“We are all at a wonderful ball where the champagne sparkles in every glass and soft laughter falls upon the summer air. We know, by the rules, that at some moment the Black Horsemen will come shattering through the great terrace doors, wreaking vengeance and scattering the survivors.
“Those who leave early are saved, but the ball is so splendid no one wants to leave while there is still time, so that everyone keeps asking “What time is it? What time is it?” but none of the clocks have any hands.”
- From Supermoney by ‘Adam Smith’.
Get your Free
financial review
These are intriguing times in the financial markets. Years of overly easy money and an enormous expansion of debt have given rise to a generalised culture of ‘get rich quick’ schemes and rampant speculation. Immediately prior to his reinauguration as US President, for example, Donald Trump issued cryptocurrency Trumpcoin, which by the following Monday was worth roughly $10 billion based on the circulating supply. A separate memecoin issued by his wife, Melania, was worth $2 billion – not quite as valuable as $2.5 billion Fartcoin. Referring to Trumpcoin, the technical analysts at Northstar made the following observation:
“Up 5,000% then down 50% in 36 hours. I’m really not sure about the wisdom or ethics of putting your name on a thing like this.”
As one of our regular ‘State of the Markets’ podcasts, with Paul Rodriguez, we recently had the opportunity to discuss the state of the investment world with longstanding friend Tony Deden. Our friend Ronnie Stoeferle of wealth managers Incrementum has been helpful enough to provide an abridged ‘bullet point’ summary of the conversation, which is published – with Incrementum’s approval – below. A link to the original interview then follows.
“• Unconventional Start: Tony did not begin his career in traditional finance. He studied mathematics and chemistry, and worked as an acquisitions analyst. His entry into finance was driven by a desire to protect a family’s capital.
“• Learning Through Practice: Tony’s knowledge of finance came from reading and practical application, not from formal financial training. He was motivated by a fear of poverty and doing something wrong, rather than by the pursuit of wealth and fame.
“• Value Investing Influences: He was significantly influenced by the value investing approach. He also developed an early fascination with economic phenomena, seeking to understand money, interest rates, and how the world operates.
“• Focus on Avoiding Errors: Tony emphasizes avoiding errors, rather than focusing on achieving big wins. He believes that understanding why companies fail is crucial. He views deploying capital like playing tennis, focusing on not making errors, rather than scoring goals.
“• Human Element in Business: Tony believes the human element is the most significant factor in corporate failure. He prefers investing in mediocre companies with great people rather than great companies with mediocre people. He also looks for factors that contribute to a company’s longevity. Critique of the Financial System.
“• Markets as a Means: Tony sees financial markets as a means to an end, similar to a vegetable market for a chef. The market itself is not the goal, but rather a tool for finding quality at the right price. He is more interested in the real economy and those who produce goods.
“• Rejection of Market-Driven Investment: He finds the investment industry too focused on outperforming markets and satisfying the wishes of those they serve. He thinks the practice is rooted in the needs and expectations of clients and the motivations of those serving them. Tony believes that comparing oneself in terms of money is problematic because people’s aims and means differ.
“• Critique of Financial Metrics: Tony is critical of measuring everything with money, especially since the nature of money itself is not fully understood. He believes the financial industry uses money as a tool without understanding its true nature. He argues that financial accounts were originally intended for accountability, not valuation.
“• Money as Debt: Tony views the current financial system as problematic because money is essentially debt. He also finds inflation a difficult concept even for economists, and believes that the rise in asset prices is similar to the rise in prices of goods.
“• Misallocation of Capital: He is concerned that money going to the stock market doesn’t necessarily lead to more production or wealth. He believes that the focus on stakeholder capitalism has damaged society, money, and savings.
“• Impact of Low Interest Rates: Low interest rates create a culture of speculation, forcing people to seek returns in the stock market, which he sees as a poor measure of economic health. Investment Approach.
“• Focus on Companies and People: Tony focuses on understanding companies and the people behind them. He is not interested in simply watching markets rise and fall.
“• Key Considerations: He considers three main questions when evaluating a business: Do I understand the business? Do I like the business? What is the motivation of the people behind it?
“• Importance of Understanding: He emphasizes understanding the business, its risks, customers, and relevance. He avoids businesses that rely too much on external forces, such as airlines or banks.
“• People and Motivation: Tony seeks to understand the motivation of the people behind a business, asking if they own the business with their own capital or through options. He also looks at whether they are in it for the long term and whether they focus on the factory floor or on Wall Street.
“• Valuation After Understanding: Tony believes in assessing a business thoroughly before looking at financial accounts. The value is subjective and financial metrics can be misleading.
“• Subjective Value: Tony emphasizes that value is subjective and interpreting value in one’s own context has helped many make progress.
“• Rejection of Formulas: He is against making mathematical formulas out of the notion of value. Economic and Societal Concerns.
“• Challenging Environment: Tony views the current environment as very challenging for business owners due to the destruction of money and savings.
“• Consequences of Mismanagement: He warns of the consequences of governments inflating away debt and printing money.
“• Culture of Consumption: He believes that society has become a culture of consumption, rather than production, and we are eating the seed for tomorrow.
“• Universal Disintegration: He sees a universal disintegration in the Western world, and thinks the vast bulk of people are being impoverished. The middle class has been destroyed in the Western world.
“• Decline in Birth Rates: He notes the decline in birth rates in advanced economies, as it has become too expensive to start a family.
“• Destruction of Money: He suggests that the destruction of money has led to the destruction of society. He points out that, in the past, families could be supported by one income, but that saving is no longer prioritized.
“• Need for Failure: Tony believes failure is necessary to bring about a rejuvenation in ideas.
“• Loss of Trust: He highlights a loss of trust in institutions, governments, and corporations. Tony believes trust is essential for progress in society.
“• Rejection of State Monopoly: Tony believes that money should be independent of the state and have its own substance. He also doubts there will be a reduction in the size of government in the West. Other insights:
“• Capital Allocation: Tony highlights the importance of capital allocation decisions for business owners, mentioning that they have to choose between investing in new equipment, hiring more people, or other options.
“• Gold: Tony owns gold not as an investment, but because he sees it as having independent value and scarcity.
“• Independence, Scarcity and Permanence: He believes the three key characteristics of a successful investment are independence, scarcity, and permanence.
“• Investment Practice vs. Business: He emphasizes that his work is a practice, not a business. Tony distinguishes between an investment practice, which seeks to do the right thing, and an investment business, which seeks to satisfy the customer.
“• Selectivity: Tony says that when selecting people to participate with them, they are very picky, looking for people who share the same values, have earned their wealth, and have a long-term time preference.”
You can listen to the full conversation here. We hope and trust that readers will find it useful.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and also in systematic trend-following funds.
“We are all at a wonderful ball where the champagne sparkles in every glass and soft laughter falls upon the summer air. We know, by the rules, that at some moment the Black Horsemen will come shattering through the great terrace doors, wreaking vengeance and scattering the survivors.
“Those who leave early are saved, but the ball is so splendid no one wants to leave while there is still time, so that everyone keeps asking “What time is it? What time is it?” but none of the clocks have any hands.”
Get your Free
financial review
These are intriguing times in the financial markets. Years of overly easy money and an enormous expansion of debt have given rise to a generalised culture of ‘get rich quick’ schemes and rampant speculation. Immediately prior to his reinauguration as US President, for example, Donald Trump issued cryptocurrency Trumpcoin, which by the following Monday was worth roughly $10 billion based on the circulating supply. A separate memecoin issued by his wife, Melania, was worth $2 billion – not quite as valuable as $2.5 billion Fartcoin. Referring to Trumpcoin, the technical analysts at Northstar made the following observation:
“Up 5,000% then down 50% in 36 hours. I’m really not sure about the wisdom or ethics of putting your name on a thing like this.”
As one of our regular ‘State of the Markets’ podcasts, with Paul Rodriguez, we recently had the opportunity to discuss the state of the investment world with longstanding friend Tony Deden. Our friend Ronnie Stoeferle of wealth managers Incrementum has been helpful enough to provide an abridged ‘bullet point’ summary of the conversation, which is published – with Incrementum’s approval – below. A link to the original interview then follows.
“• Unconventional Start: Tony did not begin his career in traditional finance. He studied mathematics and chemistry, and worked as an acquisitions analyst. His entry into finance was driven by a desire to protect a family’s capital.
“• Learning Through Practice: Tony’s knowledge of finance came from reading and practical application, not from formal financial training. He was motivated by a fear of poverty and doing something wrong, rather than by the pursuit of wealth and fame.
“• Value Investing Influences: He was significantly influenced by the value investing approach. He also developed an early fascination with economic phenomena, seeking to understand money, interest rates, and how the world operates.
“• Focus on Avoiding Errors: Tony emphasizes avoiding errors, rather than focusing on achieving big wins. He believes that understanding why companies fail is crucial. He views deploying capital like playing tennis, focusing on not making errors, rather than scoring goals.
“• Human Element in Business: Tony believes the human element is the most significant factor in corporate failure. He prefers investing in mediocre companies with great people rather than great companies with mediocre people. He also looks for factors that contribute to a company’s longevity. Critique of the Financial System.
“• Markets as a Means: Tony sees financial markets as a means to an end, similar to a vegetable market for a chef. The market itself is not the goal, but rather a tool for finding quality at the right price. He is more interested in the real economy and those who produce goods.
“• Rejection of Market-Driven Investment: He finds the investment industry too focused on outperforming markets and satisfying the wishes of those they serve. He thinks the practice is rooted in the needs and expectations of clients and the motivations of those serving them. Tony believes that comparing oneself in terms of money is problematic because people’s aims and means differ.
“• Critique of Financial Metrics: Tony is critical of measuring everything with money, especially since the nature of money itself is not fully understood. He believes the financial industry uses money as a tool without understanding its true nature. He argues that financial accounts were originally intended for accountability, not valuation.
“• Money as Debt: Tony views the current financial system as problematic because money is essentially debt. He also finds inflation a difficult concept even for economists, and believes that the rise in asset prices is similar to the rise in prices of goods.
“• Misallocation of Capital: He is concerned that money going to the stock market doesn’t necessarily lead to more production or wealth. He believes that the focus on stakeholder capitalism has damaged society, money, and savings.
“• Impact of Low Interest Rates: Low interest rates create a culture of speculation, forcing people to seek returns in the stock market, which he sees as a poor measure of economic health. Investment Approach.
“• Focus on Companies and People: Tony focuses on understanding companies and the people behind them. He is not interested in simply watching markets rise and fall.
“• Key Considerations: He considers three main questions when evaluating a business: Do I understand the business? Do I like the business? What is the motivation of the people behind it?
“• Importance of Understanding: He emphasizes understanding the business, its risks, customers, and relevance. He avoids businesses that rely too much on external forces, such as airlines or banks.
“• People and Motivation: Tony seeks to understand the motivation of the people behind a business, asking if they own the business with their own capital or through options. He also looks at whether they are in it for the long term and whether they focus on the factory floor or on Wall Street.
“• Valuation After Understanding: Tony believes in assessing a business thoroughly before looking at financial accounts. The value is subjective and financial metrics can be misleading.
“• Subjective Value: Tony emphasizes that value is subjective and interpreting value in one’s own context has helped many make progress.
“• Rejection of Formulas: He is against making mathematical formulas out of the notion of value. Economic and Societal Concerns.
“• Challenging Environment: Tony views the current environment as very challenging for business owners due to the destruction of money and savings.
“• Consequences of Mismanagement: He warns of the consequences of governments inflating away debt and printing money.
“• Culture of Consumption: He believes that society has become a culture of consumption, rather than production, and we are eating the seed for tomorrow.
“• Universal Disintegration: He sees a universal disintegration in the Western world, and thinks the vast bulk of people are being impoverished. The middle class has been destroyed in the Western world.
“• Decline in Birth Rates: He notes the decline in birth rates in advanced economies, as it has become too expensive to start a family.
“• Destruction of Money: He suggests that the destruction of money has led to the destruction of society. He points out that, in the past, families could be supported by one income, but that saving is no longer prioritized.
“• Need for Failure: Tony believes failure is necessary to bring about a rejuvenation in ideas.
“• Loss of Trust: He highlights a loss of trust in institutions, governments, and corporations. Tony believes trust is essential for progress in society.
“• Rejection of State Monopoly: Tony believes that money should be independent of the state and have its own substance. He also doubts there will be a reduction in the size of government in the West. Other insights:
“• Capital Allocation: Tony highlights the importance of capital allocation decisions for business owners, mentioning that they have to choose between investing in new equipment, hiring more people, or other options.
“• Gold: Tony owns gold not as an investment, but because he sees it as having independent value and scarcity.
“• Independence, Scarcity and Permanence: He believes the three key characteristics of a successful investment are independence, scarcity, and permanence.
“• Investment Practice vs. Business: He emphasizes that his work is a practice, not a business. Tony distinguishes between an investment practice, which seeks to do the right thing, and an investment business, which seeks to satisfy the customer.
“• Selectivity: Tony says that when selecting people to participate with them, they are very picky, looking for people who share the same values, have earned their wealth, and have a long-term time preference.”
You can listen to the full conversation here. We hope and trust that readers will find it useful.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and also in systematic trend-following funds.
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