It’s the model, stupid

Alex Pollak

Loftus Peak

It’s not about interest rates, or dividends or technical trends or any of the other hyped nonsense which passes for commentary, and last night we had proof. Global indices fell, mostly as a result of the realisation that if commodity prices remain low mining dividends are under threat. Meanwhile, the big disruptors – Alibaba, Facebook, Netflix – didn’t fall. Some will say this is because they don’t pay dividends. This is irrelevant – they make so much money that they could, whereas the miners won’t because they can’t. The more important question is what is wrong with the global economy that commodity prices are down so much? We can point to falling demand in China (true) but this doesn’t address the root cause, which is a fundamental shift from a goods economy to an information economy. Why should this matter? Because when there is information in the system, it becomes more efficient, meaning it uses less “stuff” to satisfy demand. Example 1: If you knew where a parking space was, you would use less petrol driving around. Read more (VIEW LINK)


CIO of Loftus Peak, a specialist global fund manager with a track record of successful investment in some of the world's fastest-growing listed businesses.

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