Ann: Impairment of Moomba Sydney Ethane Pipeline, page-10

"We are talking about over the next 35 years, not sure many current investors have an investment timeline that long to worry about the decline in gas usage."

Variance in future cash flows is an inordinately smaller determinant of the present value of those cash flows than a change in the discount rate applied by the market to those future cash flows.

And if uncertainty arises in how future cash flows are going to be deployed, then the discount rate implicitly applied by the market, goes up; hence, the present value of the cash flows goes down.


"If anything usage will increase over the next 5-10 years as coal fired generation is replaced by gas as part of a transition to renewables."

Gas usage to increase?
I certainly hope so, otherwise we don't have an economy.

But that will require a sense of urgency in the halls of Canberra given the long lead times involved and the entrenched ideological opposition, which means a significant volte face is needed in the hearts and minds of the people designing the nation's energy policy.

Based on precedence, I'm afraid I have little hope in the plutocrats getting energy policy right.

But, hey, there is a trivial chance it could happen.

After all, as recently as a few years ago, the loathers of all fuels fossil decried even gas as an acceptable energy source, but I guess there is nothing like a threat to prosperity and living standards to focus the mind and soften all but the most hardened ideological heart.


"If you avoided companies that didn't expand into new markets or new products you wouldn't have much growth in capital or income in your portfolio."

Are you kidding?

The equity market is replete with businesses that are extremely successful over long periods of time by sticking to their knitting, i.e. doing more of the same thing that renders deepens and widens their commercial moat.

In fact, my long-held observation is that it is the "new concept" companies that invariably make for the worst investments, because the animal spirits fail to appreciate the many risks inherent in "new business concepts"

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