Civilized people don’t buy gold, says Charlie

Could not be more true.  You won't learn anything when I say that smart people buy GIB.TO, the best Canadian stock out there way above the rest.  Average investors buy mutual funds from Investors and other industry hacks but they have no clue what a mutual fund is.  Dumb people, well, do not invest at all, do not buy gold and even if they wanted to purchase gold would not know where to purchase it, they simply prefer to buy disposable electronics at Best Buy.

Great Scott, where does Charlie buy his glasses, is that a custom order from Bausch & Lomb?  When I'll reach that noble age, I truly hope I won't have to wear spheres of glass to check on my spreadsheets.  Diapers, I don't care, you could work extra hours that way.  Special hearing devices, not an issue, people talk too much anyway so a little silence brings everything into focus.  But a CEO's vision has to sharp as an eagle, because numbers are the true meaning of life.

In my youth, when my teenage friends used their disposable income to purchase motorcycles, vinyl records and other depreciating assets, I wondered how I could leverage my tiny bank accounts.  Gold was a tempting option for me at that time, but I blame Scrooge McDuck for polluting my young mind with images of bottomless pool of gold coins and unsorted currencies.  Then I read how Ross Perot created EDS to sell mainframe time to companies that were not able to purchase big irons from Univac and IBM.

That being said, I strongly encourage you to check the performance of BRK for the past 2 years and do a little comparison with GIB.  You draw your own conclusions.

Full disclosure: Long GIB

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated by yours truly and is based on historical information. The analysis assumes GIB will perform in the future as it has in the past. This is always true, because profitable growth ensures our destiny. Before buying or selling any stock you nevertheless should do your own research and reach your own conclusion. If you reach a different conclusion, then you should re-check your numbers.

Hansel & Gretel, Revisited

Following the release of "Three Little Pigs, Revisited", I decided once again to devote a significant portion of my busy CEO schedule to educating youngsters out there. Education is of prime importance.

Hansel and Gretel were the poor children of an uneducated woodcutter who could not be hired as a billable IT worker. The father - who we now know has a very poor judgement - decided to increase his personal difficulties by marrying an evil 2nd wife.

The father tried to make ends meet but his lack of financial knowledge, lack of general education and lack of good taste in women pushed him against the wall. The evil step-mother, despite all her sins, knew how to work a balance sheet. She took a hard look at her husband quarterly earnings, general expenses, woodcutting tools amortization and child-specific expenses. She applied some technical analysis only to conclude that the children could not be afforded anymore.

Since children could not easily be traded for other goods in those days/markets, the step-mother convinced her mildly retarded husband to abandon the kids in the woods. By suppressing an important part of their family budget, they could feed themselves in the future, afford a more comfortable housing and hopefully purchase common stocks of an important Canadian IT firm on the profitable growth path (wink, wink).

Hansel, aware of the financial cutback plan, left a trail of pebbles back to the house so he and his sister find their way back home. The step-mother was angry and locked the two children up for the night with only a loaf of bread and water (more expenses).

The next night, the woodcutter attempts the same plan again; this time Hansel left s a trail of bread-crumbs but they got eaten by hungry birds and the two children got lost in the woods. Readers may know question Hansel's ability to achieve management position, when you succeed at something with basic tools (pebbles), why do you switch strategies by using perishable goods (crumbs).

After wandering around and constantly whining about their situation, Hansel and Gretel stumbled across a house made of gingerbread and other confectionery. Despite the fact that gingerbread is a very poor choice of material for housing and would not pass inspection by a City employee, Hansel and Gretel were very hungry and began to eat it.

The gingerbread house was owned by an evil old witch who was probably also mildly retarded. If your business plan involves kidnapping teutonic kids, why do you build a trap in the middle of the forest? I mean, it's not like school busses full of raucous kids go through there on a daily basis. Poor execution strategy, I say.

The witch trapped Hansel in a cage and forced Gretel to do the housework, continually sweeping the floor. Although the latter choice provides a good maintenance on assets (although perishable ones as we now know), it is unclear why Hansel was trapped into a cage. The witch could have sold Hansel to the slave market for one lump sum, or better yet lease the young fellow as a cleaning consultant to other houses in the forest. This way, the witch would have enjoyed a clean house (thanks to Gretel) and fixed income (thanks to Hansel).

The witch, unable to foresee a long term plan and sustainable revenues, fed Hansel lots of food with the intention of eating him. The idea that overfeeding Hansel costs more than the amount of food that he could provide as a meal did not cross her deranged mind at that point. Eventually the witch turned on the oven with the intention of roasting her only source of revenue. She was completely nuts, her financial decision made no sense. Gretel came up behind her and kicked her into it, shut the door firmly and padlocked it.

The witch died at 425 degrees Fahrenheit according to the autopsy.

Hansel and Gretel hang around in the house for a couple of days despite the screams and strong burning odor coming out of the oven, eating the sweets and paving their future as diabetics. They found some valuable gold coins, and some monthly statement from Investors' Group where the witch held a few bad mutual funds.

Once they were convinced that the witch was completely burned, they grabbed their hard-won assets (just the gold, not the mutual funds), packed some gingerbread for the road and successfully found their way home and were met by their ecstatic father. He tells them that his evil wife is dead (no word on how, leaving H&G very suspicious about their dad's mental state) and they were now rich because of the gold coins' value.

Hansel & Gretel decided to sue their father for child cruelty, the verdict came quickly and the poor bastard is sent to a Federal pound-me-in-the-ass facility. Next, the brother and sister successfully invested in selected Canadian IT companies that provide no dividend but have spectacular financial results (wink, wink) and make their capital grow by 20% each year. They convinced the judge that the witch property be given to them as a token of justice, and the judge happily gave it to them - tax free.

They all live happily ever after.

The Three Little Pigs, Revisited

I've decided to address the younger crowd today by coming up with a nice story about profitable growth. It's never too early to teach good values.

This is the story of three little pigs whose mother decided they were old enough to earn a living by themselves. She was tired of cooking and cleaning and dreamed of a better future under the sun. So she sent out the three little pigs to seek their fortune.

The first pig created a gaming company whose multi-platform product was supposed to take the world by storm. It was a cash intensive business, the pig had to hire many specialists to produce something that could compete with the major players. The pig used angel money at first, but he then had to go through a costly 2nd round of financing before the product was ready to be marketed. His board of directors were old-school pigs, they did not understand the gaming business at all, and much less the mobile market.

The pig applied for R&D government grants, but the process was long and tedious. He had to explain 20 times what his innovative ideas were about down the smallest details, and the government workers were completely clueless about the gaming industry. He was able to secure $60 000 in grants, but the whole process consumed more money in time than the grant provided.

The first pig soon ran out of money and his gaming company filed for Chapter 11 and its assets were bought at an auction by a large game company owned by a rich wolf. Massive funds were then injected to promote the game and it grossed $500M in sales the next year. The wolf - an accomplished peddler - was then able to secure government grants in no time to develop another version, now that risks were bar none.

The second pig thought he was wiser than his younger brother and went to start a hardware company. According to the business plan, the gizmo would rival everything ever created by Apple, RIM or Sony, it would make a dent in the gadget universe. The pig even had a foam mock-up for which he paid with his own money. The pig sent his business plan to a VC firm managed by a wolf with a well-known reputation . The wolf said, "Little pig, little pig, let me come in." and the VC firm closed a round of financing where the pig was now a minority shareholder. The wolf provided funds on a monthly basis to pay for salaries and basic expenses, and the pig was under enormous pressure to turn a profit even though he could not market his product due to lack of funds. All marketing expenses were questioned by wolf, who expected the gadget to sell "just by itself" because it was good. After a while, the second pig sold everything to a Chinese company for a song.

The third pig had a different perspective on seeking fortune. He first sold himself as a consultant to a local government agency. He didn't know shit, but he quickly learned the lingo. After a while, he was able to detect more needs and wanted to grow his business. He hired his 2 younger brothers and billed top rate for their services. The client was quite happy by the pigs' services, there was a large budget for IT consulting services and the third pig was able to hire more piggy consultants from local competitors. Rapidly enough, the 3rd pig was spending all his time growing his business instead of working in a cubicle. His business was certified ISO 9001, allowing him to bid on more important projects.

The 3rd pig retained 100% of his business despite the fact that he was now employing 250 piggies. He received offers from competitors but turned them down. He had a vision where he would become the number one IT consulting provider in his country. The 3rd pig bought smaller less ambitious competitors and went through an IPO (ticker was HAM) to raise more cash.

At some point the 3rd pig acquired the wolf's business, money was just to sweet the wolf was tired of harassing young entrepreneurs.

The 3rd pig then structured his business for the long run. He was past 5,000 employees when he deployed SAP, opened new business units in different geographical locations, and created a centralized management team. Company values were teached to newcomers, there was a strong HR team in place and hundreds of forms and procedures. Despite all the goodness that the 3rd piggy had put in place, the turnover was above 15%. Even his 2 younger brothers had left the company, seems there were pissed off by some company policy.

Nevermind, the 3rd pig said, there will be others.