Chris Mayer

Lakshmi Mittal is the head of the largest steelmaker in the world, ArcelorMittal. It is a company he built up through many savvy acquisitions. As a result, Mittal is one of the richest men in the world. He also has a global perspective second to none, having run businesses in many different countries.

So when he said he may invest in a steel plant in Alabama, I listened. “Mittal Upbeat on U.S. Growth Prospects,” a Financial Times headline reads. This is man who could put a steel plant almost anywhere in the world. For him to say the U.S. is among the most appealing is saying something…

In an interview with that paper, Mittal said: “There’s an improved picture for housing starts, and automotive demand seems to be rising. If you look at the U.S. economy in general, then you see a good story.”

The FT sums up:

“U.S. manufacturing is poised to reap the benefits of cheaper energy, propelling the world’s largest economy into a growth phase, according to Lakshmi Mittal… [He] said that the new shale-based deposits in the region made him ‘much more optimistic’ than he was two years ago about the prospects for the U.S. economy.”

These are themes we have touched on before. Just before Thanksgiving, I wrote a piece to you called “Four Reasons To Remain Optimistic,” which talked about good stories developing in the U.S. economy. I got quite a few emails pushing back on that idea.

On my recent trip to Nicaragua, I spoke at my publisher’s Rancho Santana Sessions conference. I trotted out the more optimistic theme there too. I talked about the ongoing housing and banking recovery. I mentioned the energy revolution and nascent manufacturing revival. I got push back in Nicaragua, too. Lots of people seem to want to believe the country is screwed and, well, forget it.

Investors don’t think that way. No one ever created a fortune thinking that way. There are always opportunities. Always.

Now, I want to be careful here, because it is easy to get pinned as some sort of flag-waving idiot that doesn’t get what is going on. I get it. I get the debt levels, the fiscal crisis, the creeping socialism (and creeping fascism) and all the rest. Still, to use that as an excuse for not investing is, as oil tycoon Paul Getty once said, “only an excuse for not trying.”

We have been through worse.

Take the 1950s. I’ve been reading The Best of I.F. Stone. Izzy Stone (1907-89) was a great journalist and editorialist most famous for his influential newsletter, I.F. Stone’s Weekly. In the 1950s, the threat of nuclear war hung over the landscape like a bright moon on a starless night, and Stone has several editorials on the issue. At the time, mainstream papers talked about what to do if such an attack occurred. U.S. News & World Report carried a story, “If Bombs Do Fall.” Life magazine ran a story, “How You Can Survive Fallout.” It must’ve been pretty tough to think about investing with all that going on.

We could roll back further, let’s say to 1939. What a disaster the world looked like then. War in Europe. A Great Depression at home. Yet as we now know, many fortunes had their seeds in the ground before or during this time. Stone’s editorials, which span three decades, show how this ball of ours has always been full of serious troubles. And yet…

During my talk, I quoted from an entertaining little book called The Very Very Rich and How They Got That Way by Max Gunther. I like it for its pugnacious attitude toward those wet blankets who want to quash any idea of getting rich. I like Gunther’s punchy prose, though his book is a superficial book on many levels. Anyway, Gunther writes:

“The men in this gallery… made their colossal fortunes in our own economic era or in recently phased-out eras that were not grossly different from our own. Each took the economic environment as it existed in his day and instead of letting it walk on him as most of us do, he grabbed it by the neck and beat it into submission… The supremely wealthy have always done that and always will. No matter what the environment was like, some men have figured out how to beat it. There is, it turns out, always a way.”

Keep in mind Gunther published this book in 1972 — which again, was another one of those periods with lots of macro worries. And Gunther makes a good point here why you want to invest with those proven owner-operators I love to talk about so much. The owner-operators are the ones who tend to figure out a way. They are the ones you want to invest alongside. (It doesn’t work all the time, of course. Nothing does. But I’d rather play the game this way than invest in some faceless company run by suits who own no stock save what they get through stock options.)

There are always big problems, too. But if you never play the game, you have no chance. My friend Eric Fry, who is co-editor of The Daily Reckoning and also spoke in Nicaragua, used the analogy that investment ideas are like trains — “They arrive and they depart,” as he said. Some arrive on time, some late. Some never arrive, or depart.

I extended that metaphor by saying that there are crowded trains and nearly empty trains. You get better deals traveling on less crowded trains and get where you want to go all the same. I tried to encourage people to take the less crowded trains.

I’m not saying life and investing are going to be easy. (And I’m not bullish on the stock market overall, only on specific opportunities. I’m agnostic on the market as a whole.) In the end, there is no escaping another crisis of some sort.

Timing is the thing. And if you take the long enough view, the survival rate for everything drops to zero. At some point, the sun will burn out and that will end the story here for good. But I’ve never seen the point of taking such an apocalyptic — and paralyzing — worldview.

I am reminded of that witty investor Marty Sosnoff. “This is like Venice slipping gently but proudly into the mud over 400 years,” he wrote. “In the end, the mud wins, but there have been some memorable masked balls in between.” (This is from Humble on Wall Street, a true pleasure to read and one of my favorite finance books). Or as the great speculator Jesse Livermore once said: “It’s true you can’t take it with you, but you can sure as hell use it until you go.”

So to finish where I began: If you told me I could pick only one country to invest in, I’d pick the U.S. (Fortunately, I don’t have to make that choice, and there are plenty of wonderful places to invest overseas, too, as I’ve written much about.) I’m with Lakshmi Mittal. There are some good stories emerging here in the US of A, despite the problems.

Sincerely,
Chris Mayer

Original article posted on Daily Resource Hunter 

Chris Mayer

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

  • thepercolator

    “Creeping Fascism”?

    The USA has already become a Fascist State.

  • DaveHunt

    Lakshmi Mittal also bought Beth Steel’s Sparrows Point Plant, soon to be torn down and sold as scrap. However, it was the owners after him that really took it on the chin.

Recent Articles

Let the Alibaba IPO Show You Where the Market’s Headed

Greg Guenthner

For the last few days, the market has been buzzing with excitement over the Alibaba IPO. Well, the day is finally here. And while some investors line up with their lotto tickets, ready to snatch it up no matter what the price, Greg Guenthner suggests a slightly more restrained approach. Read on...


NATO Meeting Gives You a Strong “Buy” Signal

Byron King

In early September, 2014 an important meeting was held at the posh Celtic Manor, in Newport, Wales. Heads of state were present. But it was the appearance of a Lockheed F-35B fighter jet that held the real story of what was going on... Today, Byron King pulls back the curtain on this meeting, and how you can use it to your advantage in the market. Read on...


What to Do When the Largest IPO in History Hits the Market

Josh Grasmick

The largest IPO in history is about to hit the market. And there's all kinds of speculation as to how it's going to pan out. Today, Josh Grasmick gives a definitive answer... and offers some advice on how to play this new stock for huge gains no matter what happens on day one of the IPO. Read on...


Laissez Faire
One Great Tip for Investing in 3-D Imaging Technology

Chris Campbell

By now you're likely familiar with 3-D printing. It's one of the most important tech developments of the last decade, and it's just getting started. But as Chris Campbell explains, there's another form of 3-D technology that could soon overshadow it. Read on...


How to Invest in a Strong Dollar World

Chris Mayer

Our friend Jim Rickards and founder Addison Wiggin believe the dollar will soon meet its demise. Chris Mayer, on the other hand, thinks the dollar will only get stronger this year and next. We'll let you decide for yourself. In this featured essay Chris lays out his train of thought and a guide for investing in a strong dollar world. Read on...


A Unique Way to Play the Health Craze

Greg Guenthner

With the rise of the organic food market, people are becoming more and more health conscious, and thus, more aware of what goes into cultivating their food. But there's one aspect of this market that's long overdue for a massive overhaul, and that could present a very lucrative investment opportunity. Greg Guenthner explains...