Friday, April 13, 2012

Rahemtulla, Where in the World Should I Invest?

Karim Rahemtulla is the founder and editor of The Smart Cap Alert and the emerging markets/options editor of Wall Street Daily. He knows both how to analyze markets and how to sell his best ideas. In the online world, that means he knows how to write in a convincing way. Where in the World Should I Invest?: An Insider’s Guide to Making Money around the Globe (Wiley, 2012, part of the Agora series) manifests his considerable skills. Part travelog, part investment guide, the book is not only informative but also fun to read. Sometimes it’s downright hilarious.

Rahemtulla spends the most time (and lavishes the most humor) on China and India, but he also devotes chapters to Egypt, Vietnam, Cambodia, Thailand, Turkey, Singapore, Russia and the CIS (Commonwealth of Independent States), Brazil, Chile, Africa, Central America and Mexico, Eastern Europe, and Argentina.

Each chapter follows roughly the same pattern: reminiscences of trips the author took and tips for the would-be traveler, areas in which to invest, and a description of the strengths, weaknesses, opportunities, and threats of each country or area.

By way of example, let’s look at Thailand. The author subtitles his chapter “So Much for Potential” and begins: “Thailand is possibly the best positioned to be a Tier 1 emerging market. It has a strong capitalist bent, a functioning and established stock market, decent infrastructure, a world-class metropolis in Bangkok, a booming tourism business, a strong port system, and a friendly and welcoming population with a history of modern independence from foreign rule. I could have written the same thing 20 years ago.” (p. 91)

Of course, anyone writing about Thailand has to mention its famous red light districts. Herewith an excerpt: “On the way to Patpong (a district that is more oriented toward foreigners) the streets are lined with little stalls selling Viagra and Cialis. … Strip clubs and bars line the streets as far as the eye can see, and if you’re a man, you will be tugged at incessantly by beautiful Thai girls inviting you to enter their establishments. They hang out in front of each joint in small posses, dressed alike, usually in Dallas Cowboy cheerleader-type outfits.” (p. 93)

The best investment gains in Thailand have come from property and property-related companies, followed by banks, telecoms, and companies dealing in cement and food. “[T]he type of companies that you want to invest in are those that serve the local market. Thai company shares are not hard to purchase, and some trade as American Depositary Receipts in the United States. But, as with every other emerging market, you are better off waiting for a crisis in Thailand and buying a Thai fund such as the Thai Capital Fund (NYSE: TF), Thai Fund (NYSE:TTF), or the MSCI Thailand Investable Market Index Fund (NYSE:THD). My rule of thumb is to start buying in tranches when the discount to net asset value (for TF and TTF) increases to over 25 percent—it’s like buying a dollar’s worth of shares for 75 cents or less.” (pp. 95-96)

The chapter concludes with Thailand’s strengths, weaknesses, opportunities, and threats. Among the weaknesses: “the population possesses a questionable work ethic compared to neighbors” and “the cost of doing business is slowly pricing Thailand out of the emerging market category.” (p. 96)

Whether you want to travel to some of these countries or invest in them, Rahemtulla’s book is a great place to start. Sometimes it will wave you on, sometimes it will stop you in your tracks. For example: “If you get flustered easily or hate crowds, don’t visit India.” (p. 59) If, on the other hand, “you truly are seeking to both move some cash offshore and invest like a local in many of these markets, especially Asia, it pays to open a brokerage account offshore” (p. 197)—such as at Boom Securities, based out of Hong Kong.

Whatever your wont, Where in the World Should I Invest? is a pleasure to read.

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