Investing In Smart Arenas and Avoiding Stupidity Potholes For Your Portfolio
Talking about Cashews is apropos as some of what I am going to talk about is just plain nuts in more ways than one.
In researching this story, I have discovered a somewhat startling theme here in that almost every bit of the Stupidity that we need to avoid and Smartness we need to go after for your portfolio is Political in nature.
Here are some metrics that are commonly used to look at different countries for investment potential. A good source to help you with them is The Heritage Foundation which has compiled a top 10 List, as well as a list of 160 countries for Economic Freedom.
Click Here to take a look.
Here is the Heritage Foundation’s definition of Economic Freedom and I think that it is pretty darn accurate.
“ The highest form of economic freedom provides an absolute right of property ownership, fully realized freedoms of movement for labor, capital, and goods, and an absolute absence of coercion or constraint of economic liberty beyond the extent necessary for citizens to protect and maintain liberty itself. In other words, individuals are free to work, produce, consume, and invest in any way they please, and that freedom is both protected by the state and unconstrained by the state.”
Every one of these metrics has a Political component. The first one is one that I came up with and I will explain what I am mean by it.
Capitalist Intellectual Freedom
Business Freedom
Trade Freedom
Fiscal Freedom
Freedom from Government
Monetary Freedom
Investment Freedom
Financial Freedom
Property Rights
Freedom from Corruption
Labor Freedom
All of these metrics basically measure the Stupidity Level and the Greed Factor of Politicians in each country. On a more positive note they also measure how friendly they are to Capitalism and no I don’t mean how much lines their pockets.
Capitalistic Intellectual Freedom - For my definition, this is where Political Correctness comes into play. Are alternative views and ways of doing things given any thought? Does logic or emotional and political expediency rule? Is Capitalism embraced and welcomed with open arms or is it constantly derided?
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You should be enjoying gas prices in the
range of $1.75 per gallon for High Test right
now instead of paying nearly $4.00 a gallon.
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I have found for the most part where the more “Liberal” atmosphere or outlook resides, the more likelihood Capitalistic Intellectual Freedom is oppressed in that if you don’t agree with the majority opinion, there is no civil discourse, instead you are personally attacked rather than intelligently debated on the the validity of the idea. What is really funny in a weird sort of way is that this is the same response with Totalitarian regimes, Dictatorships, Socialism, and Communism.
Also, are Businesses and Capitalist as a whole blamed for everything instead and looked at something to be sucked dry of funds for the pet give away project of the day or are they being looked at as the solution that works every time and supported and not taxed and regulated to death?
This is why Hong Kong, Singapore, Ireland and many other areas of the world are growing so fast because they do embrace Capitalism and all of the gifts it brings.
The adversarial relationship to Capitalism Intellectual Freedom has an averse attraction to Capital as a whole. You can see this around the Globe and even right here in many areas of the US. This has Political overtones in it as well.
This manifests itself in Economics in what inventions or businesses are allowed to flourish. As an example here in the US, I think it would be fair to say the Liberals virtually shut down Atomic Power plants, Coal Gasification, Oil Exploration, and New Refineries.
This has had about a 500 Billion dollar per year detrimental effect on the US Economy as a whole. Much of this is related to the Global Warming debacle and this is in spite of the fact that global temperatures dropped by about 1 degree last year just in case you did not hear that bit of news.
Because if the items mentioned above had been encouraged instead of stopped, we would literally not be importing one single barrel of Oil right now. Not one single drop. You should be enjoying gas prices in the range of $1.75 per gallon for High Test right now instead of paying nearly $4.00 a gallon.
Again, the only reason that we do not have Oil sitting at $60 a barrel right now is purely Political and totally the fault the US Congress and Senate period. Both parties can share the blame for this.
If they took action today, we could be totally energy independent within five years. Unfortunately their stupidity and search for personal power at the cost of the welfare of US citizens is hurting many people not just here in the US but, all around the world. Because we now have much higher food prices and higher prices for energy and it is hurting most people in the US and even more so in the rest of the World where food was already taking up over 50% of the household income. Now that food and energy costs have doubled or tripled in many cases, those that really could not afford it before are in much worse shape now.
But then again, putting themselves above the people they serve and not thinking of consequences has been the nature of Politics for thousands of years. I am not here to complain about it, just to make you aware of it and to show you how to profit in spite of, and because of it.
I love the US but unless something drastically changes soon, you definitely want to think about investing outside the US over the coming years and even if it does, you still should think about putting some of your portfolio in other countries.
However, where to go is the big question and that is where the metrics come into play and the Heritage Foundation’s List is a good place to start.
I want to take one example of how just one metric can drastically impact an Economy and make it a friendly place for your portfolio.
Ireland is rated number 3 on the Heritage Foundation’ list and if you have not heard of Ireland’s Economic story you are in for a treat. They are an example that how quickly you can turn around an Economy.
Up until about 25 years ago, Ireland could have fit into the description of a third-world country believe it or not.
Ireland’s unemployment rate at the time was a staggering 20%! Enter some very smart Politicians who were more interested in helping the people that elected them than the special interest groups that kept many of them in power.
What did they do that has enabled Ireland which only has 1% of the population of Europe to get 25% of all investment capital that is invested in all of the EU?
They lowered corporate taxes to only 10% for manufacturers and 12.5% for most other businesses.
Since they have done this, they have had the longest ever sustained period of economic growth ever in Europe. They have successfully fought off Liberal special interest groups that have tried to raise the tax rates and now enjoy one of the highest standards of living in the World.
The result of lower taxes is booming Economy, and a Treasury that is brimming with a virtual pot of Leprechaun gold. But it has nothing to do with magic but with what every 5th Grader can tell you about basic economics.
Ask a 5th Grader how a company can make more money and she will tell you that they should have a sale and lower their prices and then more people will come to your store. Well, that is exactly what happened to Ireland in a big way.
They actually paid attention to the well-known fact that by lowering taxes, they would raise revenue. They have successfully fought off any stupid and corrupt politicians that want to raise taxes for several decades now much to their credit.
Here is a decent story on how Ireland did it.
http://www.theglobalist.com/DBWeb/storyid.aspx?StoryId=6172
Now is it slowing down somewhat? Are they having some growing pains? Sure, they are and their economy will still have ups and downs, but the lesson is there for anyone to see, even though there are people trying to spin it otherwise.
Can you imagine any Politician having the courage or honesty to ever do this here in the US? OK, now you can quit laughing. But to be fair, Steve Forbes did propose something similar, but you saw how far he got.
If you look at the other top countries to invest in, you only need look at their taxation rates and the Capitalist Intellectual Freedom quotient to find where the money is going and also to find out why it is starting to flow out of the US. Depending who is elected this year, it may flow out even much faster if any of them raise tax rates.
There are a couple of other countries that you should look at as well and they are Brazil and Argentina.
Both are implementing reforms that are Capital friendly and are fast getting their acts together. It appears that Brazil will soon overtake the US in Agricultural production. This is just adds to the reasons why there is plenty of opportunity for investment there.
As a side note, I think as a whole Commodities are going to be a much, much better investment than equities for quite some time.
I will have a story on how you can invest in Brazil and other countries and take advantage of the Economic boom that is going on in South America.
One of the main reasons for the boom in Brazil is that they have a sane Energy Policy in place that will make them Energy independent within five years. The US Congress and Senate could learn a lot from them about Energy Policies if they cared to look.
In the meantime, looking for opportunity outside the US is a a good thing for you to do if you want to improve your portfolio. Plus, depending on who gets elected this year and what the fiscal policies are, it may be imperative in order to get decent returns.
I am Andrew Anderson and I Am An Investor.
