Donald Coxe of BMO Financial has a way with words. Here's a random selection of eye-catching quotations from his recent 40 page thesis entitled "Basic Points – The Hinge of History".
"Proclaiming the irresistible value in beaten-down Wall Street bank stocks compared with commodity stocks after the sudden demise of the smart, scrappy Bear Stearns is now rather like trying to market vacation trips to Baghdad and Falluja by comparing their costs with the tab for swim and ski trips to Dubai.
"Wall Street learned from recent history that it could get rich by selling overpriced merchandise to greedy fools, and ignored the Hinge of History that was transferring real economic and pricing power to countries that, as recently as the Emerging Markets' collapse of 1997, were considered as mere primitive playthings for traders looking for high-risk short-term gains…
"Shed no tears for the PE barons as the economy enters recession and many of their levered-up lovelies begin to lose their financial sex appeal. They continue to luxuriate in their Cecil B DeMille-scale parties and galas, while leaving the big banks to hold billions in CLOs – Cruddy, Lousy Obfuscations…
"While all this excitement was occurring among the really rich on "Jurassic Park Avenue," few who really mattered devoted much time or money on what was happening in Pilbara, Australia, the iron ore and soybean fields of Brazil, the Grasberg mine in Indonesia, or in Sudbury, Voisey's Bay or the Chilean Andes – and most of those were in China and India and they were wondering how much they were going to have to pay for the output from those remote locations. History was being made in both sets of environments – the end of an era in which Wall Street was the epicentre of the universe, and the beginning of the era predicted by Chris Patten in which China and India would return to their former rankings as the biggest and second-biggest economies on earth.
"The Hinge of History is in the process of slamming the door on the investment primacy of a wide range of investments. But, as Maria said, in The Sound of Music: "When the Lord closes a door, somewhere He opens a window". A secularist interpretation of that credo is that when one long-held investment policy becomes obsolete, another – which was discredited for decades becomes the optimal course.
- Paul Murphy is associate editor of the Financial Times.