I recently read Adventure Capitalist by Jim Rogers, which recounts his three-year, 116 country global adventure and take on the investment opportunities that existed (or not) at many of the stops. I also follow Harris Kupperman's blog "Adventures in Capitalism" -- of late, it's primary focus has been on Mongolia, a location he has moved to as he builds a company levered to the economic growth that he envisions for that country over the next 5 to 10 years.
Which leads me to the subject of today's post. Despite a perception that American stocks are "cheap", the best investment opportunities out there are not in the United States or other "mature" economies. As we continue to struggle through the after-effects of the most recent bubble, and even though there is a continued global effort to solve our problems with more debt, opportunities will still emerge -- specifically, those that are in countries that have abundant resources, favorable demographics, a modicum of respect for property rights, sanity in their monetary and fiscal policy, and governments that know to get out of the way of the positive momentum.
I like economics -- granted, I don't have any formal background (as much of my posting probably reveals). But, being a good macro investor does not require that you can explain the IS/LM curve. Quite frankly, most of the guys who focus on that stuff wouldn't do a very good job of making you money. In a big way, you have to be able to intuit what's going on and identify the trends, without reliance on some arbitrary model. And especially as it relates to an emerging market, the data isn't always what you would hope for. But, it's possible to figure it out nonetheless.
So, while I continue to believe in gold, I also believe in diversification. But, I'm not using that term in the traditional sense of sector mix. Rather, besides asset class, I think it is a smart idea to have investments that are geographically diversified (a term I first encountered with the team at Casey Research). South American farmland, bank stocks in a former Soviet satellite state -- these are the investments that are tethered to per capita income growth and present the risk-reward I'm looking for.
