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Summary

  • This isn’t the first Seeking Alpha strategy inspired by John Galt but I love the idea.
  • My approach is different from that of my predecessor; I want visionary innovative companies.
  • For details of a model, I’ll look to Partha Mohanram, perhaps the best guru you never heard of.

On August 5, 2014, Victor Wendl published a Seeking Alpha article entitled Who is John Galt And What Stocks Would He Buy? Part I. In contrast to many other guru-oriented articles, this one dealt with a fictional character. I'm not sure how I feel in general about tying attribute strategies to fictional characters (unlike the case with a Buffett-based article, for example, readers can't personally research the source to verify for themselves the wisdom or even accuracy of the tenets of the approach). But John Galt is such an iconic creation, I think we can play along. But while I am intrigued with the idea of a John Galt portfolio, I take strong issue with the way Wendl did it.

SPECIAL NOTES:

Although I disagree with Wendl's thesis, I applaud the approach he took. Talking about nothing but stocks, stocks, and more stocks with no connection to anything else is, in my opinion, boring and needlessly suffocating. Stocks and the way we think about them are inextricably bound up with our larger culture and how it influences us. Bringing these connections into the conversation can help us see stocks in fresh new ways. So good job Victor!

I apologize for being so long-winded: about 5,300 words. But if you're into John Galt, Ayn Rand and Atlas Shrugged with its 1,000-plus pages, I figure you can handle a trifling 5,300 words here.

That said, for those who just want the nuts and bolts, or who simply don't have the time to focus on more than that, feel free to skip ahead to the section entitled "About the G-Score." For a special treat, the last of the four stocks I discuss is Amazon.com (NASDAQ:AMZN), so lock and load.

Finally, lest my next three bold-face headings annoy you, be aware that the phrase "Who is John Galt?" has a ton of meaning to readers of Atlas Shrugged, the novel in which Galt is the hero.

Who is Ayn Rand?

If you aren't familiar with Ayn Rand, do yourself a favor and Google her. If nothing else, the fact that long-time Fed Chairman Allan Greenspan was in her inner circle and that 2012 Republican Vice-Presidential nominee Paul Ryan cited her as an inspiration should motivate you to check her out.

In sum, she emigrated from the Soviet Union in 1931 and after stints as a Hollywood extra and a junior screenwriter, became a noteworthy novelist whose works extolled the virtues of individualism, attacked the sort of collectivist society she experienced in the USSR (she and her bourgeoisie family were on the losing side in the Bolshevik Revolution), and sought to warn the US of tendencies she perceived that she feared would lead to a slide toward collectivism. John Galt is the hero of her 1957 novel, Atlas Shrugged, the work many see as her magnum opus.

You may have encountered criticism of Rand's ideas as being mean-spirited and best suited to adolescents. There is much she offered that's brilliant. But the plain simple fact is that for whatever reasons (personality, strategy, or a combination), she chose to communicate in an exceptionally inflammatory manner. Consider, for example, that her most succinct philosophical tract was entitled The Virtue of Selfishness. When my law school Constitutional Law professor Henry Mark Holzer (who I just recently learned was one of Rand's attorneys) assigned it as one of the mandatory texts, we, a typical bunch of left-leaning students, realized from day one why "Hammering Hank" had the rock-em sock-em reputation he did.

Most of her fiction was controversial simply because of its general anti-collectivist tone, which put her on the opposite side of many in the academic and intellectual community. But Atlas Shrugged was special in this regard even beyond its theme. Unlike her other works, this wasn't a pure work of fiction, or even of political fiction. While the basic story involving the gradual withdrawal from society of the most productive individuals as they felt increasingly stymied by the collectivist masses is actually quite compelling, there was a point in the book, a bit past the mid-point, where, as a fictional artist, Rand went off the rails, way off the rails, and veered into her idea of philosophy. That occurred particularly with the novel's famous trial speeches amounting to some of the most bloated and largely incoherent ramblings this side of James Joyce. That may have come about as a result of that part of the novel having been the product of considerable consultation with committee of her closest associates, which by the way may have included Mr. Greenspan. (Mr. Greenspan, are you seeing this? Were you at the table?) There's a joke that goes like this: What is a camel? A horse designed by a committee. Applying that here: What is the latter portion of Atlas Shrugged? A novel closely reviewed by a committee.

Full discussion of the merits of Ayn Rand's philosophy is a large matter, one that cannot fit into a Seeking Alpha article. For those who really care about this, I'll offer a shameless plug for my self-published book: Atlas Upgrades: Objectivism 2.0.

Who is John Galt?

I believe Wendl's view of John Galt, as well as the investing strategy he presented, were informed by the latter section of the book, the part I refer to as a literary camel. A bona fide view of Galt, not as a fanatic and rambling mouthpiece for dogma but as a genuine literary character, would, I believe, inspire a very different and actually very dynamic investment philosophy.

Although it takes the novel (the well-written part of it) a while to unravel the mystery, we ultimately learn that John Galt worked as an engineer at a fictional company called Twentieth Century Motor Co. The details with which we need to concern ourselves now are (1) that he invented a motor powered by ambient static electricity that was light years ahead of anything else the world had ever seen; (2) that Twentieth Century Motor was a dreadful excuse for a company that could care less about incentivizing its most productive employees, preferring instead a "from each according to his ability to each according to his needs" approach to compensation; and (3) that the frustrated Mr. Galt abandoned his project and vanished. (He and the motor resurface later, and productive citizens, including Galt, eventually wind up indicted and tried and making idiotic speeches that in and of themselves would seem to have justified long-term incarceration and possibly capital punishment for aggravated felonious monotony).

Wendl seems to have drawn inspiration from the speeches. Obviously, I don't. I draw inspiration from Galt's stature as a bold visionary, a great innovator. I see him not as the embodiment of hatred and defeatism, but as a dynamic, creative and innovative hero, a literary successor to Howard Roark (the protagonist of The Fountainhead, the 1943 novel that really catapulted Rand to the big time).

Which one of us is making a "better" choice? For those of you who have read the book, you can decide on your own. But here's my pitch: If Galt wasn't so special as a visionary, there's no way Rand could have worked the story-line to the point where the collectivist US government could have cared enough to put him on trial and give him a chance to pontificate. Even fictional dystopian bad guys don't go after nobodies. They need adversaries that are important enough to keep readers engaged, and considering the word count in Atlas Shrugged (it might actually take Atlas to bench press a hardcover edition), Rand really needed somebody really special to motivate the collectivist nitwits to go after him.

So unlike Wendl, I'm not going to wrangle some kind of I'm-mad-as-hell investing strategy out of the messiest most contrived parts of the text. Instead I'll look to the most substantial elements of the story and present an approach based on the kinds of companies that not only might motivate John Galt to invest, but possibly also to send in a resume. I'm looking for companies where the stars are the vision folks, the ones who say, "To hell with the next quarter or even the next year or the one after that; let's be great for a generation or more." I want companies where John Galt's manager is likely to call him in to tell him that his work is appreciated, that he's getting a massive bonus and that his operating budget is being increased. And when Galt, whose cousin reads and tells him about what he sees on Seeking Alpha, wonders aloud if the extra money, however much it's appreciated, will depress earnings and cause commentators to complain about missed guidance and high P/Es, he is told to not worry about that nonsense but to go on doing what he does best.

So, how am I going to identify such stocks? Obviously, there's a great temptation here to trot out the usual "visionary" names; Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX), LinkedIn (NYSE:LNKD), Tesla (NASDAQ:TSLA), Twitter (TWT), etc. You know the litany, and could undoubtedly expand on the list. But those who are familiar with my work, whether on Seeking Alpha or elsewhere, know that I'm not the sort who'll do that. To me, the process of stock selection is much more important than individual-company analysis. No matter how great anybody is at analyzing companies and stocks, it's all worthless unless you have a sensible way of deciding which stocks you should even be taking the trouble to look at, and that if you make such decisions based on the names that are most familiar to you, you lose before you even start.

I like to model (through combinations of stock screening and ranking) objectively. And that approach seems especially apt for an exercise like this. After all, the name of Ayn Rand's philosophy is "objectivism" as opposed to "shoot-from-the-hip-ism" or "stick-to-what's-popular-ism". On this, Wendl and I seem to agree. We just use different sets of motivating ideas, resulting in different objective protocols.

Who is Partha Mohanram?

For my protocol, I'm actually going to take something that's already out there, something developed by an academician named Partha Mohanram; a wonderfully creative model that computes what he refers to as G-Scores. It's the mirror image of Professor Piotroski's better-known F-Score model. (In the model, G stands not for "Galt" but for "growth" or "glamour," the latter being a phrase often used by academicians synonymously with growth. But we can have fun and pretend G stands for Galt.)

Pitotroski starts with a group of stocks with low valuations and uses his model to separate genuinely distressed companies from stronger, or at least less weak, firms; those whose shares are more likely to be better-performing bargains. Mohanram, on the other hand, starts with a group of stocks that appear (based on price-to-book ratios) to be highly valued and then applies his model to identify companies more likely to satisfy investment-community expectations and, hence, enjoy better share performance.

Obviously, since John Galt is a make-believe character, I can't say for sure he'd like the G-Score model. But based on the essential characteristics and biographical elements Rand gave him, I believe he would. My reading of Atlas Shrugged suggests to me that if Galt were real, he'd appreciate the way the model understands that shares of great innovative companies are likely to be higher priced than those you'd find in a lets-reinvent-the-buggy-whip portfolio, he'd be intrigued with the use of objective financial data to separate contenders from the pretenders. In fact, as we'll see, three out of Mohanram's eight factors are easily the sort that could motivate the ex-Twentieth Century Motor engineer to shout, "Wow. This guy Mohanram really gets it. He understands what it takes in the real world to build a great innovative company."

About the G-Score

To apply Mohanram's model, we'll start with a broad, tradable stock universe. I'll work with the constituents of the Russell 3000, excluding financials (which have differing reporting characteristics). Then, I'm going to narrow down to a sub-universe of stocks with price/book ratios that rank in the upper (i.e. the more richly valued) part of the universe.

To determine which among these richly-valued stocks are more likely to make good on the Street's aggressive expectations, Mohanram applies eight fundamental tests that are evaluated on a binary (yes-or-no) basis. Each "yes" score is assigned one point. Each instance in which a test is failed is scored zero. All the scores a company gets are then added up. Eight (company passes all tests) signifies a perfect score. Zero signifies a perfect mess. Probably to the surprise of nobody, we'll focus, on the ones with the highest scores.

Here are Mohanram's eight yes-no tests grouped, as he does, into three categories:

Signals based on Earnings and Cash Flow Profitability

These three signals identify companies that are just-plain good. He starts with the classic return on assets ratio (other well-known metrics such as return on invested capital or return on equity provide similar information), but then adds two more items designed to give companies opportunities to boost their scores if ROA is based on higher-quality earnings (i.e. earnings more oriented toward cash rather than accounting accruals).

Return on Assets

If a company's Return on Assets (ROA) is above the median for its industry, this criterion is scored one. If not, it receives a score of zero.

Cash Flow Return on Assets

Normally, ROA is computed using net income, a combination of cash inflows and accruals. For this factor, Mohanram re-computes ROA after substituting Cash from Operations for net income and again scores companies one or zero depending on whether Cash Flow Return on Assets is above or below the industry median.

Accruals

According to Mohanram, the greater the influence of accruals in results, the less likely the stock is to outperform. (Other researchers, such as Messod Beneish, Baruch Lev and Ramu Thiagarajan, have demonstrated how accrual-heavy earnings are less likely to be persistent; a major problem for those investing in richly valued stocks.) Hence, companies are scored one if Cash from Operations (mainly net income plus depreciation and amortization plus changes in working capital components) exceeds net income, and zero if that is not the case.

Signals Related to Naïve Extrapolation

Both of these signals reflect the notion that the greater the variability of a firm's results, the less likely it is that historical information will be useful as a guide to making future projections. Mohanram expects such uncertainties to be associated with lesser levels of relative share returns.

Earnings Variability

A company receives a score of one for this signal if its earnings variability, measured as variability of ROA, over the past five years was less than the contemporaneous median for its industry, and zero if that's not the case.

Sales Growth Variability

Reasoning that companies with more stable rates of sales growth are less likely to have benefited from luck and, hence, more likely to satisfy future expectation, Mohanram scores companies one or zero depending on whether five-year Sales Growth variability is above or below the industry median.

Signals Related to Accounting Conservatism

Given the aura of prudence that overlays the process of security analysis, it's tempting to allow one's self to get lulled into an assumption that good earnings quality should lead to results that are below those reported by the company. Mohanram is sensitive to three important instances where this is not necessarily so, three instances in which application of conventional accounting practices paint an overly harsh picture of a company by forcing it to reduce profits by current expenditures associated with likely future benefits (the present value of which could potentially have a favorable impact on computation of a proper stock valuation), while not affording companies a way to factor such benefits into present financial statements. This can be an important consideration for those who seek growth or glamour stocks. Accordingly, the G-Score model contains three factors addressing this. I believe a real-life John Galt, who would likely run or work at a visionary company that has to address issues of spending money versus impressing Wall Street with how things go relative to guidance, would especially appreciate these three factors.

Research and Development (R&D) Intensity

Expenditures for R&D must be recognized as current operating expenses. Hence in practice, the resulting net income figure often understates the ability of the company to produce wealth in the future. Accordingly, if a company's R&D intensity, R&D expenses deflated by beginning assets, is above the contemporaneous industry median, this factor is assigned a score of one; if not, its score is zero. If this isn't a spot-on John Galt factor, then I don't know what is.

Capital Spending Intensity

This expenditure is aimed at enhancement of the company's physical asset base, and, hence, its ability to generate future shareholder wealth. Unlike R&D and advertising, it's not recorded in its entirety as an operating expense. But higher levels of capital spending lead to higher levels of depreciation, which, even though not a dollar-for-dollar match, will still reduce reported net income. So Mohanram assigns scores of one to companies for which capital spending intensity is above the contemporaneous industry, median, and zero if otherwise. Like R&D, this is another clear-cut Galt factor.

Advertising Intensity

Advertising, like R&D, is a current expenditure that is likely to improve the company's ability to generate sales in the future. So as with R&D, this factor is scored one if advertising intensity exceeds the contemporaneous industry median; if not, the score is zero. Galt is not necessarily an ad man. But he's a smart guy and cherishes profit, the rewards of productivity. So I'd presume he'd appreciate this factor.

Now, here's the hard part, the reason why you probably don't encounter the G-Score all that often if at all. There are a lot of calculations here, a heck of a lot more than are needed for the mirror-image Piotroski model. Most screeners can't handle the G Score, and you really don't want to even think about doing this manually. And here's one more piece of bad news. Advertising is occasionally offered as a line item in the regular income statements, but most companies confine its reporting to once per year in the footnotes. That means that unless you're willing to commit to one-year holding periods (as academicians tend to do), you're out of luck since that factor can't be computed.

I think we had enough bad news. Let's consider some good news.

Following the doctrine attributed to John Maynard Keynes that it's better to be roughly right than precisely wrong, I'll just skip the advertising factor and go ahead with a model that scores companies zero to seven rather than zero to eight. Once we accept that it's this or nothing and are willing to go forward, voila, the G-Scores can be computed in the Portfolio123.com stock screener, although it would take more than a novice level of comfort with the platform. And Portfolio123 being what it is, I can not only compute G-Scores, I can actually test their efficacy. That's important, first because I modified it by eliminating one factor, and second because a lot of time has passed since the end of Mohanram's 1979-99 sample period. I really want to know if the model can be useful today. So I did a bunch of ten-year backtests (8/13/04-8/13/14 assuming rebalancing every four weeks and 0.25% price slippage per trade). The results are as follows:

Ann'l

Return %

Stan. Dev. %

Ann'l

Alpha %

N

All Stocks

12.33

24.29

2.88

2302

Hi PB Stocks

10.40

22.60

1.40

1151

G-Score = 0

2.86

38.96

-3.36

1

G-Score = 1

-3.37

38.03

-12.53

8

G-Score = 2

4.83

30.03

-5.06

33

G-Score = 3

9.12

27.40

-0.54

60

G-Score = 4

6.48

25.24

-2.78

78

G-Score = 5

11.64

22.54

2.73

140

G-Score = 6

11.89

20.87

3.29

169

G-Score = 7

13.52

22.27

4.66

50

G-Score <=4

7.38

26.16

-2.14

180

G-Score >= 6

12.64

21.05

3.96

219

High-Low

5.26

6.10

N is as of latest portfolio rebalance

Alpha computations use the Russell 3000 ETF as a benchmark

The numbers are not in perfect alignment (i.e. the results are not "monotonic"). But they look pretty good. And being an engineer and hence presumably familiar with testing methodologies, John Galt would probably be especially appreciative of three important research considerations.

  1. First, the data used in Portfolio123 and, hence, for the tests is point-in-time. There is no survivorship bias (companies that vanish during the test period are included in the test up until the time they actually vanish) and there is no look-ahead bias (for example, data from the quarter ended 6/30/07 is not available to the model on 7/1/07 but becomes available only when the data is actually visible to investors).
  2. Second, the entire test could be considered out of sample, way out of sample. The test period begins about five years after conclusion of the sample period used in connection with development of the model.
  3. Finally, there's the fact that I had to eliminate one of the eight specific factors. That tells us a lot about the merits of Mohanram's overall idea.

Some Specific Stock Ideas:

I'm going to note four stocks from among those with present G-Scores of seven. These companies stand out to me on the basis of the visionary nature of their businesses and/or the way they go about conducting what might in the hands of other be mundane businesses.

3M Co. (NYSE:MMM)

This is my number one choice as most likely to either have John Galt working there or to have received a resume and job application from him. At first glance, MMM seems like a sprawling $30-plus billion (sales) conglomerate with its fingers in Industrial markets (abrasives, filtration, etc.), Safety and Graphics (building safety, personal protective gear, reflective signage, etc.), Electronics and Energy (flexible circuits, light management films, fluorochemicals, etc.), Health Care (drug delivery, wound care, infection prevention, coding and reimbursement software, etc.), and Consumer markets (home air filtration, cleaning products, sticky notes, tapes, etc.).

Conglomerates often have poor returns on capital; such dispersion of capital is often much more effective in conference room PowerPoint presentations than it is in the real world. ROE at MMM has drifted lower in recent years, which will happen when a firm has become as big as this one is. But even so, it has lately remained stable in the high 20% range, and that's based on net income that already reflects a high R&D spend consistently amounting to about 5.5% of sales (versus Apple and its typical 2%-3% range), projected by 3M to rise to 6% by 2017. That's an outstanding level of performance.

An important internal metric at 3M is the NPVI, its New Product Vitality Index, which measures the percent of annual revenue coming from products that didn't exist five years earlier. In 2008, that number was a whopping 25. But maybe John Galt has already come aboard. In 2013, it was 33 and is targeted to rise to 37 by 2017. And by the way, it is not as if the company is always telling its engineers what to do; they get to spend 15% of their time pursuing their own individual ideas. Oh, and by the way, excess cash is being used to pay dividends and repurchase shares.

Boeing (NYSE:BA)

If you don't know what Boeing does, you've got bigger problems than deciding which stocks to look at. So let's cut to the chase. This is a horrifyingly capital intense business and one that can be nauseatingly cyclical, and for good measure plagued by trends in military spending (BA doesn't just make passenger jets). Yet despite being massive (annual sales of about $88 billion), return on capital is almost 28% and is above 25% more often than not. Adding in debt, some of which is to finance customers, return on equity is leveraged up to about 46%.

In fairness, it has to be noted that the commercial plane business is in an up-cycle of its own, helped by decent GDP but also by the fact that airlines really need a lot of new and upgraded equipment. And it's not as if the defense business has vanished. Even so, there's lot more here than favorable external factors.

BA has something important that helps it make its own luck: corporate courage. Getting its newest model, the 787, off the ground was not easy. It suffered from cost overruns. It suffered from supply chain problems. And there were questions that for a while had led to grounding by the FAA. It's not easy to plow ahead when commentators and investors are screaming about how badly you stink. But Boeing has been consistent in its vision and persistent about making it work, and fine tuning it, as with a re-engining of its classic 737. By keeping its efforts in forward gear and the R&D spigot wide open at more than 5% of annual sales, BA is now reaping rewards.

Wall Street hasn't always appreciated this low-asset-turnover (the nature of the beast) company, which can be prone to lumpier earnings and sales trends than many would like. But it's a powerful player in what's essentially a duopoly market (Airbus, of course, being the other company), is generating a lot of surplus cash flow right now (which has been dedicated in part to dividends and share buybacks), and thanks to now improved industry cyclical prospects, is well positioned to benefit from the dogged determination it's shown in the past.

International Flavors & Fragrances (NYSE:IFF)

Huh! Innovation: There? Could John Galt consider a company that does flavors and fragrances? Would the teacher who awarded him first place at his sixth grade Science Fair consider him a wimp?

Well believe it or not, innovation is very important in the flavorings and fragrances business. About half the global market is taken up by only four companies; the rest is fragmented among small players. IFF ranks third among the big companies, but it's the one that offers US investors a major-company play on this business. What's good here, is that the big four could theoretically compete on the basis of price cutting (not something investors like to see). But they don't. They compete on the basis of innovation. Hello John, welcome aboard!

When it comes to flavors and fragrances, consumers tend to appreciate things that are new or original. But that's not the whole story. We know, for example, that many want to eat healthier. Many want to cut down on fats, sugars and other stuff that's bad if taken to excess. The food industry knows full well how to deliver healthier alternatives. The challenge for the John Galt types who work at IFF and elsewhere in the industry is to get the healthy offerings to taste like something other than boiled cardboard. Flavor delivery systems are another avenue for innovation.

Like the other companies discussed here (and like any that get top G-Scores), IFF is an R&D beast; 8.7% of sales in the trailing 12 months. And again, the company benefits from insane levels of surplus cash flow. There are dividends and have been some reductions in equity, but so far, leverage reductions, acquisitions and just-plain cash buildup have been the order of the day. Note too, that in addition to product innovation, IFF is actively pursuing, let's call it market innovation; it is working hard to support its developing-world operations. Given rising living standards there, the sort of thing that lends itself to increased demand on the flavors and fragrances front, this area is growing briskly and seems to be a pie more than able to feed not just IFF but its peers as well.

Amazon.com

Yeah, I'm mean. I put this at the end. Be kind, though, there's precedent; e.g., the way 60 Minutes always puts its most interesting story at the end, the way American Idol or America's Got Talent put the best acts at the end, etc.

I don't need to rehash all the issues involving Amazon here. People know how they feel about the stock. The bear case against Amazon is repeated on Seeking Alpha with what by now has become comical scripted persistence, facts be damned. What else could one say about articles pronouncing the Fire Phone a failure even before it went on sale? As to fundamentals, this article is already way too long to go into detail. Suffice it to say, at least for this particular discussion, that AMZN passed all seven of Mohanram's G-Score tests. (If Amazon continues to spend and depress its earnings much longer, it may lose some points on signals tied to five-year average net income, as the pre-spending years cycle out. But there's still a good deal of distance between AMZN and the lower G-Scores.)

Meanwhile, much bearish Seeking Alpha rhetoric on Amazon would have a very familiar ring to John Galt. Consider the articles bashing Jeff Bezos for trying to take over the world? Go back and reread Atlas Shrugged, particularly the parts about the "Anti Dog Eat Dog" law that so enraged productive members of society, the ones who eventually dropped out and fled to Galt's Gulch. Consider criticism of Bezos for the reckless way Amazon spends and runs its business (by people whose personal track records can't hold a candle to what Bezos has accomplished). Go back and reread Atlas Shrugged, particularly the parts detailing Hank Reardon, Dagny Taggart and the crazy reckless investment in Reardon Metal and note the aura of familiarity. And by all means, as you digest the stream of Seeking Alpha bearish commentary on Amazon, think about such names as Wesley Mouch and James Taggart (two noteworthy anti-productivity guys from Atlas Shrugged), and definitely Ellsworth Toohey (the architecture critic in The Fountainhead who pretty much dedicated his life to badmouthing and trying to destroy Howard Roark and his vision; one of the most intriguing literary antagonists I'd ever seen).

Now, for a really interesting irony, consider the table below, which gives a peek into how Amazon is viewed relative to some other well-known stocks, not in the confines of Seeking Alpha, but in the investment community at large, the world where money talks and bullsh** walks.

(click to enlarge)

(Note: Enterprise Value to Sales is a legitimate valuation ratio, the level of which depends on the investment community's expectations of future sales growth and/or margin expansion.)

The table shows two important things. There is, actually, quite a bit of discernment in the market regarding companies. Investors do consider and then make choices. It's not a herd. (ii) The investment community isn't really all that passionate about AMZN; it's not hyped-up gung ho, nor does it hate AMZN. Unlike what we see so often on Seeking Alpha, the market is simply looking at AMZN, evaluating the company and its stock, and seeing it as a bit on the bullish side of ordinary.

Yes, yes, I know about the Graham-Buffett folklore about how manic-depressive Mr. Market is. Recognize, though, that this comes from an era in which rapid dissemination of information meant begging someone at a company to send you an annual report via first-class mail rather than third-class mail. I still remember a time from the '80s when I was at Value Line; I called a company to ask them to send me a 10-Q. The CFO's secretary told me that before doing that, she'd have to check with her boss to find out if she was allowed to release it to the public. Yes, that really happened! That was the world that gave rise to the legend of Mr. Market. The fact that you got online is important evidence to the effect that that world of Mr. Market no longer exists. Today, investors know things. They vary in their interpretations. But if you say or imply that the market is ignorant of anything, that's a you-problem.

Here's the irony to which I referred: If this is a John Galt portfolio, is it really appropriate to consider shares of a company that is accepted (a question we can also ask about MMM, BA and IFF)? Doesn't society hate productive entrepreneurs and creative geniuses, and do everything it can to stymie them?

Maybe, just maybe, the world we live in today, even with all its taxes and regulations, is not as Rand described it in Atlas Shrugged. And maybe, just maybe, had Rand not been so wrapped up in her personal baggage with the Soviet Union and in playing to the dedicated groupies who worshipped her, she'd have seen things a bit differently. And maybe, just maybe, had she lived and worked beyond 1982 (the year of her passing), she'd have been excited and amazed at the wave of productivity and innovation that took hold and remained in place both through Republican and Democratic eras. Maybe, just maybe, she'd have disavowed a hefty portion of her prior work. And maybe, just maybe, she'd have re-written the John Galt story to have him quit Twentieth Century Motors, move to Northern California, find some venture capitalists to back a company formed to produce and sell his motor, and eventually become obscenely rich after doing an IPO (and maybe even becoming one of the venture-capital panelists on ABC's Shark Tank). Oh wait a minute. Atlas Shrugged was already published way back in 1957. So Rand have been locked in on the story of John Galt. What to do, what to do... aha, try a new project: Write a biography of Steve Jobs. If she couldn't have outraced Walter Isaacson on that, she could have switched gears and done a biography of Mark Zuckerberg, or even Jeff Bezos, who could be put on trial with the proceeding held in a conference room at the Manhattan office of Seeking Alpha, and we could take a vote among Seeking Alpha readers to pick 12 contributors to serve on the jury - I'll bet I don't get any votes.

Source: A Different Take On A John Galt Portfolio