Chris Mayer’s World Right Side Up: Book Excerpt

Updated on

Chris Mayer is the editor of Capital & Crisis. Chris’ topic from the Value Investing Conference was People Not Personnel, The Case for Owner-Operators.

Below is an excerpt from Chris Mayer’s book, Chris also recommends the following five books

Investment books #1: Humble on Wall Street

Humble on Wall Street by Martin T Sosnoff

Investment books #2: Silent Investor, Silent Loser

Silent Investor, Silent Loser by Martin Sosnoff

Investment books #3: Sense and Nonsense in Corporate Finance

Sense and Nonsense in Corporate Finance by Louis Lowenstein

Investment books #4: Modern Security Analysis

Modern Security Analysis: Understanding Wall Street Fundamentals by Martin J. Whitman

Investment books #5: 100 to 1 in the stock market

100 to 1 in the stock market;: A distinguished security analyst tells how to make more of your investment opportunities by Thomas William Phelps

Below is an excerpt from World Right Side Up: Investing Across Six Continents

For the first time since before the Industrial Revolution, the emerging markets now contribute as much to the global economy as their more well-developed peers. Chris Mayer’s World Right Side Up: Investing Across Six Continents shows how this tectonic shift will create extraordinary opportunities for investors.

Hear Chris Mayer’s latest stock ideas in person at the Value Investing Congress Workshop on September 7th.

Chris Mayer’s World Right Side Up Chapter 10 – Southeast Asia: Travels Through Thailand, Cambodia, and Vietnam

I got an email late one night from my contact in Bangkok. “I would strongly recommend you delay or cancel your trip to Bangkok,” she began, “as the flood situation is getting from bad to worse.”

Stability and calm seem rare cards in the greasy deck of human outcomes. Instead, we reel from one crisis to another. Some are small. Some are large. But the transitions are rarely smooth. Big, influential events dominate the history of markets and men.

“Big gains and losses concentrate into small packages of time,” wrote Benoit Mandelbrot, the late great iconoclast of finance. He points to how the dollar lost value against the yen from 1986 to 2003. Half of the losses happened in only 10 trading days out of 4,695 such days. In the 1980s, nearly half of the gains from the S&P 500 occurred on one-half of 1 percent of the trading days. These are just a pair from a fat file full of such examples of big gains and losses in small packages of time.

The rising floodwaters surrounding Bangkok gave us another example. The floods had a serious economic impact.

“More than 2 million people in 23 provinces have been suffering from floods for months,” our correspondent continues, tapping out her worried lines, staccato style, in the wee morning hours from Bangkok:

More than 350 people have perished. Rice fields in nearly all industrial estates in the Central Plain have been inundated. Floodwaters have entered parts of the city. The government has no serious measures of how to deal with billions of cubic meters of water entering from the north. Bangkok is currently able to pump 300 million cubic meters a day. Meaning it will take at least 40 to 60 days before we see dry land again. This is worse than the tsunami. Waters just keep coming for weeks toward the city. We can’t even get drinking water and basic food from supermarkets for days due to logistical difficulties. This is serious.

More than 200 major highways were impassable. Factories closed. People put up barricades of sand and tarps. Bottled water supplies were running low. Estimated losses totaled $6 billion and rising, enough to shave off two points from economic growth in 2011. Some towns north of the city were under six feet of water.

Rains had been harder than normal. For months, rains pounded northern Thailand. In March, rains were 334 percent above normal. In April, they were 76 percent above normal. The months rolled by, and totals stayed high: 41 percent-plus in May, 43 percent-plus in June, 43 percent-plus in July, 22 percent-plus in August, and 46 percent-plus in September.

However, there was more to the story. Seasonal floods are common in Southeast Asia. Monsoons are an essential part of the hydraulics of these economies. A healthy monsoon season means well-watered crops and plump rice fields. This disaster, though, stemmed from more than just abnormal rains.

Not that long ago, thick forests and dense wetlands used to soak up floods. But in recent decades, industrial parks, highways, and housing projects grew to surround the city of Bangkok. As recently as the middle of the last century, Bangkok had only 1 million residents. Today, there are 12 million people living in and around Bangkok. It alone is nearly 40 percent of Thailand’s economic output.

This growth is part of a pattern of Asian cities. In 1950, 237 million people lived in Asian cities. Today, there are over 1.8 billion. Bangkok is the heart of one of the fastest-growing economies in Asia.

To read a full chapter from Chris Mayer’s World Right Side Up: Investing Across Six Continents, please click here.

Leave a Comment