Back home again – some investment and other observations
I finally made it back home to Cape Town by late last night after a very tiring 34-hour stretch of flying and transit time across nine time zones. Such is the nature of doing business across continents!
Below are some random observations of the trip.
• As mentioned a few days ago, the “airplane/airport barometer” has made an amazing recovery since only a few months ago when the numbers of passengers were way down on the pre-crisis days and upgrades were plentiful. Somewhat unexpectedly, airports everywhere were buzzing and there were no empty seats on any of the planes I took – inland in South America, between South America and North America, inland in North America and between North America and Africa.
• Additionally, the “taxi barometer” showed that cab drivers were again busy and no longer contemplating to pack up and return to the trouble spots they left in search of the American dream.
• It was excellent to again team up with good friends and business associates such as John Mauldin (Thoughts from the Frontline) and Paul McCulley (Pimco) at the annual get-together of Rob Arnott’s Research Affiliates Advisory Panel at Torrey Pines, La Jolla. It was as always frightfully insightful to be exposed to finance theory as conveyed by academics of the ilk of Harry Markowitz, Burt Malkiel, Jack Treynor, Richard Roll and John Cochrane. It is important for investment practitioners to regularly revisit finance theory in order to stay abreast of new developments and to critically analyze the investment philosophies they have adopted and whether there is a need for adjustment.
• Although I am not permitted to report on the presentations or discussions of conference, I want to re-emphasize that Research Affiliates is one of the classiest investment shops in the world and destined to capture increasingly large allocations for their highly innovative fundamental indexing approach. If you are not familiar with the concept, a brief description is provided here. (Disclosure: My investment management firm, Plexus Asset Management, exclusively represents Research Affiliates’ fundamental indexing methodology in the Pan-African region.)
• One of the speakers at the conference I met for the first time was James Montier, who has recently joined Jeremy Grantham’s GMO as a member of the asset allocation team after a long stint with Société Générale. Although often provocative with how he conveys his message, his investment views are backed by solid research and ignored at investors’ peril. I have just started reading his two books – Value investing – tools & techniques for intelligent investing and The Little Book of Behavioral Investing – How not to be your own worst enemy – and would highly recommend these to serious investors.
• On a slightly different topic, of all the countries I visited on this trip, Uruguay stands out as particularly attractive. I guess it’s a combination of factors that appealed to me, notably the quality of the people, the scenic beauty of the country (especially Punta del Este), the central location in the region, the quality of financial, legal and accounting services, Montevideo that serves as a gateway to the broader South American region, the proficiency of many people in English, and the relatively crime-free environment. I struck up a business relationship with Enrique Fynn, a very bright and knowledgeable investment professional of Fynn Capital, who will gladly provide guidance regarding investment, residency and most other Uruguayian issues. You can reach him through the “Contact” button in the top right-hand corner of the home page.
• The Dominican Republic (Haiti’s neighbor), described by Columbus as “the most beautiful place on earth”, offers a combination of attractions (scenic beauty in many parts, friendly people, cheapness and real estate investment potential) against a backdrop of third-world factors such as high unemployment, crime and Aids. On balance, the island is worth a visit, especially if one is interested in exploring its liberal residency and naturalization regime with the view of using the country as an affordable retirement destination (more information via “Contact” button).
That just about wraps it up. In my opinion, the US economy is recovering, but the convalescence of structural problems will be a multi-year process. However, there are many parts of the world, such as a number of South American countries, that hold very exciting potential and should be on investors’ radar screens.
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