05/09/2012
December 3, 2017
04/16/2012
December 3, 2017

04/27/2012

How does one invest in your fund? How does one obtain a prospectus?
What is the minimum investment? the maximum? the average?

Sorry, the fund has been closed to new investors for a while now.


I am twenty three years old, graduating with my Master’s in International Business and a Bachelor’s in Finance from the University of Florida. I am currently residing in London, completing my master’s at University College London.

My Visa expires in June and I will be heading back to Florida to figure out my career path over the summer. I wanted to ask you the best area to get started in finance to gain true knowledge about investing (or will lead to another job that will provide investing knowledge). I am willing to work anywhere in the world and work the hours necessary in order to be a successful investor. I was interviewing with a future’s trading company here in London, but due to Visa reasons it will most likely not work out.

I am trying to keep this as short as possible for you, but any suggestions would be greatly appreciated. I look forward to hearing back from you.

Sorry, I really have no idea how to help. I haven’t worked for anyone since I cleaned pools for a summer (best job I never want to do again). I started in finance by investing my own money (which wasn’t much to start with). I’d suggest that the best way to really learn is to borrow some money from some friends and just start doing it yourself. That’s how I started and that’s how i’d do it again.


In order to execute your YEN thesis, are you long USDJPY?

I’m playing cash YEN through USDJPY. Figure I’m going to be holding this for a VERY long time.


Hi Kuppy,
Thanks for your wonderful site! Very useful and thought-provoking!
I was wondering if you had ever looked at fortress paper (tsx:ftp) and if so what you think of it? Thanks.

Fortress has one of the greatest finance minds behind it. He’s kobbled together all these assets for almost nothing. That said, I’m not a huge fan of disolving paper at this point. It’s a small niche market and a lot of capacity is coming. I’d guess that the era of peak margins is now behind the company and you’ll go back to more normalized margins. I’d much rather bet on something like MERC which is just about to start seeing margins expand materially.


1. Is gold money? 2. Is it a way of dividing up all of society’s assets and production? 3. If the mined supply of gold increases by 1.5% this year, does that new gold have a ~1.4% claim on society’s assets and production? If gold is just a commodity like silver, copper etc, how should it be valued?

That’s way too many questions. Gold isn’t money currently, but should be. I value gold at a price level that would give the marginal producer the incentive to add capacity–that would imply a price where he makes at least a 20% ROA to compensate for all the headaches of running a goldmine. I put that bottom floor today at roughly $1400-$1700. I think the same applies to any other commodity that you intend to invest in for a long term play.


Kuppy:
If your thesis that the yen has topped is correct, this would seem bullish for Japanese equities. What sectors of the market do you think would most benefit: e.g. financial, industrial?

A weaker Yen is good for many Japanese businesses, but most Japanese companies have distorted balance sheets stuffed with Yen. If the Yen drops, so do their assets. Keep that in Mind. In the end, I have no real interest in owning Japanese equities for anything but a trade. For over 20 years now, Japan is where capital goes to die. I see nothing that really changes that, even at 100+ JPY.


Energold seems to be executing quite nicely on their game plan. My question is in regard to their sustained growth. In general it is easier for smaller companies to realize high percentage growth. The larger the company gets the more difficult it becomes. It would be reasonable to assume that at some point Energold’s growth rate will begin to taper off. How many more years do you think Energold can continue their above industry average growth? Thanks,

Energold’s hard-rock drilling growth rate has already begun to taper off. It’s very difficult for companies to continue their agressive growth rates as they get larger and this is perfectly expected. What I’ve always found is that as the growth rate slows, the rate of earnings growth rapidly expands as less money goes into growth initiatives. This is why you buy when there’s a lot of growth and very little earnings, and you hold when the 2nd derivative on the growth curve goes negative because suddenly earnings explode. Then you get out of the way before people realize that the earnings will plateau with the slower growth rates and that current earnings growth rates are not sustainabe. That sweet spot is probably in 2-3 years with Energold if you just look at the hard-rock drilling. However, this new entry into the oil sands totally resets that math. Maybe Energold can grow for 5-10 more years before the growth rate in earnings trails off?


Kuppy,
For a total novice on valuation/company fundamentals, what is a good way to start researching and looking for 5 in 5 companies? Any advice would be appreciated. Thanks.

I’ve found that the best way to do this is to look at the macro environment and see which industries should do well given your ideas about the future. Outside of that, I like to scan for small companies with rapidly increasing revenues and sensible business models. You can usually find a lot of branded products with high growth that the market is ignoring. Otherwise, it always helps to read everything and see what smart friends are buying….


Hi Kuppy. I am curious to know if you have specific bank recommendations in Mongolia for where I could find the highest yield on a CD/Checking account,etc? Most accesible via a short-term trip from the US?
Thanks in advance.

I really can’t comment on this as you need to go out there and negotiate to get the best rates. The quoted rates are frequently 20-30% below the rates that you can negotiate out of the banks. Once on the ground, it gets easier. For safety, I’d stick to the largest banks. Current negotiated rates are around 0.8% monthly on deposits up to about 18% on 1-year CDs.


http://www.capitalistexploits.at/2012/04/a-mongolian-meet-up/

Kuppy, saw that you will be speaking at this. Is it worth going?

Mongolia is beautiful in summer. You should go and check the country out.

Chris and Mark offer you a perfect opportunity to see Mongolia and also meet with a bunch of businesses operating in Mongolia. In a few days, you’ll get to hear dozens of perspectives (mine is only one of them). If you are looking to learn about Mongolia, this is probably the best way to do it.

(I want to point out that I have no direct financial involvement in this trip).


How do you reconcile your long term bullish position on gold + views on currency debasement/future inflation with your theory that “an increase in smelting will crush the price of silver”? For the record, I’m certainly not a tin-foil hat wearing gold bug, although I do own some miners/etfs. In any case, these views seem contradictory on the surface and I would like for you to clarify. Furthermore, as the historical record clearly shows, bubbles occur irrespective of supply/demand fundamentals. Can you not envision the price of silver multiplying (as it already has) alongside the price of gold despite fundamental considerations?

If they print more currency, all commodities should go up. Gold and silver are just easy to own because of all of the factors that have made them into money for thousands of years. I prefer to own commodities that are near their cost of production and without sizable overhangs of new production. Gold is great in this regard. Silver isn’t as good. It will probably still go up and i still own all of mine, but over the next few years, I don’t have very strong expectations for it, compared to other commodities. If they print enough, everything goes up, but I tend to prefer cycling into whatever is cheapest at the moment and out of those that are overvalued and at more than twice production cost, silver is one of the more overvalued commodities out there.