Why I don’t invest in stocks (and where I do park my investment capital)

shutterstock 145160464 150x150 Why I dont invest in stocks (and where I do park my investment capital)

December 11, 2013
Santiago, Chile

Earlier this week, Start-Up Chile announced the next round of new businesses who have been accepted to the program.

If you’re not familiar with it, Start-Up Chile is a government program that provides $40,000 in equity-free seed capital (plus a residency visa) to entrepreneurs and their startup companies who make the cut.

Now… in my worldview, this program shouldn’t even exist. This is a government program funded by Chilean taxpayers, and I don’t agree with the idea of government stealing people’s income for any reason.

Unfortunately we don’t get to live in a world where politicians cannot plunder the wealth of citizens.

But the compromise is that we get to vote with our feet and live where we want; we can choose to thrive in a place where taxation is relatively low… and where the politicians fund startups with taxpayer money rather than drones that drop bombs on children by remote control.

Chile is one of those places. It’s far from perfect, but the fundamentals are solid. The government balance sheet is strong– Chile has ZERO net debt. Yet the level of taxation here is among the lowest in the developed world.

So far Start-Up Chile has been a great success for the country.

I know many of the alumni who have come through the program, both foreign and local; several still operate their businesses here and have become successful, creating additional wealth and jobs in the local economy.

This latest round will bring in startups from 28 countries in industries as diverse as agriculture, travel, medical care, advertising, and cryptocurrencies. (Some of my students from our summer entrepreneurship camps have been accepted as well…)

I follow this closely, mostly because I’m an avid investor in startup companies.

With global markets trading at nose-bleed valuations, and almost every possible objective metric suggesting that a crash is coming, a conventional approach to investing seems crazy.

Besides, it’s clear that fundamentals no longer matter. Central bankers are spraying so much money into the system that the only thing driving stocks and bonds is the expectation of further printing. Central bankers have completely hijacked the markets.

I’m simply not willing to take Ben Bernanke on as my silent partner. This is why I invest in real assets– primarily, high quality agricultural properties and private operating businesses.

(Note- I didn’t say precious metals because gold and silver are a form of money to me, not an investment or speculation).

Given the long-term supply, demand, and policy fundamentals of agriculture, I think this sector is exactly the right place to be for the next decade. And owning physical, productive land is as close to the source as it gets.

Private businesses also make a lot of sense, allowing you to invest on the cutting edge of emerging trends and technologies, as opposed to big behemoth corporate bureaucracies. And while the risk potential is greater, so are the potential rewards.

I think any of us would have rather invested in Apple when it was just a startup in the Jobs family garage rather than the slow-moving bureaucracy it is today.

But just like great agriculture properties, such deals and talent are hard to find; this is one of the reasons I hold my entrepreneurship camps each summer, why my team and I travel the world looking at global opportunities, and why we follow programs like Startup Chile so closely.

We’re launching a new service after the holidays for investors who agree with this premise, but need help sourcing and navigating quality deals. More to follow on that in a future letter.

from SOVErEIGN MAN http://www.sovereignman.com/finance/why-i-dont-invest-in-stocks-and-where-i-do-park-my-investment-capital-13278/
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Last Day of the Reason Webathon! Let’s Make That Box Orange, People!

Her name is Caitlin. http://jakethealligatorman.com/caitlin-the-lobster-girl/ ||| Jake the Alligator ManLook over there at the top of
the next column to your right. What do you see? A donation box
that’s theeeeees close to being all filled up with
your amazing generosity here during this, our most successful
annual Reason webathon to date. As of 6:30
this morning ET, we were 97.5% toward our audacious goal of raising
$150,000 to fund the best damn libertarian journalism, commentary,
and general carrying-on in the known universe. If you plunk down
$3,800 (or its equivalent in Bitcoins)
right the hell now, BOOM, mission accomplished.

What do you get for your donation? Besides
the feeling of intense satisfaction in knowing that your money will
never pay for ridonkulous headlines like, “Bitcoin
Proves The Libertarian Idea Of Paradise Would Be Hell On
Earth
,” $100 gets you a subscription & a classic black
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Thanks for putting up with a week of sales pitches (though
please note that there are m-a-n-y more hours in the day!), and
thanks most of all for helping us get better at doing what we do.
Take it away, Nick Gillespie & friends!

from Hit & Run http://reason.com/blog/2013/12/11/last-day-of-the-reason-webathon-lets-mak
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US Stocks Slammed; Retrace Payroll Gains

But…we have a deal in DC?! As the safety bid for bonds and bullion continues, stocks are greatly rotating lower, retracing all the post-payrolls (taper is a good thing) gains. Perhaps more notably, attempts to juice stocks with EURJPY are failing (for now)…

Retraced…

 

EURJPY not working…. But AUDJPY is…

 

Charts: Bloomberg


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/szz7OL9auCQ/story01.htm Tyler Durden

Speaker Boehner Explains The Budget “Deal” – Live Feed

A modest cut in the slowdown of the growth of debt in the most indebted nation on earth is being heralded as a ‘win’ by many (even if the ‘market’ is entirely ignoring it). We leave it to Speaker Boehner to explain the “compromise” but remind readers that the extension of emergency claims is off the table (for now) and thusly, the unemployment rate is about to drop notably – providing the Fed the cover (along with this fiscal ‘tailwind’) to spin a tale of taper sooner rather than later.

 

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/NZzYjCLog_s/story01.htm Tyler Durden

Speaker Boehner Explains The Budget "Deal" – Live Feed

A modest cut in the slowdown of the growth of debt in the most indebted nation on earth is being heralded as a ‘win’ by many (even if the ‘market’ is entirely ignoring it). We leave it to Speaker Boehner to explain the “compromise” but remind readers that the extension of emergency claims is off the table (for now) and thusly, the unemployment rate is about to drop notably – providing the Fed the cover (along with this fiscal ‘tailwind’) to spin a tale of taper sooner rather than later.

 

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/NZzYjCLog_s/story01.htm Tyler Durden

Some Stunning Perspective: China Money Creation Blows US And Japan Out Of The Water

With private sector loan creation in the US and Japan virtually unchanged since Lehman levels (and the US in danger of posting a negative comp in a very months) and Europe loan creation contracting at a record pace, it falls upon the Fed and Bank of Japan (and possibly the ECB soon) to inject the much needed credit-money liquidity into the system. And, as everyone knows, month after month the Fed and the BOJ diligently create $85 billion and $75 billion in new outside money out of thin air (that this “credit” ends up in the stock market is a different topic).

So to help readers get a sense of perspective how the US and Japan compare when matched to China, below we present a chart showing the fixed monthly “money” creation by the Fed and the BOJ compared to the most comprehensive money supply aggregate available in China – the Total Social Financing – for the month of November. The chart speaks for itself.

Basically, while everyone focuses on the breakneck money creation by the Fed and the BOJ, what happened in the past month is that China quietly created some 20% more money. Perhaps most impotantly, between these three entities, nearly $400 billion in liquidity was created de novo in one month! Because when the entire world is a credit-fueled ponzi scheme, these are the kind of numbers that matter.

For those curious, here is a more detailed breakdown of the Chinese numbers from Bank of America.

New bank loans and TSF rebounded notably in November

Despite higher and volatile interbank rates and rising bond yields, credit growth remained quite robust towards year-end. Two most watched data points, new bank loans and Total Social Financing (TSF), rebounded notably to RMB625bn and RMB1230bn respectively in November from RMB506bn and RMB856bn in October. YoY bank loan growth remained unchanged at 14.2%, while yoy outstanding TSF growth moderated to 19.5% from 19.7%. Today’s money & credit data should be positive for markets which have been worried that the PBoC could tighten credit supply to reduce leverage by citing rising bond yields and interbank rates.

Details of TSF: All financing activities accelerated

  • New entrusted loans rebounded notably to RMB270bn in November from RMB183bn in October, while new trust loans increased to RMB102bn from RMB40bn.
  • New corporate bond rose to RMB138bn in November from RMB107bn in October. We note that government and coporates delayed their bond issuance or scaled down the size after bond yield soared, but the net corporate bond issuance in TSF still rebounded due to a smaller amount of expiry in November from October.
  • New FX loan edged up to RMB12bn in November from RMB5bn in October.
  • Non-discounted bankers acceptance (BA) increased by RMB6bn in November after falling RMB40bn in October. We think the monthly numbers are particularly volatile, and there is no need to overly-interpret it (This is also the reason why we exclude it from calculating our revised TSF growth.)

Loan details: demand for working capital remained decent

  • New MLT corporate loans fell to RMB86bn in November from RMB144bn in October. Concerning seasonality, the number is not low. Note that it dropped to –RMB3bn in November 2012 from RMB169bn in October 2012 despite supportive policies and recovering growth momentum then. We believe policies would remain relative neutral in coming months and there could be no sudden reversal of policies.
  • New short-term corporate loans rose to RMB241bn in November from RMB215bn in October. Meanwhile, discounted bills also increased by RMB19bn after falling RMB71bn. It suggests loan demand for working capital remained decent.
  • New MLT loans to household (mainly mortgage loans) rebounded to RMB182bn in November from RMB154bn in October, supported by strong home sales momentum in previous months. New short-term loans to households rose to RMB80bn in November from RMB51bn in October, reflecting that SME loans could remain supported.

* * *

So how long before the developed and developing world “have” to create $1 trillion or more in money supply each month to keep the house of cards from toppling?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3lToNGkt1XQ/story01.htm Tyler Durden

Rand Paul’s Sham Plan to Save Detroit

If Nixon deserved points for going to China, Rand Paul deserves
points for going to Detroit — and trying to convert the GOP
from a pasty white guys’ party to a multi-hued one where everyone,
even people with “pony tails, tattoos and earrings,” are
welcome.

But his actual plan to try and save Detroit by creating Economic
Freedom Zones, I note in the Washington Examiner this
morning, is simply old garb with new accessories. It’s basic
premise that it is not government but entrepreneurs who can revive
economic basket cases like Detroit is obvious to everyone (except
liberals, communists and the Pope). But the problem is that the
lovers of America’s regulatory state will never unshackle
entrepreneurs and let them work their magic as this plan would
require. I note:

This approach worked well in England,
turning London’s depressed docklands into a super-dynamic hub for
finance and other businesses in the 1980s. It also transformed
India’s
Bangalore from a sleepy little town (that Winston Churchill once
compared to a prison) into a global IT powerhouse in the 1990s.

But it has been a disappointing failure in America. Why? Because
neither Republicans nor Democrats have ever managed to create
anything resembling a genuine enterprise zone.

Go
here
to read the whole thing.

from Hit & Run http://reason.com/blog/2013/12/11/rand-pauls-sham-plan-to-save-detroit
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Rand Paul's Sham Plan to Save Detroit

If Nixon deserved points for going to China, Rand Paul deserves
points for going to Detroit — and trying to convert the GOP
from a pasty white guys’ party to a multi-hued one where everyone,
even people with “pony tails, tattoos and earrings,” are
welcome.

But his actual plan to try and save Detroit by creating Economic
Freedom Zones, I note in the Washington Examiner this
morning, is simply old garb with new accessories. It’s basic
premise that it is not government but entrepreneurs who can revive
economic basket cases like Detroit is obvious to everyone (except
liberals, communists and the Pope). But the problem is that the
lovers of America’s regulatory state will never unshackle
entrepreneurs and let them work their magic as this plan would
require. I note:

This approach worked well in England,
turning London’s depressed docklands into a super-dynamic hub for
finance and other businesses in the 1980s. It also transformed
India’s
Bangalore from a sleepy little town (that Winston Churchill once
compared to a prison) into a global IT powerhouse in the 1990s.

But it has been a disappointing failure in America. Why? Because
neither Republicans nor Democrats have ever managed to create
anything resembling a genuine enterprise zone.

Go
here
to read the whole thing.

from Hit & Run http://reason.com/blog/2013/12/11/rand-pauls-sham-plan-to-save-detroit
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Sham of the Year

Time has
picked the pope
as its person of the year, thus angering those
readers who are certain that the title should have gone to some
other figure (usually Edward Snowden). My position this year is the
same as every year. As I put
it
 back in 2002, after the magazine gave its honor to a
trio it dubbed “The Whistleblowers”:

The year they picked "You."My hat goes off to Time—not for its
selection, but for once more inspiring so many people to discuss
the world’s single vaguest annual award as though it were
meaningful and important. Even People‘s yearly
announcement of the Sexiest Man Alive—isn’t it funny how the
sexiest man alive always turns out to be famous already? What are
the odds of that?—has the advantage of being restricted to one
qualification (sexiness); if an aggrieved fan wants to dispute the
pick, she at least knows what she’s disputing. To this day, I’m not
sure how one outqualifies someone else to be Man of the Year. The
magazine’s definition—”the single person who, for better or worse,
has most influenced events in the preceding year”—isn’t helpful,
since the mag regularly ignores the “single person” bit in practice
and doesn’t seem very interested in the admittedly impossible task
of measuring “influence,” either.

Nonetheless, each December people behave as though there is some
platonic ideal Man of the Year out there, and that the
disinterested scientists at Time somehow misidentified it.
Last year the rap on the editors was that they only picked Rudy
Giuliani because they were too scared to select Osama bin Laden.
(Their stated rationale was that he was “not a larger-than-life
figure with broad historical sweep,” but “a garden-variety
terrorist whose evil plan succeeded beyond his highest hopes.”)
This time the complaint is that they’ve picked three people whom
hardly anyone’s heard of and who didn’t make much of a difference
in the big picture anyway. (They are nonetheless, one presumes,
larger-than-life figures with broad historical sweep.)…The more
dissension, the bigger the buzz; the bigger the buzz, the better
for Time. What can I say? It’s a great way to sell
magazines.

from Hit & Run http://reason.com/blog/2013/12/11/sham-of-the-year
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Discovering Your Inner Hunter-Gatherer: Q&A with Paleo Manifesto Author John Durant

“When I’m talking to a libertarian and I make the point that the
USDA food pyramid is not god’s truth, they’re like, ‘Oh, right, of
course it isn’t,’ says John Durant, author of
The Paleo Manifesto: Ancient Wisdom for Lifelong
Health
. “It doesn’t require a lot of persuasion that the
official guidelines on diet are wrong.”

Durant’s book tells the story of how he discovered his inner
hunter-gatherer, and it offers practical guidelines for how to
transition to the meat-heavy low-carb diet favored by our
Paleolithic ancestors—and a surprising number of libertarians.

View this article.

from Hit & Run http://reason.com/blog/2013/12/11/discovering-your-inner-hunter-gatherer
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