2: The Mail King Born Again, Rabbits & Black Ships Money, Don't learn the wrong lessons, Portrait of a Happy Contrarian, Mirrors!
“My main desire was to get a car” - René Girard
Greetings friends 👋
Hope you had interesting week since I published the last issue. I can tell that Spring is around the corner, and this is one of my favorite times of the year!
Last week, in issue #1, I commented a Yahoo Finance expanding on Choice Equities Capital Management’s letter mentioning Pitney Bowes ($PBI). Having looked closely at the company and the stock during the last few months, I decided it was time to dust off those Excel modeling skills and put together a quick write-up about the company (unfortunately after the thesis mostly played out on Q4 data related to the Ecommerce revenues…).
You can find the full paper here :
You will learn :
How a century-old company is planning its revival
What hides under the hood and the market has missed for too long
The top catalysts that could propel the stock significantly higher
I will mention new articles from my research blog in this newsletter, but if you would like to receive the research write-ups directly in your inbox, you can subscribe to new updates directly on Rhizomes Research! ┐( ˘_˘ )┌
Investing & Business
Rabbits & Black Ship Money
Reading time: ~20 minutes
I absolutely love Jamie Catherwood’s take on financial history. He has a talent to make current trends resonate through historical phenomenons. In this issue of Investor Amnesia, he draws historical parallels that question the current trend of digital collectibles (or NFTs for Non-Fungible Tokens) :
For those who need a crash course on NFTs, I recommend this article by Peter Yang!
Following the aftermath of a rare and transformative event causing societal upheaval and mass unemployment in certain professions, policymakers stepped in with government issued payments to help citizens cope with their liabilities while unemployed. Quickly, however, this “free money” and more idle time produced speculation in bizarre “assets” like collectibles. Soon a mania unfolded in collectibles where particularly rare items fetched increasingly higher and higher prices to the point of madness.
Of course, I am not talking about COVID-19, stimulus checks, and NFTs / sports cards…. but the Japanese Meiji Revolution of 1868 and ensuing speculative mania in rabbits. I’m sure you all could guess that anyway, though, right?
Hard to not be baffled by how history rhymes and how human nature stays true to itself.
After the Meiji Revolution of 1868 in Japan, the newly established government in Tokyo made widespread economic and political reforms. One of the most profound reforms was destroying the Japanese class system (samurais, merchants, farmers, etc.). For Samurais specifically, the government continued providing them with their compensation, but were instructed to establish new businesses or locate investment opportunities in order to put their compensation to a productive venture.
Shortly after this societal shakeup unfolded, ‘some foreign merchants started to import rare foreign rabbits for pets to Japan.’ Before long the rabbits became wildly popular in Japanese celebrity circles, and the price of these en vogue rabbits started rising. As you probably guessed, the newly idle samurai class armed with capital they needed to deploy began buying/selling rabbits, as well as raising them for profit.
Sure enough, it soon went… Let’s say overboard :
A Japanese news paper even reported that some wanted to sell their daughters in order to purchase rabbits.’ […] In terms of prices, there were records of a rabbit being traded for 600 Yen. For context, average monthly rent in 1872 was a mere 0.58 Yen. Fearing the societal impact of rampant speculation and the prospect of a bankrupt samurai class, the government levied a ‘rabbit tax’ that effectively ended the rabbit market overnight. Rabbits that had been selling for hundreds of Yen were no suddenly worth as little as 0.2 Yen.
I won’t spoil the fun any more than that, but be sure to head there and have a read. On top of the Rabbit Mania from the Meiji era, Jamie also does a focus on the Victorian obsession with curiosities.
You can read the whole piece here.
A fun fact mentioned in this article : the British oil giant Shell actually got its name from the import-export of Decorative Shell Boxes.
Don’t learn the wrong lessons from the Dot-com crash
Reading time: ~10 minutes
Ensemble Capital, has a publication named “Intrinsic Investing” which I read regularly. Their latest article resonated with the current meltdown we have seen in tech and momentum stocks, along with renewables.
Some selected highlights :
It is true that many individual internet related companies of the Dot Com era barely even had a real business model and investors in these stocks lost everything. But the flame out of Dot Com stocks obscures the fact that the internet has proven to be a far, far bigger deal than most people thought it would be 20 years ago.
[…]
Rather the massive error that investors made was to incorrectly think that pretty much any company that was operating in internet related industries was a sure thing. Despite the internet proving to be very real, most of these stocks performed terribly with many falling into bankruptcy and never capitalizing on the internet boom.
The lesson of the Dot Com bubble and crash is not to get out of the market when speculative activity surges. Rather the lesson is to avoid those specific stocks that are speculatively valued and to be highly skeptical of unproven businesses that claim they are sure to capitalize on exciting new trends.
It is during periods like these that stock selection becomes extremely important.
You can read the full article here.
If you enjoy this newsletter, make sure to subscribe if you haven’t already !
Thought-provoking stuff…
The Happy Contrarian
Reading time: ~10 mintues
I know René Girard mostly through his mimetic theory that I first discovered while in undergrad. I actually find that it is one of the most of the powerful contemporary theories given how versatile it is. One of the most elegant and mind-blowing applications might be his book (A Theatre of Envy: William Shakespeare) on reading Shakespeare through the mimetic theory lens.
In this portrait published in Commonweal Magazine, we learn more about the man behind the theory, a true iconoclast. As much as the word contrarian has become a buzzword in investing, Girard lived up to the definition :
Girard was aware that much of what he was proposing was too new and too unusual (and sometimes too idiosyncratic) to go unchallenged. Always the strategist, he often invited people to challenge his arguments before he published them. Beyond the sheer human need to be with others, Girard needed the opposition and counterarguments of his conversation partners to test his ideas and push them to their breaking point.
The article also summarizes the power of his literary theory, as it has been applied to too many domains to be able to count:
Just open a newspaper and pick something, anything, at random. Even the stock market? Especially the stock market, Girard would respond. That’s “the most mimetic institution” of all—indeed, a textbook illustration of how mimetic theory works: “You desire stock not because it is objectively desirable. You know nothing about it, but you desire stuff exclusively because other people desire it. And if other people desire it, its value goes up and up and up.” There is hardly a field, sphere of life, or situation, where Girard’s theory does not apply.
Finally, the article mentions an interesting facet of his personality, his so-called “intellectual conversion” to christianity:
Something that many of his academic colleagues could not forgive Girard for was his religion. While he started from a purely secular position (“I am rooted in the avant-garde and revolutionary tradition”), Girard adopted Christianity for philosophical reasons. His theory led him to think that the Passion of Christ (as recorded in the Gospels) was a turning point in history because it put an end to an uninterrupted line of violent scapegoating by exposing the scapegoat mechanism for what it was. As Haven shows in Evolution of Desire, Girard’s was primarily an “intellectual” conversion. He needed to believe in order to make better sense of the world—as he observed, “conversion is a form of intelligence.”
You can read the whole piece here.
Arts & History
How mirrors changed Art forever
Reading time: ~10 minutes
Mirrors are amongst the most trivial objects one can find in a house, especially pocket mirrors. Their historical impact, though, was tremendous !
When it comes to the manufacturing process of mirros, progress made through sveral centuries deeply changed their daily use but also more generally our own way of thinking about our image, our capacity to mimic and use figuration.
If like me, you have always been amazed by the level of details in paintings (especially drapery studies, you will find the following mind-blowing :
The flowering of portraits and self-portraits coincides with the moment when we learn how to make a small, perfect, clear and flat mirror, capable of framing the image and to return a clear reflection, without distortion
[…]
The unequalled degree of precision offered by the representation of fabrics, objects and characters in Flemish and Italian paintings from 1420 onwards can be explained by the use of an optical device acting like our cameras, such as the curved mirror depicted by Holbein in The Ambassadors
You can read the whole piece here.
Screens as modern mirrors
Reading time: ~10 minutes
The Contrebande blog published an interesting analysis of 2 Italian movies released in 2019, that resonated with the article about the history of mirrors.
These Italian films of 2019 highlight in a very different and quite skilful way the uses of the smartphone by young people, far from the outdatedness of French cinema on a similar subject.
┐( ˘_˘ )┌
Selfie, Being 16 in Naples by Agostino Ferrente is a documentary in which two Napolitan teenagers from a working-class neighborhood tell their daily life through the screen of a smartphone.
Likemeback by Leonardo Guerra Seràgnoli is a fictional film following the wanderings of three friends. They are addicted to smartphones and celebrate the end of the school year by going on a cruise along the Croatian coast.
The great interest of Selfie, being 16 years old in Naples, is the erasure of the filmmaker who simply defines the starting “concept”, and then lets the two boys build their own film with the smartphone at their disposal."
Likemeback on the contrary depicts the raw usage of the camera as conceived by social media. Three teenagers go through their dream vacation in almost permanent poses, glued to their mobile phones, primarily concerned about the image they will reflect on their social network. At first glance, the director therefore rushes straight into the trap of the device as a trope, without taking any step back. However, helped by unknown but talented young actresses, he pushes the realism of situations so far that he manages to deliver an excellent and shocking take on the consequences of the never-ending intrusion of the smartphone in the user’s intimacy.
You can read the whole pîece here.