When Sotheby’s got bought out earlier in the year I was disappointed, as its shares were one of the few ways the everyman could receive a dividend from the central banks.
As I wrote in QE for the auctioneer (16 June), as central banks have made the rich richer, shrewd investors would do well to invest in companies that absorb said riches. As wealthy collectors bought more art with their newly created wealth, and investors turned to art in search of returns in a low interest rate world, Sotheby’s had been coining it.
And retail investors who owned the shares could get a piece of that central bank money as flowed narrowly into the sunlit uplands of the economy.
When it was, almost fittingly, taken off the market by a billionaire, I was dismayed. But there’s a certain private company going public on the stock exchange in Milan this week, which may provide a similar way of tapping into the central bank pipeline…
The “have-nots” and the “have-yachts”
Sometimes it’s the cure and not the disease that ultimately kills you. So it is to be for savers/investors when it comes to the cure that has constantly cheered their chilled hearts since 2009. That cure, in the form of larger central bank balance sheets, was explicitly aimed at producing a positive wealth effect by boosting asset prices and encouraging consumption.
It succeeded, at least it did for those who owned assets, and the FT ‘How to Spend It’ supplement beam testimony to the link between the rise in asset prices and a type of rise in consumption. Of course, that illustration of the gap between the ‘have nots’ and the ‘have yachts’ has created its own form of threat to savers, and now a new monetary policy is mooted which will shift wealth from the owners of assets, in particular credit assets, to wage earners and the leveraged.
– Russell Napier
As symbols of wealth go, there’s nothing quite like a yacht – or superyacht.
The Ferretti makes both, comprising of eight different yacht brands, and it’ll be selling a 30% stake of its business on the stockmarket this week.
Its average yacht costs €3 million, and if central banks continue their policies of inflating financial assets at the next hint of economic decline, I expect it’ll sell a lot more of them.
What’s more, Ferretti has no debt and actually turns a profit, in stark contrast to all the tech unicorns this year that have IPOed to much fanfare and then flopped at market.
It’s worth noting that another yacht maker will be going public later this year, also in Milan, putting 35% of the company on to the market – a firm called Sanlorenzo, which makes a limited number of vessels per year.
Want a cut of the next QE? When central banks roll out the printing presses again, the rich are gonna buy more yachts, and fill the sails of investors in the yacht makers. The “have-nots” can at least stowaway aboard the wealth of the “have-yachts”…
Leaving brick and mortar for “boat country”
On the topic of yachting, while this isn’t quite the same, do any readers of this letter own a narrowboat?
We’ve written extensively in this letter on the merits of “unplugging” wealth from the financial system. Living on a narrowboat and being able to move your home anywhere in the canal network has a similar feeling to it, though on a broader scale. The optionality it brings, seems a bit like “unplugging” your livelihood.
I know a guy who bought one a while back. He enjoys exploring the “boat country” in England on the weekends, albeit at a slow pace.
A shot from the prow, taken near Northwich
He didn’t want to play the property ladder game, especially in London, where property has been a football of central banks, just as the yacht industry is.
If you walk past Little Venice near Paddington, it seems some folks have placed wide-bodied vessels on a permanent mooring to create a permanent home for a much cheaper price – I’ll need to see what Akhil Patel makes of that.
The boat cost him 14 grand. And if you move to a different mooring every fortnight, you don’t need to pay for a permanent mooring permit. Not bad, considering the average house price here is almost half a million quid.
I must say, I’m tempted to ditch my flat and get one of my own – the most obvious drawback would be finding one that fits my height. Being 6’ 5” doesn’t lend itself to most of the vessels I’ve seen…
If you’ve any experience of narrowboat life and the freedom it brings, I’d love to know: [email protected].
All the best,
Boaz Shoshan
Editor, Capital & Conflict
Category: Market updates