For many years, the famous Chief Investment Officer of the Martian Future Fund has visited Earth to review potential investments. Many investment concepts and beliefs develop because there are so few reasonable people left on Earth. So why not seek guidance from a reasonable Martian to understand the madness of the world investment climate.
Once again, the Clime team was fortunate to catch up with Karl and we met with him in the Goldman Sachs Corporate Box at the SCG during a rain break in the New Year’s Test.
Clime: Thank you Karl for making some time for us to chat to you again this year.
Karl: No problem. Indeed, I look forward to our meeting each year and with the rain tumbling down, I can think of nothing better to do. So fire away with your questions.
Clime: To begin with, the most significant world event in recent times: Can you tell us how the leadership of Mars reacted to the election of Donald Trump as US President
Karl: Well, they weren’t surprised. The Martian view was that one of the two candidates would be elected, and that’s how it played out. Martians actually know a lot about Mr Trump given the Miss Universe Pageants. “The Apprentice” was also a big hit on Mars, more so than it was on Earth. Admittedly, we are a little peeved that the Miss Universe Pageant has never been held on Mars and we find it difficult to understand why Miss Mars never wins. Quite possibly this will be corrected this year, as our intelligence agencies suggest that Mr. trump will ensure that the next Miss Universe will be either Miss Russia, Miss Taiwan or Miss Mars. It would be a great win for our planet.
Clime: Have you met Mr. Trump on this trip?
Karl: Yes, of course I have. Mr. Trump places great importance on the US relationship with Mars – much more so than, say, with Russia. Indeed, it is a fact that our leaders were contacted by Mr Trump before he contacted any of your world’s leaders. We had no need to call Greg Norman to get Trump’s phone number like your Australian Prime Minister.
Clime: Why do you think that he regards Mars so highly and more so than Russia?
Karl: I believe it is because Mr Trump regards Mars as a potential source of funding. Today Mars remains the only place from which the US and indeed Mr Trump’s private companies have not been able to borrow money. It will be a priority of his Administration to open up a credit line with us. I am actually surprised that this has not yet been made clear, but no-one on Earth has asked Mr. Trump how he is going to fund any of his policies. Mars is an obvious source of real credit and clearly preferable to printing more money.
Clime: Did you find this out in your meeting at Trump Towers?
Karl: No I knew this before I flew down. The Office of the Martian Leadership agreed to my meeting at Mr. Trump’s insistence and our monitoring in cyber space of Russian hacking intelligence convinced us that Trump would be seeking loans from the Martian Government. My specific instruction from the Martian administration was to clarify whether the loans would be for the US Government or for Trump Enterprises. We like many on Earth are confused by Trump’s “fence” language. So I was instructed to determine whether the loans are actually sought to build a big fence or to fund a new US defence initiative or some sort of offensive play against China. (In any event, I was keen to meet Ivanka – she has a large fan base back home and I wanted to get a selfie with her.)
Clime: Did you find out what the loan proposal was for?
Karl: Yes – the loan (or investment as Mr. Trump calls it) actually covers all three possibilities. Trump is proposing that the CIA builds a gated golf course and casino in Taiwan so that US and Russian spies can meet in the club house after a round of golf. Quite ingenious, it must be said, but we have no interest in lending or investing in this development. In my view the security value of land in Taiwan would be questionable – particularly if the Chinese took offence to the project, and I suspect that is part of Trump’s plan. He thinks the Chinese will take the project over with a huge profit. I think they will take it over, but they won’t be paying for it. Anyway, you can probably glean that this proposal was the basis of his call to the Taiwanese President.
Clime: Anything else that you can share with our readers on your meeting with Mr. Trump?
Karl: Look, most of the meeting was in confidence and I only mentioned the golf course because Trump himself tweeted about it on Christmas Day. But I can say that Mr. Trump is very, very, very bullish about the growth opportunity in the US. He does not see any problem in funding his promises as the next Chairman of the Federal Reserve will be an old mate from Lehman Brothers. As Trump himself told me – “Karl, we will make America great again by cutting taxes for US multinationals, creating very, very, very long term debt and printing money. It’s simple and I don’t know why it hasn’t been done before. It takes me, Donald Trump, to come up with the solution and I want Mars to lend America the money – how about it?”
Clime: Your response to the request?
Karl: I told Mr. Trump that Mars was currently reviewing very similar proposals from Italy, Greece, Venezuela and indeed with his friends in Russia. Unfortunately, I had to tell him that in my view his ideas are not new, but I did give him some hope by stating that US credit appeared better than that of the insolvent Italian Bank (Banca Monte dei Paschi di Siena, actually the oldest surviving bank in the world, founded in 1472) which is seeking Martian credit support. Mr. Trump seemed to take great heart from that response.
Clime: Turning to Europe – on this trip have you developed any reason to invest there?
Karl: No. Europe remains a mess and this is clearly observable even from Mars. It constantly sits under a thick, dark cloud. My visit there a few weeks ago was remarkably similar to each of my visits over the last 8 years. It’s the same hopeless leaders, making the same hopeless decisions, for the same hopeless results. It’s Ground Hog Year every year in Europe and 2017 promises more of the same.
Clime: You mentioned that you were in discussions with an insolvent Italian Bank, Monte dei Paschi. Is there a deal there for your Fund?
Karl: Absolutely not. Honestly, on this trip I have been in discussions with about six insolvent Italian banks. If I was a cowboy, like a US hedge fund, I would say that I am currently spoiled for choice. However, the choices range from a likely loss of capital to a certain loss of capital. I will leave it to the Central Bankers to print more money and bail out all these duds. I am perplexed that a few weeks back the Italian Government announced they were bailing out Monte dei Paschi with 26 billion euros. The week before that the Italian Government was seeking a bridging loan of 50 billion euros from the Martian Future Fund to feed ATMs across their country. So my question is this, Where did the 26 billion euros come from? My guess is Uranus.
Clime : Uranus has a Future Fund as well?
Karl: No, that was a Martian joke.
Clime: Has your visit to Australia unearthed any promising opportunities?
Karl: You guys always ask me this, and my answer is the same each year. I promise you that Australia is just a great place to visit and I am always very grateful that the US investment bankers host me at the cricket and the Australian Open each year. That is why I am here and my Government and company visits are really just lunch and dinner appointments. It was also great that I could see Sydney Harbour again on James Packer’s boat, though I understand the Lowy’s were a bit annoyed that I didn’t utilise their ocean liner. (By the way, let me tell you that Mariah Carey’s entourage were an absolute pain; I’d happily see them off to Mercury to work the mines.)
Clime: So nothing of interest in Australia?
Karl: There is potential but more from a trading perspective with Mars. We may be interested in your excess baby milk powder if China continues to stuff up the trade. I looked at your meat but the requirement to only export live sheep and cattle seems too hard, and it is too far to Mars. Why don’t you guys process it and freeze it for the trip? I also met an interesting Australian company with a concept to provide data storage above the clouds and in the solar system. Storing data on Mars is quite exciting and would make it very difficult for the Russians to hack. I have asked these guys to keep me informed. I only hope they are sane.
Clime: Any final thoughts for our readers?
Karl: I really don’t have any sage-like advice. 2017 opened with a bang, but stock prices have levelled since and it is really only the US markets that are reaching new highs (and even they are starting to plateau already). The other major markets are below peaks reached years ago and Australia is still 15% below its 2007 high. It feels more exciting on Earth than it looks from Mars. However, I have been doing some reading on this visit and I think that your readers may enjoy two quotes from some profound thinkers on Earth. One is current, by the economist Robert Schiller, and one is from the past by the late astronomer Carl Sagan.
“The problem is that the world is too complicated. Part of what drives markets, people believe, is what other investors are doing. So as an investor you end up trying to predict what other investors are going to do. It’s like a game we’re playing. That’s why it’s not going to work out that everything is optimally priced and stable.”
I agree with Schiller’s statement, for too much investment on earth is short term focused and simply ignores the fact that most investment returns need to meet long term liabilities or claims. Investing needs to be logic based. Value based investing is the most sensible long-term approach. Markets driven by silly human activity are not efficient and that presents an opportunity for investors with an eye for value.
Karl Sagan described what Earth looks like from Mars. When we look at Earth from Mars, we see a little blue dot in the far distance. To quote Sagan’s words …
“Let’s look again at that dot. That’s here. That’s home. That’s us. On it everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives. The aggregate of our joy and suffering, thousands of confident religions, ideologies, and economic doctrines, every hunter and forager, every hero and coward, every creator and destroyer of civilisation, every king and peasant, every young couple in love, every mother and father, hopeful child, inventor and explorer, every teacher of morals, every corrupt politician, every “superstar”, every “supreme leader”, every saint and sinner in the history of our species lived there – on a mote of dust suspended in a sunbeam… Our posturing, our imagined self-importance, the delusion that we have some privileged position in the Universe, are challenged by this point of pale light. Our planet is a lonely speck in the great enveloping cosmic dark. In our obscurity, in all this vastness, there is no hint that help will come from elsewhere to save us from ourselves.”
While I love visiting Earth, I have no reason to believe that we on Mars can solve the Earth’s problems. It needs a lot more than money but unfortunately that is the sole focus of most of the leaders on Earth that I meet. And don’t get me started on global warming! 2017 will be an interesting year to observe from afar and a volatile one to endure on your planet. I wish your readers the best in 2017 and look forward to reflecting again in the future.