“Travel — its very motion — ought to suggest hope. Despair is the armchair; it is indifference and glazed, incurious eyes. I think travelers are essentially optimists, or else they would never go anywhere.”
— Paul Theroux, The Tao of Travel
I know that things look bleak on many fronts: the crisis in the European Union, the fiscal and monetary insanity in the US and the looming debt troubles in Japan — to name just three. For a lot of investors focusing on just these markets, it must be hard to get out of bed in the morning.
But the world is changing. The dominance of these Western markets (including Japan) is not what it once was. And they are becoming less important as time goes by and as the rest of the world catches up.
My new book World Right Side Up: Investing Across Six Continents is primarily about this new world and the opportunities it creates. I think the story it tells will prove to be the most important investment trend of the 21st century.
I’ve talked about the book on radio and TV. And I’ve had countless private conversations about it as well. I thought I’d write up some of the most asked questions I get and my answers to them.
What is your favorite emerging market right now?
I like many of the so-called “frontier markets.” Right now, I’m pretty jazzed up about Mongolia. The pace of growth there and the potential is mind-boggling. I plan to visit in June. I recently recommended a play on Mongolia to my subscribers. But I’m hoping my visit turns up some additional ideas. I also think Myanmar could be the next big story in Southeast Asia and I’m keeping an eye out for opportunities there.
I see a lot of opportunities in certain Africa markets. My favorite way to invest in Africa is through Francis Daniels’ Africa Opportunity Fund. I visited him in South Africa last year and we’ve maintained a correspondence ever since. The fund is a smart, opportunistic way to invest in Africa.
What are your least-favorite emerging markets?
I get asked this a lot too. Of the markets I’ve been to and follow, I’d say I’m worried about China. I think China is due for more than just the soft landing everyone seems to expect. I think China is starting to lose its cost edge in certain areas of manufacturing. I see spiraling wages and surging costs of living. I see a vulnerable banking system and shaky property market.
Longer term, I think China’s economy will be much bigger than it is today. But there will be hiccups, and the risk of having one now is high. What happens in China will affect a lot of markets, so I’m watching it carefully.
I am not a fan of Brazil at the moment. I see a heavy-handed government making a lot of bad moves lately. Brazil is also a difficult place to do business. In South America, I’d rather invest in Colombia, Chile or even Peru.
What’s the role of the US in all of this?
There are two ways to look at it. One way is to fret over a US that will have less influence and less importance in the world. Another way, the way I like to look at, is to think that we’ll have a much more expanded marketplace to work in.
I think of this analogy: Would you rather live in a mansion in a neighborhood in shambles? Or would you rather live in a nice house surrounded by other nice houses? I don’t feel threatened by other countries getting wealthier. I look at it as an opportunity.
It might be worth pointing out that the chapter on the US is the longest one in my book. In other words, I think there is still plenty to do right here at home.
Have you ever gotten sick on your travels?
I don’t know why, but people like to ask me this. In all the traveling I’ve done, I was only really seriously sick once. It was my first time in India, on my second-to-last day, after nearly three weeks there. Remember Slumdog Millionaire and the bottled water trick of resealing old water bottles? It got me. I got very sick that night, and after several hours of unsuccessfully battling it, I called the hotel to send a doctor. I asked the hotel to let him in my room, because I was in no condition to do so.
Next thing I remember, I wake up with this angelic doctor by my bed. He gave some shot in the butt. Took blood. And then came back a few hours later to check on me. I was much better. I remember paying him about $80 in cash — for two house visits, blood work and meds. Cheap!
What’s the strangest place you’ve ever been?
There are a lot of images that come to my mind. I remember sitting in a bar in Cambodia where people drank cocktails from shell casings. I remember a restaurant in China that looked like a pet shop because you picked what you wanted to eat from one of the tanks and it later arrived on your plate. Very fresh!
I think it was pretty strange to be in Bangkok during the floods last October. I remember cars parked on the highway bridges. I remember sandbags around many of the buildings. And I remember being greeted by name as I walked into the hotel. I was the only one checking in that night!
I just turned 40 years old and celebrated the event by hiking the Inca Trail to Machu Picchu with a buddy of mine from high school. I’ve always wanted to go there. And I figure it would be a good challenge to hike it. I had been training every day for a few months, just to make sure that no one had to haul me off those mountains!
But that trip was just for kicks. Investment-wise, I have a long list of places on my radar to check out in the future. Markets are constantly changing. New opportunities open up all the time.
Chris Mayerfor The Daily Reckoning
Chris Mayer is managing editor of the Capital and Crisis and Mayer's Special Situations newsletters. Graduating magna cum laude with a degree in finance and an MBA from the University of Maryland, he began his business career as a corporate banker. Mayer left the banking industry after ten years and signed on with Agora Financial. His book, Invest Like a Dealmaker, Secrets of a Former Banking Insider, documents his ability to analyze macro issues and micro investment opportunities to produce an exceptional long-term track record of winning ideas. In April 2012, Chris released his newest book World Right Side Up: Investing Across Six Continents.
Too bad that Mongolian ETF is a no-show…
“Right now, I’m pretty jazzed up about Mongolia.”
things are that bad, huh?
“think China is starting to lose its cost edge in certain areas of manufacturing.”
that would have been news a year ago ….
“Or would you rather live in a nice house surrounded by other nice houses?”
Yes, that is the point. What America and other industrialized nations need to realize is that the sooner these third world nations get their wages up to our levels(or we all reach parity somewhere in between) then the sooner jobs start flowing back to our shores. Jobs need to go to where they are most efficient for their markets and not where the cheapest workers are. Wage parity will create this scenario so higher wages in China is a good thing for all of us wage slaves
Fiscal & monetary insanity in the USA?
Maybe the next election will sweep the Republicans out of office, and the Dems will have enough votes to implement the will of the people?
Nah. More likely Romney will win the advertising wars. Then it is back to the usual borrow & spend Republican way of life.
“Then it is back to the usual borrow & spend Republican way of life”
NAH! NO !! The Republican Way of Life is now defined by the Tea Party – Cut Debt to save our future…..
“Then it is back to the usual borrow & spend Republican way of life.”
“The Republican Way of Life is now defined by the Tea Party – Cut Debt to save our future…”
well, actually, the last time the republicans were fiscally responsible was under gingrich from 1995 to 2001. since then it’s been one spend-fest after another, the only difference between the parties has been what gets the borrowed money and what doesn’t.
really can’t blame the repubs, the people demand spending and any politican that doesn’t spend gets voted out. the tea party has an attitude of “keep your government hands off my medicare”. the democrats are flatly irresponsible – the dem-controlled senate hasn’t produced a single budget in three years and obama’s budget was so horrible it was voted down 535-0 – nevertheless even if they were responsible there’s nothing anyone can do. the top of the dollar ponzi has been reached and the productive citizen population is in steep decline with no recovery in sight. who is in the white house and who controls congress will make no difference to either of those at all. there is no solution. we’re doomed.
Mongolia has about 2.5mln people….on raw number data, the city of Alberquerque has a larger economy than monglolia
Income disparity and unemployment in the USA should make you less sanguine
I don’t think Americans are aware that the greatest threat to personal safety and the economy lie within the US borders
GMAN said “The last time the republicans were fiscally responsible was under gingrich from 1995 to 2001. Since then it’s been one spend-fest after another, the only difference between the parties has been who gets the borrowed money and who doesn’t.
Actually GMAN, I think that the balanced budgets were the work of Bill Clinton (a D not an R).
The Teabaggers seem like a faction hell bent on self destruction.
“Actually GMAN, I think that the balanced budgets were the work of Bill Clinton (a D not an R).”
the ship is going down and you want to argue about an entry in the logbook?
as anyone who was around at the time will recall, clinton fought the gingrich republican budget tooth and nail. he vetoed it the first two times it came up and finally signed the exact same budget the third time it came up because public pressure was just too great and the republicans had gathered enough democrats in both the house and senate to ensure a veto override – something no president wants. when finally he was forced to sign it he told his supporters, “don’t worry, we’ll fix this later.” as anyone who was around at the time will recall. of course his “fix” was to take credit for it when it turned out so well – and for this he is celebrated as a great democrat. and he is.
now get thee to a lifeboat.
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