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Yesterday was a interesting day in downtown Hurd's Bank. Hurd's Bank is a isolated anchorage in international waters off the coast of Malta in the Mediterranean Sea that shipping companies love to anchor their idle ships at. Shipping companies like Hurd's Bank because they can anchor ships here for free because no country owns this anchorage.. Anchorage spots in territorial waters of most countries usually cost thousands of dollars a day, which is expensive when a ship is not making money

During very slow shipping periods like this state of the current world economy, ship owners love to park ships in places like Hurd's bank and then reduce the crewing levels of the ship. When a ship is not moving cargo, it is a big money loser and shipping companies cut as many costs as they can. That is why to this day, one can see a enormous amount of ships anchored here in Hurd's Bank and in places like off the coast of Singapore in international waters.

Many experts are now calling a end to the recession. For me...that question is really up in the air. The recession and/or really slow economy will end when the ships are not at anchor in places like Hurd's Bank or Singapore.....It will end when the ship's are moving cargo....grain, coal, oil, cars, and containers filled to the brim with electronics.....that is when the recession will end.

I am still investing but not claiming the end to anything......because I don't just google or look at nice neat graphs...I observe the world around me and the industry I work in is a big tell on the world economy......It is sort of why occasionally you will hear CNBC types like Cramer blabber on about some thing called the Baltic Dry Index.

Any way....Yesterday we had quite a bit of excitement amidst the boredom here in Hurd's Bank. This engine room like most engine rooms on big ships use sea water to cool the main engines. We use huge pumps driven by motors to push water through our coolers. Well to prevent our pumps from getting clogged up with fish and sea weed we use huge strainers to collect that type of stuff before it goes through the pump. Every once and awhile these strainers must be cleaned when they get clogged up and yesterday, boy did they get clogged up!!!

I don't know where they came from but a ton of Jelly Fish got sucked into our intakes. It is a big chore to open up those strainers and clean out things like Jelly Fish. During the course of the cleaning as we literally filled up five gallon buckets with huge jelly fish, I asked a simple question, "Where did all those Jelly Fish come from?"

The guy that answered that question was some hick guy that come from way out in the woods in some location near Pittsburgh. This is a guy that never traded a stock in his life and probably that most of you would look down upon seeing as he is a typical seaman alcoholic. His answer to me was that because of pollution the natural predators to jellyfish have been dying......things like Sea Turtles, I believe, eat Jelly Fish.

When people make comments like this I usually research to find out if what they are saying is true or not. Right now, I am out in Hurd's Bank accessing the internet via my cellphone....roaming charges stop me from making massive searches on all types of topics that most would view as boring.....but even if my Alky friend's info is wrong, the story makes a good metaphor for what is happening to the environment.

After over 20 years at sea, I have noticed a very real decline in sea life. I always ask the question, "What happens when all the fish die?" Very few like to answer that and even fewer like to seriously think of the implications but I think about stuff like this which is why I noticed when a rather obscure stock of a company was mentioned in HG last month in Tiny Gems that deals with the environment.

I bought into that one because one thing I noticed about the stock market is that in the short term it follows fads. Right now, the current fad is Chinese stocks. Don't get me wrong....I love Chinese stocks....I know the reasons on why to buy CHinese stocks better than most but it seems to me that others are catching wind of those reasons. So I am looking at some other stuff....Start buying things that will be part of the next fad.

I don't know when, where, how or why it will happen but I know that somewhere over the next 5 to 10 years, more likely than not there will be a huge ecological disaster. I don't know whether it will involve water or air or things like topsoil (you need good topsoil to grow food) but I can sense something like this down the road....when and if such a event happens, stocks that deal with improving the environment will be all the rage.

Right about now, some might be going....well, OK,,,,,Show me your fancy DCF analysis of some stocks. I will tell people I am a non-believer in that deity. Too many people bow down to that God and I refuse to. Among the reasons I refuse to is over the years, I learned something about the "stock Market". The Stock Market is not just numbers...it is also part emotions, it is part ego, it is part all of the non-logical things that make each and everyone of us humans.

I have watched many people over the years running DCF analysis....Some of the ones running those analysis know the nature of what the numbers tell them and know the impreciseness (Is that a word?) of it all......but I have watched others take it as Gospel.....I have watched many be fooled by it. I have watched people run numbers that say a stock should be priced at $50 and they see the stock selling at $20 with fundementals that seem to be excellent......such people will come on screaming, "I am going all in"....This is a can't miss.......these people sometimes get slowly deflated not by a huge drop in price....but sometimes by something as simple as the stock price not budging at all for many years....Why how can this be???

The truth is many stocks never reach people's estimate of "fair value"......sometimes it is because the stock is in a boring industry that no one cares about....sometimes the stock never reaches fair value because of investor perception. For instance, the company might have excellent fundamentals but management is not trusted (Some think AOB might fit this category). Then again a particular stock that some person might detest because their DCF analysis churns out a unnatractive (in their eyes) value......well sometimes such companies might go far beyond people's mathematical equations of value and stay there longer and stronger than anyone could have ever predicted.

The market is a popularity contest....A good investor simply percieves future trends better than others much like a fashion expert gets known to be a expert by correctly guessing the types of fashions other people will like....that is how the market is played in the short term and most people here are short term investors interested in trading in and out of stocks depending on what others find fashionable.

The in thing this year is Chinese stocks but I am more interested in the "in" thing 3 to 5 years from now. It is not just going to be Chinese stocks.....no, no....there is more to this game. Hopefully we can improve the environment and find more fish in the sea.......




Starrob


Live from Hurd's Bank (Off the coast of Malta)
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