Shorting Tesla, Cooking Pollution, Sexist Swedes, Tuk-Tuks and Harry Steele Stock Investor
December 11, 2023 Volume 4 # 30
Stocks Gambling Investors Are Shorting
The largest short position on US stock markets is Tesla. Shorting stock is when someone thinks it is going lower. Tesla might be selling a lot of cars but Elon Musk is said to be selling stock to cover what he is losing in X, that’s Twitter X, not to be confused with Space X which is making oodles. Elon would be smart to clam up.
Falling Oil Prices Help Kill Inflation
Oil prices dipped below $70 a barrel in the past week. That is down from a 52 week high of $95. When oil prices go up there is usually the mindless reaction by television news to interview people at the pump who bemoan the cost of their commute. The falling price of oil has not produced any good news stories, but we’ll take it.
Economist Hubert Marleau had this to say in his weekly newsletter about oil prices:
“…the $10 drop in oil prices has reduced global oil energy bills as a percentage of world GDP to 2.5%, down 0.80% from the end of September.
What is even more important is that, with this leg down, both oil and gasoline prices are where they were in 2018 and much of 2019. That is not bullish for oil stocks, but very helpful to reduce expected inflation and interest rates; and, in turn, eventually favourable for growth.”
An Unknown Pollutant: Cooking Fuel
People cook with a lot of nasty things, nasty from the air pollution it creates, to say nothing of things like methane that were big at the oil led conference on climate change in Dubai. This is never brought up since it would be picking on poor people.
People in poor countries, and some not so poor countries, cook with wood, charcoal, animal dung -pictured above- and coal. It wasn't long ago that rich countries cooked with coal too. Woodstoves are banned in Montreal. Mine has a catalytic converter.
China Number One in Electronic Exports
Americans (and Canadians) going for cheap stuff at the likes of WalMart and Canadian Tire shopped themselves out of a job to save money.
Those Sexist Swedes. Who Knew?
Marie Cure was the first woman to win a Nobel Prize in 1903. And she won it again, the only woman to win two Nobel Prizes in two different categories: Physics in 1903 and chemistry in 1911. It was for her work in radioactivity.
The biggest category for women is Peace: the first winner was an Austrian aristocrat: Bertha von Sutter.
She died in June of 1914, two months before the Austro-Hungarian Empire led the world into the Great War that destroyed the old Europe she was part of.
Only three woman have won the Nobel Prize for Economics.
Claudia Goldin, an American, won the Nobel for Economics this year:"for having advanced our understanding of women’s labour market outcomes".
Speaking of Swedes: How about a $23,000 camera?
The Hasselblad CFV 100 C. It is digital and can take huge format pictures.
But it seems only the really high end cameras sell. Smartphones rule. I took all the photos in a biography of an art collector, Marcel Elefant, with an I-phone.
Electric Mopeds and Tuk-Tuks
Scooters and three wheelers. They are not the things driven by the people at enviro-summits but they are helping clear the air, in particular in some of the smoggiest cities on the planet. Two wheel traffic in Indonesia in this pic.
Their popularity has cut demand for oil by a million barrels a day—about 1 percent of the world’s total oil demand, according to estimates by Bloomberg New Energy Finance. On the world’s roads last year, there were over 20 million electric vehicles and 1.3 million commercial EVs such as buses, delivery vans, and trucks. But there are more than 280 million electric mopeds, scooters, motorcycles, and three-wheelers on the road last year.
The electric transport revolution is a great chance to rethink how we move through our cities—and whether we even need a car at all.
Cars, after all, often have only one occupant. You’re expending a lot of energy to transport yourself.
By contrast, electric mopeds and bikes use a lot less energy to transport one or two people. They’re also a lot cheaper to buy and run than electric cars.
If you commute on an e-bike 20 km a day, five days a week, your charging cost would be about $20—annually.
And a Word on Old Tuk-Tuks
This is an article I wrote after a trip to Bangkok in 1999.
Someone is killing the tuk-tuks of Bangkok. After a brief experience, maybe it's a good thing.
The tuk-tuk is a motorized rickshaw, a three-wheeler with seating for three, plus the driver who sits up front steering with motorcycle-style handlebars. Its name comes from the sound its engine makes at idle, tuk-tuk-tuk, as the driver revs the little 650cc motor to keep it from stalling. The older the tuk-tuk, the more distinctive its sound.
Sitting in the back of a tuk-tuk gives you a different view of Bangkok's grid-locked traffic. And a different taste of its smoggy air as the exhaust from a giant bus spews straight into your face. Then as the driver threads the needle though this mess you could reach out and touch the giant wheels of the bus. The advantage of the tuk-tuk is that it can squeeze through places a car can't. In theory, it's cheaper than a metered cab, usually a yellow and green Toyota Corolla.
In reality, many of the tuk-tuk drivers are low-level shakedown artists. You have to negotiate a fare, and the tourist usually gets taken to the cleaners. On the trip I described above, the driver took us in a circle and dropped us off near the university. After walking for 10 minutes, we found ourselves back at the place where he picked us up.
Worse is the deal many tuk-tuk drivers have with local jewellery and clothing shops. One man promised us a 20 baht (about 90 cents) ride but said he would first drop us off at a shop. The shops pay off the drivers by giving them cash or a coupon to buy fuel. The scam is one reason the local government is on a campaign to get tuk-tuks off the streets of Bangkok. The other is many modern urban Thais find tuk-tuks an embarrassment.
"Tuk-tuks aren't a national symbol of Thailand; skip that silly idea," wrote Som Chai in an online argument in the Bangkok Post. He was responding to a British tuk-tuk maker who said he couldn't get his new tuk-tuks registered in Thailand anymore. Mr. Chai told him to button it.
"Thailand has enough tuk-tuks, and no more are needed. Pollution has reached high levels in Bangkok, and all nasty vehicles should be reduced and banned. What is good for Europe is not necessarily good for Thailand. Stop complaining and look for a decent vehicle."
Pollution is where most tuk-tuks fail the test of a modern vehicle. They are two-stroke engines, the same type used in things such as lawnmowers and chainsaws. As anyone with a lawn mower knows, you have to add a small percentage of oil to the fuel mixture. The two-stroke engine produces a lot of power for its size, and that gives the tuk-tuk low-level torque to zip through traffic. But it also produces a lot of pollution. We're not talking greenhouse gases here, but old-fashioned smog.
"A single motorcycle taxi with a traditional two-stroke engine emits as much pollution as 50 modern automobiles, and the Asian Development Bank estimates 100 million two-stroke vehicles ply the roads in Southeast Asia....the equivalent of 5 billion cars," says an article in Mother Jones on the evils of the two-stroke engine. Well, Mother Jones may have an agenda, but Bangkok sure has air pollution.
A Swedish company called Monika has come up with a solution. It sells a tuk-tuk that runs on natural gas. Thailand has its own natural gas, so that's not a problem. But now even Monika is complaining the government won't let in any more of its tuk-tuks.
That leaves Bangkok with 7,400 tuk-tuks. But it looks as if it's bye-bye tuk-tuk as the number is dropping. The city has raised taxes on them for one thing. Even though the new models don't pollute as much, maybe the tuk-tuks are also dying off because they don't fit the image of a city that, although it has traffic jams, has a subway and elevated transit system that would put any Canadian city to shame.
Note: Almost a quarter of a century later Tuk-Tuks in Bangkok are more and more electric, something that didn't exist back then.
Essay of the Week
This is a chapter from my book on Harry Steele, and how a poor boy from a Newfoundland outport started to build a fortune that was worth half a billion dollars by the time he died.
Chapter Five
Stock Market Investor
It is more important to know when to sell than when to buy.
— Harry Steele
Years before he left the navy, Harry Steele became a successful stock market investor, helped at first by his wife Catherine’s brother, Roland Thornhill. Roland was a stockbroker in Halifax, working for a small Saint John, New Brunswick, firm called Eastern Securities. Harry opened an account there and started buying small amounts of stockwith money left over from his pay in the navy, which was not an extravagant sum.
“Harry became fascinated with the investment business. He used to take me down on board the ship, as he was still in the navy, and I would visit with him and some of his mates in the boardroom. They were all interested in the stock market, but Harry was just obsessed with it,” recalls Roland.
Bill Shead recalls that Harry had a good feel for what was going on in the market, and Bill credits Harry with giving him a grounding in the world of money, which paid off down the road, making his retirement that much more comfortable.
“Harry’s brother-in-law was involved in the investment field, and he and Harry would often talk finance when they were together having a drink or on a ship,” recalls Bill. “We got involved as well, and we learned quite a bit from him. I got interested in it, and I think I started my first investment when I was on that ship and thanks to that I’ve done fairly well but not in the class of Harry.
“I would think Harry had a sizeable nest egg when he left the navy, which allowed him to go off and intobusiness. He was generous, and he didn’t splurge on things, so he was careful. He was conscious that there was a wayto make a dollar. Any invest- ment that he made, I’m sure he was aware had some downside potential but a hell of a lotof upside potential. He was not afraid to take a risk.”
Even his brother-in-law was surprised at how he took to the market. “I’ll tell you how good Harry was: One time when he was just about ready to get out of the navy, he talked to me about becoming a sub-agent for Richardson [Investments, which had acquired Eastern Securities] in Newfoundland. I told him that before becoming an agent, you had to write a test, which would tell them if they had a suitable candidate. So he said he wanted to take it and he came and we put him in a little office there for exactly one hour. I gave him the test and sent it off to Winnipeg wherethey analyzed it.”
The test measured Harry’s interest in and knowledge of markets, his ability to pick promising investments, and otherqualities that would make him suitable to work in the field. Remember, this was a man who was still in the navy with a full-time job running a complex base in Gander, Newfoundland.
Roland was shocked at the result. “The chap who was in charge in Winnipeg [would] normally review it and comment that the candidate wasn’t suitable or was adaptable, and I should pursue it, but in this particular case he called me and said I should hang on to this guy because this was one of the best results they had ever seen.”
Harry did not become a sub-agent, but he started to trade heavily. To handle his deals, he dealt, in particular, with two men who would have a profound influence on his business and invest- ing life: the late Nigel Martin, then a Torontostockbroker, and Seymour Schulich, whose investment savvy made him one of the richest men in Canada, something that has allowed him to become a generous philanthropist.
Seymour started as a research analyst in the Montreal office of Eastern Securities. At the time, there were not many Jews in the investment business, but that was about to change. Seymour, the city kid from the Snowdon district inMontreal, hit it off with Harry, the kid from Musgrave Harbour. Both had overcome adversity to achieve success, and thetwo became lifelong friends. For a while, Seymour was chairman of Newfoundland Capital Corporation, and in later years the two men and their wives went on cruises together. “Seymour has got an ego the size of Manhattan, but there’s no better friend in the world,” says Harry.
One of Seymour’s closest friends was Nigel Martin, a Toronto broker originally from Montreal. Martin was a boy wonder as a stock trader, and after working for a large firm, he became a partner at Thomson Kernaghan (astockbrokerage), with a 15 percent stake. Harry was a client at the firm through his connection with Seymour Schulich.One of the brokers he dealt with there was David Bruce, an affable Scot who continues to work as a broker to this day.
“I met Harry through Nigel. When we left Dominion Securities [DS] in 1973, Nigel and I went to join Ted Kernaghan,and we were at Kernaghan … then. Nigel’s association with Seymour Schulich was from his Montreal days when he wasat DS and Seymour was a good friend of Harry’s. When Harry asked Seymour for a broker, he mentioned Nigel’s name. So he called Nigel in 1974, and we started from there, forty-three years ago,” says David.
At the time, Harry was still the base commander of Gander, but, as mentioned, he was already a successful stockmarket inves- tor with a sizeable portfolio. As Roland Thornhill notes, Harry had a natural feel for markets, and he studied the way markets move and how to value a particular stock by reading about it.
One company that came into his sights was Eastern Provincial Airways. The company was based in Gander and, as we will learn later, Harry was interested in attracting its employees to The Albatross, the hotel he and his wife owned in Gander.He could see that the shares of EPA were pretty beaten up and he put in an order with Nigel Martin and David Bruce to keep an eye on the company’s stock.
Boeing 737 in EPA livery.
Eastern Provincial was not the only stock Harry was interested in. It was different from the others he traded, however, because he was not interested in acquiring control, or at least a sizeable position, of any other firm. Harrywas a trader, and David Bruce says he was a very disciplined trader.
“He was very successful building up his nest egg; he was an excellent trader. He was impatient; he wanted the stockright then, ‘Right now’ he would say. Any time Harry had a profit, he’d say, ‘Let’s go, let’s leave some for somebody else.’ He was not someone who would ride things forever.”
Bruce estimates that by the time Harry left the navy his fortune was close to a million dollars — a lot of money then. That is a figure that other people outside the family have also come up with.
Bruce remembers the price Harry was paying for Eastern Provincial stock more than forty years ago. “We werebuying the stock for between two and three dollars, but I don’t know … the precise deal he did with the Crosbies.”Details of that transaction are dealt with in chapter 7.
As a Scotsman, David Bruce loved to fish for Atlantic salmon, the same fish that rises to the fly in Harry’s fishing camps in Labrador and swims in the lochs and rivers of the highlands of Scotland. David Bruce and Seymour Schulich were the perfect guests at Harry’s fishing camp. When they were on the river or over drinks and dinner, the conversation was all about business and especially the stock market. Just the way Harry liked it.
“Harry Steele was a spectacular guy, someone who would always give you the time of day. He knew everybody bytheir first name and where they came from and what they were all about. He had guys who would follow him to the ends of the earth. He was an absolute guy’s guy,” says David.
“He was very easy to talk to and not tough at all unless things weren’t going his way. I’ve seen him angry probably twice since I’ve known him. One of them was when he had the big pilot’s strike at EPA; he was absolutely furious athis pilots.”
Though Harry Steele’s stock market acumen helped him in busi- ness, some of his family members and colleagues say at times it was a distraction, if not an obsession. If Harry had one vice, it was the stock market. A man who relied on information, whether it was a Soviet radio transmission or a stock tip from his network, Harry was always on thelookout for a winner.
“That was Harry’s only addiction, to use your word, but it never killed him, so what the hell,” says one of his closest advisers.