Of Enemies Abroad, And At Home (#politics, #America, @realDonaldTrump, #loyalty)

We are now being told that the election of Donald Trump represents a virulent strain of tyrannical fascism in American politics, which was before lying under the surface but is now unapologetically out in the open. Certain agitators and political commentators are claiming that they don’t feel safe in a world where Trump is president, implying that there may be physical threats against their life, property or lifestyle under his regime. The conclusion is that Trump is to blame for a politics of potentially open, physical violence across partisan lines.

But if this is what Trump represents, Trump is the necessary response to an earlier dynamic, not the initiator of it. You see, the Left has been successful in its quest to control politically-acceptable speech. The world of man can be controlled by arms, or by words and ideas. If certain words and ideas can not be uttered, then the people who believe in them have no choice but to take up arms in their support. What choice but violence does a person have to convince another of his views, if his views are considered unutterable in society?

We are also told that Trump is committing what amounts to treason in warring with political factions in his own country while buddying up to autocrats in other countries, such as Russia. If the right way, and the only way, to conduct a political strategy is to play by your opponent’s rules, then this criticism may have merit. But politics is war by other means, a game of domination and annihilation. If you are a globalist after global control, you might call a truce here and there with domestic factions to enhance your projection of power outside your borders.

But what if you are a “nationalist” or “patriot”, like Mr. Trump?

If your primary political concern is dominance within your own borders, it is clear who your enemies and your friends are. Your enemies are any domestic political factions which question, criticize or otherwise restrain your full use of power inside your borders. And your friends are any parties, inside or outside your borders, that can either help you defeat your domestic opponents in some way, or who can agree to some kind of truce that lets you focus on defeating your opponents at home.

Make no mistake about it– Mr. Trump is in a war for his political (and potentially even vital) life, such is the nature of politics which has no rules but that which each opponent might individually observe. And looking at the world as he claims to, it seems not only not treasonous, but completely rational, to find friends where they can be found in order to quell the domestic disturbance represented by the Democrats and the American Left. And we can sense the truth of this proposition in observing that while critics of Mr. Trump argue that he should make peace with his domestic opponents to fight external enemies, these critics are not suggesting these opponents make peace with Mr. Trump, nor are these opponents themselves voluntarily laying down arms against Mr. Trump for the time being to take them up against the Great Alien Menace. Actions speak louder than words here.

And what about the spat with the domestic spy agencies? Ignoring the fact that they were un-American and not to be trusted under the Bush regime, and were clearly un-American and autistically-focused on studying the communication patterns of those people they nominally serve under the Obama regime (and when did these people face election and change under any of the last three administrations?), they are supposed to be answerable to the Congress, which supervises them, and the President, who leads the nation they serve.

To raise the claim that Mr. Trump is playing a “dangerous game” in challenging their methods, claim and authority, is to belie the very corruption his opposition to these organizations so far engenders– this may be a hard metaphor for many to understand these days, but it would be as if the appointed chief executive of the owner of a company was playing a dangerous game in challenging the actions and attitudes of the company’s hired employees. This argument has the theoretical cause-effect relationship of American civics exactly reversed.

In case anyone needs reminding these days, why is it exactly that the American intelligence “community” (note: for their to be a community, there by definition must be some who are inside it and some who are outside, that is, citizens of the domain and barbarians at the gates…) is to be considered trustworthy?

Have they demonstrated gross competence at their appointed tasks? Anyone who has not forgotten the failures of September 11th, 2001, must puzzle at the question.

Have they any kind of record of their activities and thinking that is examinable by the public? No, only the Congress and the President have access to that information (if the intelligence agencies are honest in presenting it in the first place!) and there is a clear principal-agent problem in electoral politics presented by these defined secrets.

And what kind of people are they who join these secret cabals, whose jobs seem to consist of lying for a living, trafficking in arms and illicit substances and occasionally murdering people deemed to be strategic problems for themselves or the government they represent?

Well, just that– liars, murderers, professional criminals and reckless thrill-seekers.

A better question than “Why should they be trusted?” is “Why should they be tolerated in a society that claims to have an open government?” Speaking of tyranny and autocratic rule, is there any model more noble in form than the modern spook cartels?

Video – Rahul Saraogi On Value Investing In India (#valueinvesting, #India, @manualofideas, #investing)

The Manual of Ideas presents Rahul Saraogi, managing director of Atyant Capital Advisors

Major take-aways from the interview:

  • Referring to Klarman, finding ideas and doing the analysis is a small part of investing; the two most critical factors to succes in any investment as a minority shareholder are corporate governance and capital allocation
  • Good corporate governance means a dominant shareholder who treats minority shareholders like an equal business partner: even aside from egregious fraud and legal violations, you can face situations where dominant shareholders use the company like a piggy bank or to promote personal agendas
  • Once you’ve cleared the corporate governance hurdle you must consider capital allocation: many times companies follow the same strategy that got them from 0 to a few hundred million in market cap, which will not work to get them to the next level; often by this time the dominant shareholder is sufficiently wealthy and loses interest in capital allocation to the detriment of minority shareholders
  • India’s investment universe:
    • Indian GDP close to $2T
    • Indian market cap $1.5-2T
    • 80-85% of India’s market cap is represented by the top 150 firms: mega-cap banks, steel producers, etc., that trade on ADRs and everyone knows of outside of India
    • Thousands of listed companies below this with market caps ranging from $2-3B to a couple million dollars
    • Rahul finds the next 1200-1300 companies below the top 150, with market caps ranging from $50M-$2B, to be the most interesting opportunity
  • Corporate governance is binary: either a company gets it, or it doesn’t
  • Case study: 1998, invested in a sugar manufacturer trading for $20M generating $20M in annual earnings with a 14% tax free dividend yield, virtually debt free, strong moats, dominant player in its field, grew from $20M to $900M market cap, the owners were very focused on growing capital, no grandiose desire to build empires, not trying to grow the top line at all costs or gain rankings, just allocating capital wisely
  • Every investor is looking for shortcuts and binary decisions, ie, “Should I invest in India or not invest in India?”; the reality is it’s a lot of work, it’s about turning over as many stones as you can– what Buffett has done well is finding people who can compound capital and then staying with them through market cycles
  • You can do what Buffett did in any market but you must dive into it, get your hands dirty, do the work it takes and then maintain the discipline to stick with what you’ve found
  • Home-market bias: most people are going to allocate most of their capital in their home-market, because by definition anything that is not familiar or proximate is considered risky; consequentially, “locals” will disproportionately benefit from economic and financial gains in their local markets
  • India can not and likely will not become a dominant allocation in a foreign investors portfolio; without devoting 100% of your time and energy to understanding that market, or having someone invest on your behalf who does, you will likely not understand the culture, motivation and habits of the people in that market
  • “It is imperative that in any market you go with people who understand it and are focused on it full time because investing is ultimately bottom-up”
  • Accounting, financial reporting and investor relations practices are modeled off the US and UK so they’re similar; however, many businesses are run by one or two entrepreneurs and they’re often too busy to be available to speak with outside investors, but persistence pays off when they realize you’re interested in learning about their business
  • Access to capital in Indian markets has improved, meaning it has become easier for Indian companies to scale
  • Why does India have high rates of capital compounding? India is a 5,000 year old civilization and has had borrowing, lending and private markets for capital that entire time meaning people are aware of capital compounding; that being said, India has companies and management that understand ROC, those that don’t, and those that are essentially professional Ponzi-schemes, issuing capital at every market peak and then trading for less than the issued capital at the trough because they’re constantly destroying wealth
  • Rahul sees the government as incapable of providing the public infrastructure needed by the growing economy; he sees the economy turning toward a “private-public partnership” model that is more private than public– enlightened fascism?
  • As companies rushed into this private-public space, a lot of conglomeration and corporate mission-creep occurred, resulting in systemically low ROC for companies in the infrastructure space as most as poorly run; failure of top-down investing thesis
  • “I’m looking for confirmation in facts, not in other investors’ opinions”
  • I can comment on whether valuations for individual companies make sense, but I can’t make a judgment on the value of a broad market index, I just don’t think that number means anything
  • Risk management: develop assumptions about the company’s business and then periodically analyze what the company is doing relative to original investment hypothesis; if your assumptions prove to be wrong or something changes drastically with the company, that is when you hit a “fundamental stop-loss” and corrective action needs to be taken immediately, even if the stock has done well and the price has risen