Taibbi warns of fortunes generated from low margin businesses. Remember the warning if you’re thinking of investing in companies promising wondrous profits from low margin businesses like taxi rides and restaurant deliveries. From Taibbi at taibbi.substack.com:
When the face of a traditionally low-margin business starts collecting private jets, it’s time to head for the exits
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Scrooge never painted out Old Marley’s name. There it stood, years afterwards, above the warehouse door: Scrooge and Marley…
Oh! but he was a tight-fisted hand at the grindstone, Scrooge! a squeezing, wrenching, grasping, scraping, clutching, covetous old sinner! Hard and sharp as flint, from which no steel had ever struck out generous fire; secret, and self-contained, and solitary as an oyster.
Charles Dickens never quite explained the business of Scrooge and Marley in A Christmas Carol. We knew old Ebeneezer was familiar with the fellows at the “‘Change” (the stock exchange), spent time in a “counting-house,” and was owed money all over town. One of the few things that made him happy was the passage of time, for debts to him — marked “three days after sight of this First of Exchange pay to Mr. Ebenezer Scrooge” — would become mere worthless securities, “if there were no days to count by.”
One theory is “Scrooge and Marley” were engaged in an age-old business called “supply chain financing.” The concept is simple. A supplier sells an order to a buyer. Rather than wait for the buyer to pay, the supplier accepts immediate payment with a slight discount from the supply chain financier, who in turn later collects the full amount from the buyer.
Scrooge once would have been a perfect fit as a leading man for Supply Chain Financing. It’s “blocking and tackling” finance work, a simple, unsexy living, best left in the hands of one who holds pennies in a vice-grip. If you’re not the type to bring a book of debts home for pleasure-reading, you wouldn’t prosper in this profession.
That was consensus, until Lex Greensill came along.