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."

That's not only the foundation for what I believe, but it's also the basis for how I invest.

It's a technique I call "Liberty Investing."

As such I like to invest in countries and companies whose operations are compatible with freedom, as defined by the Founding Fathers and the best U.S. political and economic traditions.

To me, this is ultimately the right way to run both societies and companies. And when we follow them, our returns will be consistently superior over the long term.

The Foundation of Liberty Investing

Using my general Liberty Investment principle, I often look for a number of characteristics in the countries where I invest.

For instance, market signals should be paramount and government participation in the markets should be relatively low. The Heritage Foundation Index of Economic Freedom is a good measure of this.

Each country should also have a high level of integrity-meaning they follow the rule of law. A good score on Transparency International's Corruption Perceptions Index is a good measure of this.

They should also be generally free and democratic, and should have a fairly small government and moderate taxation. Interest rates also should be above the level of inflation, so they don't deprive their economies of domestic savings.

Finally the local bureaucracy should be reasonable to deal with. The World Bank has an Ease of Doing Business Survey that tells you this.

You see how this freedom-based investing technique works?

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