Update No. 161 – 03/05/14

I always enjoy travelling in the United States. Well not so much the travel itself, that’s tedious no matter where you do it, but there is positivity (most) Americans have that I don’t feel when I speak to residents of other countries. It’s a big part of the reason big ideas get off the ground here that might struggle to gain traction in Australia, or other countries. There are more investors here willing to set aside (some of) their capital for really ambitious ideas.

The Biotech and Technology sectors here plainly got themselves into substantially overvalued territory in the last 12 months (there are a few businesses in Australia that got swept along with that, but the majority are US domiciled). These sectors are rapidly getting themselves back to much more sensible levels. I wouldn’t have expected in 2009 that any equities, anywhere in the world would have got themselves to such overvalued levels within 5 years. Obviously, individual companies become overvalued all the time, but whole sectors getting so hot like that with such a major economic dislocation as the GFC still close enough to see in the rear view mirror is a surprise.

The US economy is plainly running faster than it was last time I was here. I have moved through Los Angeles, Las Vegas and Minneapolis as I type this (I will post it from Omaha), I was in the North East last time I was here, so it could be the differences in geography playing tricks, but planes, hotels and shops are full, less shops are vacant and to an outsider, things feel like they are running a little faster.

There are some things that frustrate me whenever I find myself in the US, I will get two off my chest now, it won’t change anything, but I’ll feel better for having moaned about it. Firstly is the display in stores of prices that do not include the applicable sales tax, this may seem a small thing, but it is inefficient and I loathe inefficiencies. I think Americans like to be reminded constantly how much they are giving away in taxes, there is a special loathing for taxation here, but there would be an improvement in the US economy if some law was passed requiring the final sale price to be displayed.

Secondly, the tipping culture is an absolute nightmare in my view. The ‘expectation’ for the provision of a gratuity is probably the most annoyingly inefficient element of American culture, a tip should be provided when, and only when a higher level of service than reasonably expected has been received in my view. The payment of an appropriate level of remuneration to staff is the business of the business. The best I can tell is that tipping is supposed to be “from each according to his ability to each according to his need”, and I think that idea should make all Americans uncomfortable.

The week was a very good one for the EGP share price (particularly relative to the benchmark), but there was no news that should have led to any meaningful price changes, it happens that way sometimes…

My post next week will be from home and will cover my time at the Berkshire Hathaway AGM this weekend – Tony Hansen 03/05/2014


Apr 1st 2011

Jan 1st 2014

Current Price

Current Period

Since Inception

EGP Fund No. 1












EGP Fund No. 1 Pty Ltd. Up by 3.33%, leading the benchmark by 0.02% since January 1st. Since inception, EGP Fund No. 1 Pty Ltd is Up by 69.76%, leading the benchmark by 40.34% all-time (April 1st 2011).

*1 after 31May 2013 dividend of 2.333 cents per share plus 1 cent per share Franking Credit

*2 calculated based on dividends reinvested