How China Will Change Investment....

In my Money Week column this week, I've been looking at how the rise of China as the world's largest stock market will change investment. Here's a taster....

Any serious investor will already be comfortable with the emerging markets. They know the BRICs - Brazil, Russia, India and China - are doing a lot better than the traditional developed economies. They probably have some money in a fund specialising in those stocks. They might even have dipped into what the investment industry calls the frontier markets – places such as Pakistan, Tunisia, or Vietnam.
But over the next twenty years, the amount of attention they will need to pay to them is going to vastly increase. The emerging markets are going to stop emerging. They are going to turn into the establishment.
The mood of the global markets used to be set in London or New York. Over the next two decades, it will increasingly be set in Shanghai, Moscow on San Paulo. That is going to change the way the markets operate, the signals that suggest you should buy and sell, and the way that investors get rewarded. It will make investing a lot more scary, and the markets will be a lot a more volatile. But you need to get on the right side of that trend, or end up getting badly burned.
Last week, Goldman Sachs published a set of long-range forecasts for global stock market capitalisations. It predicted that by 2030, the value of emerging market
stocks would rise more than fivefold to $80 trillion. Their share of world equity capitalization would, the bank forecast, rise to 55% from 31% today. China will be the world’s largest market. Its total value, Goldman predicts, will increase to $41 trillion by 2030 from just $5 trillion today. It projects that the US market will be worth $34 trillion by then, making China easily the worlds biggest.
That will be a big change. Right now, the US stockmarket still accounts for almost 30% of global market capitalisation. China is just 7.2%, only a little ahead of the UK at 6.6%. Brazil accounts for only 2.8% of the world markets, just slightly more than Switzerland (although there are 205 million people in Brazil, compared to 7.6 million in Switzerland).
There is nothing very controversial about that. The emerging market economies are growing at a far healthier rate than either the US or Europe. The International Monetary Fund predicts the emerging economies will grow at 6.4% next year, compared with 2.4% for the developed world. They keep on growing at double or triple our rate every year. Nor is there any reason to expect that to slow down. The demographics of the developing world are in far better shape. So are government finances. And they still have a lot of catching up to do to match living standards in the West. It’s hardly a surprise that their stockmarket will overtake ours. A hundred years ago, New York surpassed London in importance. Fairly soon, Shanghai will overtake New York.
The interesting question is how that will impact on the way the markets work.
We are used to a world where the dominant investment themes and ideas are set mostly in New York, and partly in London. The Dow Jones index might just be thirty companies. Its rather strange composition might well mean that it isn’t even a very accurate reflection of the American economy, never mind what was happening in the rest of the world. As a general rule, however, if you knew what was happening to the Dow, you’d have a pretty good idea where the rest of the world’s markets were heading. Likewise, the FTSE is an oddball mix of companies, largely dominated by oil and mining companies, plus a big bank and drugs company. It doesn’t tell you much about the British economy. But if mining stocks are all the rage in London, you can be certain they will soon be just as popular in the rest of the world as well.
The themes in New York and London dominate the global markets everywhere. If dividends are in fashion in the U, they will be growing in importance globally. If stock buy-backs are a more popular way of rewarding investors in London, that will be replicated around the world.
Expect all that to change in the next twenty years. What will count is the mood in Shanghai, Moscow or San Paulo. The one number you really want to know won’t be the Dow: it will be the change in the Shanghai Composite. It will be the way those markets are developing, the way that money is flowing through them, and the demands that investors are making, which will set the tone for the global markets. European and American markets will take their cue from the emerging market, not the other way around.
That may well turn out to be scary for investors. It’s dated to portray the Shanghai index as an old-fashioned gangster market, with some mysterious Mr Chan sitting in a dark basement dictating whether it rises of falls with a click of his fingers. But it operates to very different rules to the stock markets of the West. It is heavily manipulated by the government. It has no clear and transparent rules governing what firms can be listed, and what they need to disclose to investors. It is not fully open to foreign investors. And the Chinese, who make up the bulk of investors, are inveterate gamblers, who have always thought stock markets should be casinos without the neon lights and cocktail bars rather than places where you try and seriously analyse a company’s likely future earnings. The critics who point out the New York and London market promote a casino culture, treating stocks like gambling chips, haven’t seen anything yet.
The stock market right now is volatile, short-termist and self-interested. But as it comes to be dominated by Shanghai and Moscow it is going to get a lot more so. The market will be dominated by the state, because that is the way that business works in China and Russia. It won’t be very interested in small investors, because they don’t count for very much in any of those markets. Nor are the standards of honesty likely to be the same.
There is no point complaining about that, however. It is where the money will be. The rules of investment are about to change, and investors need to make sure they understand that. Because one thing is always true: if you don’t understand the rules, then you haven’t much chance of winning the game.

Steer Clear Of The New Lord Hansons...

In my Money Week column this week, I've been arguig that investors should steer clear of financiers such as Nat Rothschild, and Hugh Osmond. They look like the new Hansons. Here's a taster....

In a dull, nervous market, they have at least provided a splash of colour. In the past few months, investors have seen two high-profile IPOs by celebrity financiers – Nat Rothschild and Hugh Osmond – raising huge sums of money to create new listed acquisition vehicles.
Investors appear to have bought into the concept enthusiastically. Both men come across a new generation of Lord Hanson’s, the fabulously successful 1980s tycoon, who used his company as a vehicle for a series of high-profile takeovers, gobbling up huge chunks of British industry, and making a fortune for his army of loyal and devote shareholders along the way.
But the Rothschild’s and Osmond’s investors are making a big mistake. This is the wrong decade to be trying to recreate the acquisitive conglomerate that was so successful three decades ago. There is very little money left to be made through financial engineering. If investors want high rates of return they should be looking to small companies, technology entrepreneurs, or the emerging markets. The new generation of mini-Hansons are not going to deliver it for them.
There is little escaping the ballyhoo that surrounded both IPOs. When your name is Rothschild, it is not too hard to get pulses racing in the financial markets: it remains, a couple of centuries after the dynasty was founded, the best brand name in high finance. Nat is the latest in a long line of Rothschild’s to play the markets with consummate skill. He may be best known in this country for his very public row with George Osborne in 2008: it was Nat Rothschild who claimed that Osborne tried to solicit a donation from the Russian billionaire Oleg Deripaska after visiting his yacht off Corfu that summer. But Rothschild has been known for some time as a hedge fund manager with excellent links to the Russian mega-rich.
Last week, he successfully floated Vallar in London, raising £707 million from investors for a shell company that plans to make acquisitions in the mining and natural resources industry. Together with James Campbell, a former Anglo-American executive, the new business will hunt out lowly-rated assets and piece together a new conglomerate. Investors loved the concept. The company raised comfortably more than its £600 million target for the float.
They were just as keen on Hugh Osmond’s new venture. Back in March, the financier raised slightly more than £400 million for his vehicle, Horizon. Osmond first made his name on the floatation of Pizza Express with his colleague Luke Johnson, and went on to create the pubs chain Punch Taverns. He’s made plenty of money for his backers over the years. The idea behind Horizon was to find companies that had taken on too much debt, buy them, restructure their balance sheets, and get them back into good shape. It has been linked with the homebuilder Crest Nicholson and the car repair chain Kwik-Fit, although it hasn’t completed a deal yet.
Both companies look to have ambitions to become the Hanson of the new decade. Through the 1970s and 1980s, Lord Hanson built up a hugely successful conglomerate. He’d buy up companies such Imperial Tobacco, strip out and sell-off irrelevant subsidiaries, toughen up the financial discipline of what remained, and make a fortune for his shareholders in the process. One of Mrs Thatcher’s favourite tycoons, he helped re-shape British industry in that turbulent decade, and although he didn’t leave much of a lasting legacy – the Hanson that remains is quite a small building products company – he was a hugely influential figure in his day.
Just like Hanson, Vallar and Horizon are acquisition vehicles run by celebrity financiers, built around the idea that they can buy up assets cheaply, work them harder, and piece together a conglomerate founded on the personality of a dominant financier.
The trouble is, it is not likely to work. The climate in which they are operating is very different from 30 years ago.
First, there aren’t many underperforming conglomerates out there ready to be broken up. One of the most successful tactics of the corporate raiders of the 1980s was to target big companies that had lazily put together a mix of businesses they didn’t understand very well. But every company has slimmed down to its core business at least a decade ago - there aren’t any left to break up.
Next, there are not many companies that are being inefficiently run. Two decades of chief executives mouthing the mantra of shareholder value mean there aren’t many companies that can be easily made leaner, or more focussed – and certainly not by men who are better know for their financial connections than for their ability to actually run a business.
Thirdly, two decades of pressure from the private equity industry mean that most assets are ‘sweated’ about as far as possible. There isn’t much fat out there to cut, and certainly not in the way there was in the 1980s. Likewise, if there was value to be created out of re-structuring a balance sheet, the chances are one of the leveraged buy-out funds would have already bought it.
True, Osmond may be looking to restructure companies that have taken on too much debt. But if they are good businesses, their existing banks or shareholders will surely do that for them. Rothschild may use his contacts to find mining assets that are worth a lot of money – but why won’t their owners list them themselves, or sell them to one of the resources giants?
The reality is, there is no low-hanging fruit out there, which is all these kind of
acquisition vehicles can pick.
Investors should realise that there are likely to be very meagre returns from financial engineering in the next decade. That era is over. If you are looking for above average returns, you should be looking at small entrepreneurial companies, at technology stocks, or to the emerging markets. That is where the growth is coming from – and not from celebrity financiers, no matter how illustrious their track record or family name.

Why Investors Shouod Push For Higher Dividends...

In my Money Week column this week, I've been arguing that shareholders shouod be pushing for higher dividends. Here's a taster....

What’s the most important task for the chief executive of a quoted company?
Driving earnings per share forwards, perhaps? Increasing the rate of return on capital employed? Or taking notice of a wider community of ‘stakeholders’.
A generation ago, the answer to that question would have been a lot simpler. His or her main duty was to maintain, and even better steadily increase, the amount that the company paid out to its shareholders every year.
And yet, over the last decade, the dividend has gradually dwindled in importance, until it often appears like little more than an easily expendable luxury.
That is a big mistake. Dividends are a crucial component of the total returns investors can make on their money. And they are a great way of disciplining chief executives. If there is one thing the City should try and get right in the next decade it should be getting dividends back onto the pedestal they once occupied.
Research published this week by Capita Registers showed just how far dividends have fallen down the list of the City’s priorities. In total, UK listed companies paid out £56.9 billion to their shareholders in 2009, a reduction of around £10 billion, or 15%, on 2008. Much of that was accounted for by some of the big banks scrapping their dividends as a result of the credit crunch. But it was far more wide spread than just the financial sector. Overall, 202 listed firms cut their dividends, and of those, 74 paid out nothing at all. Meanwhile, 179 companies increased their payouts, whilst 60 held them steady.
The situation is even worse if you look at the balance of payments between companies and investors. Taking the last two years together, quoted companies paid out £123 billion in dividends. But they took back £124 billion in rights issues to bolster their balance sheets (about 60% of which went to the state-rescued banks). Investors were net losers from the deal. Nor is that likely to get any better soon. In the coming year, Capita only forecasts a 5% rise in the overall levels of payouts.
Much the same is true in the US. Thirty years ago, according to Standard & Poor’s figures, 94% of American listed companies sent a cheque every quarter to shareholders. Now it is only 74%.
It is all a far cry from the days when the dividend was king.
When BP cut its dividend in 1992, during the slump in the oil market and a global recession, it was such a traumatic event for the oil giant that it was thought necessary for the whole board to be restructured. Tycoons such as Tiny Rowland could build whole careers on the simple rock of constantly paying out high dividends to armies of small shareholders.
These days chief executives appear to think they can push the dividend up or down a bit, according to market conditions. It doesn’t appear to be any more important than adjusting the advertising budget. It certainly isn’t something that would prompt the resignation of the board. Nor would it raise much more than a few grumbles among the shareholders.
There are, of course, reasons that dividends have declined in importance. They aren’t always tax-efficient – investors have to pay income tax on them, compared to usually lower capital gains taxes on increases in the share price. Companies have explored other ways of rewarding shareholders, such as share buy-backs.
But it has gone too far.
Dividends are important for three reasons.
First, they are a crucial component of shareholders’ total return. Over the medium-term, the owners of capital will be rewarded just as much by the payouts on their shares as they will be any rise in equity markets. More importantly, companies can control it. There isn’t much they can do about share prices. Equity markets are buffeted by dozens of different events. But they can always decide their dividend.
Next, it an’t be fiddled. A clever finance director can come up with all sorts of different ways of measuring performance, most of which can be tweaked depending on where you park different assets and liabilities. Investment bankers can devise fiendishly complex ways of restructuring companies that are meant to ‘create value’ for shareholders. They may or may not be real. But if a company used to pay out 50p per share every six months, it either still does or it doesn’t. It’s completely transparent.
Thirdly, the dividend is the essence of what a stock market is about. Investors gives companies their money to build factories, shops and warehouses, In return, they receive a steady share of the profits in the form of dividends. Lose sight of that, and it hard to think what the stock market is really for.
So what can the markets do about it.
Two changes would help.
First, why not link the pay of chief executives directly to the dividend? Instead of baffling schemes designed to pay-out if they hit a whole series of benchmarks, just offer them a slice of the total pay-out to shareholders. If they can get the dividend up, then they’ll make a lot of money. If they cut the pay-out, they’d loose a lot of money. It would be simple, easy to measure, and make sure they were motivated by precisely the same target as their shareholders.
Next, exert some discipline.
Institutional shareholders should get back to the policy of turning on boards that cut the dividend. It should be a last resort, to be used only an the direst of emergencies, not one of the first costs that can be sliced during a downturn. Make it clear that the chairman and chief executive are expected to offer their resignation at the same time.
Both would very quickly make paying out regular and rising dividends the main priority of most listed companies again.
And, fairly quickly, that would make for a far healthier stock market – and certainly one that was a lot more rewarding for investors.

Getting Japan Wrong....

In my Money Week column this week, I've been looking at the 20th anniversary of the Japanese crash...and suggesting we learnt all the wrong lessons from it....

As anniversary’s go, it was hardly one anyone would want to celebrate very much. Twenty years ago last week, on December 29th, 1989, to be precise, Japan’s Nikkei index reached its all time peak 38,957. From there, it spiralled into an eternal collapse from which it still shows very little sign of recovering.
It is the mother-of-all-bear markets. Yet it is also significant for far more people than the few unfortunates who bought into the Tokyo market as the 1980s closed. Economic policy making is dominated by the fear of repeating Japan’s two decades of stagnation. The policies Japan forged to combat it – printing money, and massive government deficits – have been followed by the US, the UK, and most of Europe.
And yet, now that we have some perspective on the collapse of the Nikkei, it is clear that we learned all the wrong lessons from the bursting of the Japanese bubble. Printing money that didn’t exist and endless rounds of extra government spending haven’t worked for Japan. They merely led the country into bankruptcy. The same policies aren’t likely to work out much more happily for the rest of us.
If it was a marriage, the Japanese bear market would now be marking its China anniversary. During the 1970s and 1980s, the Japanese economy and stock market was one of the strongest in the world. From 11,000 in 1985, the Nikkei index nearly quadrupled over the next four years. Property prices went even crazier. At one point, the value of all the land in Japan was worth four times as much as the whole of the United States, even though the US is four times the size. (Property prices, since you ask, are still 60% below their peak levels).
Like all bubbles, the Japanese boom took a kernel of truth, and stretched it to absurdity. The country was on a roll. Its auto and electronics industries were crushing the bloated dinosaurs of Europe and the US. It was emerging as the richest, most technologically advanced society in the world. It was no surprise that everyone wanted a piece of the action. Prices massively overshot themselves – as prices in a free market usually do. A collapse of the bubble was inevitable at some point.
The government and the Bank of Japan were initially fairly relaxed. But once it became clear that growth was taking a hit, and the banking system was badly injured, two policies were developed in response. Interest rates were slashed, and when that didn’t work, it was followed up with a novel policy called ‘quantitative easing’. And the government ran up huge deficits to stimulate demand.
The world’s central bankers have looked at the Japanese experience and drawn a simple lesson. Monetary and fiscal policy “should have become even more aggressive in an effort to prevent a deflationary slump,” argued a key paper on the fall-out from the Nikkei’s collapse published by the US Federal Reserve. In effect, the lesson policy-makers have drawn is that Japan came up with the right medicine, but not quickly enough. The Japanese experience inspired their response to the credit crunch. We’re doing what they did more than a decade ago, only more aggressively.
There is just one snag, however. In Japan, it didn’t work.
Two decades on from the crash, the Nikkei still hasn’t recovered. In the depths of the crisis last year, the index went down to almost 7,000, and is still hovering around 10,000. The economy splutters on life support. The banking system refuses to spark back into life. The deficits remain huge.
In truth, we learned the wrong lesson from Japan.
There are two important points.
First, the cure has been worse than the disease.
Japan has landed itself with a potentially massive debt crisis. The budget deficit is running at 10.5% of GDP, one of the highest in the world (although not, of course, as high as Britain’s). According to International Monetary Fund, government debt will hit 246% of GDP by 2014, compared with 108% for the US. The markets are looking at Japan, and wondering if that kind of debt will be affordable. The possibility of default is already being discussed.
Next, the Japanese were being unrealistic in expecting to get back to the growth levels of the 1970s and 1980s. For much of the post-war period, Japan was a young, smart country, playing catch-up with the West. By 1989, its companies couldn’t play catch-up with anyone. They were already world leaders, whether it was on design, technology or manufacturing savvy. Growth was always going to be a lot harder.
On top of that, Japan was rapidly aging. More than 20% of the Japanese are already over 65. Since 2006, the country’s population has been steadily shrinking, and over the next decade will fall by 3.2% from its current 127 million, according to government projections. In the light of that, Japanese growth wasn’t all that bad. Between 1991 and 2000 it grew at an average rate of 1.5% a year, which was about the same as France and Italy. Between 2004 and 2008 it grew at more than 2% each year. Japanese companies continued to be some of the most formidable in the world, and its designers and entrepreneurs as brilliant as ever. Take a look at the number of Toyotas and Nissans on the roads, the Nintendos in every satchel, and the Uniqlos in every shopping mall. You can perfectly plausibly argue the Japanese economy has been doing fine for the last 20 years.
In effect, Japan should have accepted that the excesses of the 1980s bubble had to be purged. And that an aging, advanced society was not going to be capable of rapid growth. All that government spending did little to revive the economy. But it has bankrupted the country, and may create an even worse crisis some time in the coming decade.
It should be going into an era of an aging, declining population, with government finances in good shape. And it should have accepted that its days of rapid growth are behind it. At best, the policies of printing money, and massive deficits, have been irrelevant. At worst, they are storing up problems for the future. And the real tragedy is that we seem intent on repeating their mistakes – when we could have been learning from them.

Did We Learn The Wrong Lessons From Japan?

More on bubbles. I've been writing about the collapse of the Nikkei 20 years ago for The Spectator. You can read it below. I can't help feeling the world took the wrong lessons from Japan. We keep being told we have to print more money, and raise government spending, so that we don't have a Japanese-style lost decade. But it hasn't worked for them. Anyway, here's the piece.

Twenty years ago this month, as we’ve been reminded by countless documentaries, the Berlin Wall was coming down. Eastern Europe was convulsed by a series of revolutions from which Communism never recovered. Yet, much further east, something else was happening which arguably has had just as profound an impact on how the global economy had developed since then. The rampant bull market in Japanese equities reached its final, frenzied peak.
For stock market historians, December 29th, 1989, will always be a key date. On that day, the benchmark Japanese index, the Nikkei 225, which includes companies such as Honda, Nissan and Sony, hit its all-time peak of 38,957.44, having quadrupled in value from 1985. When the markets re-opened for the first trading day of the 1990s, the index started falling. And falling, and falling, and falling.
And, give or take a few blips, it has been falling relentlessly ever since. Over the next two and half years, the Nikkei fell by 63%. By that was far from the end of it. In March this year, amid global financial panic, the Nikkei touched a fresh low of just over 7,000, more than 80% down in the peak. Even today, as the anniversary nears, it has managed only to claw its way back to 9,500, a quarter of its level two decades ago.
Nor is it just stocks. In the 1980s, the Japanese property market went even crazier, reaching levels that might even make a salesman from Foxtons blush. That market carried on rising even as stocks started to collapse: in 1991, an alarming calculation found that the value of Japan's land was about $18 trillion, or four times the value of all the land in the United States (even though Japan is only about the size of California). Since then, Japanese property prices have plunged as calamitously as stocks, and today remain about 60% below their 1991 levels.
It was, and remains, the Mount Everest of bear markets. And it is an event that dominates the thinking of both investors and policy-makers the world over.
Like all bubbles, there was of course some substance to the Japanese boom of the 1980s. The country was on a roll. Its car and electronics manufacturers were flattening the old, bloated giants of American and European industry. Take just about any product you can think of, and the Japanese version was more reliable, better designed, and cheaper as well. Management theorists flocked to witness its lean, flawless factories: futurologists predicted that pretty soon we would all be wearing kimonos and eating sushi.
The trouble was, like every bubble, it took the kernel of a truth, and stretched it to absurdity. Land in Japan might be short supply, but there wasn’t that little of it. There was a limit to how many Sony Walkmans we wanted to buy, no matter how good they were. And in a free market, the European and American car manufacturers were always going to smarten up their act to compete with the likes of Toyota. The bubble was always going to pop one day. What no one quite foresaw was how spectacularly it would burst, or with such calamitous consequences.
Twenty years later, what are the implications of that crash? For investors, there are plenty, even if the lessons are nearly all dismal ones.
The Nikkei crash blows just about every investment cliché out of the water. Buy and hold? Well, you wouldn’t want to have bought and held this market. Buy after the crash? Well, not really. If you bought the Nikkei in 1992 or 1993, you’d still be out of pocket. Stocks always perform in the long-term? Wrong again. Maybe the Nikkei will recover one day, but it’s likely to be your grandchildren who see it back at 40,000. Maybe even your great grand-children.
More significant, however, might be the influence of the Nikkei crash on policy-makers. We hear a lot about how central bankers are trying to avoid the mistakes of the 1930s. But so much has changed since before WWII, few lessons from that era are really very relevant to today’s world. What central bankers are really trying to do is avoid the mistakes of the Bank of Japan in the 1990s.
Initially, Japan’s monetary authorities didn’t reckon they had much to worry about. Sure, stocks were down, but they looked pricy anyway. The Japanese carried on raising interest rates until August 1990, long after the Nikkei collapsed. It was only once it became clear that growth, which was averaging around 5% annually in the 1980s, had evaporated, that they started to take action. Interest rates were cut, dropping from 6% in 1991, to 1.75% in 1993. And the government started to pump money into the economy: a budget surplus of 1.3% of GDP in 1990 became a deficit of 5% by 1995.
The trouble was, none of it seemed to work. The Japanese economy spluttered a bit every time it was stimulated, then stalled again. As the slump stretched into this decade, the Bank of Japan tried something new. Because it couldn’t cut interest rates anymore, it started printing money, or what was called ‘quantitative easing’. In effect, Japan’s response to the Nikkei’s collapse has been an economic laboratory for how the rest of the world should cope with the financial shocks of the last year. All we’re doing now is what they did a few years ago. There’s only one snag: none of the prescriptions really seemed to work.
For the world’s leading central bankers, the lesson has been that Japan didn’t act quickly enough or aggressively enough. Monetary and fiscal policy “should have become even more aggressive in an effort to prevent a deflationary slump,” argued a key paper on the Japanese experience published by the US Federal Reserve. And that has been the intellectual rationale for the speed and aggression with which the Fed, and the Bank of England, along with other central banks, have both cut rates and printed money in the past year.
But there is an alternative explanation. Just as plausibly, the Japanese propped up the banking system too long: its half-dead, zombie banks acted as a drag on the economy. They allowed too many bankrupt companies to stagger into a financial twilight zone. And they ran up so much government debt that they crowded out the private sector, and left the country fundamentally insolvent. And whilst they printed money like crazy, that just fuelled bubbles in other countries – as hedge funds and other borrowed cheap yen – while Japan stagnated. All they achieved was to turn a short nasty slump, into a long, catastrophic one.
Rather worryingly, we are doing very similar things. Our banks are propped up with billions, but still refuse to lend. And we’ve become even more indebted: in the three years after the Japanese bust, public debt rose by 140%, but ours is already up by 170% since 2007, including the cost of bank bail-outs. And whilst we’re printing money, all that seems to do is create asset bubbles elsewhere.
Central bankers and policy-makers in both the UK and US think they have learned the lessons of the Nikkei’s collapse, and the two decades of economic stagnation that followed. They are determined to avoid Japan’s mistakes. But it is equally possible they are just repeating them – except on an accelerated timetable. In which case, rather disappointingly, sometime around 2030 we’ll be looking back and wondering how the slump that followed the credit crunch managed to last two whole decades.