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A Liberty Investor's Guide to Latin America
Words, indeed, are powerful things. As an Englishman in America, my personal favorite is freedom.
It's embodied by those words penned so long ago by a young Thomas Jefferson…
It's the idea that "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."
Investing in Emerging Markets with U.S.-Traded ADRs
For most of the past decade, the name of the game in worldwide equities has been investing in emerging markets.
If you don't believe me, just take a look at the performance of the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM).
T. Boone Pickens Loses "Big" in Alternative Energy
No, he didn't lose a donkey.
But T. Boone Pickens lost a synonym for the animal and a whole lot of money in the wind industry.
"I'm in the wind business…" said Pickens yesterday on MSNBC's Morning Joe. "I've lost my ass in the business."
Pickens didn't blame his own investment for the current situation. He acknowledged that the technological shift in shale oil and gas development has greatly changed the game for American energy, and has made drilling more practical and affordable.
But the statement was just a precursor to his observations that Washington has little priority to setting a national energy policy that is both sustainable and affordable to Americans.
On the show, Pickens hammered home the point that the current administration not only lacks an intelligent energy policy. "They don't have an energy policy."
Why this statement is shocking to anyone, especially the hosts, shouldn't confuse anyone.
Investing in Emerging Markets: Is it Time to Invest In Thailand?
There is a good reason investors have been clamoring to invest in emerging markets.
With the West spinning its wheels, the truth is there's a good deal of money to be made in these markets in 2012.
One emerging market I like is Thailand.
The Hunt for Higher Yield: Investors Pour into Emerging Market Debt
The never-ending hunt for higher yield is leading investors to bet record amounts on emerging market debt.
In just the first two weeks of 2012, governments of undeveloped economies from Asia to Africa sold more than $30.6 billion in dollar-denominated bonds according to Bloomberg News.
That's up from roughly $19.9 billion in the same period last year and the most since 1999, when Bloomberg began collecting data.
Typically, investors shun emerging market bonds during times of uncertainty in favor of "safer" assets like gold and U.S. Treasuries.
But that has started to change.
The Big Move Into Emerging Market Debt
In fact, investor demand is overwhelming supplies as orders have outstripped the amount of bonds being sold.
During a recent auction, the Philippines received $12.5 billion of orders for $1.5 billion of 25-year bonds, pushing the yield down to a record-low 5%. Indonesia sold 30-year bonds at a record-low yield of 5.375% and Colombia sold $1.5 billion of 29-year bonds at 4.964%.
Analysts say the debt crisis in Europe, along with record low yields on U.S Treasuries, has investors on the hunt.
They are now buying the debt of undeveloped nations like Indonesia, Mexico and Brazil, even though credit-rating firms rank them as more risky than their European counterparts
"What we're seeing is a re-evaluation of sovereign-credit risk, increasingly being driven more by fundamentals than by classifications," Eric Stein, a portfolio manager at Eaton Vance Corp. (NYSE: EV) told The Wall Street Journal.
According to the J.P. Morgan Emerging Markets Bond Index, investment-grade sovereign emerging-market bonds are yielding an average of 4.7%.
By contrast, Italian 30-year debt yields 7%, while Spanish 30-year debt yields 6.1%.
One reason emerging market bonds are attracting interest is…
Emerging Markets Forecast 2012: Forget the BRICs! Here Are the Best Emerging Markets of 2012
Don't let the headlines fool you, there's lots of money to be made in global investing in 2012.
You're just going to have to be careful – more so than in years past – because right now the line drawn between successful markets and markets that are in danger of collapse is treacherously thin.
Take the fashionable growth markets, the BRICs – Brazil, Russia, India and China – for example.
It's been 10 years since Goldman Sachs Group's Chairman of Asset Management Jim O'Neill coined the BRIC acronym. His recommendation was certainly effective – one of the best of all time, even. But today, all four BRIC countries face problems, and their troubles illustrate the dangers of following investment fashions.
These Two Emerging Markets Just Got A Lot More Enticing
With U.S. economic growth on the wane and the European Union (EU) on the brink of collapse, there's never been a better time to increase your exposure to emerging markets.
And two fast-growing developing economies just became a lot more enticing.
I'm talking about Colombia and South Korea – both of which just signed free trade agreements (FTAs) with the United States.
Both treaties date back to the last days of the Bush administration – when bilateral trade deals were fashionable – but had gotten hung up in Congress.
To some extent, free trade agreements merely deflect trade from other paths. However, since the EU has signed a trade deal with South Korea and is negotiating one with Colombia, there are both defensive and trade-building reasons for these deals.
South Korea is a trillion-dollar economy and one of the United States' most important trading partners, with two-way trade totaling $74 billion in 2008. And Colombia's potential as a trading partner is enhanced by its geographical position – close to both the East and West Coast U.S. markets.
Both countries are growing quite fast. In fact, Colombia is expected to clock growth of more than 5% in 2011 and 2012.
The Biggest Beneficiaries
The South Korean deal offers the most potential to U.S. exporters, as the deal is expected to add about $10 billion to U.S. exports and gross domestic product (GDP).
U.S. exporters of agricultural products, which are projected to double from their current $2.8 billion, will be the primary beneficiaries. However, U.S. auto manufacturers and banks will also have a chance to break into the market.
On the other side, Korean exporters of cars, trucks and computer equipment will benefit from better access to the U.S. market.
Colombia has a thriving agricultural sector, but U.S. meat exports should jump significantly. Pork exports, for example, are forecast to grow 72%. IT companies and chemicals producers also will gain improved access to the Colombian market. But the greatest potential will be unlocked in the heavy equipment sector, as Colombia races to develop its mineral resources.
Reduced sanitary inspection barriers will improve the trade flow both ways. That will increase demand for Colombian coffee and flowers. But the big breakthrough will be in Colombia's energy sector, as the country's oil is an increasingly important export to the United States.
Now let's take a look at some of the specific companies that will cash in on these deals.
Grow Your Personal Wealth By Piggy-Backing on Emerging Markets
It may be hard to believe that people are getting wealthier these days, but they are – just not in the United States.
No, the growth in personal wealth that we're seeing today is taking place in emerging markets half way around the globe – far removed from the employment and debt problems plaguing the West.
Brazil, Chile, China, Colombia, India, Indonesia, Malaysia and South Africa over the past decade have all posted annual gains in individual wealth of more than 10% – and some well in excess of even that figure.
That compares to growth of just 5% in that period for the United States, Japan, and Europe.
What these growth ratessignal is a trend toward steadily increasing purchasing power – as well as consumption and investment – among the people in the world's emerging nations. That means growing markets and increased profits for businesses and financial institutions.
It also means more moneymaking opportunities for savvy investors with the foresight to ride the trends along with them.
Where's the Wealth Growing?
To uncover the best ways to profit, we must first find where the wealth is growing the most – and where it will keep rising.
The McKinsey Global Institute (MGI), a consulting firm specializing in management and economic research, maintains an index of the world's leading urban centers, known as the City 600. MGI reports the 600 cities in that group – 380 of which are in developed nations, including 190 in North America – currently generate just more than half of global gross domestic product (GDP).
However, by 2025, that percentage will increase to 60% of global GDP, and 136 new cities will move into the top 600. All 136 will be located in developing nations – with 100 from China alone – displacing North American and European cities.