Introduction

The Esoteric Investor is the product of research I did for my own investment management firm, Nariman Point, LLC. My firm focuses on making investments that are demographic in nature and completely unusual. This book is not meant to offer any stock tips, or investment philosophies or anything of the sort. It is simply a 10,000 foot view at a variety of interesting opportunities that exist due to dramatic changes occurring around the world. One example is finding opportunities that relate to aging populations in developed nations. I have spent the past six years focused on the life markets (see my biography). These markets are composed of longevity and mortality risk instruments such as life settlements, reverse mortgages, longevity reinsurance, and, in some cases, extreme mortality bonds. On one level these products are all linked to insurance, but on a macro level they are about a watershed time in human history when many of us will live to be 100 years old, and the economic impact that fact carries. As populations live longer they create a drag on retirement systems, which needs to be addressed. Unfortunately, as the baby boomer generation begins retiring (baby boomers make up almost one-fourth of the U.S. population), longer-living retirees can destroy the fiscal soundness of governments and companies. I believe we are headed for a violent and catastrophic pension collapse in the Western World as well as in Japan. These topics are covered in detail in this book. The theme of demographics is an important one, and the word is changing before our eyes. Markets have become overcrowded and volatile due to the modern era of rapid dissemination of information. Furthermore, understanding and predicting where regulation and taxation are going in the U.S. seems as difficult a task as predicting where regulation and taxation are going in India, or in another emerging economy. The end result of all this is that the vast majority of professional and retail investors are chasing the same few easy ideas, which makes most of these ideas not interesting. So, the real purpose of this book is to offer something a bit different in the way of analysis. I don’t make any stock recommendations. Stocks may be mentioned to highlight that some equities do exist that pertain to the topics discussed in the book; however, these are not recommendations, and I probably do not own any of them.

For years I have been interested in a few investments: fisheries, water, and human demographics. Although I made the last one into a career, I never gave up reading about and researching the other two. Tuna was interesting because I often came across headlines such as “Tuna sells for $400,000 in Tokyo.” I never understood why there was not a standardized futures contract that allowed for the hedging of tuna prices. It turns out that there is a form of tuna futures contract, but not in the same sense. Tuna also starting piquing my interest when I learned that certain types of bluefin tuna were nearing extinction due to overfishing. Generally, aquaculture (the practice of breeding and farming fish) became of considerable interest to me because I found it shocking that the majority of commercial fishing that occurs today is for the purpose of catching smaller fish to feed raised fish such as salmon and tuna. Simply, we eat mostly farmed fish that is raised for consumption by corporations, not fish caught in the wild by a guy wearing a yellow raincoat. Then I learned about the Tuna Wranglers and Tuna Kings of Australia, who were making millions of dollars catching and trapping large schools of bluefin and selling them to the Japanese. Coupled with seeing Tsukiji fish market in Tokyo for myself, I had to take this further.

Regarding water, my interest stemmed from my frequent trips to India growing up and even recently, although India has changed quite a bit during that time. What I never understood was that in nations such as India—countries that need water more than anyone (over 1 billion people)—water was treated the absolute worst. It was highly polluted, contaminated, and filled with waste. In Hinduism, the concept of restricting beef in the diet arose from cherishing the cow, which provided milk to the people. In the same way, water is the absolute and literal lifeblood of the human race, yet it is abused and misused, especially in India. When I began to explore water as a commodity, I reached a tentative conclusion that perhaps that this misuse of our water resources can be attributed to a mispricing of water. Water is considered “free” right now and therefore is treated as if it belongs to no one.

With help from my coauthors and researchers Richard Ellis, a highly respected marine conservationist, and Joseph Shaefer, a retired USAF Brigadier General/Special Forces-turned-wealth manager, I delved into these interesting topics of the plight of the bluefin tuna and how valuable water really is. In addition, this book covers topics such as longevity and mortality risk, which, again, is my specialty. I sincerely hope that you enjoy reading this book as much as I enjoyed putting it together.