In all areas of life, the best leaders display their excellence over and over again. High profile areas you see this is in business, sports, and politics. Other places which are not so prominent would be as parents or in the classroom. The topic of leadership is studied, analyzed, and debated to no end. I think one of the common characteristics of great leadership is clarifying what the purpose of the task is and then get everyone pulling in the same direction to achieve the goal. We were having dinner with friends the other night and our guest was a world-class swimmer, rower, and runner. He told us entertaining stories of his time as a college rower and the teams he was on. Only one of those groups had a winning record, the rest did not have a victory. All of the teams had talented individuals on them, but only one group was successful. You see this very often in sports, but you also see it in business.
Over 90% of all start-up companies fail within 3 years. Many large enterprises which were once thought to be unassailable fall by the wayside. For example, Enron, Kodak, Blockbuster, and Circuit City, are all names from recent years which have gone out of business. It does not matter what kind of business you have, the leaders have to anticipate the future and create plans to try to position their enterprises in areas where they can prosper. In addition to planning, without good execution a great plan is worthless. Execution in business occurs on many different levels:customer service, merchandising, marketing, human resources and skill development, finance, etc.
In a domestic setting, leadership from parents comes in all kinds of ways. First and foremost, setting a good example, instilling values and work ethic, and providing positive guidance are crucial. Too often in society today, failure is magnified and success minimized. Ultimately, having clarity from the top about what is trying to be accomplished, and a singularity of purpose from everyone involved is common trait of good results in many areas of society.
Financial markets are in the midst of earnings season and this past Friday, the jobs report was much better than expected. What is always interesting about markets is how people view the current environment in a different way. In this week's Barron's, legendary investor Leon Black commented he is selling everything not tied down and refinancing whatever he can. Market participants seem to disagree with Mr. Black as there are plenty of buyers for almost every kind of financial asset.
I would be remiss if I did not bring up the Berkshire Hathaway annual meeting, held yesterday in Omaha, Nebraska. Having gone to the meeting before, it is certainly a unique event and many people go for a variety of different reasons. I went because I wanted to hear Buffett and Munger opine on finance for 8 hours ( I know, I am a bit of an odd duck). The refreshing thing about those two guys is they walk it the way they talk it. Everything I have ever read from Buffett and Munger was consistent with what they say at the annual meeting.
This year, noted short seller Doug Kass had the opportunity to ask questions to Buffett. He brought up succession, valuation, the role of Buffett's son on the board, and Buffett's motivation for results. In addition, Kass tried to hustle Buffett for an investment, which I found to be very tacky. I guess you have to know guys from the financial world are always trying to sell something. If you read the answers Buffett gave to Kass's questions, you can see why Buffett is where he is as his answers were intelligent, direct, logical, and non offensive. Leadership on display right before your eyes.
The world is changing right before our eyes. If you look at what is transpiring in the world with respect to energy, the massive growth and sustainability of production in North America changes the economic and political equation all over the world. One group of countries which faces a sea change is the Middle East. To understand energy, you have to focus on demand first. The growth in demand in energy is all based on the large countries in Asia, China and India specifically. Their continued use and growth of energy will be constant for many years because of the low penetration of cars there. As more and more people buy and use automobiles, their energy use will keep expanding. From that perspective, OPEC countries are in good shape to continue supplying oil and gas.
However, currently the biggest energy consumer is North America, which is quickly producing more and more energy, and as a result, becomes less dependent on OPEC oil. The wild card in the energy situation is Russia because it has more energy in its country than any other country, except Venezuela. Russia's big problem is extracting the resources from the ground. Russia is logistically far better positioned to supply China energy products than Middle Eastern countries. Russia is reliant on energy revenues to fund their government, as are the OPEC countries. Energy is a national security issue and should be taken very seriously by any individual or investor. The private sector in energy is the growth engine allowing more production to take place in the U.S, and Canada, and potentially Mexico. If the politicians just keep their hands off of the engine, there is a very good chance of a dramatic change taking place in this crucial area.
U.S. companies are borrowing money at record low levels, this time in Europe- http://www.bloomberg.com/news/2013-05-03/microsoft-at-t-cross-atlantic-for-euro-rates.html
Many investors think Twitter should be used to help make decisions- http://techcrunch.com/2013/05/04/people-are-speaking-markets-are-reacting-fears-are-falling-and-hackers-are-gonna-hack/
Disney is on fire- the stock has had a massive run, and Iron Man is raking it in- http://www.bloomberg.com/news/2013-05-04/disney-s-iron-man-3-on-track-for-sales-of-up-to-170-million.html
Finally, summer is approaching and the weather is starting to get hot. I hope you are enjoying the weather and staying happy and healthy. If you have any comments, questions, or thoughts about the blog, please post them!!! Thanks and have a great week!
Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charter holder.