August 4, 2015
The last decade has seen an extraordinary rise in the importance of a unique class of investor. Generally referred to as “price-insensitive buyers,” these are asset owners for whom the expected returns of the assets they buy are not a primary consideration in their purchase decisions. Such buyers have been the explanation behind a whole series of market price movements that otherwise have not seemed to make sense in a historical context. In today’s world, where prices of all sorts of assets are trading far above historical norms, it is worth recognizing that investors prepared to buy assets without regard to the price of those assets may also find themselves in a position to sell those assets without regard to price as well. This potential is compounded by the reduction in liquidity in markets around the world, which has been driven by tighter regulation of financial institutions, and, paradoxically, a greater desire for liquidity on the part of market participants. Making matters worse, in order to see massive changes in the price of a security, you don’t need the price-insensitive buyer to become a seller. You merely need him to cease being the marginal buyer. If price-insensitive buyers actually become price-insensitive sellers, it becomes possible that price falls could take asset prices significantly below historical norms. This is not to suggest that such an event is inevitable, still less is it an attempt to predict in which assets and when it will occur, but anyone conditioned to think that these investors provide a permanent support for the markets should be aware that the support may at some point be taken away.
The infiltration was discovered when detectives tapped the mobile phone of a Ferrari-driving businessman suspected of laundering money “on a vast scale” for organised crime gangs and reported hearing him receiving secrets from inside the Bank. ... The major national security breach has been kept tightly under wraps by police chiefs and spies at MI5 for more than 16 years, shielding those implicated in the highly embarrassing scandal from public, parliamentary, and judicial scrutiny. ... In 1998, as part of a major probe codenamed Operation Beregon, the detectives reported that they had eavesdropped on a high-rolling young stockmarket speculator receiving highly sensitive information about the bank’s monetary policy committee (MPC). ... A source with knowledge of the operation said: “Organised crime’s infiltration of the City of London and financial services industry has long been a concern. Intelligence such as this was a real risk to the economic well-being of the UK and shouldn’t have been suppressed.”
Look up and eastward from the old streets of downtown New York, look over the crimson banners of the auction houses on University Place, and you will see an ancient wall of brick jutting into the sky, throwing its shadow upon the roofs and chimney pots of Union Square. If the sun is bright or the neon lights in full flush, you can read on that expanse of grimy brick a faded legend: “F. A. O. Schwarz—Toys of All Kinds.” Painted in plain, white letters, the words create a nostalgic stir in the beholder, especially if he is a New Yorker who can recall grandfatherly tales of horses whinnying at stable doors in Washington Square, of grooms shouting in cobbled byways, and country carts bumping along with loads of aromatic hay. It is, indeed, an old, old sign, thickly brushed in the times when Santa Claus sometimes had an “e” at the end of his honored name. ... Ride fifty blocks uptown, and you will see that name set up again, neat and bright, in inch-high block letters of wood that occupy a one-foot length of the most valuable space on earth: a Fifth Avenue show window. The letters, gleaming white and blue amid the sawdust of a rodeo exhibit (with rocking horses at a hand gallop), repeat the name “F. A. O. Schwarz” and nothing more, nothing about toys. It’s no longer necessary for the Schwarz store to shout. This low Whisper will serve. Everybody knows it is the chief toy emporium of the world, unique because it is the biggest store that sells nothing but toys.
China may soon be the world’s biggest producer of wine. In his father’s hometown, a prominent architect — and unlikely winemaker — sees a new Napa. ... When Ma Qingyun visits Yushan, a rural town an hour outside of Xi’an, in China’s Shaanxi province, he travels in a chauffeured black Mercedes-Benz. His car speeds eastward along the newly paved roads ... “How about we chug the first glass?” Frank Fu, a Shanghai-based venture capitalist, suggests, holding up his full wineglass and looking around. Laughs ripple among Ma’s guests, unsure if the suggestion is serious. Ma nods and laughs. “Sure!” Fu clinks glasses with his neighbors before tilting his head back and downing the wine. A few of the other guests join in. ... Baijiu is still the most popular alcohol in China (and accounts for about 38 percent of worldwide alcohol consumption), but the past few decades have seen a rapid expansion of the country’s wine market. China is now the fifth-largest wine-producing nation in the world, and it nearly tripled its consumption of red wine between 2008 and 2013, becoming the world’s largest consumer of the beverage. But old drinking habits linger, and Ma has acquired a benevolent patience with potential buyers who swig his painstakingly crafted pinots as if they were baijiu.
FOR SALE: Largest ranch in the U.S. within a single fence. Texas fixer-upper with more than 1,000 oil wells; 6,800 head of cattle; 500 quarter horses; 30,000 acres of cropland; tombstones for legendary cowboys, long-dead dogs, and a horse buried standing up. Favorite of Will Rogers and Teddy Roosevelt. Colorful history of drinking and divorce. Fifteen-minute drive to rib-eyes at the Rusty Spur in Vernon. Ideal for Saudi oil sheiks, billionaire hedge funders, and dot-commers who can tell a cow from a steer. Profitable. Zero debt. Property taxes only $800,000 a year. Price: $725 million.