Tag Archives: Warren Buffett

The slammer got slammed

There is nothing so rewarding as the moment you realise that you get to slam the door on those slamming the door on you. It is an innate feeling that is in the core of all of us. It is more powerful than getting the drop on your boss or CEO with an overwhelming amount of narcissism and the overbearing feeling towards the need of being some dominant / dominatrix figure (at that point they become merely a figurine).

I made several references over the course of 2018 that this was coming, the stronger one in May 2018 (at https://lawlordtobe.com/2018/05/05/milestones/) where I made the reference: “the EU was never about everyone agreeing on everything and the economic setting that requires that to happen at present is also making the dangers of waves that sinks the barge called EU. Now, that seems like an exaggeration, but when you realise that the German anchor is the only one giving stability, you can see the dangers the EU faces and more important, the dangers of no reserves and an utter lack to keep proper budgets in place, a setting now in more danger for the reasons that I gave supported by the economic views of many others. I believe some are downplaying the impact, yet when we realise that EVERY European Union government is downplaying the economic impact (as every nation always wants to look as good as possible, which is a PowerPoint setting of the human ago) we get a much more dangerous setting“. The article ‘Milestones‘ has more, it also has references to the AfD (Alternative for Germany), and even as we see in the Financial Times (at https://www.ft.com/content/d695fff8-b838-11e9-96bd-8e884d3ea203) “It is a happy hunting-ground for the AfD: if polls are accurate, it could emerge as the most popular party in regional elections on September 1, even beating the left-of-centre Social Democrats which have governed this corner of East Germany since reunification in 1990. Two other eastern regions, Saxony and Thuringia, are also choosing new parliaments this autumn and, as in Brandenburg, the AfD is set to make big gains. That is a major problem for the eastern political elite“, I believe that this powerful eastern political elite is part of causing the headline ‘Germany: AfD surge threatened by party disunity‘, they are that scared at present. The gains cannot be stopped not to the degree some elitists are vouching for; the best that they can hope for is derailing them from becoming the majority, which is actually a political war that is allowed. The question becomes will it work?

We are 2-3 weeks away from finding out.

CNN gave us less than 2 days ago: ‘5 of the world’s biggest economies are at risk of recession‘ (at https://edition.cnn.com/2019/08/14/economy/recession-risk-economies/index.html), it is a huge part because the impact matters. Under Mario Draghi and his bond buying program, there are no reserves left, so the impact towards recession is about to get real. The shift in quality of life makes the consumer spending tactic an instant non option.

Yet, it all comes down to the Washington Post who (at https://www.washingtonpost.com/business/2019/08/14/stocks-tank-another-recession-warning-surfaces) gives us: ‘Stocks losses deepen as a key recession warning surfaces‘. It is here that we get: “after a reliable predictor of looming recessions flashed for the first time since the run-up to the 2008 financial crisis. The Dow Jones industrial average fell 800 points, or about 3 percent, and has lost close to 7 percent over the past three weeks. Two of the world’s largest economies, Germany and the United Kingdom, appear to be contracting even as the latter forges ahead with plans to leave the European Union. Growth also has slowed in China, which is in a bitter trade feud with the United States. Meanwhile, Argentina’s stock market fell nearly 50 percent earlier this week after its incumbent president was defeated by a left-wing opponent“. First of all, ‘reliable predictor‘ is not the term I would use, the dangers were clear for well over a year, it was the wrong stage of a trade war, with the Huawei 5G setting that pushed the inevitable date forward by a lot. The entire Huawei stage was a stage of stupidity, and a more dangerous post-recession part than anyone was willing to consider. We might find clarity in the footnote: “But with so many losing confidence in the near-term prospects of the economy and rushing to buy longer-term bonds, the U.S. government now is paying more to attract buyers to its 2-year bond than its 10-year note“, is looking in the wrong direction. It is merely a small symptom at present and direct consequence on risk and not the one that bites. The US is losing its footing on the global mobile market faster and faster. And even as we accept the ‘marketing’ that Huawei gives via Cnet towards 6G, the direct truth is outstanding for a longer time. It links to my own IP that is currently available to Huawei and I want my share of that market, I believe that my part after the fact will be enough to truly make me independent on several fronts. One party found my claim a $ billion market through the investment on $25m post taxation too good to be true, but it is the second wave that takes care of my needs and you gotta give a little to get a little. It is was the ‘denied’ parts of Credit Agricole and the Paris games of 2024 that gave me the final straw I needed to see that I was right all along. In all this verification that I was correct was always the biggest issue for me to deal with, and the recession is making those big business daddies of greed close to desperate, giving me a small push forward. Those people are not willing to walk away from a one billion market at the investment of 2.5%, no bank has ever offered those margins and with the Credit Agricole parts exposed to the smallest extent, I know it will work. It is there that I saw that the IP I designed was never considered by either Google or Huawei, all set to iterative paths to innovation, and the economy shows that nearly all of the other players were looking at the next quarter, whilst the quarter+3 was the game changer. The Olympics gave the option to look at inverted innovation and make it a new innovation, Paris was not the first, but certainly the clearest indicator and whilst we see through Channel News “Huawei Technologies has joined 564 other entities in the Paris Call“, the message is not that there are 565 players, it is that they are all looking in a similar direction whilst the none excavated the gold mine that was right behind them, a first lesson that the classics can inspire towards a new direction. Now that I see their direction I found two other fields that had not been considered to the degree it needed. Saudi Arabia is giving us Neom City, but there is a lack in one direction and now that this can be exploited we see even more options. You only had to be willing to get your hands dirty in the most literal of ways. And all this is pushed even more through the impact of the European economy. A French invention gets a new life after almost 2 centuries and we can see that there is more to be found.

Sergey Brin on Sat. morning

It is what else Harmony OS can do that will push the benefits away from the US and it will hurt Google to the smallest degree (almost inevitable), Google is just too big, but now that the equation changes, it is Google who will be chasing Huawei, so well done Trump dude, you merely made everything worse for America and I will sell to the quickest bidder and the 2.5% approach gives me the edge; the two known entities Ren Zhengfei and Papa Smurf Sergey Brin can make the investment from the small change they have in their pockets and the bait would be just too appealing for them.

Al this was confirmed and accentuated through the US Senate with: “In February, the US Senate Commerce Committee held a hearing titled “Winning the Race to 5G and the Era of Technology Innovation in the United States”, to discuss what policies are required to accelerate the deployment of 5G to keep America “competitive on the international stage”” and whilst we accept the American point of view, they forgot about two elements in the 5G field and the upper echelons of decision makers showed at that point that they were working in a dimmed room without lights, giving additional evidence that they never saw the writing on the wall and now I get to make a new voice and whilst I only am willing to trust Google or Huawei in all this, there can only be one winner and the others are merely a chaser at best, it is the price of iteration over innovation. Even as Microsoft and IBM are in denial of what they are about to lose, they do know and accept their choice. Microsoft is banking on Azure and there the hindrance of Harmony will cause a void, they were ready for Android, yet HarmonyOS is another matter and China is seeing that as another opportunity. It is there where we see the talks of Huawei with the Shanghai Blue Cloud Technology taking an additional turn, and how many players in the Paris games are banking on Azure? How many lose out when they are not ready for the 5G version 2 under HarmonyOS, it will work with Android and Azure, but suddenly we will see some accidental 10% gap (latency) and that is how the game was played and all this before my elements come into play, and they will!

The big business slammers all relying on PowerPoint presentation they are given the elements and when we see the 2023 acceleration and people cannot answer the differences because they never considered looking behind them as well as looking at the corners of their eyes, the blind corners they ignored; now they no longer have one blind spot, they suddenly have three and we get all kinds of concept promises in presentation form, all whilst the data was never that unclear from the very beginning. An issue they claimed that it was being looked at.

So here I am, having to take their shit with the option to sit at the sidelines watching them fight over options because they anticipated without comprehension, sometimes the universe gets to be nice and smile at those having to take their shit. A direct zero day exploit of the applied intent of narcissism on how good a presentation looks, whilst their data never clearly supported it.

My case of exceeding expectations towards customer satisfaction trumped some short sighted ‘Ca$h is king‘ setting, because it works at the grocer, but that part has no bearing when their minimum needs exceed he budget of 80%, it was a simple equation from the very beginning. So when we are now considering the new ‘truth’ where the Washington Post gives us less than an hour ago: ‘Weak global growth likely to mean US slowdown, not recession‘, we merely see wishful thinking in the quote “Yet most analysts expect the U.S. economy to power through the rough patch, at least in the coming months, on the strength of solid consumer spending and a resilient job market. The U.S. stock market plummeted earlier this week when the bond market, spooked by the global turmoil, sent a possible early warning sign of a recession ahead: The yield on the benchmark 10-year Treasury note slipped briefly below 2-year Treasury yields“, the article (at https://www.washingtonpost.com/business/weak-global-growth-likely-to-mean-us-slowdown-not-recession/2019/08/15/1cb8d81a-bfba-11e9-a8b0-7ed8a0d5dc5d_story.html),all whilst we see the clarity of next quarter believes linked to the next Thanksgiving and Christmas, all whilst it is Q2 2020 that makes the tequila slammer which gives the drinker the sledgehammer headache stated it was one that they never saw coming. The entire trade war is taking a new turn and when the people realise on all that the US is missing out on and therefor anyone taking that path will also learn that there is a long term price to pay and it is the markets that Google and Huawei are now staging for that brings the next stage. China has too much to gain, whilst Google will try to retain losses that they will optionally get (reduced growth is clearly a loss). Even as the impact for Google is small, losing one percent is still big news and there one percent adds to a billion plus, whilst their risk to hedge will cost them a mere 1.8% of the optional loss, it is a non-issue.

Guarantee?

There is none, but the option of a new 2% market is worth so much more than that, and it is not open to the iterative industries, innovators only, because it will be about the momentum and there is too much to gain. Consider what the 565 are looking at, whilst I focused on the group that represents up to 445,000,000 SME companies in a new 5G setting. The Olympics are merely the icing on the cake. 2020 Tokyo opens the doors more clearly but the impact is abundantly seen in Qatar 20222 and Paris 2024. And at present I see that they never looked in the places where they could be, merely where they want to be.

In the end it is one of Warren Buffett’s quotes that got me there: “the great moves are usually greeted by yawns“, thanks Warren; you were absolutely right on that part!

 

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An exceptional pound of flesh

Two articles hit my eyes as I took a small break from my midterm exam. When you dig into the: who, what, when, where how and why of Patent Systems, your sanity prevails if you take a small break every 2-3 hours. It is just the only sane and safe way to avoid getting stuck on the same page.

The two articles were ‘Cuba seeks foreign investment as it shores up increased diplomatic ties‘ (at http://www.theguardian.com/world/2015/apr/10/cuba-seeks-foreign-investment-as-it-shores-up-increased-diplomatic-ties) and ‘Pound volatile amid general election uncertainty‘ (at http://www.theguardian.com/business/2015/apr/10/pound-volatile-amid-general-election-uncertainty), there is no real relationship in these matters, or is there?

First, let’s take the last part first as to get it all out of the way. The end gives us: “Investors were also positive on Greece’s payment of a €450m (£325m) debt to the International Monetary Fund on Thursday“. Why? Let’s not forget, this payment is nothing more than 1/3rd of a billion against outstanding HUNDREDS OF BILLIONS, so why are investors relieved? Greece has not presented any decent acceptable plan and the visit from Tsipras to Moscow to rattle some cages will count against him sooner rather than later. In addition I would like to call attention to the ‘altered’ view from Christine Lagarde as she mentioned “developed and emerging economies still suffering the after-effects of the 2008 crash must collaborate better to avoid an era of low growth”, which reads like a detour, an extra train stop on the track where the distance between recession of true growth seems to be increasing, not decreasing or remain stable. Apart from the fact that Greece only has 5 days left to present their plan (at http://www.bbc.com/news/business-32229793), the one part everyone simply ignores is that after they get the money, then what? If these newly elected officials will not push through and re-debate the issue again, the Eurozone is down another seven billion euro plus, then what? Will Greece become a vulture funds target? Will we see newly created carefully phrased denials on what will never be? That one part can be found in the quote “Without new money it will struggle to renew €2.4bn in treasury bonds due to mature in the middle of April, or pay back another €0.8B to the IMF on 12 May“, so consider that Greece might be unable to pay back 770 Million Euro on May 12th (decently likely scenario), what else can they no longer pay? Let’s not forget that the 12th of May payment makes up for 0.25% of the debt, the interest would be is a lot more than that, so how will any ‘investor’ choice pay out? Are you people awake now? So, I dealt with Greece! Now to the linked other parts!

You see, the link to England will become apparent soon enough, when we consider the quote “Analysts have warned that the pound could have further to fall as financial markets react to uncertainty created by the closest general election for more than 20 years” l, we have to wonder how reserved these analysts truly are, a stable growing economy is scaring them? I agree that the plans from Ed Miliband are decently ludicrous, bus in the end, if elected, he must do what is best for the nation (which means that he would have to vote for David Cameron, hawk! Hawk! Hawk!). In all seriousness though, a close call or not, there is something wrong with the statement Michael Hewson makes: “The pound has started to come under some pressure in recent days as the prospect of political gridlock“, whilst the market is positive as Greece pays back less than a percent of its debt, this whilst it is clear that Greece has no funds left. How is that dimensionality rational in any way, shape or form? That is, unless you take into account the part that the Guardian is not mentioning. If the market is truly worried on what happens when Nigel Farage comes out on top, or ends up with too much of a gain, then the united front that Farage and Le Penn would show, would truly be a concern to investors, because those two have had enough of the entire Eurozone issue on several levels and Greece only worsened their resolve (meaning that both are more eager to pursue the end of their EEC membership. a nightmare scenario for markets on a near global base.

Now, the markets also made the following ‘claim’: “Currency traders have also been unsettled by signs of weakness in Britain’s manufacturing sector. Production figures are due out on Friday morning“, this is fair enough, you see, manufacturing is an issue and it is not that strong in the UK or in many other places for that matter. Yet, two hours ago, the following was reported: “UK industrial output is weaker than expected: it edged up 0.1% in February, vs expectations of a 0.4% gain, while manufacturing met City forecasts with a 0.4% rise. Industrial production is the wider measure, which comprises manufacturing, mining and utilities“, so manufacturing met the expectations, so why the hesitation? I am not making any assumptions here, but I am wondering on how much certain markets assume that met expectations were supposed to be exceeded. Especially in a European mess that is still all over the place. It is almost like the markets will not tolerate any bad news, is this linked to some views on US bubbles (housing for one) that could burst before June 30th? This is a question, not an assumption or an implied issue. but the question should be asked in a very clear way and certain parties should answer it in very clear ways too, because at present, when you see some journalists report on economy, they quickly move all over the field, pretending to draw a picture, whilst the sketch we end up seeing is that of something we did not ask and it leaves many with too many questions. Did I oversimplify the matter again?

So now we get to the true path in all this, the link between the Pound and Cuba. Some might know them, some do not, but I remember the Cuban Fleet Freight Services (Cuflet). I reckon that looking into options with Cuba via Cuflet could spell good times for several players, if manufacturing options are found in emerging markets, why not see what offers could be made and found there. The Dutch could gain a headway by looking into the Bicycle market, engineering projects, the issue is clarity. When we consider the article ‘Navigating Complexity in foresight: Lessons from the UK future of Manufacturing Project‘ (at https://ec.europa.eu/jrc/sites/default/files/fta2014-t1practice_52.pdf), I personally am willing to get a few giggles from the futility that figure one shows (2008, Popper’s foresight Diamond). I do not disagree with the image of with the elements of creativity, interaction, evidence and expertise brings, but in the end Manufacturing is about what one has and the other one needs. So elements like Viability, opportunity, economy and shipping brings us the need for what can be manufactured, what could be sold and what is to be delivered. So when I read the conclusion on page 11, where we see “The high level of complexity of manufacturing systems and the diversity of forces acting on them make anticipating future configurations , challenges and opportunities particularly difficult. Manufacturing foresight needs to deal with multiple units of analyses, assimilate a variety of evidence at different levels of disaggregation from a variety of sources and integrate diverse stakeholder’s perspectives“. A view from academics from Cambridge as well the government office for science.

So let’s break that down in something we all can understand.

  1. Good business is where you find it. (Robocop, 1987), which gives us opportunity
  2. Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage to move in the opposite direction (Ernst F. Schumacher), which gives us a handle on complexity in regards to manufacturing systems (the reason to avoid complexity whenever possible).
  3. We have to choose between a global market driven only by calculations of short-term profit, and one which has a human face (Kofi Annan), which gets us to the economic side.

We have been so blinded looking at those who only seek short term maximised personal gain, that we forget the satisfaction that can be gotten from a long term goal where both sides make gains and interact with their economy in a profitable way, without denying the other party their goals. Here we see the option for both the UK and Cuba. It is not a given, it is not a guarantee, but an option, an opportunity to consider. It is the one side of Warren Buffett I do (partially) admire, he thinks long term (in case of Tesco, not long term enough), but overall the long term side will always pay off, which is the path we should walk, which is of course not the path that the bulk of hedge funds operators want us to consider and as too many listen to those people, we end up having a problem. So as we look at the pound of flesh that could give us a sterling reward, we tend to ignore that part for the fake glory of short term boosts. Yet, if we see Lidl and Aldi where we clearly see exactly that this longer term approach will keep them afloat, unlike their competitors, which is the issue at hand!

Because in the end, the conclusion quote from the academic article gives us the massive anchor that they did not properly dimensionalise ‘assimilate a variety of evidence at different levels of disaggregation from a variety of sources and integrate diverse stakeholders perspectives‘, too often the data presented from the view of the stakeholder cannot be trusted. Whether it is the weight applied to the source, the way the question was formulated and set into the data collective, or the methodology of analytics that was pursued afterwards. It was a painted view from a person with a goal and a presented image, that ‘presented’ image tends to colour all connected evidence, which gives us a view of many games as they are played, but in all this, we all make the same mistake, we compare presented results and statistical results, whilst the individual sources are often too unknown, which is truly a bad an unexceptional path to walk.

 

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A basket full of trash

Have you ever had this? I am not talking about the Christmas or the hospital basket. No, I am talking about those ‘greeting’ baskets you get. One of these: ‘welcome new member’ baskets. You accept them with a smile, whilst you know you are getting a bag full of goodies that have value that is close to zero. Now we get these baskets from book clubs and other longer term commitment places, none of this is a big mystery to many people, because at some point, we all get confronted with this basket. Now, let’s change the game a little, now we consider the same basket, but in this case we don’t look at some two bit online retail vendor, now we look at Price Waterhouse Coopers.

That part is seen in the Guardian as per today. Let me refresh you on some of the facts, for that I will take you back to my blog from October 25th 2014 called ‘Price Waterfall Blooper‘. In there I wrote the following “Consider that PwC had (a reported by the Guardian in an earlier blog) last year; PwC was paid £10.4m by Tesco for its auditing services and a further £3.6m for other consultancy work (a newer version at http://www.theguardian.com/commentisfree/2014/oct/23/guardian-view-tesco-auditing-debacle-pwc-systemic-shambles)“. Now when we add today’s information, information I quite honestly never considered: “The Groceries Code Adjudicator, Christine Tacon, announced the move, saying she had formed a “reasonable suspicion” that the retailer has breached the Groceries Supply Code of Practice“. Now, let’s take a quick look at this so called ‘code of practice’. First of all, the information is found here: https://www.gov.uk/government/publications/groceries-supply-code-of-practice. The fact that this is on a dot Gov dot UK site should indicate that this is the serious stuff. So this code of conduct states at 4.1 PART 4—PRICES AND PAYMENTS, the following: 5. No delay in Payments and at 9. We see Limited circumstances for Payments as a condition of being a Supplier. This is just two of a long list of a code of conduct. The reason to mention these two is the question that follows. ‘How come the auditor was not aware of these facts?’. These are not just simple facts, they are codes of conduct, and can someone please explain to me how this is not raised by the firm charging close to 14 million pounds for one year of work? There are two other parties who are about to see the limelight. Party one is the Press. You see, I was following part of this since last year October, yet, I do not remember seeing the press being awake on these facts. I have a decent excuse living on the other side of the planet and the fact that these elements are not part of my Master of Intellectual Property education, yet the press, Pricewaterhouse Coopers as well as whatever legal aid is out there in UK farmland, it seems to me that too many people were not paying attention at all. There is actually a third side to this. I missed it initially, but when you look at the Guardian on October 23rd (at http://www.theguardian.com/business/2014/oct/23/tesco-black-day-profits-down-92), we see the following: “Tesco claimed that the rogue accounting practices – which relate to how the supermarket banks payments from suppliers – dated back at least two years“. Now consider again the government side that states ‘Guidance Groceries Supply Code of Practice, Published 4 August 2009’, so the statement and the fact that there was a code of conduct out for half a decade, did no one consider that there were additional issues that might rise?

Who on earth is running PwC in London? More important, what on earth is mentoring these wannabe’s? I have good right to speak in this manner. This took me 5 minutes to figure out when I got wind of this small fact, the fact that PwC, the Press and others were not all over this from day one is a little too weird for words. Consider the people that quickly left Tesco when the water got slightly too uncomfortable. Should they have known? I’ll let you answer this question for yourself, but now also consider that the auditors did not make mention in reports on some of these parts, they DEFINITELY should have known about the codes of conduct for the simple reason that part of this is linked to the pesky rules regarding payments and so on. What else did these people miss? More important, consider the date I mentioned (October 23rd), now consider the Deloitte report, was this part in that report? If not, consider that they had to check on these ‘miscalculations’, as we see the mention ‘rogue accounting practices‘ and ‘payments from suppliers‘, did no one consider looking under rock number two? Granted that Deloitte did not get much time, but as we see that suppliers were part of the mix, did no one mention the question ‘What about the Groceries Supply Code of Practice? Do we need to consider any issues there?‘ Did that question seriously not come up?

Now consider my blog from October 13th called ‘A matter of Jurisprudence‘, there I wrote the following “company secretary Jonathan Lloyd, who advises the board on legal and governance issues, had resigned and was serving out his notice until March 2015”, the second one “Ken Hanna, chairman of Tesco’s audit committee, is also set to step aside as a non-executive director as the company’s chairman reshuffles his management team”, which was shown from several sources. Now consider the fact that we see Jonathan on legal issues and Ken as part of the audit committee, they should have known about the ‘Groceries Supply Code of Practice’, which now gives an entirely different light into their departures. So was PwC completely in the dark about this? If the answer is yes, then my next question should be ‘why are they allowed to be auditors?’ Is that such a weird question to ask? It is a code of practice, not a fraternity paper on how to score, so I reckon, especially as it has financial sides, the auditors should have taken a look, moreover, Deloitte should (they might) have reported on this. The fact that the press is only now revealing these events calls for additional questions, but their fumbling is not part of this article, the fumbling of accountancy firms a lot more, for the mere reason that the code states at 5. “A Retailer must pay a Supplier for Groceries delivered to that Retailer’s specification in accordance with the relevant Supply Agreement, and, in any case, within a reasonable time after the date of the Supplier’s invoice“, which should have been part of the financial checks, can we all agree on that part?

And as we take a better look at this basket (have you figured it out yet), we see that the players were in a lot deeper than initially suggested. This cesto, has harboured information, misinformation and above all else, a lack of illumination of the facts as is. First there is Tesco themselves, the latest information shines a harsh light on several members who have vacated their office, in addition there is the case I made on October 13th in my blog ‘A matter of Jurisprudence‘, where I mentioned one person (Rebecca Shelley) who would have been at the centre. The mention on the Birchwood Knight site was “As part of her corporate affairs role, Rebecca will be responsible for government and media relations, investor relations, internal communications and corporate social responsibility“. Rebecca’s job hits ‘government relations’ and ‘social responsibility’. How come that this ‘Groceries Supply Code of Practice’ remained so below the radar?

So when we see months of reporting and we see the lack of mention of this so called ‘code of practice’ we also see the mention in today’s article “Business secretary Vince Cable said: “This is an historic day for the groceries code adjudicator and shows we have created a regulator that has real teeth“. Who is this Vince Cable catering for? You see, if this statement had been given before December 1st 2014, then there might have been a case, at present the act of mentioning it months after going live is just another presentation of a sad story on how some people could be seen by many others as some parties remaining silent hoping to make a bundle down the track.

So I reckon that Tesco will have to sweat the small stuff for some time to come, however, the more we get to see at present, the less clean the image of PwC seems to be. In the case of PwC it will become a case that is worrying on several levels. Not only are the looking for hardship over what was done, as per now it seems that PwC will be scrutinised for the things they did not do, not properly oversee or missed altogether, as per today it sucks to be the senior account holder of the Tesco account, because the fallout will continue for a decently long time to come.

So as we see the basket (also known as a cesto) filled with the trash of information, wrongful acts and none acts, can we all agree that we got a whole lot of nothing, an act that will have severe repercussions and not just legal ones! Does anyone remember this Warren Buffett fellow and how he lost 2 billion in value? If we combine what we have seen so far and add the part that I discussed in October regarding the Chadbourne papers, I can repeat that quote: “that directors of companies must make certain disclosure statements in the directors’ reports. This applies not only to information which the officer actually knew of but also information he would have known about if he had conducted a reasonable enquiry. However, the provision goes further and requires the director to confirm that, so far as the director is aware, there is no relevant audit information of which the company’s auditors are unaware”. This now brings an entirely different light to the Groceries Supply Code of Practice, moreover, it could be suggested that Warren Buffett now has a clear case in legally reclaiming his losses, consider that the US has the Sarbanes–Oxley Act, after Enron, which took care of the power players real fast. The UK has the Corporate Governance Code. I reckon that it is not too far-fetched that Mr Warren Buffett could be offered a deal for his lost two billion. If so Warren, remember this poor blogger and I feel so much better getting to work in a new Jaguar XK, in British racing green of course.

 

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A buffet called Buffett

It is the independent that comes with the goods this morning (at http://www.independent.co.uk/news/business/warren-buffett-tesco-losses-take-millions-off-berkshire-hathaway-earnings-9848441.html), and even though Tesco is at the centre, this is not about Tesco; it is about all of us!

The article refers to a view given a few weeks ago when we saw ‘Mr Buffett, who has called his investment in Tesco a “huge mistake”‘, this is all good, and we saw this before, but how does this amount to Warren Buffett being the ‘Sage of Omaha‘ go from a brand name to a person in a public area where the others can snack on him, like food for Hyena’s and so on.

Well, this is all about us in the end and about image and ego. You see, there is something massively wrong with those who WERE (past tense) with Tesco and as the quarter of a billion hole was found, instead of calling for restraint and standing by the ethical high ground Dave Lewis was standing. People like Mike Ashley who did bet on Tesco bouncing back, as they should and I hope that Mike Ashley makes a bundle on this. Yet, the centre piece actually not one but two of them are all ignored. The first one is that Tesco still made a billion, so as we see people running away in ‘fear’ and all other sorts of reasons, the value of Tesco went down. I reckon that those screaming in misconceived ‘horror’ are now paying for the speedy speaking, I am not impressed with their anguish and I am not convinced that it was genuine.

You see, if the financial backers had stood firm with Lewis, the hurt might have been there, but the structural repair would have been basic structural repairs and the pain to the financial backers would have been slightly more than superficial in the end.

The second part of this stake is Pricewaterhouse Coopers. There are too many questions, no answers coming in and no solutions directly in sight, other than those that would continue Tesco at a massively reduced size. I am still not impressed, you see, we all did this to ourselves. I oppose certain practices, not just because the stakes are high, but because as we ‘cater’ to profit, especially unnatural high percentages, we only cater to fatal self-inflicted wounding. So how does this link to Mr Warren Buffet (oops, intentional typo). You see we get that from the following two quotes ‘A week after Mr Buffett significantly reduced his shares in the retailer he saw $1bn (£160mn) wiped off the value of his stake in IBM, after the tech giant recorded a 17 per cent drop in its third quarter profits‘ and ‘Just days later, Coca-Cola caused Mr Buffett’s investment losses to climb to $2bn (£1.26mn) after the soft-drinks giant’s shares plummeted six per cent following flat sales and a lowered guidance for the year‘. So how does this affect us? Well consider the lives we have, the things we buy and the corners we cut. Are the two drops even a surprise and more important is the Tesco example strong enough for others not to play that dangerous game? I am not implying that certain ‘errors’ are currently being instigated, but consider the news on how America is now so much on a better track with people having jobs (which is true), yet consider when people like you and me spend money on a laptop, software and on cheaper food and no fuzzy drinks. I can say ‘YAY!’ to all three. My laptop (not an IBM Lenovo) is failing me, it is 4 years old and I have no budget for at least a year to replace it. Can you afford a new laptop, just like that? I have not bought software, still using Office 2010 (and happy to use it) and to keep my likes budgeted, my last can of coke was about 2 weeks ago. Many are turning their dimes to make ends meet and the market forgot about the people like you and me! In the end the concept requires people to buy and the juggling of numbers is no longer an option, we all depend on the cheaper places like Aldi to get a good deal. So how can Coca Cola remain so high? Will 6% be just the start of the plummeting for now? Yes, we tend to buy a little extra during Christmas and America has an upcoming thanksgiving in less than 3 weeks and Christmas 4 weeks after that, yet what happens 6 weeks after that? Will jobs suddenly get lost again, with unemployment numbers to go up? I am not sure, but it is not unlikely. People like financial analyst Charles Nenner have been speaking in regards to a crashing Dollar; he stated ‘The government has loans outstanding that are very short term.  If interest rates only go up a half a percent, they are already in trouble.  Also, the United States doesn’t have the power to force a lot (of Treasury bonds) on other countries because the United States has decided not to be a power anymore‘, which is kind of funny, because I saw that danger scenario coming for well over a year ago. Yes, I have seen some of the abuse of people stating that I am so wrong, which is a view that is fair enough, yet what happens when visible analysts in the economic market, not just like Charles Nenner, but heaps of others all making predictions in the same direction, then what will you do? Disagree a little more, or just until the dollar becomes Junk (or on equal footing with the Yen), then who will YOU blame?

Those who have no debt at that point will just lose mobility, those in debt will feel that drowning feeling sooner then they think. In the end we all did this to ourselves (to some degree). So as warren seems to lose 2 billion out of the 70 he had. I think that these ‘investors’ draining on the 10%-15% they expect, will soon need to refocus on the options where it is not about how quick you make a buck, but how you can slowly make some dollars and not lose your investments. That will be centre to all future deliberations, those who do will hold on to the farm, those who don’t will hand their farms over to those who did and now there is no actual option to recover for those who lost it. That is at the centre, as the economy is not restoring to the public and the consumers we see a push towards Aldi and other budget minded places like Aldi.

These ‘investors’ should start to realise that getting a 3% return is not that bad, it beats praying for profit in excess of 10%, which is less and less realistic, whilst they end up writing off the virtual money pool they thought they had. It all starts with the consumer, investors forgot about that, no matter what profit you expect or what is ‘balanced’ on paper, if people do not have the money to buy, it pretty much ends and that part was ignored by too many for too long a time.

The other part in all this remains PwC, let’s just accept that not all is well when we see ‘cover my back‘ statements and signing off on well over 100 million in inflated numbers, especially with a 10 million pound auditing bill, can we agree to the small fact that a clear statement after a thorough investigation at PwC could have prevented a massive loss of value for Tesco, which would have kept many investors in a lessened state of panic. By the way, did Coca Cola downgrade the profits as the stimulus is now ending? If so, what true hardships are ahead for the people as funds will need to come from other places?

For now the people are still struggling and poverty has never been higher in the US, so there will be consequences there too, but how much of it will hit the UK full on is a matter that will require time to investigate and time to protect against, time that seems to be wasted on several low yielding efforts (read: concepts that will not come to fruition). I cannot state what the best course of action is, but I feel fairly certain that the current trend will not solve anything; it will only make it harder for everyone down the track.

 

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The orchestration has engaged

It is nice when the world falls apart, when you look at the abyss in front of you softly stating: ‘It cannot get any worse!’, then you feel a foot pressing against the lower spine of your back as you lose your balance and fall down. The last thing you hear is ‘Guess again!’

This is how certain news events felt the last few days. I am not referring to the McCain family, who states that the press has not learned anything, post-Leveson. Was anyone surprised?

My issue is with Andy Street at the John Lewis department store (at http://www.theguardian.com/business/2014/oct/03/john-lewis-boss-andy-street-says-france-finished). In light of Tesco, I wonder what drives this person. Yes, we all know that John Lewis is upper class shopping, yet is that reason for whatever you think? Apart from your freedom of speech, which I will not hinder, my question becomes, in light of your remark “He told the gathering of entrepreneurs that the award was “made of plastic and is frankly revolting”“, so not only are you a snob, the element grace is just not within you. Fair enough! Yet, consider that as you got recognised with an award, you should consider the 3 G’s, “Be Gracious, Be grateful, Get off!” (Thanks Paul Hogan for that jewel!)

I am all for freedom of speech, but I am also in favour of accountability. So when I read this: “Street advised his audience: “If you’ve got investments in French businesses, get them out quickly.” The eurozone’s second largest economy is struggling for growth under President François Hollande and the country’s finance minister admitted last month that it will overshoot the EU’s 3% budget deficit target this year. The French economy has been hampered by low growth and poor tax receipts in recent years“, I wonder how often Mr Street got hit with the silly stick in the hours before he spoke these words.

The second issue I see is also from the Guardian (at http://www.theguardian.com/business/2014/oct/02/warren-buffet-tesco-huge-mistake), this is an entirely different matter. We all make mistakes, so when a billionaire admits to this with the headline ‘Warren Buffett: ‘Tesco was a huge mistake’‘, it is not that big a deal initially, but then I went to think it through. Why is there such a massive overreaction in regards to Tesco? Yes, the profit was overstated; however, Tesco made over ONE BILLION! Can we please wake up now? In a year where most nations are doing worse than zero per cent, in a time when the straps are on so that we recheck every dime we spend. Tesco made over a Billion. Yes, I saw the statements ‘too big to fail‘, but in this instance I do not agree. In the case of the Dutch SNS Reaal, that place LOST a Billion, Tesco MADE a billion, so can we please wake up and not overreact?

So, when the response comes, ‘Well Lawrence, you seem to be overreacting here a little above average’, my response would be ‘darn right!’

You see, the initial events, of Blackrock moving out, whilst this is a drop on a plate, is what I personally see as a form of orchestration, a few big wigs who seem to be hoping on massive write offs for Tesco. There is something so darkly unethical about such actions, that these greed driven profiteers would endanger the incomes of tens of thousands just to get a nice dividend. This is what it looks like, am I right?

That remains to be seen, but overall the fight is not done yet. Tesco is not sitting still and the new Tablet as it launched just now could be another incentive, especially if we consider where Tesco could also be active. If this is the budget option, with Tesco Mobile in the Netherlands, This gem could find many happy homes during the Dutch Sain Nicholas feast (which is on December 5th), in additional to the Christmas celebrations, as many Dutch do both instances. Tesco is not done by a long shot and the activities that we see give me the impression that several actions do not seem to be about ‘cutting losses’, but as stated on many occasions that I am not an economist.

So, when I see this article http://www.independent.ie/business/irish/billionaire-mike-ashley-bets-on-tesco-bounce-back-30616710.html, where Mike Ashley, who owns Newcastle United takes a 43 million pound share believing that Tesco Shares will bounce back, I say “well done Mate!”, two thumbs up for this man. Now, let’s be honest, as this man seems to be a millionaire a thousand times over, 43 million will not seem like a big dent in his wallet, but the fact that this man is willing to enter more cash then I will ever make (even if I grow to the ripe old age of 14645), the entered amount will boggle my mind for some time to come.

This is one of the two parts where disbelieve is still on the front of my mind. Let’s be clear, I get the entire write off, loss of share value, yet the actual occurrence, especially with a billion in profits is too strong to be just a jittery action from the market. The fact that Blackrock moved out to this extent is still an issue. It left me with two options, either they know something Dave Lewis has not been told yet, or they wanted a curve so that they can make a sweet deal down the track. Let’s not forget that the value write off is just on paper, it is like a virtual event. Blackrock did not hand over these billions in gold or actual cash; we are seeing the fallout of virtual value (as I see it). And this all gets me to the final quote, which was also in the Warren Buffet article and had been mentioned in earlier articles. “UK fund manager Neil Woodford – who decided to sell his stake in Tesco in 2012 after its first profit warning – said last week it could be a long time before any of the British supermarkets became good investment prospects again“. Why?

You see, if he sold his shares earlier, fair enough. Yes, we see that Sainsbury is lowering expectations and shares have fallen there too. I think that all supermarkets will have to change their entire approach. We see that places like Aldi and Lidl are growing, especially in Australia where Aldi is now more and more a common sight, yet over here Woolworths and Coles remain. The same applies to England, in the end people need food, so these places will remain locations where food is bought and yes, as Tesco mobile remains competitive, people will come for that options too. All that is a given, so why such a massive overreaction?

This is at the heart of my foundation for suspected orchestration. If you are in the UK, then take a look at the papers and the degree that they are looking at Pricewaterhouse Coopers. They did the auditing for Tesco, so why is not every reporter looking at PwC and seeing what links might be there, which is not an accusation, but consider all the redigesting we see on several papers, they all mention PwC in a casual way, when they have been auditing Tesco for some time. Only the Times (at http://www.thetimes.co.uk/tto/business/industries/banking/article4214689.ece) had done so, yet the full article is not available to me as I am not a subscriber (one of the reasons why I stick to the Guardian).

There are two more quotes the first is “Shorting Tesco has been a profitable bet” and “Traders gamble on falling share prices by borrowing equities from other investors and selling them in the hope of later buying them back cheaper – known as shorting” The latter quote comes from http://www.thisismoney.co.uk/money/news/article-2772107/Dont-shred-thing-new-Tesco-chief-warns-staff.html, so it is a way to make money, even though it seems unethical, the act is not, but one could call it questionable. This is the one moment where I need to ask the one question in regards to the given scenario. Let me first add the following quote “Lewis’s ‘no shredding’ order will be seen as a sign that he is determined to get to the bottom of the problem.  It also indicates that the group fears the errors – whether or not deliberate – may extend deep into the company“, as well as “Cantor Fitzgerald analyst Mike Dennis said: ‘A discrepancy of this size suggests this is not just the behaviour of a few individuals, but behaviour instilled by the senior management team“, which is where I was all along. Is this the case and if that part was known to 1-2 insiders, could this be the reason for certain action? What if Blackrock dumped its part to cause a stronger downfall, so that they can buy it again later with a much more interesting profit curve, which makes up for a lot more than the small loss they had, what happens then?

All valid questions, I just wonder if those who have actual answers are willing to give them, because it looks like a slippery slope of massive proportions. As this happens to the one place that feeds a nation, how will the people react should evidence of intentional tampering ever be shown?

Then how angry will the people get?

 

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