The Food Ceiling

The Green movement and their Environmental friends are forever banging on about the cost to the Planet of the continual use and extraction of the fossil fuels oil and gas for the production of energy to keep us warm and mechanically mobile. God forbid that you use the word “Fracking”, you may be turned into a pillar of salt! Well, I guess I do have a little sympathy with some of this argument as in the West we have definitely become very wasteful of these precious and finite resources.

There may however be a more worrying shortage on the horizon and that will be food. The real ceiling may be the world`s ability to feed its ever growing population. Today there is apparently in excess of three billion acres of productive land. This is enough to feed around nine billion people if they are all of the grazing and vegetarian variety. However if they are disciples of the American eat meat and waste food habit, this number drops to below three billion. You see the problem. Somebody is going to go hungry. The people from the Developing Nations are growing richer and are demanding to eat more meat. Certainly more land will come under cultivation and this along with genetic engineering will address some of this problem, but at the end of the day the demand for fertilisers will soar and fertilisers are a by- product from oil. Therefore a new source of energy must be found to drive the cars and planes and also light and heat the world in order to preserve fossil fuels for food production. This energy could be generated from nuclear fusion, neutrino capture, graphite materials, renewables or other exotic ways yet to be discovered.
It is said that in the next few years we will see Russia head up the oil- producing league table followed by America and then Mexico with the Middle Eastern countries trailing behind. This totally will change the political scene and may also reduce the American desire to go to war to “protect its` interests”. This will also have a knock -on effect on the Arms Industry which will really take some ironing out.

From the Saltydog point of view it raises the chance of investing into Mexico, the Biotech Industries and Agriculture funds. It will be interesting to see if these areas come to the forefront of our numbers either in the Unit Trusts or the ETFs. So yet again it is a question of watch this space.

Of course the food and population problems could be resolved if the meat eaters decide to eat the vegetarians.

The philosophy needed when buying and selling funds

Recently a subscriber to Saltydog was disturbed to find that the day after he committed to the purchase of a particular fund; the price went up before the trade was completed. He was annoyed with himself that he had not made his decision earlier and felt that he had missed out on the gain. From his frantic description it sounded like he felt he had suffered a “near death experience.” Well, there are a couple of points to be made here. Firstly, would he have been happier if it had gone down in price before the trade was completed. Secondly, he should be congratulating himself that he was climbing onto a fund that was rising. Finally, he should not be greedy and trying to guess the bottom or top of the market, that, as has been said many times before, is a mugs game.

A gain of any sort is better than a loss. A much more unsatisfactory situation than the one above is when you do not sell a failing fund even when you know you should. You hold on waiting for it to recover. You quite wrongly feel a loyalty to this fund because perhaps it has served you well in the past, so you continue to perpetuate your loss. Now you have really moved into the no sleep at night arena.

keepcalmJesse Livermore has a number of quotations that cover these situations…..
“A loss never bothers me after I take it. I forget it overnight. But being wrong -not taking the loss -that is what does damage to the pocket book and the soul.”
“The only thing to do when a man is wrong is to be right by ceasing to be wrong.”
“One of the most helpful things that anybody can learn is to give up trying to catch the last eighth -or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent.”

Baron Rothschild has similar sayings to these from Jesse Livermore and both of these people were highly successful investors at the turn of the twentieth century. It must be worth taking this philosophy on board and to try to operate your portfolio using these maxims.