IDENTIFY TRENDS, ANCHORS
Develop global investment view, anchor it in Enduring Principles
Barrack Yard Advisors uses focused research and strategic guidelines to anchor a global market view.
By first identifying global themes in which companies can potentially prosper, Barrack Yard focuses its research to identify opportunities:
Rising Global Middle Class and Asian Parity
Research has led us to conclude Asia is on a long-term trend that could result in economic parity with the West in the next 50-75 years.
Faster Asian growth rates and the rise of a global middle class are potential consequences. Among other things, demand for middle-class amenities (food, clothing, education, mass-market luxuries, travel, etc.) creates potential for companies that cater to these needs.
Malthus may be right and Asian parity could result in global shortages. Unless we experience a new technological revolution, we may be on the verge of a Malthusian world where resource shortages are a problem.
The future is unknowable and Malthus’ vision has not come-to-pass since he first articulated his theory. Are current perceived shortages cyclical, or secular?
Debasement of Currency by Fiat
In the aftermath of the bursting debt bubble (25-years in the making), the Federal Reserve needs to print an unprecedented amount of money to avoid severe deflation. Eventually, this will debase the value of the USD. Central banks in many other countries are following suit.
Barrack Yard Advisors seeks store-of-value to hedge the falling value of paper money: farmland, fixed assets that are not particularly interest rate sensitive, potentially strong currencies, etc.
Security: Public and Private
Security is a perpetual human concern.
Talk of U.S. defense budget cuts have resulted in low valuations for contractors – but Barrack Yard Advisors believe spending on protecting cyber-space and fighting terrorism will remain robust, and few are focused on militarization of the Indian Ocean.
One example of private security is the need for wealthy individuals from countries with dodgy property rights to have assets in a safe and secure place, such as Swiss private banks.
We devised this term to describe firms that possess powerful, enduring business models that cannot be destroyed by inept managers in the intermediate term.
Barrack Yard Advisors buy these durable businesses when they are out-of-favor, so long as we are content with their (well-covered) dividends.
Interest Rate Risk
Ours will not remain a zero-interest-rate world forever.
Barrack Yard Advisors understand that when interest rates rise above 0%, the rise could have a devastating impact on many asset prices.
Toll-takers are companies with a business model similar to that of a turnpike operator: they provide a fixed asset that others need to use and have to pay for the privilege. Financial Exchange operators and Ports operators are examples.
Rarity refers to assets, both physical and intellectual, that are uncommon and difficult to replicate. Examples of rarity include land in Champagne, casinos in Monte Carlo, water rights in California, and bio-seed patents.