Columbus Day
Life in Northern Europe
A Great Chinese Solar Stock
Today is Columbus Day. I’m working, and the stock market is open. But the bond market is closed.
Here in Massachusetts, the banks are closed, government offices are closed, the post office is closed and schools are closed. Stores of all kinds are open, but retail establishments that operate after 12 noon are required to pay their employees time and a-half … regardless of the number of employees on their payroll.
The holiday is not celebrated in Minnesota (can you guess why?). In South Dakota, it’s a state holiday known as “Native American Day.” And in Nevada, it’s not a legal holiday but a day of observance.
In Venezuela, it’s celebrated as the Day of Indigenous Resistance!
What kind of crazy holiday is this?
Well, as we all know, Christopher Columbus “discovered” America by sailing to the islands of the Caribbean in 1492. But he didn’t reach the mainland (South America) until his third voyage, in 1498. And he never set foot in what is now called the United States. In fact, throughout the course of his four voyages, he believed that he was exploring remote lands of Asia.
Because of erroneous assumptions about the diameter of the earth, Columbus had concluded Asia could be reached before food and water supplies on the ships ran out. If this continent hadn’t been here, he would have died.
And when he actually did die, in Valladolid, Spain, at the age of 55 (approximately) in 1506, he was still convinced that his journeys had been along the east coast of Asia.
Today, most people accept that Leif Erikson, born in Iceland in 970, visited America first, skipping from Greenland to Baffin Island, Labrador and Newfoundland. There’s speculation that he went even further, which is why you can see a statue of Leif on Commonwealth Avenue in Boston, but there’s no hard evidence that he actually made it to what is now the United States. Still, the trip to Newfoundland, made nearly 500 years before Columbus’ first trip, is reason enough for Minnesotans, 17% of whom claim Norwegian descent, to celebrate Leif Erikson Day on October 9.
Ironically, America was named for Amerigo Vespucci, who voyaged to South America perhaps five years later and became well known chiefly because of the letters he wrote. Vespucci was also Italian, but like Columbus, he was working for Spain. (That’s where the money was.) And Columbus, well, his name became attached to Colombia, currently famous for its oil, coffee and drugs.
But Columbus also lives on in the following places:
Columbus, Ohio
Columbus, Arkansas
Columbus, Georgia
Columbus, Illinois
Columbus, Indiana
Columbus, Kansas
Columbus, Kentucky
Columbus, Minnesota
Columbus, Mississippi
Columbus, Montana
Columbus, Nebraska
Columbus, New Jersey
Columbus, New Mexico
Columbus, New York
Columbus, North Carolina
Columbus, North Dakota
Columbus, Texas
Columbus, Wisconsin, a city in Columbia and Dodge counties
Columbus, Wisconsin, a town in Columbia County
Columbus City, Iowa
Columbus Grove, Ohio
Columbus Junction, Iowa
Columbus Township, Illinois
Columbus Township, Indiana
Columbus Township, Iowa
Columbus Township, Luce County, Michigan
Columbus Township, St. Clair County, Michigan
Columbus Township, Missouri
Columbus Township, Nebraska
Columbus Township, North Carolina
Columbus Township, Pennsylvania
And …
Columbia, Alabama
Columbia, California
Columbia, Connecticut
Columbia, Illinois
Columbia, Fayette County, Indiana
Columbia, Iowa
Columbia, Kentucky
Columbia, Louisiana
Columbia, Maine
Columbia, Maryland
Columbia, Mississippi
Columbia, Missouri
Columbia, New Hampshire
Columbia, New Jersey
Columbia, New York
Columbia Center, New York
Columbia, North Carolina
Columbia, Pennsylvania
Columbia, South Carolina
Columbia, Tennessee
Columbia, Virginia
Also …
Columbus, the European module for the International Space Station
7 newspapers
13 railroads or rail or metro stations
12 ships
13 aircraft or airports
4 medical institutions
46 educational institutions, chief among them Columbia University
31 companies
And more.
My considered guess is that the only name with comparable appeal is Washington. Put them together and you get Washington, District of Columbia, which is where the money is today—as well as the growing debt that accompanies it.
More about that below.
But today is Columbus Day, the day we honor the man who had the courage to venture into the unknown, to do something different. As Americans, we all owe him a debt of gratitude. And as investors we should remember that it’s people like Columbus who have made America great, people who try something new, and create value from nothing. We need more men (and women) like him today.
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Segueing from Columbus to travel in general, let me tell you a bit about my latest trip, which included a business conference in London, followed by a tour with my wife through Luxembourg, Maastricht, Brussels, Ghent, Bruges, Antwerp and Amsterdam.
At 18 days, it was my longest vacation in decades, and I returned quite relaxed and recharged.
Plus, I have some insights into the world, some new, and some simply reinforced.
1. English is the lingua franca of Europe, even though the island where it’s the national language is not part of the Euro community. Every day, the Internet strengthens the role of English in the world. Note this advertising campaign for the city of Amsterdam, using English.
2. There’s little better than sitting at a sidewalk table with a glass of local Belgian beer and watching people walk—and bicycle—by.
3. Speaking of bicycles, our four days in Amsterdam were eye opening. Over the past 40 years, the government has made life more difficult for cars and easier for bicycles, and as a result, bikes are ubiquitous in the city. Here’s a picture I took of a musician who had just got off his bike—which he rode with his string bass on his back, two speakers on the front and a knapsack on the back. To me, the best part of the prevalence of bicycles is that they’re so much quieter than cars.
4. Luxembourg boasts that it’s the safest city in the world. In part, that’s because the country has a GDP of more than $80,000 per person. But a country full of bankers isn’t a lot of fun.
5. Brussels has one of the world’s most beautiful squares. After bombardment by the French in 1695 (and subsequent fires) demolished a third of the town, the city rebuilt quickly, and the resulting very decorative buildings—of multiple architectural styles—escaped undamaged by the destruction of the World Wars of the 20th Century.
6. You are what you read—or watch. This is not specifically about Europe; it’s universal. On this trip, British Air provided free copies of the Daily Mail at several occasions, and it’s fair to say that its readers care more about celebrity scandals and pregnant princesses than they do about the troubles in Syria or the U.S. budget troubles. I did enjoy the three pages of puzzles in the newspaper, but was amazed (and saddened) to see the Englishman next to me on the flight back to the U.S. read virtually every story in the paper over a two-hour period.
7. Lastly, and most importantly, it’s clear that life in northern Europe is good, especially if you have a job or a pension. The safety nets are strong. But for young people, the lack of growth opportunities is a pity, and a sign that the safety nets are likely to weaken in the future. We all know that the southern European countries are a mess, but even the relatively disciplined sober northern countries are lagging. Both the Netherlands and Belgium had negative GPD growth last year. France was flat at 0% and strongman Germany grew at just 0.7%. The U.S., by comparison, screamed along at 2.2% and China, at 7.8%, was a rocket!
So, if you want to invest where the growth is, you shouldn’t look to Europe.
First, you should look to the U.S., where creativity and entrepreneurship create dynamic new growth companies every day. I don’t recommend buying when they’re new, though; I recommend waiting until they come public and then investing in the top performers. It’s a system that we’ve been perfecting since 1970 at Cabot (that’s 43 years!) and you can read more about it later this week when Paul Goodwin does an interview with Mike Cintolo Chief Analyst of Cabot Market Letter. For details, click here.
Second, if you like life in the fast lane, you should invest in China, where the sheer force of demographics combined with growth-friendly government policies is creating growth companies with the potential to even upstage world leaders like Google, eBay and Facebook. China expert Paul Goodwin is the guru of this investing style, and the readers of his Cabot China & Emerging Markets Report have been racking up profits in recent months as Chinese stocks have taken the lead once again.
Plus, I don’t think it’s over! In fact, Paul recommended a new stock last week that I think will do very well in the long run, simply because China’s leaders are working very hard to solve the country’s pollution problem while meeting its energy needs. The company is a world leader in the solar power industry, with annual revenues of over $1.3 billion. Yet the market values it at just over $1 billion. And the chart is strong—the stock broke out to new highs on Friday!
Now, if you’re a decent researcher, it won’t be hard to find the name of this stock yourself. But then the question is, where do you buy? And more important, how will you know when to sell? For the answers to those questions, you really need Paul. For details, click here.
Yours in pursuit of wisdom and wealth,
Timothy Lutts
Analyst, Cabot Stock of the Month
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