We all have little personal “tells” that show what’s going on inside our heads…
Maybe you’re a “toe tapper” when you’re under stress. Or perhaps you’re an “earlobe puller” — cops look for that whenever they suspect a less-than-honest answer to a question like: “Why were you driving so fast over the speed limit?”
Not that that’s happened to me, mind you. I’m just sayin’…
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Blue Mountain Credit Alternatives Fund was up 0.36% for November, although the fund remains well into the red for the year. For the first 11 months, the fund was down 24.85% gross. Q3 2020 hedge fund letters, conferences and more Blue Mountain's fundamental credit strategy was up 0.63% for November, including a 1.09% gain for Read More
One of my idiosyncrasies when I’m under a little stress is to rub the knuckles on my right hand. Why? Well, I had a little run-in with an overseas shopkeeper years ago. It wasn’t a fight. But as I’ll explain in a moment, it demonstrates in its own small way the numerous investment opportunities in emerging markets…
I was living in Guatemala, trying my best to learn Spanish at a language school while staying with a local family in the beautiful, picture-postcard city of Antigua. The only problem was the daily regular electricity blackouts. Too much demand, not enough supply.
It was a big problem then, and it’s an even bigger problem now in many countries with untapped economic potential. But as many of these countries invest in their infrastructure, we begin to see an explosion of growth and a smart investor is positioned to take advantage of the ensuing investment opportunities.
For instance, Mexico recently moved to break up the country’s government-sanctioned electric power monopoly with the hope that it results in improved reliability and more capital investment. (Something Jeff Opdyke has positioned subscribers of Sovereign Investor to take advantage of within Mexico’s growing electricity infrastructure).
It’s a similar theme worth watching in Poland, another favorite country of Jeff’s. Some are calling for the new government in Poland to make big changes in the country’s underinvested, state-controlled power utility sector. The CEO of Poland’s third-largest utility lamented that there is no other alternative, if the goal is to increase investment in electric generating power for Poland’s fast-growing economy.
But as Jeff explains, “Today, Warsaw’s per-capita GDP (on a purchasing parity basis) exceeds Vienna, Rome, Lisbon and Madrid. In short, Warsaw has become wealthy. And Poles live at an equal or higher standard of living than locals in some of Europe’s great capitals.” Continued investment in the country’s infrastructure will allow that economic growth to flourish, creating new investment opportunities along the way.
India is another hot spot ripe for investment in power generation. The local grids are unreliable. Large tech companies, such as Infosys, often build their own generating assets so they don’t run the risk of plants sitting idle, waiting for the power to come back on. Smaller companies can’t afford that option, and neither can most Indian households. Experts estimate about 300 million Indians don’t have access to any regular supply of electricity.
The country has started investing heavily in building up its infrastructure. In fact, China announced it will invest $100 billion in India over five years to be used to modernize railways, highways, power generation and more.
Shining Light on New Investment Opportunities
Back to Guatemala. When the blackouts hit Antigua late each afternoon and early evening, everyone burned cheap, locally-made candles.
So after my Spanish language skills developed a tad, Don Pedro, the dad of my adopted household, asked me (with a wink and a little smile) to stop by the outdoor mercado and buy more.
What was the wink and smile all about, I wondered.
I was soon to find out. The local candle maker, who operated out of his own big stall at the mercado, was a nasty, brutish Seinfeldian “soup nazi” sort of character. And, of course, as a guileless norteamericano, I was the perfect victim for his act.
I reached into the large neatly-stacked pile of tapers to pick up a bunch, ready to ask “Cuanto cuesta?” (How much does it cost?) … And received a sharp, very hard rap right across the knuckles by Mr. Candle Nazi, wielding a big stick of tallow like a police baton.
My knuckles still sting when I think about it now. Apparently, I violated the unspoken rule. Don’t touch the freakin’ candles, gringo, before you’ve paid for them!
I laugh about it now, years later. The lack of reliable power, the candles and all — it was a minor annoyance for me. But for local people, it’s hardly funny. It points out, in ways small and large, the many costs that come with unreliable, underinvested electric grids: higher costs, poor service and an underdeveloped economy.
It also shows the bigger reward at hand as more investors understand the size of the investment opportunities ahead.
Editorial Director, The Sovereign Society
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