[Marxism] Billionaire worries about "the survivability of mankind"
lnp3 at panix.com
Thu Mar 23 12:14:21 MST 2006
(Ran into this on the always useful http://www.jameswolcott.com/)
The Rainwater Prophecy
Richard Rainwater made billions by knowing how to PROFIT FROM A CRISIS. Now
he foresees the biggest one yet.
By OLIVER RYAN
December 26, 2005
(FORTUNE Magazine) Richard Rainwater doesn't want to sound like a kook.
But he's about as worried as a happily married guy with more than $2
billion and a home in Pebble Beach can get. Americans are "in the kind of
trouble people shouldn't find themselves in," he says. He's just wary about
being the one to sound the alarm.
Rainwater is something of a behind-the-scenes type--at least as far as
alpha-male billionaires go. He counts President Bush as a personal friend
but dislikes politics, and frankly, when he gets worked up, he says some
pretty far-out things that could easily be taken out of context. Such as:
An economic tsunami is about to hit the global economy as the world runs
out of oil. Or a coalition of communist and Islamic states may decide to
stop selling their precious crude to Americans any day now. Or food
shortages may soon hit the U.S. Or he read on a blog last night that
there's this one gargantuan chunk of ice sitting on a precipice in
Antarctica that, if it falls off, will raise sea levels worldwide by two
feet--and it's getting closer to the edge.... And then he'll interrupt
himself: "Look, I'm not predicting anything," he'll say. "That's when you
get a little kooky-sounding."
Rainwater is no crackpot. But you don't get to be a multibillionaire
investor--one who's more than doubled his net worth in a decade--through
incremental gains on little stock trades. You have to push way past
conventional thinking, test the boundaries of chaos, see events in a bigger
context. You have to look at all the scenarios, from "A to friggin' Z," as
he says, and not be afraid to focus on Z. Only when you've vacuumed up as
much information as possible and you know the world is at a major
inflection point do you put a hell of a lot of money behind your conviction.
Such insights have allowed Rainwater to turn moments of cataclysm into
gigantic paydays before. In the mid-1990s he saw panic selling in Houston
real estate and bought some 15 million square feet; now the properties are
selling for three times his purchase price. In the late '90s, when oil
seemed plentiful and its price had fallen to the low teens, he bet hundreds
of millions--by investing in oil stocks and futures--that it would rise. A
billion dollars later, that move is still paying off. "Most people invest
and then sit around worrying what the next blowup will be," he says. "I do
the opposite. I wait for the blowup, then invest."
The next blowup, however, looms so large that it scares and confuses him.
For the past few months he's been holed up in hard-core research
mode--reading books, academic studies, and, yes, blogs. Every morning he
rises before dawn at one of his houses in Texas or South Carolina or
California (he actually owns a piece of Pebble Beach Resorts) and spends
four or five hours reading sites like LifeAftertheOilCrash.net or
DieOff.org, obsessively following links and sifting through data. How
worried is he? He has some $500 million of his $2.5 billion fortune in
cash, more than ever before. "I'm long oil and I'm liquid," he says. "I've
put myself in a position that if the end of the world came tomorrow I'd
kind of be prepared." He's also ready to move fast if he spots an opening.
His instincts tell him that another enormous moneymaking opportunity is
about to present itself, what he calls a "slow pitch down the middle." But,
at 61, wealthier and happier than ever before, Rainwater finds himself
reacting differently this time. He's focused more on staying rich than on
getting richer. But there's something else too: a sort of billionaire-style
civic duty he feels to get a conversation started. Why couldn't energy
prices skyrocket, with grave repercussions, not just economic but
political? As industry analysts debate whether the world's oil production
is destined to decline, the prospect makes him itchy.
"This is a nonrecurring event," he says. "The 100-year flood in Houston
real estate was one, the ability to buy oil and gas really cheap was
another, and now there's the opportunity to do something based on a
shortage of natural resources. Can you make money? Well, yeah. One way is
to just stay long domestic oil. But there may be something more important
than making money. This is the first scenario I've seen where I question
the survivability of mankind. I don't want the world to wake up one day and
say, 'How come some doofus billionaire in Texas made all this money by
being aware of this, and why didn't someone tell us?''
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