Investment Landscape – in 10 Soundbites

On Change: Everything is in flux.  Everything is a “fad”.  Nothing is constant.  Change comes, so accept it and embrace it.

On Capitalism: Capitalism is about efficient allocation of capital.  Regulations that get in the way distort capitalism and lead to inefficient allocations, often to the financial supporters of government.

On Social Democracy: You cannot borrow and tax your way into growth.  Pushing public debts onto Sovereign balance sheets for good reasons, ends up staying there for bad reasons.  Sovereign defaults is the expected outcome as politicians avoid hard solutions.

On Bureaucracy: The Fed has 20,000 employees.  20,000!

On American Democracy: Taxpayers want small government, as they pay for it.  Non-taxpayers want large government programs.  Only time will tell who will win out in the “grand experiment” of American democracy.

On Contrarian Investing: To make money you want to be where others are not or fear to be.  Be illiquid when others are not, own loss making ventures when others want dividends, be contrarian.

On China: China’s growth is amazing.  If only their government was driven to generate economic growth.  It is not, it is driven to stay in power and growth gets them there, for the time being.

On The Next Big Thing: China’s growth saved the world economy post the dot-com bubble.  Who/what will save us when the China ceases to?

On Investing Long-Term: There are two ways to invest; one involves constantly picking the right asset, and moving to the next one as soon as the money has been made in the first.  It is frenetic and involves thousand of investment decisions in a short period of time.  Another one is boring and patient and simply requires investments that fit a longer time-frame.

On Investment Horizon: In the investing game, time is your friend.  Invest so that your wealth can compound at the highest rates over the cycle, and remember that the gains in the out years are where the money is really made.