Category: simonblack

I’m doing my best to take a few days off this week, and have the pleasure of spending time with some friends here in a fairly remote corner of Vietnam’s magnificent coastline.

This is one of the most pristine places I’ve ever been– a high-end resort nestled at the top of a mountain in the middle of nowhere overlooking Vietnam’s postcard-perfect Vinh Hy Bay.

I’ve traveled extensively through Vietnam over the years, from Hanoi in the north, to Saigon in the south, and all along the coast. And the country has always impressed me with its raw beauty.

But what’s always been even more impressive to me is how productive and industrious Vietnam has become.

Remember, this place is supposed to be Communist. And like all Communist experiments, this one nearly ended in economic catastrophe. Vietnam was among the poorest countries in the world just 30 years ago.

But in 1986, on the brink of economic meltdown, the government launched a series of sweeping economic reforms they called ‘doi moi’.

Suddenly it became possible for private individuals to start their own businesses, invest capital, and keep what they earned.

The economy started to boom practically overnight, and it’s been growing consistently at 6% to 8% annually for more than three decades.

The primary driver of the Vietnamese economy, of course, is production. Manufacturing. Exports. Etc.

In fact Vietnam is now a dominant manufacturer across dozens of industries and stands to gain if there’s a protracted trade war between the United States and China.

What’s also interesting about Vietnam is that the savings rate is one of the highest in the world– Vietnamese save an overwhelming percentage of their incomes to invest in the future.

So in other words, Vietnam’s economic model is based on saving and production.

This stands in stark contrast to the Western economic model which is based on debt and consumption.

In the United States (and much of Europe), for example, consumer spending comprises roughly 70% of all economic activity.

So consumption, not production, is the single largest component of GDP.

No one ever talks about American producers or entrepreneurs driving economic growth. It’s all about the consumer.

And savings rates in the West are appallingly low… sometimes even negative.

People go into debt to spend money they don’t have to buy things they don’t need to impress people they don’t like.

It’s totally absurd. Yet this is the primary economic growth model for most Western nations.

Consumption, of course, extends far beyond individuals.

Just look at government spending as an example.

The US government’s total debt level now exceeds $21 trillion. And just this week alone, the US government is issuing $300 BILLION in new debt.

To put that number in perspective, the entire US national debt was around $300 billion when John F. Kennedy was President of the United States.

Now they’re issuing that much debt in a single week.

Where does it all go?

The government spends trillions of dollars each year… and a lot of it gets wasted on some of the most comical misuses imaginable.

The National Institutes of Health, for example, spent $1,552,145 of your money to develop a video game that teaches parents how to feed their kids vegetables.

Then there was the $544,338 that the Justice Department spent to spruce up its LinkedIn profile.

And those are just two very tiny examples.

There are also really big, egregious examples, like that $2 billion Obamacare website fiasco.

Or the $1 billion that the Defense Department spent to destroy $16 billion of perfectly good ammunition.

This is all useless, wanton consumption. And it doesn’t take a rocket scientist to figure out the long-term consequences.

Countries whose economic models are based on savings and production will prosper.

Countries whose economic models are based on debt and consumption will suffer.

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Just a few days ago, shareholders of Tesla approved an almost comical pay package for their cult leader CEO Elon Musk that could potentially put $50 BILLION in his his pocket over the next decade.

Let’s put this figure in perspective: at $5 billion per year, Musk would make more than every single CEO in the S&P 500. COMBINED.

In other words, if you add up the salaries of all the CEOs of the 500 largest companies in America, it would still be less than the $5 billion per year that Mr. Musk stands to earn.

That’s pretty astounding given that Tesla’s own 2017 4th quarter financial report (page 24) states that Elon “does not devote his full time and attention to Tesla”.

Or more importantly, that under Musk’s leadership, Tesla’s chronic financial incontinence has racked up more than $4.97 billion in operating losses for its shareholders.

Or that the company has been under SEC investigation (without bothering to disclose this fact to shareholders).

Yet they saw fit to reward him with the largest CEO pay package in the history of the world.

This is precisely the type of behavior that is only seen during periods of extreme irrationality when financial markets are at their peak… and poised for a serious correction.

I’ll close this brief letter today quoting John Thompson, Chicago-based value investor and Chief Investment Officer of Vilas Capital Management.

Thompson is one of the few hedge fund managers who has consistently outperformed the market, and his fund is betting big against Tesla. What follows are some passages about Tesla from Thompson’s recent investor updates:

I think Tesla is going to crash in the next 3-6 months. . .

. . . partially due to their incompetence in making and delivering the Model 3, partially due to falling demand for the Model S and X, partially due to the extreme valuation, partially due to their horrendous finances that will imminently require a huge capital raise, partially due to a likely downgrade of their credit rating by Moody’s from B- to CCC (default likely) which should scare their parts suppliers into requiring cash on delivery (a death knell), partially due to the market’s recent falling appetite for risk, and partially due to our suspicions of fraudulent accounting activities, evidenced by 85 SEC letters/investigations and two top finance people leaving in the last month. . .

Tesla, without any doubt, is on the verge of bankruptcy.

The company cannot survive the next twelve months without access to capital from Wall Street Banks or private investors.

We estimate that Tesla will need roughly $8 billion in the next 18 months to fund operating losses, capital expenditures, debts coming due, and working capital needs.

However, it appears that due to past SEC investigations and current investigations (which terrifyingly have not been disclosed by the company), it will likely be difficult for Tesla to access public markets.

According to a recent analyst report, there have been 85 SEC requests for additional information and disclosures in the last 5 years.

This compares to Ford Motor Company’s total of zero over the same time frame. This means that Tesla is pushing many, many boundaries.

When a company is under formal investigation, it is difficult, if not impossible, to raise capital from public markets as these investigations must be made public, which generally craters the equity and debt values.

Therefore, Tesla investors better hope there are a number of Greater Fools in China or elsewhere to keep the company solvent.

At some point, the music stops and there aren’t any open chairs.

No matter how good a social investment makes you feel as it is going up, extreme anger will result if most or all of your money is permanently lost, especially when it is due to false and misleading statements by senior company officers.

This is when the [Department of Justice] steps in and escorts untruthful managements to their new living quarters.

. . . As a reality check, Tesla is worth twice as much as Ford* yet Ford made 6 million cars last year at a $7.6 billion profit while Tesla made 100,000 cars at a $2 billion loss.

Further, Ford has $12 billion in cash held for “a rainy day” while Tesla will likely run out of money in the next 3 months.

. . . I have never seen anything so absurd in my career.

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I was in the gym earlier today trying to ward off the effects of trans-Pacific travel and 12 hours of time zone changes when the news flashed across the TV that the US government was issuing another round of tariffs against China.

This may be the dumbest move they could possibly make.

It’s so stupid, in fact, that I couldn’t contain myself in print. For this, I had to go to audio… and record a pretty epic rant on the absurdity of tariffs.

In short, if China is crazy enough to produce and sell steel to the United States at prices that guarantee they’ll LOSE MONEY, the US government shouldn’t impose tariffs. They should send the Chinese a fruit basket.

China is basically giving the US free money. Don’t be ridiculous. Take the money.

The US is NOT the loser in this situation. America is the winner. The Chinese are willing to sell steel at below their cost of production. Duh.

But the US government insists that they need to protect the American steel industry because it’s vital to national security.

Seriously? The largest, most advanced economy in the world thinks that the production of a basic commodity is vital to national security?

If that’s the case, then what else is vital to national security– the lumber industry? Hip Hop? Twitter?

Steel is a tiny industry in the US that employs around 90,000 people. Starting a trade war over this (which is historically BAD for everyone’ prosperity) is just plain silly.

This is my favorite podcast I’ve done in at least a year. You can tune in here…

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The US pension system has gotten so bad, Congress is actually planning for its failure.

As the government was working on the recent, new budget deal and subsequent boost in government spending, Congress quietly snuck in a provision that forms a committee which would use federal funds to bail out as many as 200 “multiemployer” pension plans – where employers and labor unions jointly provide retirement benefits to employees.

As is often the case, this rescue “plan” is too little too late. The US pension system is beyond repair. And if you’re depending on pension income to carry you through retirement, it’s time to consider a Plan B.

Before explaining how dire the situation actually is, let’s take a step back…

Pensions are simply giant pools of capital used to pay out retirement benefits to workers.

Typically, employers and employees contribute a percentage of the employees’ salary to a pension throughout his or her career. Then, upon retirement, the pension is supposed to pay a fixed, monthly amount to the retiree.

There are both government and corporate pension plans.

Boston College estimates the nation’s 1,400 multiemployer plans (corporate) are facing a $553 billion shortfall. And around one-quarter of those are in the “red zone,” meaning they’ll likely go broke in the next decade or so.

But Congress’ committee, assuming it works, wouldn’t even rescue the red zone plans, much less the remaining 1,200.

And it doesn’t even begin to address the real problem – the $7 trillion funding gap faced by the government’s own pensions.

Congress is stepping in because the Pension Benefit Guaranty Corporation (PBGC) – the pension equivalent to the Federal Deposit Insurance Corporation (FDIC) – is completely insolvent.

Like the FDIC, the PBGC is an insurance program funded by premiums paid by its participating members (pensions). Its entire income is made up of premiums collected and the investment income it earns on those premiums.

So, as the markets crash, not only will the PBGC’s portfolio get slaughtered… so will those of the pensions it guarantees (which will then require more funds). And as these pensions fail, the PBGC will collect less in premiums. It’s a vicious circle.

But things are plenty bad already.

The PBGC, which only covers corporate pensions, had a $76 billion deficit in 2017. It has total assets of $108 billion on its books compared to potential loss exposure of more than $250 billion.

By its own estimation, its fund to cover multiemployer pensions (which makes up $65 billion of the deficit) will be insolvent by 2025.

Pensions are in such bad shape today for the simple reason that investment returns are too low. And pensions can’t cover their future obligations.

Pension fund managers invest in assets like stocks, bonds and real estate in hopes of generating a safe return.

Most funds require a 7%-8% return in order to meet their future liabilities.

But with interest rates near record lows, these funds are having to take on more risk in order to meet their minimum return requirements. They’ve reduced their bond allocations and started buying more stocks, private equity and other riskier assets.

Some funds, like Hawaii’s pension fund, went even further and dabbled in the incredibly risky strategy of selling put options. By selling a put, you collect a small premium if markets stay calm or rise. But you’re exposed to unlimited losses if markets crash – like they did when the Dow fell 2,400 points in a week last month.

At the end of last year, equities made up nearly 54% of public pension fund portfolios. The $209 billion New York State Common Retirement Fund has over 58% of its assets in stocks. Kentucky’s $20 billion pension for teachers is 62% in stocks.

These giant funds, which are supposed to pay for public and private employees in retirement, are piling into stocks at record high valuations. And when the volatility hits, it will be devastating.

Consider that America’s largest pension fund, The California Public Employees’ Retirement System (CalPERS), lost 5% of its assets ($18.5 billion) in just 10 trading days leading up to February 9.

Pension funds should never experience that kind of volatility. But the current macro environment is forcing them to make dumb decisions in hopes of generating a minimum return.

Luckily, if you’re a smaller investor, you still have plenty of solid investment options available – even if you’re investing with tens of millions of dollars.

I’ve told our Sovereign Man: Confidential readers about an asset-backed loan earning 13% a year. And they’ve already safely earned millions of dollars in interest.

You can also invest in super-safe stocks trading below their net cash, like Sovereign Man’s Chief Investment Strategist, Tim Staermose, does in his service, The 4th Pillar.

But these strategies get more difficult if you have hundreds of billions of dollars.

So these pension funds are forced to buy stocks and real estate at all-time highs. It stretches valuations and creates huge risk.

Still, pension fund allocations to equities are near all-time highs.

So, ask yourself, what will happen to your retirement if the stock market falls just 20%? What about 50%?

There’s zero chance these funds will be able to pay out retirement benefits. They’re taking huge risks at all-time highs and they have zero downside protection (the PGBC is broke).

It’s smart to consider some other options like a self-directed IRA, solo 401(k) or a SEP IRA – which allow you significant latitude in making better, safer and stronger investments.

Plus, they allow you to put more money away toward retirement before tax. And there’s no downside to that.

You’ve got make long-term plans for retirement. The pension system is broken. So the time to take action is now.

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‘Mrs. F.’ was 84 years old the first time she ever went to prison.

Her crime? Petty shoplifting. She stole rice, strawberries, and cold medicine.

She served her time. Got released. Then shoplifted again so that she’d go back to prison.

She’s now 89 years old serving out another 2 ½ year sentence, not too far away from where I am right now, at a women’s prison about 60 miles outside of Tokyo.

She’s not the only one.

One in five female prisoners in Japan is senior, almost all of whom have been convicted of petty crimes like shoplifting.

This is no accident. Elderly women in Japan are economically vulnerable. Half live below the poverty line. Many live by themselves and have no one to turn to for help.

So there’s a growing trend in Japan of elderly women deliberately committing petty crimes– hoping to get caught so that they’ll be sent to prison.

In prison, of course, they’re fed, clothed, housed, and even have their health care covered by the state.

It’s a pitiful, last resort form of welfare that’s likely going to become worse as Japan’s already elderly population continues to age.

It’s also a sad example of what happens when a nation’s economy goes bust after a dangerous, explosive, unsustainable boom.

Back in the 1970s and 1980s, Japan was indomitable.

This country had pulled itself out of the ashes of the atomic bomb in World War II and set itself on a path to dazzling economic growth.

Within a few decades, Japan had become one of the wealthiest nations in the world. And by the 1970s, they began flexing that economic might.

If you’re old enough you might remember the Japanese scare, especially in the early 1980s, as Japanese companies were buying up huge chunks of US real estate, businesses, etc.

Japan had all the money… and it seemed like they were going to conquer the world.

The Japanese stock market was soaring. Japanese property prices were, by far, the most expensive on the planet.

Then it all went bust in the late 80s.

It turned out that Japan’s massive economic boom had been fueled by years of unsustainable monetary policy– the central bank simply conjuring trillions of currency units out of thin air.

The country had been flooded with money. Bank balance sheets were stuffed full of trillions of yen and they began liberally loaning out– practically giving away– money to businesses and investors.

They were able to get away with it because Japan’s economy was healthier than the rest of the world’s.

The US was going through a series of deep recessions. Japan, meanwhile, was a production and export powerhouse.

So even though the Japanese central bank was printing unlimited quantities of paper money, the rest of the world readily accepted it.

Japanese financial markets soared, and large Japanese companies went on an international shopping spree, gobbling up prized assets– especially in the United States.

But by the late 1980s, the giant Japanese monetary bubble burst. Everything crashed. Stocks. Property. The economy itself.

Three decades later it has yet to recover.

We’ve talked about this before: Japan is a classic example that the good times NEVER last forever. (And it’s important to plan accordingly.)

Moreover, Japan teaches us that financial and economic downturns can last for DECADES.

A lot of people understand that stock markets and economies move in cycles– periods of boom and bust.

But there’s a common misconception that the ‘bust’ part of the cycle will be short-lived, maybe a few months, 1-2 years at most.

Japan shows that downturns can be more severe, and last longer, than anyone could possibly imagine.

Last, Japan is a monument to the serious social consequences that unfold when a long-term economic downturn strikes.

This sad story of poor, lonely, elderly women deliberately committing crimes so that they’ll be taken care of in prison is just one example.

On the other end of the age spectrum, younger people in Japan have stopped having children.

Due to the long-term economic downturn, Japan’s young adults don’t have the financial stability to get married and start families, and the birth rate has been declining as a result.

Last year, in fact, the number of babies born in Japan was the lowest number EVER in the 118-year history of their public records.

And this shrinking population has its own long-term consequences– a lower tax base, fewer workers paying into the pension system to support retirees, etc.

On top of it all, Japan’s long-term economic downturn has obliterated the finances of the government.

The Japanese government has to borrow appalling amounts of money in order to make ends meet each year.

The national debt here has become so large that it’s more than twice the size of the Japanese economy.

Plus it takes the government more than 20% of tax revenue each year just to pay INTEREST on its debt– and that’s at a time when rates are actually NEGATIVE.

This country is really amazing, I’ve always loved it here.

But Japan has been suffering for a long, long time, both socially and economically. The two go hand in hand.

That makes this place the most important case study in the world.

Because everything that Japan did back in the 70s and 80s to cause these long-term social and economic problems is EXACTLY what most of the West is doing now: printing money, keeping rates too low, inflating asset bubbles, going into debt, and acting like the good times will last forever.

It would be utterly foolish to believe that this time is different.

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Well, it happened again.

On Friday afternoon, the national debt of the United States hit another major milestone, soaring past $21 trillion for the first time ever.

Clearly that is an enormous number… it’s actually larger than the size of the entire US economy, which is pretty incredible.

But what’s always been the more important story about America’s pile of debt is how rapidly it’s growing.

For example, in the span of a SINGLE DAY, from Thursday to Friday, the national debt grew by $73 BILLION. In a day.

To put that number in context, $73 billion is larger than the size of most major companies like General Motors, Ford, and Southwest Airlines.

And in the month of February alone, the national debt grew by an astounding $215 billion.

$215 billion is larger than the GDP of New Zealand. Greece. Oregon. More than twice the size of the GDP of New Mexico. Just in a single month.

Most disturbingly, the national debt has grown by more than $1 TRILLION… just in the last SIX MONTHS.

I’m scratching my head right now wondering– where did they spend all that money? Was there a major economic crisis, wave of bank failures, or severe depression that required massive fiscal stimulus?

Nope. It was just business as usual.

Even better, the economy was supposedly doing totally awesome over the last six months.

And yet, even with all that positivity, the government still managed to rack up an extra trillion dollars in debt.

Amazing.

One important point to make is that debt growth is VASTLY outpacing GDP growth. And this is critical to understand.

Last year, for example, the US economy grew by 2.5% in ‘real’ terms, i.e. stripping out inflation.

Even if you include inflation in the calculation, the size of the US economy increased by 4.4%. Yet the national debt grew by 6%.

Now that might not seem like a big difference. But it is. On a proportional basis, the national debt expanded 36% faster than the US economy (even if you include inflation).

Over the course of several years, that effect compounds into something that’s quite nasty.

At the end of 2008, for example, the size of the US economy was $14.5 trillion. A decade later, the size of the economy is $19.7 trillion, 36% greater.

Yet over the past ten years, the national debt has grown from $9.4 trillion to over $21 trillion– a growth rate of 123%!

It’s really, really hard to pretend that this is good news.

But that doesn’t stop people from trying.

We’re constantly being told the same old nonsense that “the debt doesn’t matter” because we owe it to ourselves.

And, sure, it’s true that the US government owes a lot of this money to various institutions across America. Like Social Security. Or the US banking system. Or the Federal Reserve.

I find it difficult to see the good news here… as if it would somehow be beneficial to default on (and hence bankrupt) Social Security. Or the US banking system. Or the Federal Reserve.

Doing so would cause the most drastic financial cataclysm ever before seen in the United States.

So… yeah, the debt does matter.

Yet these major milestones are simply yawned off now, as if trillions of dollars in new debt is just par for the course. And that’s pretty sad.

Most people are in one of three camps when it comes to the debt.

#1: They ignore it altogether, and stick their heads in the sand (or up somewhere else).

#2: They acknowledge the debt, but tell themselves fairy tales that it doesn’t matter… or that the government is going to somehow ‘fix’ it. (which is ridiculous given that the government is the one causing the problem to begin with.)

#3: They view the situation rationally and understand that, maybe, just maybe, at some point in the future, there might possibly be some consequence to arise from the largest debt pile that has ever been accumulated in the history of the world… and they make sensible preparations just in case.

Which group are you in?

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Yesterday I spent the day up in the mountains above Medellin with some colleagues, touring a cannabis plantation that I invested in a few years ago.

Cannabis production is now legal in Colombia. And the company is one of a handful that has a license.

I’m not a user myself, but I’ve long understood both the financial benefits of cannabis production, as well as the potential health benefits of the product.

We’re not talking about recreational use.

In fact, almost all the plants that the company is growing right now are non-psychoactive, i.e. they’ve stripped out the ‘THC’ within the plant that gets people high.

Instead they’ve focused on CBD, an ingredient within cannabis that has been shown to have some incredibly positive effects on the human body.

They showed me case after case of children with epilepsy, paralysis, and even cancer, being treated with, and cured by, CBD-based medicines.

It’s great to be part of a business that can have such a profound impact.

And it’s quite a testament to this country that they set up the entire enterprise right here in Colombia.

The founder of the business, an old friend of mine, told me yesterday that there’s no way they could have built this company in North America or Europe.

Colombia is light-years ahead of most of the world in terms of its cannabis regulations, so what the company is doing wouldn’t even be legal in most places.

They also enjoy the added benefits of dirt-cheap labor costs, and ideal natural growing conditions that make them vastly more cost competitive than anyone in the US or EU.

This is one of the things that I love about doing business overseas: you’re often able to accomplish things that would never be possible back home.

I’ve had the same experience with the agriculture business that I founded in Chile back in 2014.

In just four years we’ve grown to become one of the largest players in the country, and soon we’ll be one of the largest producers in the world.

I would never have been able to build that company back in the US. It’s too expensive, there’s too much competition, too much regulation.

In Chile, we have access to some of the highest quality farmland in the world at prices that are a fraction of what they are in the US.

Labor costs are equally cheap.

There’s very little regulation that frustrates our progress.

Plus, one of the things I like best about Chile is that I can bring foreign talent into the country from anywhere in the world.

I don’t have to settle for local talent. I can literally hire anyone on the planet and legally bring them into the country with permission to work– and that is a privilege we have enjoyed time and time again.

Like Chile, Colombia also has fairly attractive immigration laws that simplify the residency process and make it straightforward to bring in foreign talent and labor.

You can use those same rules to obtain residency for you and your family.

As we have discussed several times in this letter, having a foreign residency makes a LOT of sense.

Obtaining foreign residency doesn’t mean that you have to physically move.

But simply taking a few administrative steps to obtain legal residency in a foreign country ensures that, no matter what happens, you always have a place to go where you’re welcome to live, work, invest, do business, and bring your family.

Think of it like an insurance policy: you might not ever need it.

But if the day ever comes where you feel like you need to leave your home country, having foreign residency already established will make your life infinitely better.

Plus, in a number of countries (including both Colombia and Chile), after a few years of legal residency under your belt, you’ll be able to apply for citizenship and a second passport.

Your children and grandchildren can even be eligible to receive citizenship as well… meaning that entire generations of your descendants could benefit from a few simple administrative steps that you take today.

This is an option that makes a lot of sense… with very little downside.

And if you’re entrepreneurial-minded, you might also obtain residency in a foreign country where there’s a ton of business and investment opportunity.

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It’s been a few months since I’ve traveled to Medellin– I have a number of investments and business interests in this region, and I like to check in on them from time to time.

Plus, Medellin is a wonderful city. You don’t have to twist my arm too hard to visit here.

If I weren’t living in Chile (which is also really, really great), Medellin would definitely be on my short list of places to live.

The weather here is fantastic with its eternal spring temperatures. The city is stupendously cheap, from food to real estate to local labor. And expats can enjoy a really fulfilling social life here.

I’ve called Medellin the “Austin, Texas of South America”, because of its unique, vibrant, slightly weird culture.

But one of the major difference I’ve noticed on this trip is the sudden influx of Venezuelan migrants. They’re everywhere.

Colombia is dealing with a massive refugee crisis, with more than 600,000 Venezuelans pouring across the borders.

Most of them are relatively poor and uneducated, so I’m seeing a lot of them on the streets. It was the same in Cartagena earlier this week.

Last night I met one Venezuelan man named Alejandro who moved here about a year ago.

Back home in Venezuela, Alejandro was quite successful. He owned a prominent business and enjoyed all the benefits of his hard work.

He had a beautiful, luxurious home in one of the finest neighborhoods of Caracas. He had plenty of savings in the bank, and a substantial nest-egg set aside for his retirement.

He even had a few toys– some nice cars, a small boat, etc.

Now it’s all gone.

The government took everything from him– his business, his land, his savings… either through direct confiscation or through hyperinflation.

Alejandro didn’t see it coming. And he didn’t have a Plan B.

All of his savings, all of his assets, all of his income, were tied up in the same country– Venezuela.

And when that country went to hell in a hand-basket, Alejandro lost everything.

Now he works as a personal trainer in one of the local gyms.

This is a common mistake that a lot of people make.

When times are good, we presume that they’ll last forever. Economic growth. Political stability. Financial success. Rising asset prices.

But these things rarely last forever.

When times are good… when optimism is at its peak… that’s PRECISELY the time to be thinking about a Plan B.

Having a Plan B doesn’t mean you expect the world to come to an end. It doesn’t mean you’re pessimistic or crazy.

It means that you’re rational. That you know there are very few things in the world that last forever.

One simple approach to developing a Plan B for yourself: Don’t keep all of your eggs in one basket.

If you hold your savings, own your business, own your real estate, own your investments, etc. all within the same country of your citizenship and residency, you are taking on a lot of risk.

One wrong move– whether it’s political instability, economic crisis, or even just a nasty lawsuit, and all of those assets can go up in smoke.

The world is a big place with plenty of options.

There are safe, credible, stable places with rock-solid banks which might also provide a good home for at least a portion of your savings.

There are fantastic investments that you can make OUTSIDE of your home country that are just as lucrative (if not even more so) than where you’re currently investing.

It’s 2018. We’re not living in the Middle Ages anymore. We have the entire world at our fingertips, and accessing the abundance of opportunity (and safety) out there is easier than ever.

Don’t commit the mistake of believing that the good times last forever.

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By the late summer of 30 BC, ancient Rome had been embroiled in an almost endless, decades-long period of instability and civil war.

Twenty years prior, back in 50 BC, Julius Caesar and Pompey the Great had waged a long, bloody conflict against each other for control of Rome, one that ultimately ended with Caesar’s victory… and his subsequent assassination.

With Caesar dead, Rome once again plunged into chaos, resulting in more years of bloodshed and warfare between Marc Antony and Octavian, Caesar’s grand-nephew.

By August of 30 BC, Marc Antony had lost the war.

And with Antony and Cleopatra’s famous double-suicide, Octavian (who was later known as Augustus) soon became Rome’s first emperor.

Romans welcomed the change. They were tired of war and yearned for stability.

And with his victory over Antony and Cleopatra, Augustus began a period of relative peace and stability known as the Pax Romana that would last for more than two centuries.

The benefits to Rome were extraordinary.

Liberated from the burdensome costs of war, Rome’s treasury became flush with cash, and the government invested heavily in much-needed repairs and expansion of infrastructure.

Their redeveloped network of aqueducts carried 300 MILLION gallons of water per day into the city from distant reservoirs, a volume that rivals major cities even in our own time.

They also improved their a highway system, which consisted of 51,000 miles of paved roads up to 24-feet wide.

Plus, with all the war savings, the government was able to eliminate certain taxes and simplify the tax code.

Trade and commerce flourished. Unemployment fell. Money held its value. Prosperity and opportunity abounded. And it lasted for decades.

History is full of similar examples which show that prosperity almost invariably follows peace… especially after decades of violent civil war.

That’s exactly what’s starting to happen here in Colombia.

The conflict against Communist revolutionaries and paramilitary forces began in this country more than 50 years ago. And it has been one of the longest and bloodiest civil wars in modern history.

The human cost alone, with roughly 200,000 dead, is absolutely appalling.

And the economic costs are incalculable.

Infrastructure is an easy example: Colombia has had pitiful, dismal road and rail networks for decades.

Every time the government built a road or railway, the revolutionaries blew it up.

Highways, oil pipelines, electrical infrastructure, and even Internet / mobile architecture have either been damaged, neglected, or outright abandoned as a result of the violence.

A simple 400 kilometer drive, for instance, between Colombia’s two largest cities– Bogota and Medellin– can easily take 8-10 hours due to the pitiful road conditions.

This has had a major, unimaginable impact on domestic trade and transport.

More importantly, the government has spent the bulk of its revenue for the past several decades on security and defense… and paying for it all through cumbersome tax increases.

But that’s all starting to change.

In late 2016, the Colombian government ratified a peace treaty that formally marked the end of the civil war– which included the FARC laying down its weapons and transforming itself into a political party.

And yesterday was the very first national election since the treaty was signed– a major step to demonstrate that the peace process is real.

15 million Colombian voters cast their ballots unimpeded. Contrary to gloomy expectations, there were no stories of polling stations being blown up or voters being gunned down in the streets.

It was a peaceful election.

And for the first time in longer than anyone can remember, the question of “What to do about the FARC” did not dominate the issues.

Instead, Colombians finally have the chance to prioritize something other than security– like, the kinds of economic reforms that are necessary to increase prosperity.

(Colombia has more than a dozen political parties, so there’s no clear majority; but two of the more conservative parties had a very strong showing yesterday, suggesting a shift towards pro-growth policies.)

Now, there are definitely still problems here, so it’s not all rainbows and buttercups just yet.

Smaller paramilitary groups are still operating in the countryside. There are a lot of people who are opposed to the peace treaty.

They have mountains of regulations and tax rules to unwind.

And on top of everything else, Colombia is now having to deal with a refugee crisis from neighboring Venezuela.

But it’s becoming more and more obvious that this country is getting up off its feet.

Exports and economic growth are rising– slowly, but the initial signs are encouraging.

There’s also an abundance of new infrastructure projects already in the works or in the planning stages– and these will likely provide a strong boost to commerce and trade.

I also expect a foreign investment bonanza in this country.

Colombia is a great production hub, boasting a skilled, inexpensive workforce, cheap natural resources, plenty of manufacturing capacity, and deep-water seaports straddling two oceans.

Colombia also has a huge population of 50 million people whose economic prospects are rising.

This is a pretty rare combination, which makes this country a great option for foreign companies seeking high quality, low-cost production with quick routes to both Americas and a robust domestic economy.

And for the first time ever, these projects and investments can finally happen without the constant, looming danger of civil war.

This is just the beginning.

And if history is any guide, the prosperity and benefits that come from this Pax Colombiana can last for decades.

So it’s definitely worth keeping Colombia on your radar as there will continue to be some very compelling business and investment opportunities here.

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The government hasn’t yet figured out how to tax having sex. But Rhode Island at least wants to tax pornography.

Yes I’m serious.

It starts with censorship: two Rhode Island state senators just introduced legislation that would require Internet Service Providers (ISPs) to block all “sexual content and patently offensive material.”

We have no idea, of course, what is considered “offensive”. But in an age of cry-bullies where even the word “man” offends delicate university students, we can only imagine this covers a lot of ground.

Rhode Islanders could then unblock this ‘offensive’ content with a written request, presentation of government-issued ID which proves they’re over the age of 18, and then making a one-time payment of $20.

Internet Service Providers must collect the money and send it to the Rhode Island Treasury every quarter.

Enforcing this law rests solely on the shoulders of the ISPs. If they fail to respond to reports of unblocked pornography or sexual content, they will be fined $500 for each instance.

We can only begin to image what other genius ideas these politicians will come up with next.

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