Poland Is Already Richer Than Japan – Soon It Will Be Richer Than The U.S.
Inside Today's Issue
Essay: Making Money In Emerging Markets
Federal Debt Continues To Surge
Gold And Silver Rise On Election News
Investors Distressed About Distressed Debt
Chart Of The Day… Construction Spending
Today’s Mailbag
Most investors believe emerging markets are risky.
And, really, who wants to buy a business you’ve never heard of, in a country you’ve never even been to? But, as I showed you earlier this week (with Chris Weber’s Max Yield strategy), if you’re careful, emerging markets investments can create very significant amounts of what I call “real wealth.”
Real wealth isn’t just a lucky stock tip. Real wealth derives from understanding the permanent structural advantages that some businesses (and some markets) have, which enable them to produce market-beating rates of return on capital. Understanding these structural advantages is what allows the rich to get a lot richer.
In short: using these strategies isn’t guessing. It’s playing a rigged game.
Not surprisingly, these ideas aren’t often taught. Not in business school. Not on CNBC. But if you’ve read my work for any length of time, you’ve probably got five or six of these ideas taped to your trading desk. Access to this information is really what I’m selling – as every long-time subscriber knows.
By the way, I sincerely appreciate it when you share what you’ve learned from our work and how it’s changed how you invest. Please, take a minute to tell me about your investing journey and what you’ve learned from us about real wealth building: [email protected].
I’m going back to emerging markets again today because we’re launching our next investment practice (Porter & Co. Emerging) early next year. I hope all of you will become a Porter & Co. Partner Pass member this year to lock in access to this work, which will be exclusively for our Partners.
Why do we care about emerging markets? They offer two significant “real wealth” advantages for investors.
The first advantage is the currency. When a poor country gets richer, its money tends to get stronger against the dollar. As you saw earlier this week, when emerging markets currencies appreciate, the gains can be substantial.
The second advantage is a re-rating. As a country grows richer and safer, investors will pay more for each dollar of its companies' earnings. The same profits that were worth 10x earnings become worth 15x earnings. Nothing about the business has to change – your investments can appreciate simply because the entire economy is growing wealthier.
You’ll notice something about our emerging markets investments: they’re even more conservative than our U.S. investments. That means buying companies that…
have been around for decades
have huge moats
have very high returns on their capital
are likely to remain the market’s leaders for at least the next decade
And – no matter what – we will always make sure that we’re getting paid to take these risks. That means a dividend that’s far above what we’d receive in a similar U.S. business.
