term. A company can decline or disappear completely, dividends can dry up, takeovers force your hand, but that doesn't take away from the bold statement. I completely agree with the lifecycle thesis as outlined by @Smurf1976 in post #14 , by the way.


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## frugal.rock (28 June 2020)

I don't know why, but many stocks I have watched for unhealthy lengths of time, trigger memories of events experienced in nature.
I have shared some, but here's another one...
Your in the tinny to go fishing on the bay, you notice a bit of choppy surface in-between current flows.
Looks interesting, so you putt over and drop anchor, throw a handful of chum or 2, and then cast the light weight hook and tackle.
Bang, your on immediately. You reel in your garfish, and take it off the hook.
Quickly bait the hook again, cast, bang! Brilliant.
Repeat over and over with an occasional handful of chum.
You know it's time to go home when you have a good feed, but ooh boy, it's lovely to be grabbing easy fish.
The message sinks in that the fish have picked up on the game as your next cast doesn't get a bite.
Time to go and do the fiddly gutting, as no amount of chum or baited hooks are successful.
Wait another day, different spots, same scenario or not.


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## frugal.rock (29 June 2020)

*How to spot the next big thing*
*https://www.asx.com.au/education/in...ter/201604-how-to-spot-the-next-big-thing.htm*


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## Dona Ferentes (30 June 2020)

frugal.rock said:


> *How to spot the next big thing*
> *https://www.asx.com.au/education/in...ter/201604-how-to-spot-the-next-big-thing.htm*



FR, I've never warmed to _Woger the Wabbit_, from the days when he was learning from John Abernethy at Clime and even less now he has his own shingle, (he's had some shockers of tips but would adamantly stick with them if the '_intrinsic value_' method said so) but he has some use in bringing stocks to others' attention. At least he has  discipline in an approach.

There is quite a bit of happy hunting in the information, the metadata, proffered by fund managers. Taking the view that a _ten bagger that pays dividends _will most likely be found among small to medium caps, there are a few managers, listed and unlisted, that throw up useful stuff. As a long term holder of Mirrabooka MIR, I align with their style, which is investing for the medium to long term, looking at formulation and execution of the business strategy; and analysing key financial indicators, including prospective price earnings relative to projected growth, sustainability of earnings and dividend yield and balance sheet position including gearing, interest cover and cash flow.

Other players worth following include Naos (NAC and NCC), Thorney (TOP more than TEK) and Sandon (SNC) plus the WAM stable. The unlisted include Bronte Capital and ideas from managers through FGX. (And of course _*ASF*_)

Because, after all, the *Next Big Thing* is what will make the difference.


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## Chronos-Plutus (30 June 2020)

frugal.rock said:


> I don't know why, but many stocks I have watched for unhealthy lengths of time, trigger memories of events experienced in nature.
> I have shared some, but here's another one...
> Your in the tinny to go fishing on the bay, you notice a bit of choppy surface in-between current flows.
> Looks interesting, so you putt over and drop anchor, throw a handful of chum or 2, and then cast the light weight hook and tackle.
> ...




Perhaps a link between nature and the stock market. Complex Adaptive Systems is a place to start in this area with a particular focus on Starling murmuration and fractal systems within nature:


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## mullokintyre (9 November 2020)

Yo Frugal, like that Fishing analogy. Problem is, as always, spotting that  bit of choppy surface in-between.
For the past six weeks or so, I have been down at Malacoota whiles Mrs Mull has been working a locum.
Spent as much time as possible looking for those spots. Only found one, and got a heap of good sized bream in the lakes.
Alas, the rest was only so so.
Bought myself a  fishing drone, and spend a more than a few  hours trying it out of the surf beach. 
Apart from a a few small Oz Salmon and a couple of port Jackson sharks, things didn't go to plan.
Have a bit to learn yet.


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## Dona Ferentes (16 November 2020)

This is an issue that has been exercising the minds of many. I read somewhere that the rotation from 'growth' to 'value' last week was a _*15 Sigma*_ event, whatever that means.


*Asset management is in turmoil. So does value investing still work?*

*THE ECONOMIST*
_ 

For a moment this week investors could afford to ignore stockmarket superstars like Amazon and Alibaba. As news of a vaccine broke, a motley crew of more jaded firms led Wall Street higher, with the shares of airlines, banks and oil firms soaring on hopes of a recovery. The bounce has been a long time coming. So-called value stocks, typically asset-heavy firms in stodgy industries, have had a decade from hell, lagging behind America’s stockmarket by over 90 percentage points. This has led to a crisis of confidence among some fund managers, who wonder if their framework for assessing firms works in the digital age. They are right to worry: it needs upgrading to reflect an economy in which intangibles and externalities count for more._
_
For almost a century the dominant ideology in finance has been value investing. It has evolved over time but typically takes a conservative view of firms, placing more weight on their assets, cashflows and record, and less on their investment plans or trajectory. The creed has its roots in the 1930s and 1940s, when Benjamin Graham argued that investors needed to move on from the pre-1914 era, during which capital markets were dominated by railway bonds and insider-dealing. Instead he proposed a scientific approach of evaluating firms’ balance-sheets and identifying mispriced securities. His disciple, Warren Buffett, popularised and updated these ideas as the economy shifted towards consumer firms and finance in the late 20th century. Today measures of value are plugged into computers which hunt for “factors” that boost returns and there are investors in Shanghai loosely inspired by a doctrine born in Depression-era New York.

The trouble is that value investing has led to poor results. If you had bought value shares worth $US1 a decade ago, they would fetch $US2.50 today, compared with $US3.45 for the stockmarket as a whole and $US4.65 for the market excluding value stocks. Mr Buffett’s Berkshire Hathaway has lagged behind badly. Despite its efforts to modernise, value investing often produces backward-looking portfolios and as a result has largely missed the rise of tech. The asset-management industry’s business model is under strain. Now one of its most longstanding philosophies is under siege, too.

Value investors might argue that they are the victims of a stockmarket bubble and that they will thus be proved right eventually. The last time value strategies did badly was in 1998-2000, before the dotcom crash. Today stockmarkets do indeed look expensive. But alongside this are two deeper changes to the economy that the value framework is still struggling to grapple with.The first is the rise of intangible assets, which now account for over a third of all American business investment — think of data, or research. Firms treat these costs as an expense, rather than an investment that creates an asset. Some sophisticated institutional investors try to adjust for this but it is still easy to miscalculate how much firms are reinvesting — and firms’ ability to reinvest heavily at high rates of return is crucial for their long run performance. On a traditional definition, America’s top ten listed firms have invested $US700bn since 2010. On a broad one, the figure is $US1.5 trillion or more. Intangible firms can also often scale up quickly and exploit network effects to sustain high profits.

The second change is the rising importance of externalities, costs that firms are responsible for but avoid paying. Today the value doctrine suggests you should load up on car firms and oil producers. But these firms’ prospects depend on the potential liability from their carbon footprint, the cost of which may rise as emissions rules tighten and carbon taxes spread.
_
_Value investing’s rigour and scepticism are as relevant as ever — especially given how frothy markets look. But many investors are still only just beginning to get their heads round how to assess firms’ intangible assets and externalities. It is a laborious task, but getting it right could give asset management a new lease of life and help ensure that capital is allocated efficiently. In the 1930s and 1940s Graham described how the old investing framework had become obsolete. Time for another upgrade_.


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## Dona Ferentes (17 December 2020)

*Your company needs you: why companies need engaged shareholders*
Firstlinks | December 16, 2020
_‘A lot of people die fighting tyranny. The least I can do is vote against it’. Carl Icahn._
Capital markets have been wonderful inventions. Freed from self-interest and patronage, they allow Adam Smith’s ‘invisible hand’ to unemotionally allocate scarce capital around the economy – investing where it will be most productively used. Society as a whole reaps the benefits. Greater economic output raises living standards for all. Better investment returns mainly benefit those most in need: retirees and those planning for retirement.
These days capital markets are heavily regulated affairs. They should be. Despite their capacity to turbo charge economic growth, capital markets have significant flaws. Some of these shortcomings are plain to see. Wealthy and compassionate societies don’t let market forces decide whether an ambulance arrives. We set the boundaries that markets operate within because we know there are many problems that markets on their own can’t solve. For the problems we do want them to solve, however, capital markets can still fall well short of what we want them to achieve, often at the great expense of investors.

*The Agency Problem*
The original sin within our model of capitalism, is that it separates the ownership of companies from their management. Few family owned businesses can attract the capital or talent necessary to build a BHP. Thus, by separating the ownership of a company from its management, businesses are able to grow – and create wealth and jobs – in ways few private firms can replicate. In doing so we create what economists call an ‘agency problem’. Investors, who put up their hard-earned savings and own the company, must rely on their agents, management, to run the business with their best interests in mind.
Managers on the whole are an honourable breed. But, as Paul Keating liked to say, ‘in the race of life, always back self-interest’. Time and again, left unsupervised, managers have demonstrated a terrible tendency to run companies in ways that suit them, not their shareholders.
Our solution to this agency problem is supposed to be robust and independent company boards. Shareholders appoint directors and pay their salaries. They are there to act as the guardians of our capital and to stand up to managers on our behalf.

*The ‘Wall Street walk’*
The entire premise of shareholder capitalism rests on the notion that a board is there to represent shareholders. When the relationship is working well, a company’s corporate governance framework should look like the healthy model below. Shareholders appoint directors who, in turn, oversee management. Boards are there to offer advice to management when it is needed, and to hold them to account when it is necessary. Management then have a clear guiding principle to work towards – prioritise shareholders and shareholder returns.


Well-functioning corporate governance models look great in textbooks. In the real-world, modern capital markets have left shareholders increasingly separated from the boards that are supposed to represent them. Firstly, shareholders come and go today with incredible speed. In the 1960s, the average share holding period for a US share market investor was six years. By the 1990s this had fallen to just two years. Today it sits at six months. While a company’s owners come and go every few months now, boards and managers work together hand-in-hand for years, sometime decades. Given this arrangement, it is easy to see how boards can become co-opted by their management teams. Adding to the process of shareholder and board alienation, almost all ‘shareholder feedback’ today comes to boards through the manager and the manager’s investor relations team (when was the last time you directly spoke to the board of a company you owned). Even with the best of intentions, boards are at risk of receiving curated shareholder feedback, feedback that fits with managements’ own agenda.
In the real-world, the most common corporate governance failing at a company is that its board slowly becomes entwined with its management team. Managers then begin to set their own priorities for the company and their own vision for the future. Sometimes these overlap with what is best for shareholders. Too often they do not.
When this occurs, shareholders – who are the _owners_ of the company – are left with two options. Accept the outcomes that management deliver or sell your shares and move on. In market parlance this second option is referred to as the ‘Wall Street walk’.
*The passive problem*
Exacerbating the agency problem in recent years has been the explosive growth of passive investing and the exchange-traded fund (ETF) industry. The premise behind passive investing is hard to fault. ‘Efficient market theory’ argues that everything you could ever know about a stock is already in its price. Given that, don’t bother trying to analyse companies. Instead, let others do the hard work of figuring out what a company is worth and passively invest into the markets as a whole. (This logic is certainly boosted by the fact that, after fees, the average fund manager underperforms the market over time).
While ETFs have provided many investors with a great low-cost way to invest in the market, they have badly amplified the agency problem that already existed in the stock market. As the share of companies owned by passive investors has increased exponentially, fewer and fewer shareholders today are actually involved in the process of holding managers and boards to account.
*Vote with your hands, not your feet!*
When shareholders feel that the Wall Street walk is the only way to escape an underperforming company, the entire premise of how capital markets are supposed to work has broken down. The point of public companies is that public scrutiny and shareholder democracy is there to shine a light, to hold the people working for us to account. If shareholders do not exercise those rights, self-interest and cronyism very quickly sets in. Worse, the cycle becomes self-fulfilling. When shareholders vote with their feet and not their hands, vested interests learn a very dangerous lesson. Once learnt, the problems tend to get worse over time, not better.
All of this means that it is more important than ever that shareholders pay attention to what is going on at their companies these days. If you are a shareholder in a company, you are the owner of the business. Make a point of engaging with your board – they are there to represent you. Most importantly, take the time to vote at shareholder meetings, and if you’re unhappy, vote with your hands, not your feet! You own the companies that you invest into. The people running them are supposed to be working for you.

*Miles Staude of Staude Capital Limited in London is the Portfolio Manager at the Global Value Fund (ASX:GVF). This article is the opinion of the writer and does not consider the circumstances of any individual*


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## peter2 (18 December 2020)

With all the recent capital raisings lately, this thought keeps reappearing.


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## qldfrog (18 December 2020)

peter2 said:


> With all the recent capital raisings lately, this thought keeps reappearing.
> 
> View attachment 116541



The amazing thing is that many do NOT have this thought


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## Dona Ferentes (20 February 2021)

Just want to drop this in here, if only because I will remember that the link, the idea, is posted here, when that li'l ol' bubble reappears

Investoramnesia.com


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## Dona Ferentes (25 March 2021)

45 Investment Ideas for the Next Five Years









						400th Edition Special: 45 of the best investment ideas
					

Over eight years since February 2013, Firstlinks has become a leading financial newsletter, publishing thousands of articles from hundreds of writers. To mark this milestone, 45 experts have joined the celebration for our 400th edition bringing their best investing ideas for the next few years.




					www.firstlinks.com.au
				




_I'd be very happy for newbies to be directed here._


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## basilio (9 April 2021)

Farming trees for metal.  The next big Nickel boom ?
For real..








						These trees bleed metal — and could help power the future
					

These plants suck metals from the soil at amazing rates. Scientists hope farming the plants could provide an environmentally-friendly alternative to mining.




					www.abc.net.au


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## Dona Ferentes (24 April 2021)

Howard Marks (Oaktree) has  a few points I'd like to save

_Value investing doesn’t have to be about low valuation metrics. Value can be found in many forms. The fact that a company grows rapidly, relies on intangibles such as technology for its success, and/or has a high P/E ratio shouldn’t mean it can’t be invested in on the basis of intrinsic value._
_Many sources of potential value can’t be reduced to a number. As Albert Einstein purportedly said, “Not everything that counts can be counted, and not everything that can be counted counts.” The fact that something can’t be predicted with precision doesn’t mean it isn’t real._
_Since quantitative information regarding the present is so readily available, success in the highly competitive field of investing is more likely to be the result of superior judgments about qualitative factors and future events._
_The fact that a company is expected to grow rapidly doesn’t mean it’s unpredictable, and the fact that another has a history of steady growth doesn’t mean it can’t run into trouble._
_The fact that a security carries high valuation metrics doesn’t mean it’s overpriced, and the fact that another has low valuation metrics doesn’t mean it’s a bargain._
_Not all companies that are expected to grow rapidly will do so. But it’s very hard to fully appreciate and fully value the ones that will. _
_If you find a company with the proverbial license to print money, don’t start selling its shares simply because they’ve shown some appreciation. You won’t find many such winners in your lifetime, and you should get the most out of those you do find_


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## finicky (24 April 2021)

Yeah, I feel I missed out on Xero (XRO) years ago because I couldn't see past more simple valuing measures based on current and near earnings. The chart was suggesting a buy too; it was forming a rounding low under $20 on a monthly chart.


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## basilio (27 June 2021)

The role of computer chips in economic ascendancy,.
Who makes the chips that control everything ?


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## Dona Ferentes (27 June 2021)

I was kind of hoping this could be my thread. Why don't you set up your own? .  ...


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## basilio (27 June 2021)

Dona Ferentes said:


> I was kind of hoping this could be my thread. Why don't you set up your own? .  ...




Sorry...   I was trying to find a suitable place to  put this story up and thought that the "thought bubble" seemed a good fit.
The question of investment in the basic tools of of an electronic society seems on song.  And I think  the thread  has attracted a range of constructive responses.
And my contribution  was not meant to be anything else. 

Cheers


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## Dona Ferentes (11 July 2021)

Thought Bubble #8 or is it 9​A thoughtful friend sent me this link... It is worth sharing









						Robust and Resilient Finance - John Kay
					

Support for this paper was gratefully received from the Korea Institute of Finance. Abstract The development and growth of the financial sector within the last 50 years has been justified on the grounds that new instruments and greater levels of trade result in a more efficient allocation of...



					www.johnkay.com
				




*Robust and Resilient Finance*​*Abstract*
The development and growth of the financial sector within the last 50 years has been justified on the grounds that new instruments and greater levels of trade result in a more efficient allocation of risk.  The experience of the Great Financial Crisis punctured this narrative, but much of the policy response has focussed on establishing new and more complex regulations.  This misunderstands the nature of risk and uncertainty in the financial system and the real problems of complexity that arise in these types of systems.  An analysis of the history of financial development highlights where socially harmful approaches have grown into destabilising practices.

_... and after a random walk over the economic landscape, visiting Adam Smith, Lloyds versus gesellschaft (laying bets on the interpretation of incomplete information Vs the socialisation of individual risks), Rajhuram Rajan at Jackson Hole, too big to fail Vs too complex to fail, unplanned growth of networks Vs planned network development, in a series of chapters, and written in a way most layfolk could understand:
*The rise of modern finance * _

*Why we trade

The rise of derivatives trading*

_*Trouble in the Teton Mountains (* that infamous 2005 Fed meeting*)*_

*The problems of complexity

Robustness and resilience

Conclusions*
Lehman – an ill-managed purveyor of unneeded products – represented exactly the kind of business that should fail in a well-functioning market economy.  The view that it was a mistake for the US government to permit Lehman to collapse is expressed, not by people who miss the services that Lehman provided, but by people who regret the consequences of its failure.  The lesson is not that policymakers should try to prevent such failures but that public processes should ensure that similar failures are more easily contained.  This requires reintroducing to the financial sector the modularity and redundancy which characterise robust and resilient engineering systems and which recent decades have foolishly sought to characterise as inefficiency.

@mullokintyre , _you'll like this last chapter_ !


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## Dona Ferentes (18 July 2021)

_a bit of a cut and paste, part of a bigger opinion piece_ : https://www.firstlinks.com.au/investing-goes-water-hell-water

" Everyone is looking for the next Amazon, and access to capital for startups has never been easier. This has no parallels in history, and ass _The Economist_ says:


> _ " ... something astonishing is going on in fintech. Much more money is pouring into it than usual. In the second quarter of the year alone it attracted $34bn in venture-capital funding, a record, reckons CB Insights."_




"That's AUD45,000,000,000 in three months, just for fintech startups. It's no wonder older companies are facing unprecedented tech disruption. Business has never seen so much capital available to so many *smart *people.  

​
*The wonderful Non-Profitable Tech Index*​"Goldman Sachs produces an index of listed US tech companies which are not making a profit. The chart below (from Bianco Research) shows how this index remained flat for the period 2014 to sometime in 2020. As companies benefited from a quick adoption of tech during COVID, the index reached a peak of 433 on 12 February 2021. It has since fallen to the current level of 328 which some might call a reality check, but who knows when to calculate a P/E, you need an E, and none of these companies have one.





*...---... ...---... ...---...*​
_The Law of Diminishing returns tells me they're not "smart people". Big time dice throwers, yes, and happy to put their hand out the window, because it's raining money. But smart. Nope. Not most of them. _
​


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## Dona Ferentes (29 July 2021)

frugal.rock said:


> *How to spot the next big thing*



Ophir Asset Management, which positions itself a specialist small and mid-cap equities investment manager, has written this:

How not to miss the next 10-bagger: valuing early-stage growth companies.

https://www.ophiram.com.au/how-not-to-miss-the-next-10-bagger-valuing-early-stage-growth-companies/
.
We are in a period of unprecedented innovation and disruption globally. Exciting new companies are emerging every day. If investors can better understand how to value young, fast-growing companies, they will be much better placed to identify the next 10-bagger.

*When DCF doesn’t work*
For investors to grasp the challenges in valuing early-stage growth companies, they must first understand the mechanics of Discounted Cash Flow (DCF), a valuation method that all analysts are taught.

A DCF financial model projects the expected cash flows of a business into the future. Those future cash flows are then brought back to a value today by applying a discount rate to adjust for the level of risk and uncertainty faced in achieving those cash flows.

The DCF methodology is relatively easy to implement when investors value mature business that have years of consistent earnings and stable margins. But it is much harder to value a business using DCF when its earnings streams are less predictable, such as in an early-stage, fast-growing company. This can lead to potentially extreme mispricing of equities over time, as the likes of Amazon, Google and Afterpay all appeared overvalued but recorded spectacular growth.

*Useless metrics*
As with DCF, many of the stock standard valuation metrics such as P/E (price/earnings) or PEG (price/earnings to growth) can be completely useless when analysing immature companies.

Their P/E or PEG ratios can look astronomical, and change wildly, because their current earnings may only be a tiny sliver of their potential earnings when they mature. To achieve scale, these companies are often heavily reinvesting in themselves with high R&D costs. Revenues may grow rapidly, but it could take years to deliver profits....

*The corporate lifecycle*​Many early-stage growth companies simply don’t have free cash flows that are used to value the worth of a share. So, investors must make assumptions about what these will look like in the future.

*Turning to qualitative factors*​But how do you make those assumptions?

To evaluate young, high-growth companies, analysts must dive into the underlying business, and judge how long it will take to mature. They will need to refer less to financial ratios and income statements, and more to qualitative factors such as:

Recurring revenue
Scalability
Competitive advantage
Size of addressable market
Best-in-class leadership
Organisational culture
Track-record of success
Ability to create new revenue streams
Few of these traits can be meaningfully reflected in spreadsheets.

For legendary investors, such as Peter Lynch, Warren Buffett and Howard Marks, it is the quality of a company’s growth that determines its value, not revenue or even earnings growth per se. When they analyse the broad range of factors outlined above, they can make informed judgements on which businesses are most likely to be long-term successes.

*Focusing on four factors*
The study of early-stage companies should focus heavily on four key factors:

*1. Identifying assets*
Usually, the first thing to consider when formulating a valuation for an early-stage company is the balance sheet. List the company’s assets which could include proprietary software, products, cash flow, patents, customers/users or partnerships. Although investors may not be able to precisely determine (outside cash flows) the true market value of most of these assets, this list provides a helpful guide through comparing valuations of other, similarly young businesses.

*2. Defining revenue Key Progress Indicators*
For many young companies, revenue is initially market validation of their product or service. Sales typically aren’t enough to sustain the company’s growth and allow it to capture its potential market share. Therefore, in addition to (or in place of) revenue, we look to identify the key progress indicators (KPIs) that will help justify the company’s valuation. Some common KPIs include user growth rate (monthly or weekly), customer success rate, referral rate, and daily usage statistics. This exercise can require creativity, especially in the start-up/tech space.

*3. Reinvestment assumptions*
Value-creating growth only happens when a firm generates a return on capital greater than its cost of capital on its investments. So a key element in determining the quality of growth is assessing how much the firm reinvests to generate its growth. For young companies, reinvestment assumptions are particularly critical, given they allow investors to better estimate future growth in revenues and operating margins.

*4. Changing circumstances*
Circumstances can move or change quickly for early-stage companies. When a young company achieves significant milestones, such as successfully launching a new product or securing a critical strategic partnership, it can reduce the risk of the business, which in turn can have a big impact on its value. Significant underperformance can also result when competitive or regulatory forces move against a company.


.x.x.x.x.x.x.x.x.x.x

and _, if you can't find a metric from those listed above that suits your growth trajectory, then look out for another one _


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## Dona Ferentes (5 January 2022)

appeared in the _New Yorker _magazine, in 1993


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## Dona Ferentes (5 January 2022)

This 1999 film changed cinema – and forecast our digital future​_In their 1999 film, the Wachowskis glimpsed the future of our digital lives. More remarkably, they shaped them._

*Samuel Earle*
05 Jan, 2022

In the most iconic scene from _The Matrix_, released in 1999, Morpheus holds out his hands and, with a coloured pill in each palm, offers Neo (Keanu Reeves) a choice. Neo doesn’t know it yet, but he is living inside “the Matrix”: a computer simulation of the year 1999, designed by machines to enslave the human race. Morpheus (Laurence Fishburne) belongs to a band of rebels determined to free humanity, and believes that Neo is the one (or rather “the One”) to do so.

“You take the blue pill, the story ends, you wake up in your bed and believe whatever you want to believe,” he says. “You take the red pill, you stay in Wonderland and I show you how deep the rabbit hole goes.”
Neo takes the red pill, and we see how deep the rabbit hole goes: into a bleak future where, some time late in the 22nd century, humans are confined to womb-like pods that line metal skyscrapers, harvested as an abundant energy resource that machines live off. Machines plug humans into the Matrix to blind them to this unbearable existence: the virtual world keeps them passive.
For Neo and the movie’s huge fan base, reality was never the same again. _The Matrix_ instantly became both a Hollywood blockbuster and a cult classic, with four Academy Awards and an unusually devout and diverse following. Today, its influence is everywhere: from fashion and philosophy to the shape of our technological anxieties, the proliferation of conspiracy theories and the political tumult of the past five years.
_The Matrix _presented an exhilarating kind of dystopia, tailor-made to the paradoxes of the digital age. On the one hand, the eponymous computer simulation is a sinister mechanism of control that hides from humans the true source of their oppression. On the other, once aware of the simulation, people have the power to plug back in and bend reality to their will.

The directors, Lilly and Lana Wachowski, foresaw contemporary tensions online: between the internet’s tendency towards freedom and conformity, anarchy and authoritarianism. More remarkably, through the sheer force of the movie’s prescience and popularity, they shaped those tensions. “There is no religious text more foundational to the internet than _The Matrix_,” the critic Max Read wrote in 2019, marking the film’s 20-year anniversary. According to Kanye West, _The Matrix _is “the Bible of the post-information age” – this is among the pop star’s more credible claims.
More than two decades on, _The Matrix _remains eerily relevant to our world. Though two 2003 sequels (_The Matrix Reloaded _and _The Matrix Revolutions_) failed to reach the same heights, the thrill of the franchise hasn’t faded. Now, with a fourth film, _The Matrix Resurrections_, the franchise returns to a context that it played no small part in creating: a world riddled with the feeling of tumbling deeper and deeper down the rabbit hole, waiting to wake up.
In September 1993, when the Wachowskis were working on the script for _The Matrix_, _The New York Times _told its readers about a new “thing” called “the internet”: “an unbelievably dense global matrix of 1.7 million computers”, the paper explained, that is “currently the world’s most fashionable rendezvous”.
This was one of many signs that the internet was going mainstream. The same year, the world wide web went public, Rupert Murdoch bought his first web service and the _New Yorker _ran a cartoon that is still the most reproduced in its history: a dog sits at a computer and says to a canine friend: “On the internet, nobody knows you’re a dog.” It played on what seemed like a fundamental fact of life online: an internet user’s anonymity, which opened up infinite possibilities. “You can be whoever you want to be,” one early online user enthused. “You can be the opposite sex … You don’t have to worry about the slots other people put you in.”

_The Matrix_ harnessed this liberating promise. The title referred to an early word for the internet, the rebels use phone lines to move between real and virtual worlds, and inside the simulation, you can manifest a truer version of yourself. Neo is a bored software engineer called Thomas Anderson before he is “Neo”. The movie’s diverse and androgynous cast suggests a world beyond gender and race. When Neo meets fellow super-hacker, and future lover, Trinity (Carrie-Anne Moss) in person, he is surprised: “I always just thought you were a guy.” “Most guys do,” she replies.
Promise of escape and reinvention​The original script made this theme even more explicit. Not only is there speculation of Trinity’s gender – “87 per cent of all women online are really men”, a character insists – but another rebel, Switch, is written as gender-fluid: a man in the real world and a woman in the simulation. Warner Bros insisted Switch should be a woman – a gender-fluid character would be too “weird”. Yet the lost plot-line took on added significance when, in 2012, Lana (previously Larry) came out as trans, and then in 2016, Lilly (previously Andy) did too. Lilly’s statement was headlined: “Sex change shocker – Wachowski brothers now sisters!!!”
_The Matrix _was the second movie the siblings directed. The first was _Bound_, a lesbian neo-noir thriller released in 1996. In one of their rare interviews for _The Matrix_, conducted on a chatroom (they signed a no-press clause in the Warner Bros contract), a user named “enjoythesilence” asked the Wachowskis if they saw similarities between _Bound_ and _The Matrix_. “Both films examine the idea of an individual searching for their true self while attempting to escape the box that we often make of our lives,” they wrote.
The promise of escape and reinvention recurs in the Wachowskis’ work. “There’s a narrative omega point in every Wachowski movie,” Lana said in 2018. “We have to find a door, imagine a way out of this world, into a different world. In order to experience this new world, you have to let go of a lot of traditional assumptions, your standard expectations. Beyond the rabbit hole, new possibilities, new versions of us can exist.”
By 1999, when _The Matrix_ was released, internet excitement had reached delirium. _Time_ named a young Jeff Bezos Person of the Year for embodying “the two great themes of the year: online shopping and ‘dot-com’ mania”. The BBC called it “the year of the internet”. But there was always a dark side to this dreaming, not least in the age-old fear that our technological genius might spell our downfall. With machines developing so fast, how long before they subjugated the human race?


> The 1990s seem a sanctuary of calm: a time when history had ended, and the future was something to look forward to.



_The Matrix _met this mood of triumphalism and paranoia perfectly. While scenes in the simulation were imbued with a phosphorus green (harking back to old PCs), pioneering CGI, camera work and fight scenes choreographed by the legendary Hong Kong director Yuen Woo-ping created something that felt new. Some hailed it as “the first movie of the 21st century”. The storyline also riffed on _fin de siècle_ fantasies. “We have only bits and pieces of information,” Morpheus tells Neo from the barren lands of the 22nd century, but “at some point in the early 21st century, all of mankind was united in celebration. We marvelled at our own magnificence as we gave birth to AI, a singular consciousness that spawned an entire race of machines.”
The reason why the victorious machine race then establishes the human simulation is explained later, by Agent Smith (Hugo Weaving), a “sentient program” charged with safeguarding the Matrix against the rebels. Smith explains how the machines first simulated “a perfect human world” without suffering, but humans rejected it. “Which is why the Matrix was redesigned to this,” Smith says, dryly. “The peak of your civilisation.”

From the barren lands of 2021, it is tempting to agree with Smith’s conclusion. Since 2016, a series of surreal events has left our world in a spin: a cascading climate crisis, Britain’s surrender to Euroscepticism, Donald Trump’s mutant presidency, a devastating pandemic, the storming of Capitol Hill by a band of horned conspiracy theorists. The internet lets us experience these events intimately and obsessively, wherever we are. The more dizzying the spectacle, the more we are glued to our screens, immersed in footage of Australia’s wildfires one moment, attending Trump’s press conference the next. The classic question of history – “Where were you when X happened?” – now receives a unanimous response: online.
But the internet is also experienced as the prime mover in our chaos. The matrix of computers that enables a greater awareness of reality also makes us feel as if reality is slipping away. The age of information is also the age of misinformation, making our politics feel wilder and less plausible – as if, like Alice, we have gone through the looking glass; as if, like the humans in_ The Matrix_, we are living in a simulation. In comparison, submerged in memory’s mist, the 1990s seem a sanctuary of calm: a time when history had ended, and the future was something to look forward to.
The turbulence of 21st-century politics has only heightened a sense that, as Adam Gopnik wrote in 2017, “we are living in the matrix, and something has gone wrong with the controllers”. The fear that reality is a hoax predates the internet – Plato’s allegory of the cave and René Descartes’ “evil demon” are famous examples – but, popularised by _The Matrix_, it is now a cultural mainstay.
Elon Musk, the Tesla CEO and self-described “techno-king”, claims there is a “one in a billion chance” we are not living in a simulation. Two tech billionaires have reportedly hired scientists to work on setting us free. At a more playful level, the acronym IRL (“in real life”) emerged in the 1990s, reflecting the sense that a whole part of life was no longer “real”. Weird events are routinely described as “a glitch in the matrix”.
Yet the reality or unreality of our world was not the central concern of _The Matrix_. The Wachowskis called it “an intellectual action movie” and, while it’s filled with philosophical references, the most overt is to the French theorist Jean Baudrillard. The directors made Baudrillard’s _Simulacra and Simulation_ (1981) required reading for the cast: Neo holds a copy and Morpheus quotes the theorist. Baudrillard was even asked to assist on the sequels but refused. The simulacrum hypothesis deserved better than to become a reality, he said.
Conspiracy theories flourish​Writing when the internet was in its infancy, Baudrillard’s principal idea was that under a deluge of what we now call “content” – news articles, photos, movies, adverts, television – anything as singular and concrete as “reality” ceases to exist. Representations of the world saturate society. Even lived experience takes on an unreal edge: an endless déjà vu of stories already encountered, a succession of screens where you watch “reality” take place. Baudrillard argued that this deluge of information – “viral” in the truest sense – led to “the liquidation of meaning”. All events whirled in a “vertigo of interpretation”. Any protest could be “the work of leftist extremists, or extreme-right provocation, or a centrist _mise-en-scène_ to discredit all extreme terrorists and to shore up its own failing power, or again, is it a police-inspired scenario?” Baudrillard insisted “all are simultaneously true”: it just depended on what channel you chose.
In this context, conspiracy theories flourish: anyone can find comrades for their cause, no matter how outlandish. Or rather, because corporate interests actively promote sensationalist content, maximising engagement, the more outlandish the better. The vocabulary tied to the rise of “conspiracism” is bound up with _The Matrix_. Online, to be “red-pilled” is now a verb, meaning to awaken to a vast conspiracy that only a select few can see. The paths by which algorithms radicalise online users are called “rabbit holes” (a nod to both _The Matrix_ and_ Alice in Wonderland_).
Donald Trump’s rise remains one of the starkest symptoms of our collective descent down the rabbit hole. Trump was a conspiracist who called every truth into question: from the size of his inauguration crowd to his predecessor’s country of birth, to the weather on any given day. As Baudrillard foresaw, in a society dizzy with information overload, “ ‘take your desires for reality!’ can be the ultimate slogan of power”.

Perhaps inevitably, given _The Matrix’s_ own symbiotic relationship with the web, the film became entwined with Trump. The red pill was appropriated as a symbol of the alt-right, and an entire industry now surrounds it: movies, podcasts, YouTube channels – all telling their audience a version of the same, conspiracist story, that reality is a hoax imposed by a politically correct, feminist cabal determined to subjugate men. Trump was cast as Neo. In edited clips, he dodges bullets marked “fake news”, “Hillary Clinton” or “CNN”. “TheRedPill”, a notoriously misogynistic forum on the social media site Reddit, became a hotbed for support. The forum’s creator, later revealed to be a Republican legislator, used the alias “Morpheus Manfred”.
Of all _The Matrix_’s legacies, appropriation by the far right must be hardest for the Wachowskis to swallow. In more plausible readings, the red pill represents class consciousness or hormone therapy (oestrogen pills sold in the 1990s were red). But Neo’s arc from computer nerd who hates his job to _Übermensch_ tasked with saving the world fitted too neatly with the fantasies of frustrated white men Trump tapped into.
More than two decades after its release, _The Matrix _stands as the definitive movie of the digital age. In light of the internet’s chaotic evolution, the title is not all complimentary. We are in a very dark timeline, as the saying goes – one where Elon Musk can tell 34 million Twitter followers in May 2020 to “take the red pill” and Ivanka Trump can reply “Taken!” (Lilly Wachowski added a blunt remark to that exchange in May 2020: “F--- both of you.“)

Far from offering an open space for self-expression, the internet is dominated by some of the wealthiest corporations in history: Facebook, Twitter, Google and Amazon. The first three are accused of exploiting our psychological vulnerabilities to maximise profit; the fourth is a $US1 trillion ($1.4 trillion) company and the zenith of digital capitalism, built on the back of lifeless work that would make the machines in _The Matrix_ proud.
The dreams of realising a second life online are fading. Internet culture values authenticity over anonymity, neatly aligning with the business interests of Silicon Valley. It doesn’t matter if you’re a man, woman or dog – they’ll sell your data just the same. “We don’t need you to type at all,” Eric Schmidt, then CEO of Google, enthused in 2010. “We know where you are. We know where you’ve been. We can more or less know what you’re thinking about.

On October 29, Mark Zuckerberg, CEO of Meta (Facebook’s new parent company), laid out his vision for “the next chapter” of the internet. He called it “the metaverse” – a Matrix-like “embodied internet” where we can come closer than ever to finally living online. The company tried to give the idea a utopian sheen. “Imagine a world where we are represented the way we want to be,” one video declared. Venture capitalist Matthew Ball gave a better clue to where the platform’s priorities lie: “It is likely to produce trillions in value as a new computing platform or content medium.”
With capitalism feeling more insidious than ever, the fourth instalment of _The Matrix_ arrives into a world both familiar and distinct: riddled with paranoia, sapped of whatever techno-optimism once existed. It’s a world where the system hardly permits original films, let alone novel futures. In the 1990s, three of the top 20 highest-grossing movies were sequels, prequels or spin-offs. In the past decade, only three weren’t.
Hollywood’s abandonment of original film-making for box-office certainties will see many greet_ The Matrix Resurrections _with suspicion. But the Wachowskis are critics of Hollywood’s derivative tendencies. Fans will take solace in the belief that Lana Wachowski, who directed the new movie without her sister, would not return unless she thought it was creatively worthwhile. “The system abhors originality,” she said in 2012. “Originality cannot be economically modelled.”
Whatever the fourth movie holds, producers can be assured of a reliable, if splintered, fan base – from computer nerds to the trans community, Marxists to men’s rights activists. Such a mutually antagonistic audience is a fitting testament to the busy afterlife of _The Matrix_ and to the internet’s unhappy fate, which promised to bring us together and ended up – simultaneously, if not instead – tearing us apart.

— New Statesman


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## Dona Ferentes (9 March 2022)

My, how we have come a long way ! (NOT)

there's a report about a Brit soldier absent from barracks, and who may have bought a ticket to Poland, with intention of taking up arms in Ukraine



> Senior UK military officers have been worried that some British troops - regulars or reservists - might try to join the battle in Ukraine.  The head of the British armed forces said at the weekend that Britons should not head to Ukraine to fight - and should instead help in sensible ways they can from the UK.






> Adm Sir Tony Radakin said the "sound of gunfire" was not "something you want to rush to".




No. definitely not "s_omething you want to rush to_"......  Until we tell you to. "_Here we go, boys, over the top_."

(Fromelles - 2000 dead in one night)


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## Dona Ferentes (8 May 2022)

"...._good investing is not about what you know, it’s not about how smart you are. It’s not about where you went to school. It’s not about the connections that you have. Good *investing is overwhelmingly just about how you behave*. It’s about your relationship with greed and fear, how gullible you are, who you trust, who you seek your information from, your ability to take a long-term mindset, long-term time horizon. That’s what actually matters. That’s what moves the needle more than anything else._

_“And all of those topics are not analytical. They’re not about data and formulas. All of those topics are behavior, and behavior is kind of a soft and mushy topic. That’s not analytical. You can’t summarize it on a spreadsheet or with a formula. So it tends to kind of be ignored in investing, even if it is one of the most important aspects of investing._”
- Morgan Housel; _The Psychology of Money_

Because investor psychology is .. hard to quantify, we too often pretend it just doesn’t exist. Economists do this all the time. They assume people will act “rationally” to “maximize their utility.”

But people aren’t rational. Money isn’t always everything. They make decisions that aren’t remotely in their self-interest—sometimes for good reasons, sometimes not. But it makes them hard to predict… which is one reason *investing is hard.*


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## Dona Ferentes (1 September 2022)

"_Why didn’t the Roman Empire have an industrial revolution_?"

https://acoup.blog/2022/08/26/collections-why-no-roman-industrial-revolution/

The other argument was that development was hindered by having a _*mathematical system based on Roman numerals*_, rather than the decimal Arabic numerals system

Yet they could build three-level arched aqueducts with a drop of 1 degree, 



and build the Pantheon, of a cement that has lasted 1,996 years
https://www.google.com/maps/uv?pb=!...2ahUKEwioi_i0y_L5AhVeCrcAHfnKDTMQoip6BAh9EAM#
https://www.google.com/maps/uv?pb=!...2ahUKEwioi_i0y_L5AhVeCrcAHfnKDTMQoip6BAh9EAM#


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## Dona Ferentes (26 December 2022)

And I recently dug this out. Dating from work done last century and published in yr 2000, most of the 100 points / rules (he calls them laws) are pertinent to today. And tomorrow. The ten key points are outlined here.


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## farmerge (26 December 2022)

Dona Ferentes said:


> And I recently dug this out. Dating from work done last century and published in yr 2000, most of the 100 points / rules (he calls them laws) are pertinent to today. And tomorrow. The ten key points are outlined here.
> 
> View attachment 150924



Interesting but basically Common Sense. Common Sense often takes a leave of absence


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## Dona Ferentes (26 December 2022)

farmerge said:


> Interesting but basically Common Sense. Common Sense often takes a leave of absence



I'll start a thread on it, and list the full 100 pts. People can discuss it there


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## KevinBB (26 December 2022)

Dona Ferentes said:


> And I recently dug this out. Dating from work done last century and published in yr 2000, most of the 100 points / rules (he calls them laws) are pertinent to today. And tomorrow




3, 7, 8, 9 and 10 are particularly relevant. Thanks for posting.

KH


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