Chapter 8: The Cabriolet and the Countryman

In the new Mini line-up, I have always lusted after a cabriolet. Sure, I had the best looking one in the Clubman, but a cabriolet for my wife would be perfect. There was a problem with this though since she had at the time a Mercedes A Class, which was extremely practical. To be honest, it was more spacious than my Clubman, and with the four-door design it really provided us with something that we regularly needed. So, changing her A-Class for a Mini Cabriolet wouldn’t work out…

The stunning Cabriolet

Looking at the Countryman...

…Unless I would change my Clubman to something bigger! Since the four years that I had the Clubman, Mini had now brought out a bigger car: the Countryman. This is a proper four-door mini which can also be had with 4-wheel drive, something that I was growing interested in for when I go skiing. The problem was that when I had started looking at the Countryman I really didn’t like it. It was not a Mini! That was when it hit me that I needed to stop considering as a failed Mini, and instead see it for what it really is, a really cool tiny SUV. For sure it has a number of design cues that reminds you of the mini, and inside it also comes with the huge central speedometer and cool switches etc. Furthermore, when you actually get around to driving it, you realize that it even drives like a Mini in spite of being bigger. With the 4x4 transmission, and the powerful Cooper S engine it becomes a hoot to drive! Seriously! The traction is amazing, providing a feel a bit more like a rear-wheel drive when cornering, yet it has the stability of a 4x4. I always thought the standard Minis with the Cooper S engine would be a bit of a handful through corners as the front-wheel drive would pull straight, but here the setup made a huge difference. Seriously, they should build a 4x4 Clubman Cooper S some day…

Surf Blue is nice!

Well, with the realization that the Countryman was actually a pretty cool car, we decided to change both of our current cars. So, we ended up getting a beautiful ice blue Mini Cooper Cabriolet together with a surf blue Mini Cooper S Countryman. These are our current Minis, and as much as I love them, it is not impossible that there will be others in the future. There is already a new version of the Mini that has come out that comes with a number of improvements particularly to the interior. The cabriolet version of this one should be out in a couple of years, and maybe they will end up making an all-wheel drive Clubman some day too..

The current collection

Chapter 7: The New Mini

As luck would have, there would end up being several more Minis in my life.

By the end of the 90’s, the original design of the Mini dating back to the late 50’s was really reaching its limit. There had been some improvements done to the car over the years, such as an increase in the engine size in order to cope with more stringent emissions regulations, considerably improved brakes as well as increased wheel size from 10 to 12 inches. These all had helped extending its life, but clearly a 40 year old design was lacking in some crucial areas that had gained in importance, most notably safety. The Mini could no longer compete with modern cars when it came to protecting its occupants in case of an accident, and ultimately sales had dropped way down. It only made sense then that the production was finally halted in 2000.

However, by this time the car design and the brand name was owned by BMW. They had been looking at what VW had managed to do with the New Beetle, taking basically a modern Golf and designing a modern body that bore an obvious resemblance to the original Beetle. The market loved the cuteness of this car, and since underneath it was a fully modern and practical car, nostalgic buyers were picking it up. BMW however managed to take the concept a little bit further, with the huge success that we now know.

 This is the first BMW Mini, one I never bought

When the first New Mini was released by BMW, it was immediately a huge success. The looks of the original Mini were very well replicated, and the car was dynamically very well done. Appealing again to those (like myself) who were nostalgic of the original Mini, this car also created a whole new segment in the market; the premium small car with an original and individual design. More than just replicating original design elements, the New Mini provided a platform that allowed owners to get something much more original than the mainstream cars. Also, the quality of the car was undeniably BMW, and thus completely set it apart from other super-minis from Ford, Peugeot etc. People not needing a bigger car could finally indulge in a new level of refinement normally only found in much bigger cars. Since then, most European manufacturers have attempted to come out with their own version of this concept, but to date nobody has succeeded to topple the Mini from its pedestal.

BMW really got the Mini look right!

Personally when this new Mini came out, I was very excited and wanted to get one. I had more or less decided this, and so we took our original Mini and went to the dealer. Arriving there, and parking our Mini next to a new one, it suddenly struck me how much bigger the new one actually was. I felt it was a bit too much actually, but nevertheless continued to inspect the car. Well, in my opinion, the actual build quality of these first batches were not really up to what I expected from them. Yes, it was a nice car and the design successful, but since I didn’t really need a new car, it just wasn’t enough to convince me to buy one.

BMW then revisited their design a couple of years later, considerably improving on their first attempt. At this point they also had the intelligence of producing a Clubman version. Now in my opinion this modern Clubman is the best looking Mini that has been made so far. I absolutely love the looks of it, and can’t get enough of some of the design elements such as the dual rear-entry door or the extra ½ door on the passenger side. The interior maintains the huge speedometer, but has taken this to even another level. The extended chassis ensure a more stable ride than the normal Mini, but it still has that “go-kart” feeling to it, especially with the sports suspension package. I think the only thing that I can criticize is the mostly lackluster colours being offered, but then this is a result of the market.

This was shortly before we returned to Switzerland after living abroad for a few years. My employer at the time was offering me the option of getting a company car, but I was limited to selecting a Mercedes, BMW, Audi or a Volvo. Not that these companies don’t make nice cars, but they are just not cars for me. I am not much for luxury, and I hate big cars. Also, VWs and Audis are far too common around here, and I always liked something a bit more original. Then it hit me, Minis are BMWs! So, I asked if that would go, and luckily it did. So, I soon found myself at the dealer configuring my brand new Mini Cooper Clubman!

My Clubman!

I mentioned earlier that the colour choice was a bit limited, and so I ended up going for a blue/black metallic selection. This gave the car a lot of class, but I would have liked a more “fun” colour. I could have gone for the Cooper S version as well in order to have the more powerful engine, but the problem with this one is that it comes with an air-scoop on the hood that I feel totally ruins the look of the car. Given that this car was really for commuting to work with as well, clearly the extra power was not needed and would only result in a higher fuel consumption. I did get the sport chassis together with the largest wheels available, as well as a slew of other cool options. The result was a stunning looking car, that would always bring a smile to my face when I would drive it.

 I still think this is the best looking Mini to date

My Clubman with the Corsaro next to it

Did You Read The Fine Print?

Why do we need fine print on contracts?

Seriously, it has become such a widespread hypocrisy with the various disclaimers we always get in fine print on pretty much any contract or other such agreement. In my domain, the banking world, this has been taken to such levels it is not even funny. The thing about them is that basically nobody reads them, and even if they did they would not understand them for the most part. Yet our legal experts oblige us to have these disclaimers because it has become the law, and should we omit them we are liable for some serious legal trouble that could become very costly.

Here is one that I was looking at today, taken from the term sheet of a structured product somebody was proposing to us this morning:

This document has been prepared for information and discussion purposes only. This indicative termsheet does not constitute an offer to sell or buy any security by Exane based on the indicative information set forth herein. Although no issuer is obligated to issue such securities or financial instruments based on the indicative information set forth herein. It is not construed as and does not form part of an offer, nor an invitation to offer, nor a solicitation to buy or sell such securities or financial instruments, or recommendation to enter into any transaction based on the indicative information set forth herein. You should take steps to ensure that you have made an independent assessment of the opportunity and the appropriateness of such transactions, securities or financial instruments in light of the legal, tax and accounting implications and of your own objectives and circumstances, including the possible risks and benefits of entering into such a transaction. These indicative terms and conditions have been relied on the assumption that such assessments will be made. This information is confidential and proprietary. It is accurate only in light of this proposed transaction and will not be disclosed to anybody (except to your professional advisors directly involved in this proposed transaction) without prior written approval from Exane Group.

Okay, so we have somebody trying to sell his product, and he sends this document to you. How are you to understand his action? For me, he is clearly suggesting that I invest in this structured product. However the disclaimer text is somehow telling me otherwise.

Now let’s say I end up investing a part of my hard earned savings in this, and then it tanks and I lose all my money. My normal and human reaction would be to get seriously pissed off at the guy who suggested that I buy the crap, and typical I will then turn to him to ask for some sort of compensation given how he had informed me that this was a very good investment. However, he will then point to the disclaimer and say that it was entirely my decision and basically he has nothing to do with it.

But, if I then take the case to court, I stand a very good chance of winning the case (at least here in Switzerland) because courts here now almost always side with the client against the big bad banks.

So, basically the law dictates that banks have these disclaimers on their documents to ensure that clients are not fooled into buying something they don’t really want, but then when the client still does the law then tells the banks that those disclaimers don’t really mean anything and you can’t expect somebody to actually read and understand them.

Which brings me then to my opening question, why do we need the fine print on contracts?

Alibaba (and the billion thieves...)

There was yet another interesting IPO that took place the other day, one that will go down in history as being the biggest IPO to date. Well, to honest, I think there are many reasons why this one will go down in history, but perhaps the most noteworthy reason is that this is actually a Chinese company doing an IPO in the US. It is a huge event in that China has now outdone all the previous US tech company IPOs that have created so much wealth over the years, and perhaps the most significant marker to date that China is really becoming the leading global economic power. With investors already complaining that allocations have been far too limited, I can imagine as well that the stock price will spike in a spectacular fashion, and certainly overshadow what GoPro recently did.

I have to provide also some of my more cynical assessments here. For starters, one can question the huge surge in the stock price on the first day of trading, one that I will expect to continue over the coming days. It closed at almost $94, up nearly 40% from the IPO price. But then again, with so many potential investors being disappointed since they were not able to subscribe to any shares this was clearly to be expected. Nevertheless, Alibaba ended up being the biggest IPO in history so far, and I suppose as far as interest in the stock market goes this is positive. No, what really concerns me is that, even though this market valuation is actually based on something more real than what has been the case for GoPro, there is a potential risk that the Chinese Communist Party will expropriate the company and its shareholders.

What probably many BABA investors are not aware of, is that China bans foreigners from owning a majority interest in companies that Beijing calls “strategic and emerging industries”. To get around the law, Chinese Internet companies give shareholders rights to a “variable interest entity” instead of direct ownership. In Alibaba’s case, shareholders own a piece of a shell company in the Cayman Islands with a contractual right to a share of the profits.

The U.S. – China Economic and Security Review Commission, set up by Congress, warned against these arrangements in a June report: “This intricate ruse is a way of making the business appear to be Chinese-owned to Chinese regulators while claiming to be a foreign-owned business to foreign investors. Neither claim is technically true, and the arrangement is highly risky and potentially illegal in China.” Last year, China’s highest court ruled that variable interest entities amounted to “concealing illegal intentions with a lawful form.”

In its IPO disclosures, Alibaba acknowledged that if the Chinese government “deems that the contractual arrangements in relation to our variable interest entities do not comply with PRC governmental restrictions,” the company could “be forced to relinquish our interests in those operations.” Alibaba could also lose its operating license or variable interest entities if either is found to violate “any existing or future” laws. The Communist Party could wipe out that $22 billion by decree.

Most investors, and obviously Alibaba executives, believe there is now so much foreign investment in Chinese Internet companies through variable interest entities that Beijing wouldn’t dare jeopardize these property rights. But then again, one could also argue that if China would never do something like this because there is too much at stake, then why not change their regulations in order to make these structures legal and officially acceptable? As it stands today, there remains a potential risk that simply can’t be ignored.

So, while there have been many IPOs over the years within the tech sector that have raised capital on air, here we have the biggest one so far based on the hope that China will continue to close their eyes on this essentially illegal foreign investment. I suppose given how corrupt things are over there, it does seem likely that nothing major will be done to shake things up. But should the Chinese economy begin to falter, and there are more and more signs of this, I would not be surprised if they decided to take some more treasure from Ali Baba’s cavern…

Chapter 6: The Rare Automatic

As I have mentioned before, Minis have always been a part of my life. After being more or less forced to getting rid of my first Mini, I had moved on to a number of other cars. For sake of security and peace of mind, my next few cars had been new cars, but soon it would be time yet again for another Mini.

I am obviously very much in to cars, and love to drive. My wife, on the other hand, does not really enjoy driving. She tries to avoid it whenever possible, which obviously suits me fine most of the time. Nevertheless, there came a time when I felt she could really use her own car so as to have the freedom to move around whenever and wherever she needed to. Riding a Solex down to the train station was all fine and dandy while she was working in Geneva, but later on getting to other locations became important. Oh, and I thought it would be fun to be able to buy another car!

Her response to this was that she didn’t want a car. When pressured, she finally said that she would want a Mini Automatic. She hates manual gears, and a Mini would be small enough to easily get around. The problem was, and she knew this, that there were hardly any Mini Automatics available.  She actually thought they didn't exist at all. A small number had been imported to Switzerland at the end of the 60’s, but according to registration records there were something like three left on the road. So, pretty much impossible…

Well, one day I came across and ad in a local paper for a Mini Automatic. This was in 1988, and the ad said the Mini was from 1970 with 14’000km on it. I figured that it must have at least 114’000 km, and had simply gone around the counter once. However, when I called the seller he confirmed that it had indeed only done 14’000km, but that it was very old. Obviously we had to go and have a look at the car, but I feared the worst.

We got to the house of the owner, and he explained that he had bought the car new for his wife in 1970, but she never used it due to sickness. He instead would occasionally use it when his regular car was being serviced, and otherwise the Mini was kept in a garage. He mentioned the colour was not very nice, and then proceeded to show us the car.

My jaw dropped to the floor as I saw it. Here was basically a brand new Mini Automatic, in a beautiful mint green paint from the late 60’s. I opened the hood, and for the first time in my life I saw a Mini engine with not a single oil stain on it. The car was incredibly clean and well kept, and I honestly had trouble believing what I was seeing. We went for a drive around the block, and all the mechanics seemed very sound. It was my first time driving a Mini Automatic, and I was quite surprised to find that the ‘box actually allows you to manually select any of the 4 gears you want, which is actually really handy when driving in the mountains. Often auto ‘boxes from the 60’s are very simple 3 gears that really only provide a D or an R option. This was quite more sophisticated and beautiful to drive.

We got back to the owner's house, and I asked him how much he wanted. I was concerned he would be asking too much for me, but that is when we got the next surprise. It turns out he didn’t really know what the car was worth, and so he had asked his mechanic neighbor for a proper price. This neighbor, hoping to get the car at a cheap price, had quoted CHF 3’000 which was quite ridiculous. The thing he did not suspect was that the owner really didn’t like him, and so did not want to sell the car to him. Instead he offered it to us for CHF 2’800. I simply could not believe it, and we wrote him a cheque instantly for a deposit before we could wire the rest.

When we later brought the Mini to a mechanic to prepare it for road testing, it turned out to be the famous neighbor. He was furious that we had gotten the car, but that’s karma!

We still have this Mini today, and I never intend on getting rid of it. We don’t take it out so much anymore, but it still gets to shine from time to time. It is still entirely stock as it was 45 years ago, and almost like new.

Chapter 5: My First One!

At the tender age of 18, with my driver’s license still shiny and new in my pocket, I had managed to scrape together enough money to buy a car. Not just any car, but my car. This was a car that I had fallen in love with when I had just learnt to walk, and is a car that still today is one of my all-time favorites. A Mini. As you may have read before, Minis have pretty much always been a part of my life, and clearly this trend was bound to continue. Mine was an all-black 1978 1000, and on the day I picked it up, it was still in its original form. That was not to last for a long time.

There is something really special with the Mini. Unlike too many cars of today, it was a designer’s masterpiece. Small, light, fun, and oh so cute! I have often wondered how the British car industry could have gone so wrong ever since 1959, after having designed and built the car that is essentially the starting point for all compact cars of today. There were things not perfect, no doubt, but its simplicity makes so much sense still today. Then there all the little quirks that just makes it have its own personality.

As just about any teenage male, I quickly found that I could do with a bit more power. Sure, the lightness of the car made it respond well enough when first accelerating, but once past 60 kmh, the lack of power would become all the more obvious. Once on the highway, top speed was far too timid to satisfy my craving for excitement. That car stereo I had my eyes on for a while would have to wait in order to make place for a new carburetor. In digging through my stacks of car magazines, I had found an ad for a Nikki Twin-choke carburetor that would increase power by at least 30% (or so the ad said), which is precisely what was required. The order was placed, and my impatient waiting for the mail delivery began.

After what must have been the longest week in my life up until then, it finally arrived. All the pieces were quickly laid out in the garage, with the shiny stainless steel air-filter taking a special place so as to not get dirty. Now, I’m far from being a mechanic, but I knew that I would be able to handle this somehow. So, I grabbed the assembly instructions, and began to follow the required steps, the first being to saw off the original intake manifold from the header. Now there was no turning back!

The pieces fitted on easily enough, with the new aluminium intake manifold sitting snuggly over the header. At this point I did stumble upon my first problem, that would later cause considerable fear. The gas cable was for a right-hand drive, and so a bit too short for my left-hand drive. It did manage to fit, but the cable was a bit too tight. No matter, it all worked well enough. Time for the first test drive, with no time to put the hood back on the car. Driving around my block, with no hood on the car, on a peaceful Sunday afternoon, made the Swiss neighbors come out and stare. I’m sure if I would have gone around one more time, they would have called the cops. Twice more around and they would have shot me! But I wasn’t concerned with that as everything was working like a charm, and it was time for a real test. Back to the garage, and with the hood finally in place I set out to some more open roads.

After driving for a while, the engine would begin to run very rough. I was concerned that there was some tuning problem, and so pulled over to inspect the carburetor. As if I would be able to tune it! In touching the manifold, I discovered that it was freezing. Since the original cast iron one is connected to the header, it is automatically heated. Not so with the new aluminium one. It was at this point that I discovered a copper pipe running through the length of the manifold, and I had the idea of cutting the rubber pipe that served for the in-car heater. In its simple design, this is just a pipe through which passes warm water from the radiator. In passing it through the manifold, it would keep it from freezing. Problem solved!

Soon I found myself on the highway, ready to test the top speed of my “sports” car. The speedometer was a unit that was graded until 140 kmh, and I had previously been able to get it to maybe 135. Now the needle was pointing straight down, somewhere in the region of what would have been 165 kmh. As I floored it, and the carburetor would open fully, and a deep loud guttural howling would invade the already noisy cabin. It wasn’t me doing the howling, although at this point that would have been very likely, but the new carburetor. Satisfied with my test, I decided to exit the highway, and took my foot of the accelerator. That’s when nothing happened! The throttle was stuck full open as I raced up the off-ramp, and reality switched to slow-motion.

My first thought was that this was bad. Then I thought of the lousy brakes the Mini had, and bad turned to worse! Logic finally set in, and I pressed the clutch, put the car in neutral, and switched off the engine before it totally over-revved itself. Stepping hard on the brakes, I pulled over to the side of the road. Well, so much for a throttle cable intended for a right-hand drive. I got the throttle un-stuck, and puttered home a more leisurely pace. Tomorrow was Monday, and I would be able to get a proper cable.

Some time had gone by, and I was able to save up some more cash to spend on the car. After the improved performance the Nikki carb had given it, something had to be done about the lack of music in the car. Okay, the noise from the engine was music, but you did tend to get a bit tired of it after a while, and hey, I was still a teenager and needed to listen to my favourite tunes on full blast! I was lucky to have a brother who was very much in to electronics, and who was working for a small company in Sweden that built handmade custom amplifiers. He made me an amplifier for my Walkman, and all I needed was a good set of speakers. The rear seat was turned in to a sub-woofer by closing of the cavity underneath with a wooden board, and then inserting two woofers in this board. I then inserted a pair of mid-range speakers in the side compartments in the back, and some tweeters up front. For not a lot of cash, I had an outstanding sound-system, that would out-shine those of many friends that had cost way more.

It’s funny how as I write this, my mind is filled with all the memorable moments I lived with that car. Most of them are fun; some are exciting, and others downright scary. I suppose those stories will have to be put in paper at some point, but that will be for another post, as this one is about the car.

So, what could be done to improve the car at this point? Minis are known to have an outstanding road handling, as they are indeed like go-karts. However, a set of wider wheels with fresh rubber can’t hurt, and so I set off scavenging the demolition sites to find some appropriate wheels. Four scruffy aluminium 5x10 inch wheels would have to do the trick. A bit of elbow grease had them looking like new, and with some Dunlops fitted, the car was again ready to roll. Here I ran in to a new problem, the tires where a bit too wide, and the rears would rub on the inside of the fenders as I raced up some local mountain roads.

I headed back to my trusted car magazines, and found a place that sold spacers. These would move the wheels out slightly, providing enough clearance for the wider tires. On top of that, the wider width should further improve the handling, and so the order was placed.

Fitting the spacers was a breeze, and the new look of the car was simply stunning! The wheels would stick out from the fenders, giving the all black Mini a very aggressive look. Problem is that in Switzerland it is strictly forbidden for tires to be outside the fenders of a car, so some fender flairs would be needed, but that would have to be for later. A new test drive was necessary, and I headed back up my favourite twisty mountain road. My car was now perfect! The handling was amazing, the engine powerful, and the sound system would really wake up the neighborhood. And it looked great! This joy was not to last for long though…..

The following week, my mom needed to borrow the car to drive to town with. I thought nothing of it, gave her the keys and she was off. On her way back home, she was pulled over by the cops as they had noticed the tires. They set about measuring the width of the car, and declared it illegal on the spot. My mom was allowed to drive it home, but that was it!

When the car was later brought in for the required technical inspection, after I had removed the incriminating parts, the authorities scrutinized every millimeter. The result was that it would require a fortune to make the car road-worthy again, a fortune I didn’t have. So, in the end, I had to get rid of the car. I still have the pictures of it though, just after I had the spacers put on, and it still gets the adrenaline flowing when I look at them.

Chapter 4: The 15 Years Anniversary Special

Several years later, my parents ended up buying a brand new Mini for my mom. This time it was an anniversary limited model celebrating the 15 years of the Mini, making this then 1974. It was a beautiful black Mini 1000 that proudly carried a numbered badge by the windscreen showing it was part of a limited production. Although it was perhaps not as practical as the Clubman, it was nevertheless another great car.

This is not actually ours, and I am hoping to get some original photos later

After my mom had used the car for a while, it was sold to my sister as her first car. She covered quite a lot of distance in that little car, including a trip around Europe together with her boyfriend. I would never have considered a Mini as a long-distance touring car, but they certainly had no such consideration. This may be because my sister had some experience with long drives in small cars, having travelled together with my dad from Sweden to Lebanon in a Fiat 127 in 1974.

She then ended up selling it on to my oldest brother as his first car, which is when he began making some particular improvements to the car.

At the time he was working for a company in Gothenburg that built amplifiers. These were extremely high end things, producing incredible sound. For his Mini, he then built a very special setup that was installed in a custom built center console. For such a tiny car, the amplifier was a six-way unit providing filtered outputs specifically for the bass, midrange and tweeters. He then converted the space underneath the rear seat to a bass speaker by boarding it off and installing two bass drivers in the space. Two mid-range speakers were glued to the roof of the car, in the middle, and finally two tweeters were installed on a new custom made dashboard.

The result was simply stunning!! Most people will never have a stereo in their home that comes close to that setup, and to find that in such a small space! With the custom made center console in place, and the custom dashboard that housed the tweeters, he built a few other improvements to the interior such as what may be the world’s first cup-holders in a car. For the rest, he left the exterior pretty much stock, focusing really on improving on the interior. It did help provide me with some ideas for the future…

They had a numbered plaque. 200 were made...

Chapter 3: The Wimpey Car

My next Mini experience was our first year living in Saudi Arabia. In 1971 we moved to a place called Tabuk in the north-west part of Saudi Arabia, and here we became acquainted with an English construction company called Wimpey. They had built a fairly big camp there for all their staff, and the primary source of transportation for their workers was a Mini Moke. This was a car based on the Mini that was originally designed to be a military vehicle, but due to the lack of off-road capabilities caused by a poor ride-height resulting from the tiny 10” wheels and particularly a lack of 4-wheel drive it was not successful. It would later become a popular beach car at resorts on exotic islands in the Caribbean, but by the end of the 60’s this was not the case. Wimpey however had decided to adopt the Mini Moke as it was an extremely simple design that was well suited to the hot climate found in Tabuk. The Mokes were all painted yellow, and we quickly dubbed these cute little cars Wimpey cars.

 This is a bit what our "toy" car looked like at the time

At the time we were a small group of Swedish kids always playing together, and at one point we were given a Mini Moke as a life-size toy. The engine had been removed, so instead we would get four or five kids behind it to push it around, while one or two of the other kids would sit in the car and steer it and hit the brakes when needed. I suppose this may seem as a strange toy, and probably in today’s over sanitized society our parents would be locked up for providing such a dangerous toy, but for us it was the coolest thing ever.

If I had a much bigger garage I would love to have a Moke in it. Just like a Citroën Mehari, it is one of those extremely simple cars that really do not need to have any sort of roof. They should be driven short distances in summer weather, typically to go to the beach, or perhaps just out for an espresso on a terrace. But my garage is full…

Reality? What Reality?

Yes I know, I keep coming back to the same topics a bit too much. I just made a post about yet another debt issue in China, and now I am about to give you an update on GoPro. Certainly looking at what is happening in the market today I think it is safe to say that my ramblings are not getting a lot of attention. More like, nobody is reading this stuff, but at least when the market tanks again I can prove that I said it first…

So, what about GoPro? Well since the IPO the stock price has been doing very well indeed. There was a bit of a slump off its initial peak, and the price was hovering in the low $30’s. Today the price has gone over $66!! Going back to my comparison in the earlier entry, that gives GoPro a market capitalization of $8 billion. Nikon is around $6 billion today, perhaps a bit less since the stock price has dropped in the last few months. I don’t know about you, but I certainly can’t see how that is justified.

Let’s look at some more figures about GoPro just to try and dig a deeper hole. Last quarter earnings were $11.7 million, with a loss of $20 million. The revenue for the last quarter was $244 million. The situation gets worst then when compared to last year, when the company experienced a y/y growth of 87% resulting in an annual revenue of $985 million. So the huge growth last year, which obviously served as a catalyst in driving up the stock price, is all gone! Already!! Sure, they are still selling a lot of cameras, but not really more than last year, which would give you an indication the market is becoming saturated. To close this paragraph of figures; forward PE is more than 40x next year's expected earnings!!

What investors seem to be looking at is the rapid increase of GoPro filmed media on YouTube. The numbers here are important, but these investors are forgetting that GoPro is a hardware company, not a media company. All those home-videos being uploaded do not belong to GoPro, and they do not make cent from them. You could imagine that this increase would have an impact on camera sales, but we have already seen the situation with regards to the hardware sales. I just don’t see how investors are expecting GoPro to make money from videos that private individuals are making.

Meanwhile in China, the Return!

Not so long ago I wrote about a growing concern of the debt situation in China. That particular issue pertaining to loans being disguised to look like bank to bank loans has not gone away since, but it seems finance specialists are not really picking up on it. For sure there are many other economic issues around the world these days to keep us all busy and worried enough, but I would counter by saying that a slow-down of the economic growth in China such as we are witnessing will only make the debt issue considerably worst.

Well, it seems as if there are more bad news coming out of China. Chinese property developers have found a way of raising funds through a method that makes their debt loads seem less than what they actually are. They do this by issuing perpetual securities.

I bet some of you right now are wondering what perpetual securities are, and why are they a problem. I suppose just as perpetual movement is something utopic, these securities could seem equally utopic as they are really loans that are never redeemed. Essentially a perpetual security is a corporate bond with a high interest rate and no maturity date.

These securities are increasingly popular among Chinese property developers that are currently suffering from the country’s real-estate slump and government limits on their ability to tap credit from state-controlled banks. One particular advantage to the issuers is that they can be treated on the balance sheet as equity rather than debt. That is because payments are made at the discretion of the company, so they are considered as dividends rather than interest payments.

The result of this is that some property companies are looking financially much better than what they really are. Analysts feel that these instruments are toxic for investors as they basically mask the real leverage and profitability of a company.

As of June, eight listed property developers had issued perpetual securities totaling 86.5 billion yuan ($14.1 billion), nearly double the 44.1 billion yuan recorded in the whole of 2013. If these perpetual securities would be reclassified as debt rather than equity, gearing would be considerably higher.

Essentially the sudden success of these perpetual securities is the result on the new controls on bank loans as I wrote about earlier. So, when regulators at least try to do something to avoid the situation getting out of hand (although I think they are still doing way too little), the market comes up with a new alternative that is probably even more toxic. To give you an example we can look at Guangzhou based developer Evergrande. According to Citi Research, they have issued $2.86 billion in new financing this year as perpetual securities. If these were to be reclassified as debt, their leverage would jump from 90% to 248%! Just imaging then the impact if the Chinese property market was to crash, something that is looking all the more likely each day…

In my opinion the Chinese wonder is looking more and more like a house of cards each day, but investors just don’t seem to want to see the reality as long as they are making money.

Chapter 2; The Gladys Car

My mother got her first car around that time as well, and as it turned out this was also a Mini. However, this was not just any Mini, but a Clubman. As tiny as a Mini might be, these little station wagons were extremely practical and in fact quite huge inside. The rear doors had the peculiarity of being split down the middle and opening out to the sides as opposed to most other hatches. Mind you, the hatchback had not yet been invented back then. This distinct rear opening was one of the real defining design elements of this Mini, and when BMW brought out their modern version of the Clubman in 2007 they maintained this feature.

This not our actual Mini. I hope to find some original photos soon...

Our Clubman had been bought second hand by my dad from a well-known photographer in Sweden. As a result, when my dad had come to pick up the car, it was filled with various Leica camera bodies end lenses in all the little storage bins of the car. More than likely the camera equipment in the car was worth ten times the car, and obviously they were all retrieved by the photographer before handing over the car.

The car was all red, and did not have the wood panels on the side some of the more up-scale Clubmans had. It was clearly a second-hand car, and as was often the case with cars in the 60’s and 70’s, it did suffer a fair bit from rust. I was still very young, perhaps 5, but I can still remember my dad fixing some rot holes with “plastic-padding”, and then painting over it with a small tin of original BMC red paint. This was probably my first exposure to some car DIY, something I would learn a fair bit more about as I got older.

This car quickly became very well known around where we lived, and everybody loved it. Our neighborhood dubbed it the Gladys Car, and in our family Mini Clubmans are often still referred to in this way. We eventually sold this Mini when the family moved away from Sweden, but it was far from the end of the Mini story.

Chapter 1: The Beginning

As I have mentioned, the first Mini that crossed my path, and started my life-long infatuation with this car, was my uncle Pider’s Mini back in the late 60’s. He had a cream colored Mini that was so typical at the time. Whenever he would come by with his car, my two brothers and I would run out to sit and dream in it. I bet we covered a lot of miles in our minds at the wheel of that Mini.

My uncle Pider in the trunk of his Mini

We were living in the south of Sweden at the time, and one day while my uncle was visiting we were going to go to Copenhagen for a day trip. My brothers and I had asked to get to ride in my uncles Mini, and so as soon as we woke up on the morning of our trip, we rushed out and installed ourselves in his back seat. It was so exciting to get to go in the Mini, and it wasn’t until we had all arrived in Copenhagen that my parents noticed we had not put on any shoes. In our excitement, we had barely gotten dressed before getting in the car.

So before we could begin visiting Copenhagen, eat red hot-dogs and go to Tivoli, we had to get shoes for the three of us. It didn’t take too long to find a shoe shop, and after a little bit of time we all had some shoes on our feet. I honestly don’t remember what my brothers got, but I got some awful sandals that were extremely uncomfortable to walk in after a couple of minutes. I am sure I said they were fine while in the shop, but I can assure you I regretted having sneaked in to the car without shoes for some time. I guess in the end the fact that we got to Tivoli, and had gotten a ride in the Mini, made up for any pain my feet had to endure.

I must have learnt a lesson that day as well as I have never gotten into a car without shoes on since…

My aunt Barbro showing off their Mini

The Mini Series

For as long as I can remember, I have always had a passion for cars and motorcycles. It is a passion that if anything has continued to grow over the years, and my interest covers pretty much any car or bike. This passion obviously also extends to all kinds of motor racing, particularly since discovering the movie Le Mans as a little kid. Over the years I have been fortunate enough to be able to indulge in this passion by attending numerous races around the world, and I am extremely privileged to have been able to share this passion with my wife.

There is one particular car though that stands out in my life, and that is the Mini. There is no doubt about the fact that the Mini was the first car I fell in love with at the young age of 4, and this has never left me. Much can be said about this brilliant little car, but I honestly don’t know what it was about my uncle’s Mini that appealed to me so much as a kid. Other than designing an absolutely brilliant car, Sir Issigonis managed to provide it with a look that simply appeals to most kids still today. It has a friendly look to it, a trait it also shares with the VW Beetle. I suppose it is of little surprise that these two cars are amongst those that remained in production for the longest time. Today a car model may be replaced after three or four years, but the Mini in its original design remained in production for over 40 years, and the Beetle for over 60 years!

With half a century done, there have been quite a number of Minis in my life so far, and I expect there to be a few more in the coming years. Having written a fair bit about motorcycles previously, a topic I will no doubt come back to from time to time, I thought I would write an entry about each Mini in my life so far.

So following this entry, I will be unveiling The Mini Series!!