Eat Yer Puddin

On my Cold War pod­cast, I’ve been talk­ing recent­ly about the infa­mous Bay of Pigs deba­cle. This is where the Unit­ed States, in 1961 under JFK, tried to over­throw Fidel Cas­tro by launch­ing an inva­sion of Cuba. It went hor­ri­bly wrong and was crushed by Cuba. It entrenched the ani­mos­i­ty between Cuba and the USA, pushed Cuba into the hands of the USSR, lead direct­ly to the Cuban Mis­sile Cri­sis, cre­at­ed ani­mos­i­ty between JFK and the CIA, and between JFK and the Mafia, and might have played a role in his assas­si­na­tion three years lat­er.

A small, poor, under-devel­oped coun­try defeat­ed the great and pow­er­ful Unit­ed States… in a cou­ple of days.

I’ve known, or I’ve thought I’ve known, the basic sto­ry for decades, but the more I’ve drilled into it, the more fas­ci­nat­ing it has become.

And, of course, it con­tains warn­ing for investors, which is why I’m bring­ing it up.

The first thing to under­stand is that it did­n’t start out as an inva­sion plan. The orig­i­nal idea, which start­ed under Eisen­how­er, was cre­at­ed pret­ty quick­ly after Cas­tro won his rev­o­lu­tion against the Batista gov­ern­ment (the lat­est in a long series of cor­rupt and vio­lent pup­pet Cuban admin­is­tra­tions con­trolled by the Unit­ed States). A lit­tle over a year after Cas­tro’s Decem­ber 1958 vic­to­ry, Eisen­how­er approved the secret “Plan for Covert Action Against the Cas­tro Regime”.

The plan talked about cre­at­ing an exile-based oppo­si­tion, a covert intel­li­gence and action net­work inside Cuba that worked with the lead­er­ship in exile, and a para­mil­i­tary force of Cuban exiles trained out­side Cuba who would take guer­ril­la action inside Cuba. It was all sup­posed to be kept total­ly secret and under no cir­cum­stances should it every be tied back to the gov­ern­ment of the Unit­ed States. All hush hush, a secret over­throw of a for­eign gov­ern­ment. Like they had pulled off in Iran and Guatemala a few years ear­li­er.

.… then some­one start­ed adding things. A com­bined air and sea assault. A march on Havana. Pos­si­bly US troops. By Octo­ber 1960, what began as a qui­et covert infil­tra­tion had turned into D‑Day Jr., and nobody seemed to notice the plan had com­plete­ly got­ten away from them.

Jacob Ester­line, who was the Bay of Pig Pro­jec­t’s first CIA direc­tor, lat­er summed it up like this: “How did this thing start to steam­roller and get away from us?”

Before you know it, they are storm­ing the beach­es. Of course, Cas­tro knew they were com­ing — it was the worst kept secret in Latin Amer­i­ca — and he had troops wait­ing for them. JFK, the new­ly-installed POTUS, allowed it to go ahead, but pan­icked at the last moment and cut air sup­port, which meant the troops who land­ed were sit­ting ducks for the Cuban air force.

In 1996, a group of schol­ars from Cuba and the Unit­ed States, for­mer mem­bers of Kennedy’s White House, the State Depart­ment, the CIA, Depart­ment of Defense, came togeth­er to read what were then recent­ly declas­si­fied doc­u­ments, and try and recon­struct and under­stand what hap­pened. The bot­tom line was — it was a com­plete clus­ter­frack.

Nobody “owned” the mis­sion. Every­one assumed some­one else was in con­trol. The CIA thought they knew bet­ter than the Cubans on the ground. JFK thought some­one in the CIA knew what they were doing. After top­pling Mossadegh in Iran in 1953 and Arbenz in Guatemala in 1954, CIA vet­er­an Samuel Halpern says the agency con­clud­ed you could do regime change “with mir­rors.”

How many times do we see this play out in the busi­ness world? Some CEO has a big, bold vision. They sound like they know what they are doing. Oth­er peo­ple in the com­pa­ny think the CEO must know what she is doing. After all, she’s the CEO, right? Get­ting paid mil­lions of dol­lars. Got that nice big office. A rub­ber plant in the cor­ner and every­thing. Being inter­viewed by Alan Kohler. Merg­ers. Acqui­si­tions. Inter­na­tion­al expan­sions. Piv­ot­ing to AI and data cen­tres and.… some­thing some­thing dark side.

And it fails. Big time. Turns out, things are much hard­er than they sound.

Your big vision and $6.50 will buy you a cup of cof­fee.

Which is why in QAV, we pay lit­tle atten­tion to big sto­ries and pre­fer to look at the qual­i­ty of the exe­cu­tion — the num­bers. Are they mak­ing mon­ey? Do the num­bers indi­cate they seem to have a han­dle on the busi­ness? The proof of the pud­ding is in the eat­ing.

The sto­ries are all around us. Com­pa­nies keep turn­ing them out and we keep tun­ing them out. Today it’s all AI-this, data cen­tre-that… remem­ber in 2021 when it was BNPL? We all know what hap­pened to After­pay (acquired by Block). But there were oth­ers. Zip were worth $4bn in 2021 — today worth about $2.4bn, down rough­ly 40%. Humm worth A$421m in 2021, today worth about A$246m, down rough­ly 40%. Open­pay worth $120m in 2021, went into receiver­ship in 2023 and then into liq­ui­da­tion. Sez­zle is the stand out — it was worth $1.17bn in 2021, left the ASX in 2024, now trades on Nas­daq as SEZL, worth $5.9bn. Win­ners and losers. The dif­fer­ence is in exe­cu­tion.

It was around 2021 when Alan Kohler told Tony “this time it’s dif­fer­ent”, which is why I had a nice laugh when I watched his son Chris’ recent Tik­Tok.

Back to the Bay of Pigs. Here’s my favourite sto­ry from a recent episode.

The Deputy Direc­tor of the Cen­tral Intel­li­gence Agency dur­ing this time was Gen­er­al Charles Cabell. JFK forced him to resign after the failed inva­sion. His broth­er? Ear­le Cabell. Guess what job he had in Novem­ber 1963? He was the 48th may­or of Dal­las from 1961 to 1964. In 2017, doc­u­ments declas­si­fied under the JFK Records Act revealed that Cabell had been a CIA asset since 1956.

One ver­sion of John F. Kennedy assas­si­na­tion con­spir­a­cy the­o­ries, the “Rene­gade CIA Clique” the­o­ry, impli­cates Cabell and his broth­er. This the­o­ry claims that Ear­le Cabell re-rout­ed Kennedy’s motor­cade (which then passed clos­er to the Book Depos­i­to­ry) as a favour to his broth­er.

Fun fact: Both Cabell broth­ers were tenth-gen­er­a­tion descen­dants of Poc­a­hon­tas, the Native Amer­i­can woman who was cap­tured and held for ran­som by Eng­lish colonists in 1613. She was mar­ried off to an Eng­lish­man, tak­en to Eng­land where she was shown off as an exam­ple of the “civilised sav­age”, and that is where she died aged 20 or 21 “of unknown caus­es”. She had one child.

So Poc­a­hon­tas’ great-great-great-great-great-great-great-great-grand­sons might have con­spired to assas­si­nate an Amer­i­can Pres­i­dent.

That’s some long term pay­back.

And that’s what we like in an invest­ment, too. Long term pay­back.

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QAV Myth Killers is a week­ly col­umn in the QAV newslet­ter, tak­ing apart a piece of
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