For those accustomed to viewing things in a certain way, it is quite disturbing. It is expected almost to collapse. Ocean from It just seems wrong. Yet the way we see the world is totally random, based largely on the way we have always seen.
When we consider things from a different perspective, it is not difficult to come to different conclusions. Normally, if we have a clear perspective of our traditional viewpoint, it seems pointless to look from a different perspective the world. However, when we see the picture is clouded and obscured, taking a different view is crucial. Otherwise, we guess.
Those who have been following this page in the past few months may have observed the beginning of a turnaround in focus. Events are leading us to a strategy that may seem surprising. A confluence of unexpected events sometimes leads the careful analyst to draw. Unexpected conclusions If you follow the logic of past issues but you can start to see. Germination of these ideas
In recent months we have realized the importance of not following the crowd like lemmings over a cliff covered. We have the rise of emerging markets like India and China discussed. We have the weakening of the dollar and the Washington spending spree with overtones of Keynes inspired false recovery.
As we dive headlong into election season, we all get a chance to hear the economic strategy of the two main candidates. If we put aside our preferences and partisanship for a moment, and just reasons to vote for any candidate, the economic policies of the two leading candidates leaves much to be desired. Neither has a particularly coherent economic policy, and while both pay lip service, nor fully understand the importance of free, unencumbered markets. The result is a leadership that gives no incentive to economic growth, regardless of the outcome of the elections. As long as either Bush or Kerry wins, we have nothing to look forward to.
It's not a great piece to imagine an America adoption of European-style protectionist legislation and increased regulation of business. This will slow down our economy. Semi-permanent Both camps seem to support this. Listening to our two main presidential candidates, and hearing no objection of both congressional delegation, one can only imagine the worst. The "Reagan Revolution" is finally over. The movement toward freedom and away from regulation has come to an end. Positive reforms that have not happened are likely to develop in the current environment.
This pessimistic outlook may be exaggerated, admitted. The U.S. economy has traditionally been able to grow through a rather restrictive regulation. However, a look back at the lackluster growth in the 1970s provides a vivid illustration of how bad a mismanaged economy can be. In any case, we must look to the U.S. in the same way we look at each country of the world. No longer can we invest here simply because it "home". Instead, we need to look globally, and evaluate which countries are most likely to grow.
If we approach this, without regard for the "home team advantage", investing in the U.S. is still worth considering, but it hardly looks like the best place in the world to get our money. In fact, the fastest growth probably true freedom increases, not decreases true freedom.
Where we consider the biggest increase in freedom worldwide. It is clearly not here. With the Patriot Act and similar laws, and not to mention a quiet increase in business regulations, we actually move in the opposite direction. (The Patriot Act, contrary to popular belief, is not just about wiretaps, but also adds tremendously unproductive paperwork and regulatory burdens for financial companies, among others. I encourage all readers to this huge legislative read before your tacit approval. )
Countries like China, where freedom is a relatively new concept, have the greatest chance of improvement, because they are so far behind. The news that China Minmetals plans to buy Noranda, Canada's largest mining company, is evidence of China's growing economic power. China is still problematic as an investment area, however, due to the willingness of the government to crack down on the population, and the lack of a tradition of "rule of law". To crack down on "abuse" of its mobile service by advertisers (under threat of government) the recent efforts of China Mobile is positive proof that free markets are not yet fully penetrated. Threats of invading Taiwan do not inspire confidence. Reducing the risk is high to invest in China, and by extension in Taiwan.
Yet the story is that investing is no longer focused on America, and there are other countries where opportunities are high and risks are not.
The recent elections in Indonesia seems to be a positive sign for the future. We anticipate a more positive environment in that huge country. It can be one of the best places to look in the near future. Also, in the same region, Australia and New Zealand seem to be making more incremental improvements. India has great promise, despite continuing problems with corruption. Turkey's recent provisional admission to
European Union gives them a strong possibility. The ability to jump headlong into a large market will provide a more powerful incentive than the brake on the growth of the restrictions on the free market, which is the cornerstone of EU membership. Thus, the growth in the short term high as Turkey rises to the level of the other members, but will ultimately slow the growth to the level of France and Germany, two of the world's slowest growing economies. Look back to the growth of Spain and Greece in the past when they joined the EU to see what you can expect. For the moment, at least, we see great potential for Turkey.
The main idea to take away is that the wise investor should start looking to find. Beyond the normal limits of the best opportunities This is not to suggest that we ignore. Traditions of free markets and free spirits A culture that supports it, is still crucial. But we see that culture begins to develop in unexpected places, and seeing some decline in house. So the time has come to add to our strategy. A new, more global dimension Opportunities may be better, and lower risks, in unexpected places.
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Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide range of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally and in the U.S.
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