International Investments change all the time. We should never forget
to look for, accept, adjust for and even embrace change.
Our recent major and emerging equity market updates should
give us a
moment to pause. Think how the investing world has changed. Emerging
markets used to be risky. Now they regularly outperform what used to be
the good, safe, major markets.
This year countries we used to deem high risk such as Egypt and Jordan
have helped investors double their money in less than a year. They
have both risen over 100%.
Seemingly safe markets like the United States (up 1.1%) have
lost purchasing power when adjusted for inflation.
This has been the case worldwide. Michael Keppler’s top value major
market strategy has gained 6.5% for the year while his top value
emerging market strategy is up 30.8%.
We even have to worry about Blue Chips such as General Motors going
I was especially jolted into re-thinking change while recently reading a
local Ecuadorian newspaper during President Bush’s visit to Argentina.
There was the normal Yankee bashing as 40,000 demonstrators protested
the Bush’ administration’s bullying stance. Nothing much new about
What was fresh and should have been clear earlier was the new Latin
feeling that Bush is no longer a player. What the rest of the world is
realizing is that the United States is out of money and deeply in
debt. Latin countries are depending less on US business because they do
not believe that the US has it to give.
Latin America is refocusing its efforts and build bridges with places
like China and India instead. This new ideology is rearranging my view
of how the global economy may evolve.
Previously my thinking was based around the belief that three economic
zones develop, the Asian zone led by Japan, Europe (led by Germany) and
The Americas led by the US.
Now I wonder. This feeling of change was enforced in other ways on the
same trip. Two European bankers were there helping us. These are sharp
conservative, rational, well to do business people. They are not
radical by any stretch of the imagination. I mentioned to them that
Delta Airlines was planning on adding a flight from Atlanta to Quito
Ecuador which would save them quite some time getting from Europe to
Ecuador. They currently fly to Amsterdam, then the Netherlands Antilles
and finally onto Quito, a trek that takes them 24 exhausting
hours. “We never fly though the US anymore,” was their reply. “It is
way too much trouble for non Americans to transit there.”
What struck me most was the way these very sensible people said this so
matter of factly. They had struck the US off their list of places to
fly through and seemed a bit surprised that I should even think
About the same time I was reminded of change when reading how many of
the world’s largest banks Deutsche Bank in Germany, American Express in
the US and Barclays in England for example now have smaller market
capitalizations than China Construction Bank, which following its
initial public offering October 27, 2005, is worth $66 billion. This
was the largest global flotation in the last four years.
All this certainly has me rethinking. The fall and decline of the US
Empire may be further along than we know. Perhaps or perhaps not. We
all have to guess about what change is coming. All we can really know
is there will be change.
Maybe these coincidences are just little trickles. Yet tiny streams
have a way of merging and suddenly becoming bold creeks and then
roaring rivers. So be ready for change.
I love the United States and choose to spend a lot of time here. Yet I
am happy that Merri and I also have a home in Ecuador. Life is
wonderful in both places. Having two homes gives us more flexibility
(not to mention more sun in the winter). More importantly, living in
two countries and traveling gives us expanded horizons and this helps
us never forget, to accept, adjust for and even embrace change.
You should as well and…enjoy good investing!