Investing Without Borders

How Six Billion Investors Can Find Profits in the Global Economy

Daniel Frishberg

• Publisher: Wiley
• Year: 2010
• ISBN:
  9780470609309
• Edition: 1
• Topic: Personal Development
• Subtopic: Personal Finance

An insightful examination of the skills needed to be a proactive investor and find diverse investment opportunities in the emerging economy

There is no little league on Wall Street and no white belts. Here or abroad, you are put in immediately with the black belts – the best and the brightest. Think like an amateur and they will eat your lunch in China or in the U.S. Attempting to invest overseas like a robot and following the leader will produce results just as bad as investing that way at home. While many investors are smart, creative individuals, when exposed to the herd, they tend to follow group mentality and succumb to what the people around them believe. Avoiding this trap can mean big profits for you.

With The Investment Warrior, author Daniel Frishberg-a financial professional with more than thirty years experience in the industry-shows you how to break from the pack and build a winning portfolio. The investor in the old economy didn't think critically about changing economic or political conditions around the world. He never really had to. He was lulled to sleep by the enduring dominance of the U.S. economy. This book teaches you to be an awake and aware investor, ready for the changing financial environment. Throughout the book, Frishberg discusses what it takes to successfully invest both domestically and abroad and provides practical examples. This book

• Goes beyond the current crisis and explores the importance of diversifying and escaping the "herd" mentality that hinders most investors
• Contains insights into investing for the long term and taking advantage of the growing world economy
• Details the staggering amount of resources being applied to the global boom and what this means for your investments

The lessons of this book go beyond today's economic crisis. Frishberg will provide you with insights to be used in all investing circumstances. Everyone wants to oversimplify. This is one of the most costly human foibles. You can capture considerable profits by going out on your own, and with The Investment Warrior as your guide, you'll quickly discover how.

CHAPTER 1

America the Dominator

How the U.S. Became the Most Powerful Country
on the Planet

In this chapter ...

• So you got the book. Let’s see what you get.

• Who were they? Why did they come in the first place? A change comes: We’re getting old, and printing too much money!

• Robin Hood, Sherwood Forest, and the Sheriff of Nuttin’ Doin’

• Let’s review: They come, they learn, they leave.

What’s First?

Throughout the course of this book, there will be times when I’ll want to get very specific with you. We’ll talk about various investment techniques, and those techniques are as valid today and tomorrow as they were yesterday. The investments themselves, however, well let’s face it, to get this book to you in the winter of 2010, I have to finish it in the autumn of 2009. I’m giving you my best ideas and strategies, although by the time you read this, some of them may have succeeded, played out, or even failed.

That’s OK, because I’m giving you these ideas as an example of how you should be thinking. Take them in that spirit, because my mission is to help you transform yourself into the new species of think-for-yourself investor you’ll have to be in this world without economic borders.

Our world is connected, networked as never before. We send our thoughts to each other everywhere and anywhere via e-mail, video conference, and streaming audio. We collaborate across borders and entertain each other across borders; we even finance each other across borders.

That means the rest of the world is at our doorstep; so yes, we’ll talk a lot about how you can take advantage of this new “globalized” economy. But, make no mistake about it: For all intents and purposes, it is American ingenuity that created the wealth our neighbors want so desperately to share in. And there are plenty of great American companies to invest in—companies that stand as strong as the Rock of Gibraltar, companies that will continue to stand, continue to grow, continue to be some of the best investments available to make you rich, and richer.

As I’m writing this, you and I still need and want and buy devices from Cisco Systems—devices and ideas that are bargains to us, and extremely profitable to Cisco. I have little doubt that I’ll be buying and selling that stock for the rest of my life. I’ve come to understand the company and the pricing of its stock; I can feel when it’s a bargain, and when the money has been made. You can do it, too. It only takes a little experience and practice. Play with it, and you’ll get it, just as you learned to throw a football or play ping pong, to shoot pool or draw blueprints, or to sing or dance.

I’ll also be watching (and buying and selling) the Blackstone Group. I’ll talk about these companies and others in more detail later, but for now, just imagine how Blackstone can fit into your life. This is not only about you and me buying into China, or the rest of Asia, or the rest of the world. It’s also about them buying into us—remember, it’s a global concept here. Look, the Chinese Sovereign Fund, along with smart people everywhere, has invested billions into Blackstone, and Blackstone, with its experience and savvy, used that money to buy companies, take them private, then develop and sell them, usually for a huge profit. I’m sure I’ll buy and sell Blackstone many times over the course of the rest of my life. Again, you can easily learn to do the same thing.

The point to be made here is that this is not just us and them. It’s all of us; it’s a network. A worldwide network to be sure, but hey, it takes a phone connection or a computer connection the same amount of time to go around the corner as it does to go around the globe.

As an American, you’re privileged to belong to a culture made up of inventors and innovators, a vast group of people who have been able not only to survive, but to thrive on their spirit of adventure and a vast store of knowledge—all long, long before our neighbors around the world began to “catch on.” The fact is they’ve come a long way toward catching up. But their doors, as well as ours, are all unlocked; the walls are down, the economic borders no longer exist. It is to that point that I’ve put this book together.

So then, are you ready? Good. Now let’s see how we ever got into this terrific position in the first place.

Why America Has Always Dominated: Part One

This is going to be the era when we Americans, the inspiration to the whole world, get to watch the ascendance of everybody else. It’s hard not to think of yourself in decline, when everybody else is catching up. The truth is if we keep ignoring the free spirit and willingness to take a chance and assume the risk of losing what got us to where we are, we will see some decline. Much of this book is about how to think globally and share in the good fortune of those around the world that we have inspired. More than that, it’s about how you can join me in getting rich helping them get what we have—that which they are determined to get!

Great. But don’t be fooled. The real long-term success of the United States is still ahead of us. At the moment we may be slowing our own development by focusing on how we split the pie, rather than how we grow the pie, but life in this great country is cyclical.

Our society has more freedom than any other on this planet, and when the government’s policies don’t work out, we are better able to change policies and governments than anyone else. That’s exactly what will happen. So, for now, you and I will make lots of money acknowledging that foolish U.S. policies are going to set us back a little, and give others with courage and initiative a chance to catch up and even surpass us in certain areas for a while.

Through that whole medium-term plan, don’t forget for one minute that the worst bet ever conceived on planet Earth has been a bet against American ingenuity, the American economy, and American power. History is littered with the limp bodies of those deceased, and the shells that remain of those still alive, who have made that bet against the United States—from Hitler and Tojo, to Khrushchev and Brezhnev, to Saddam and Kaddafi. I, for one, do not plan to join them.

There are major reasons for our success. Our advantages over other nations are so profound they’re difficult to overcome. Sometimes they lead us to make mistakes rooted in overconfidence and hubris, but we’ve always recovered, and when the whole world gets used to selling America, I can assure you, I will be buying.

The best and the brightest came to America, because they saw the big magic “O”—opportunity. And what created that opportunity was the very nature of the place itself. The guys who landed here way back when, landed in one of the most fertile, well-developed places on the face of the planet. It’s a well-designed place, with better resources and a better setup than anywhere else in the world. From sea to shining sea, we have good, arable land. Easy to grow stuff on, it’s the largest piece of contiguous arable land in the entire world. The middle of the country is made up of prairie land that is perfect for crops; it didn’t even need to be cleaned up before farming. And there’s more very good farmland on the East Coast, the West Coast, and down South.

There’s good, arable land elsewhere in the world, but it’s mixed in with mountains and jungles and deserts. We’ve never been saddled with the enormous burden of having to focus all our energy on trying to feed a country full of hungry, undernourished people, because it’s never been hard for us to get large tracts of land set up to feed our population. Most other nations spend all their time and energy just trying to get food.

The next reason is travel. How easy is this? There are a couple of mountain ranges a few thousand miles apart, but other than that, it’s flat! We’ve easily built roads for horses, roads for stagecoaches and buggies, roads for cars and trucks. We’ve easily built railroads north, south, east, and west. To build roads in most other countries, you’ve got to blast through mountains, or dig your way through treacherous land, or clear your way through jungles, and so on. It’s slow, tedious, and very expensive work. And I’m talking about everybody: Europe, Asia, South America, Africa, China, Russia, all of them. They have tiny little pieces of arable land mixed with very, very rough terrain, where it’s extremely difficult to move people around.

Those other countries need gigantic armies, too. Because of the layout of the land, armies need to be stationed all over the place in every key populated area. We’ve survived throughout the ages with smaller armies because it’s so easy to move them around. These things are all important because the more resources you have the more creative you can become. We had started writing music and developing the arts while many countries were still trying to figure out how to build roads. And don’t even get me started on the rivers and waterways in this country. Not only is the land fertile, we’ve got rivers that traverse the country in every imaginable direction.

Now, Europe has a lot of rivers, but they all move in one direction—without connecting. Here, the rivers connect! And it’s so incredibly easy to use that network of rivers to move everything around. It’s made it easy to develop cities, easy to get food there, easy to get equipment to the farms and to the armies.

America is also blessed with this great jagged coastline, which makes for great ports. It’s easy for us to bring in big ships. They can anchor in those deep water bays just offshore and load their goods. In many of them they can dock right at the port city, which means easy connections to the rivers and more easy means of transporting people and goods. How could this not have turned out to be the dominant force in our world? It’s really a great place to live and develop a population of people. We accomplish very easily things that are, for other nations, a considerable challenge. And that’s just the beginning.

Why America Has Always Dominated: Part Two

Because of the physical nature of the United States, as described earlier, it was relatively easy to develop this country. And because that in and of itself created opportunities, it lent itself to an immigration of very intelligent, inventive, and creative people. They were attracted by this wonderful, fertile environment. And once they got here, they began to innovate, which only caused the advantages and opportunities to increase. It’s what would happen in the NFL if the best team got to pick first in the draft. Imagine what kind of a team they’d build in a very short time!

I want to give credit to my good friend Harry Dent for this next line of thinking, and I’m compelled to include it because it really helps define the makeup of the generations of people who carry this country ever forward. Harry called one of them the “Bob Hope generation,” and it had a particular role to play. You see, the generation that preceded it was the Henry Ford generation. They were very innovative, building and discovering new things, new technologies, the assembly line, and all the great inventions that served as the building blocks for many of the things that we use today.

The Bob Hope generation fought World War II and made it safe to live here. And it was Harry Dent who pointed out that these generations alternate. One generation invents and innovates; the next distributes and takes the innovation to the masses. One generation built the assembly line for cars, the next created gigantic car companies. Then came the Baby Boomers, to start the innovation process all over again. It goes without saying that computers, along with an incredibly high-speed Internet, have been the greatest of those achievements and contributions. Next? Maybe it will be a generation that will have computers that work without IT guys. Eventually we’ll have a generation of computers that work so well and are so easy to manage that we’ll be choosing them by how well they go with our décor, as we do with lamps and telephones.

So here are all of these very smart, very innovative folks in a land where opportunities abound, and there’s another new and exciting one waiting around every corner. They take advantage of every one of these opportunities and are now inventing new ways to do things; one in particular is augmenting the human brain: computer networking and wireless digital communication devices. Together these elements facilitate the transmission of information at a speed past generations could not have even imagined.

All this led us to accelerate the speed at which more new innovations could occur. Suddenly our scientists are able to map the gene, and they can go back 15 billion years and look at things through the use of space telescopes and computer modeling. They’re no longer limited to the use of their own brains. Every American benefits from the fantastic new ways to communicate with each other. Just like the rivers found in this country allowed a faster means of delivering goods and messages, the rivers of communication now flow at a speed never conceived before.

As the resources increased and improved, naturally, more folks wanted to join in on the fun. The Baby Boomers were the first ones fortunate enough to reap the benefits of all of those improvements in communication and manufacturing and so forth. This was a large generation of people. There were a lot of them to be strong, bright, and innovative. So you can see how things grew exponentially.

I guess the final word on this country’s ability to dominate is this: Many of those other countries and their societies, particularly the Europeans, are traditionally noblemen with deep heritages. They’re steeped in their owned strata, and they’re basically stuck there. The folks who came over to America, however, were adventurous, ambitious middle-class people. They were merchants who were traveling, trying to develop more trade. Kings and queens and barons and baronesses don’t care much about getting out there and developing trade. I guess they’re too busy looking at their art. The merchants I spoke of (the middle-class folks) weren’t so steeped in their traditions. They were far too busy, out there looking for new and exciting ways to conquer new frontiers and always seeking new adventures. You might say they were the artists, not the art collectors.

Why Things Are Changing

That’s a lot of great news. Too good to continue this way forever? Well, let me say this: This generation I’ve been talking about, these energetic innovators, are, well, frankly they’re getting old. And older folks don’t have much mental flexibility. They don’t particularly like to learn new languages; they don’t care for political change. They don’t even like to move (or be moved) around much. And once the key to progress becomes technology (instead of rivers), the transfer of knowledge can go anywhere. Like, for instance, to China.

Now, there’s a place with little arable land, poor roads, and few rivers. So, why all the fuss about China? We Americans have so transformed the world that the new highway of knowledge is the Internet, and China and the rest of the world are using that technology to beat us at our own game. Rich and mature, many of us have a tendency to sit around thinking that we have all the advantages and no one could possibly have a shot at catching up with us. We forget that as we have prospered, we’ve taught them the game so well that they might become better at the game than we are. Our realization of this fact has been very slow in coming, but it will become clear quickly and suddenly. This book is not about fighting the inevitable; it is about loving it, embracing it, and riding that wave.

The problem for the average wealth of Americans in the near term is the fact that Americans just don’t seem to get it. We’re not getting the fact that when you print $12 trillion (that’s what we’re doing, you know) you weaken yourself. Other people in the world are beginning to compete. If we don’t get it that you can’t make laws dictating that folks buy cars they don’t like (made by guys making $65 bucks an hour), then those folks are going to go out and buy cars that are made elsewhere. We don’t seem to understand that when people get fed up and feel too much pressure, they can just up and move their businesses elsewhere.

We also don’t seem to get it that you can’t reward people for being lazy and slothful, and get the same level of ingenuity and aggression we’ve become used to over the last couple of hundred years. You can’t punish people for being risk takers, because those people are going to either stop being innovative risk takers and/or they’re going to go somewhere else and conduct business. We (and I say ...

Table of contents

• Title Page
• Copyright Page
• Dedication
• Foreword
• Acknowledgements
• Prelude
• Introduction
• CHAPTER 1 - America the Dominator
• CHAPTER 2 - Before the Borders Came Down
• CHAPTER 3 - The Media Act
• CHAPTER 4 - Cashing in on Six Billion Opportunities
• CHAPTER 5 - Unlock the Billionaire Inside You
• CHAPTER 6 - Being Investor 2.0
• CHAPTER 7 - Welcome to the Big Leagues
• CHAPTER 8 - More Skills, More Opportunities
• CHAPTER 9 - More Strategies
• CHAPTER 10 - Demand Top Dollar
• CHAPTER 11 - Now You Have the Power
• About the Author
• Index