The Esoteric Investor: Alternative Investments for Global Macro Investors

This book has nothing to do with corporate governance. I spent a couple of hours reading hoping to find a few possible investments to help me keep going. Unfortunately, I found very little.

The book only really reviews three areas: demographics, fish (focusing on tuna) and water. The demographics was somewhat interesting but not much new for me except for the discussion of various derivatives and reverse equity transactions. One interesting graph showed the relationship between peak spending in the US and the DJIA. By that measure, it looks like the market will start picking up again around 2018… so, there should be lots of buying opportunities between now and then.

The tuna section was much longer and less interesting. Yes, I agree. Fishing resources are diminishing quickly, consumption of seafood is way up, 90% of the big fish are gone and a third of the ocean is in collapse. I didn’t see much in the way of opportunities in that section for the investor, other than maybe in Clean Seas (ASX:CSS), which is tuna farming, or Mitsubishi, which may be hoarding frozen tuna.

I also agree with the author that bluefin tuna may be the modern day equivalent of Dutch 17th century Tulipmania. I’ll pass on any opportunities there. How about companies that can make a lot of money on restoring the ocean? That’s something we’re going to need but, of course, no one will want to pay taxes to keep the oceans alive. People that don’t believe in evolution or global climate change probably don’t see any need for oceans. (I must be having a bad day.)

The most practical section for me was the one on water. The author takes us through which countries have it, which don’t, what some of the problems are, which companies might get in on the action. Countries with ample water per capital include: Australia, Norway, Brazil, New Zealand and Canada. It was a fascinating discussion re country dynamics, like something the CIA might put out. Most of the companies mentioned were small and speculative, requiring a lot of due diligence.

One stock, Companhia de Saneamento Basico do Estado de Sao Pauo (SBS), looks worth investigating. It also fits with my recent strategy of increasing shares on Brazilian based companies. I’m impressed with their growing economy and the Novo Mercado (New Market), Level 2 and Level 1 of Corporate Governance Standards, allowing companies to accede voluntarily to more demanding disclosure, governance and compliance obligations. If it turns out a winner, the two hours reading the book will have been worth it.

Yes, The Esoteric Investor does a good job of exploring three areas. However, it was very thin with regard to exploring related investment opportunities. I’m sure there are lots of better books for that purpose.


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