Only Two Countries Don't Have Coca-Cola and Other Interesting Facts

  • “Former Treasury Secretary Henry Paulson said the U.S. will emerge relatively unharmed from the debt crisis in Europe as efforts by Greece, Spain and other nations to stabilize their economies persist for the long-term. ‘Although Europe is a drag, the U.S. will continue to muddle along with growth that really isn’t enough to make a dent in employment,’ Paulson…said at a [June 19] biotechnology industry conference in Boston. Europe will eventually stabilize and avoid a ‘catastrophic outcome,’ he said, [but] under the best circumstances, ‘this will drag on over time.’” (Source: Bloomberg)
  • Regarding the outlook in Europe: “I’m sure of three things. I don’t know what’s going to happen; nobody else knows what is going to happen; and all the experts are predicting different outcomes so 90% of them must be wrong, if not 100%. It is a folly to listen to anyone who says they know what is going to happen and make investments on that basis.” — Howard Marks, CEO of Oaktree Capital Group LLC (NYSE:OAK)

    • * Remarks delivered at a conference in New York on June 12, 2012. Any misattributions ormistakes are my own. Further comments are paraphrased as follows: Europe will probably get by, with the governments — namely Germany — doing the bare minimum. But there is certainly a non-zero chance of of something very bad happening. Either way, Europe in general is a huge mess and will likely remain so for years. The wall of worry in today’s market is well deserved; the litany of macro concerns prevalent today may be the most extreme in my or anyone’s career, but they also have existed for years — we just weren’t focusing on them. The riskiest thing in the world is a lack of belief in the presence of risk in the market; that is certainly not the case today. Act cautiously; insist on value and safety. Low-priced, well-capitalized corporate assets are — as always — the best options in this environment.

Facts and Figures

  • In the past six years, the balance sheets of the world’s eight largest central banks have more than tripled (in dollar terms) from $5.4 trillion to $15+ trillion. (Source:Bianco Research)
  • The Coca-Cola Company (NYSE:KO) will return to Myanmar (Burma) for the first time in 60 years. The only two countries left in the world without Coke will then be Cuba and North Korea. (Source:Bloomberg)
  • “From 1985 through 2011…for every dollar spent in [capex, M&A, dividends and buybacks], roughly $0.55 went to capital spending, $0.27 to M&A, and $0.18 to dividends and buybacks.” (Source: Michael Mauboussin — see attached; note: dividends and buybacks were about equal at ~9% each)
    • In the past 10 years, dividends and M&A have remained about the same (~9% and ~26%, respectively), while capex has fallen to 50% and buybacks have climbed to 14%. In the last five years, the trend is even clearer: still almost 9% in dividends, only 43% in capex, 16% in buybacks and 32% in M&A


  • Reading List — A couple of friends asked for this recently, so I thought I’d send it around in case you’re looking for some good reading material this summer. The “top 100” and groupings are just my opinion — there should be something for everyone on this list, and hopefully some new or overlooked books or articles. Please let me know if you have any suggestions or corrections to the list.
  • “Share Repurchases from All Angles” — An excellent article from Michael Mauboussin offering some clear-headed thinking on share buybacks.
  • “Bearish on Brazil” — A great debate about Brazil’s economic prospects. The attached is an essay in Foreign Affairs adapted from the author’s new book Breakout Nations: In Pursuit of the Next Economic Miracles. I haven’t read the book yet, but the essay is interesting. The author, who is head of Emerging Markets and Global Macro at Morgan Stanley Investment Management, explores Brazil’s lofty reputation as a growth market and attributes most of the successes to a heavy reliance on rising commodity prices driven by Chinese demand. The author also believes Brazil has a “hidden cap” on growth — due to high interest rates, inflationary feedback, uncompetitiveness, an overvalued currency, chronic government overspending and misinvestment, lack of productivity growth, and a lack of investment in anything other than a welfare state — that will be exposed as commodity demand/prices weaken.


  • Hedge Fund Market Wizards — Jack Schwager has just released the fourth book in his Market Wizards series. I’ve read the others, which began more than 20 years ago, and this one is the best yet. They’re all focused more on “trading” than “investing,” and some of the trade-y stuff really makes me cringe, but even the staunchest Grahamite still has something to learn here. In particular, Schwager’s interview with Edward Thorp is excellent — that material alone would make a great book.The only overlap with The Alpha Masters is a chapter on a Ray Dalio, which is longer and more detailed in Schwager’s book.  And if nothing else, Schwager’s interview with Joel Greenblatt gives this book all the credibility it needs. Highly recommended. 
    • An interview with the author by Opalesque (via a great blog) is here.