Australian iron ore producer Fortescue (FMG AU) is a great example of how value investing often works in practice. In 2018 the stock was trading for A$4. It was cheap at spot iron ore - a mid single digit FCF multiple, even w historically high discounts on low-grade 58pc Fe (1/n)

The reason it was cheap was investors believed the increased 58pc discount was structural not cyclical, and benchmark iron ore prices of US$60-70/MT were not sustainable - Chinese demand would surely falter, and send prices down to US$40-50/MT (2/n).
I basically agreed with the market. That was also my expectation. But I decided to buy some anyway because I recognized I could be wrong, and if either iron ore prices stayed at US$60/MT or rose; OR 58pc discounts narrowed to historical levels, the stock would prove very cheap.
Meanwhile, the stock was fairly priced on the base case market expectation (mirroring my own), at perhaps a HSD FCF yield. Not many investors make an investment on the basis that they might be wrong, but I did due to (1) the asymmetry; and (2) the future being hard to predict.
So what happened? Unexpectedly, there was a Vale dam failure in Brazil, taking out several 10ms MT of supply. Chinese demand remained strong. 58pc discounts narrowed, and covid further interrupted Brazilian supply, while Chinese have stimulated infra to offset covid headwinds.
Iron ore prices have gone to US$130/MT. No one expected that - least of all me. The result? The stock is up 5x to A$20 and has paid out A$3 in dividends since 2018 - 75% of its 2018 trading price. I made a lot of money on FMG not because I was right but because I was wrong.
Unfortunately, I did sell too soon (in hindsight) - about A$11-12 average during 1Q20 - albeit partly to help fund purchases that have since performed as well to better. But that's not really the point. The point is, value investing is a very counterintuitive pursuit.
Major market moves are caused by new, unexpected developments. Value investing is often about recognizing that the future is full of surprises, and positioning yourself favourably with respect to asymmetry; it often means betting on things you don't actually expect to happen.
The other reason I owned it was I also owned Ferrexpo (FXPO LN). FXPO was on the other side of product spreads - they produce higher quality 65pc pellets - and pellet premiums for higher quality material had surged to record highs, mirroring FMG's product discounts.
FXPO was trading at a low to mid single digit P/E because investors didn't believe high pellet premiums were sustainable. But if that was to prove to be the case, it could well also be the case that FMG's large product discounts also wouldn't be sustainable.
The market was assuming the worst of all worlds for both stocks - something you often see with cheap stocks, where glass-is-half-empty thinking prevails, and investors focus more on the risks than the opportunities (something I always seek out in investments).
It was unlikely both stocks were going to simultaneously experience the worst case scenario priced into both stocks. It's turned out pellet premiums have fallen. FXPO has still done ok, while FMG has done spectacularly. You don't have to predict future - just identify asymmetry.
Another way to put it is: the market tends to price in the most likely outcome (the mode) as if it were 100% likely, and ignores other possible outcomes/tails in the distribution. People don't think probabilistically and overestimate their ability to predict the future.
Asymmetric opportunities in tails are also not exploited because doing so is best served through a diversified approach, but there is currently a cult of concentration. Consequently, investors will only buy things where they feel sure about outcome, thus creating the opportunity.

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First thread of the year because I have time during MCO. As requested, a thread on the gods and spirits of Malay folk religion. Some are indigenous, some are of Indian origin, some have Islamic


Before I begin, it might be worth explaining the Malay conception of the spirit world. At its deepest level, Malay religious belief is animist. All living beings and even certain objects are said to have a soul. Natural phenomena are either controlled by or personified as spirits

Although these beings had to be respected, not all of them were powerful enough to be considered gods. Offerings would be made to the spirits that had greater influence on human life. Spells and incantations would invoke their


Two known examples of such elemental spirits that had god-like status are Raja Angin (king of the wind) and Mambang Tali Arus (spirit of river currents). There were undoubtedly many more which have been lost to time

Contact with ancient India brought the influence of Hinduism and Buddhism to SEA. What we now call Hinduism similarly developed in India out of native animism and the more formal Vedic tradition. This can be seen in the multitude of sacred animals and location-specific Hindu gods
🌿𝑻𝒉𝒆 𝒔𝒕𝒐𝒓𝒚 𝒐𝒇 𝒂 𝑺𝒕𝒂𝒓 : 𝑫𝒉𝒓𝒖𝒗𝒂 & 𝑽𝒊𝒔𝒉𝒏𝒖

Once upon a time there was a Raja named Uttānapāda born of Svayambhuva Manu,1st man on earth.He had 2 beautiful wives - Suniti & Suruchi & two sons were born of them Dhruva & Uttama respectively.
#talesofkrishna https://t.co/E85MTPkF9W


Now Suniti was the daughter of a tribal chief while Suruchi was the daughter of a rich king. Hence Suruchi was always favored the most by Raja while Suniti was ignored. But while Suniti was gentle & kind hearted by nature Suruchi was venomous inside.
#KrishnaLeela


The story is of a time when ideally the eldest son of the king becomes the heir to the throne. Hence the sinhasan of the Raja belonged to Dhruva.This is why Suruchi who was the 2nd wife nourished poison in her heart for Dhruva as she knew her son will never get the throne.


One day when Dhruva was just 5 years old he went on to sit on his father's lap. Suruchi, the jealous queen, got enraged and shoved him away from Raja as she never wanted Raja to shower Dhruva with his fatherly affection.


Dhruva protested questioning his step mother "why can't i sit on my own father's lap?" A furious Suruchi berated him saying "only God can allow him that privilege. Go ask him"
Great article from @AsheSchow. I lived thru the 'Satanic Panic' of the 1980's/early 1990's asking myself "Has eveyrbody lost their GODDAMN MINDS?!"


The 3 big things that made the 1980's/early 1990's surreal for me.

1) Satanic Panic - satanism in the day cares ahhhh!

2) "Repressed memory" syndrome

3) Facilitated Communication [FC]

All 3 led to massive abuse.

"Therapists" -and I use the term to describe these quacks loosely - would hypnotize people & convince they they were 'reliving' past memories of Mom & Dad killing babies in Satanic rituals in the basement while they were growing up.

Other 'therapists' would badger kids until they invented stories about watching alligators eat babies dropped into a lake from a hot air balloon. Kids would deny anything happened for hours until the therapist 'broke through' and 'found' the 'truth'.

FC was a movement that started with the claim severely handicapped individuals were able to 'type' legible sentences & communicate if a 'helper' guided their hands over a keyboard.