- Investors tend to shy away from complex situations because they are difficult to understand. However, complex situations are exactly where the outsized profits lie for those who are willing to dig deeper.
- The Chinese financial system has two sides, a scary one and a strong one.
- There is one thing China has that no other market economy has.
I’ll start this discussion with the story of American Express (NYSE: AXP) and its 1963 salad oil scandal.
Anthony “Tino” De Angelis, a former commodities broker, figured that he could trick inspectors by putting just a few feet of salad oil in his containers and make it look like the containers were full as the oil floats on top of sea water. This allowed him to borrow huge amounts against the salad oil collateral. At one point, the oil market crashed and it was impossible to cash in on the collateral as there wasn’t any. More →