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Following Buffett’s Lead On Stocks To Buy And Hold Forever
This is Porter’s Daily Journal, a free e-letter from Porter & Co. that provides unfiltered insights on markets, the economy, and life to help readers become better investors. It includes weekday editions and two weekend editions… and is free to all subscribers.
Editor’s note: Partner Pass members will be receiving three recommendations in their inboxes tomorrow, Thursday, October 9. Porter is providing a surprising new recommendation in The Big Secret On Wall Street – an unusual second recommendation for the month. Erez Kalir is also releasing a Tech Frontiers recommendation tomorrow – pushed back from the normal first Thursday of the month. And Marty Fridson’s Distressed Investing is publishing its regularly scheduled bond recommendation tomorrow as well.
Putin’s brutal attacks… All oil is his oil… No one messes with this Japanese firm… Following its 17 Rules for 300 years… Buffett’s going in big on these companies… Gold continues to run hot… A new twist on the jobs market… |
Table of Contents
In the early 2000s, Russian President Vladimir Putin began seizing control of the Russian economy.
Putin’s actions were unmistakably brutal… At least 20 high-profile deaths or imprisonments were linked to his efforts to control all of Russia’s energy complex.
And financially vicious… Putin gobbled up any international oil companies that got involved and “sold” them to state-run firms.
And he did this all for wealth and power. Putin knew that Western powers were weak – he knew NATO wouldn’t engage in things like espionage, blackmail, or murder to protect their interest in the ways that Putin had in gaining them.
He knew he could seize their assets easily.
There are exceptions… There was one institution not even Putin was willing to cross.
As an example, in 2009, a massive oil, gas, and liquefied natural gas project had taken in huge amounts of foreign capital, almost $100 billion. But long before the oil started flowing, Putin decided to kick the foreign investors out and keep the resource for himself.
But one Japanese company was an early investor in the deal. All the international firms were kicked off the deal or had their stakes greatly diminished, including energy giant BP.
This Japanese company retained its full stake.
It is an ancient Japanese family-run business – which owns virtually nothing openly or directly. It wins without a battle by focusing on long-term advantages rather than short-term clashes.
Asia is controlled by only a few dozen families. And the most powerful families are hidden from the public. They do not operate directly, or in the open, but instead through an enormous web of holding companies. They control banks, insurance companies, and have privileged access to government capital. Rather than seeking formal control, they sell majority stakes to prominent operators, while always secretly holding the reins of power.
They are masters at discretion. They are masters at being able to accurately value each portion of a corporation’s capital holdings. And most of all, they are the uncontested masters of long-term strategy. They do not measure results quarterly. They measure results by the century.
And, by doing so, they maximize their return on invested capital in ways no other business in the world can. Over hundreds of years, they’ve learned that real real power is having the ability to destroy everyone… but, unlike Vladimir Putin, choosing not to do it. And Putin didn’t mess with them.
There are perhaps five companies in Japan that have such influence.