Just finished reading Adventure Capitalist by Jim Rogers. Well I picked up the book expecting some tips/fundae on Investing and stuff but it turned out to be more of a travelogue.
But Jim Rogers with his travelogue makes investing a very simple game by talking at very macro level …essentially answering where the country is headed?
Let s see some of the basic questions that will answer which country is headed where?
Median age of Population?
Demographics determine whether the country is heading towards progress or busy feeding his old/tired. Japan is a case in point, where the population is highly skewed to old age, which puts a lot of pressure on the working population. Countries like Ireland and India are to benefit from the young population. USA is to face the same problem with retirement period of baby boomers coming close.
Would like to digress here ………….I am just wondering if the same could be applied to some of the PSUs in India. MTNL is a case in point – relatively old and huge staff mainly being retirement benefits makes it tough for the company. Auto manufacturers in USA (GM) are also suffering from the same. Currently GM is benefiting from the rising interest rates in USA, as it is has maintained the funded status of its retirement benefits.
Corruption and bureaucratic hurdles.
The amount of money/FDI coming into a system/country is inversely proportional; to the levels of corruption and bureaucracy in a country. This in case of Jim Rogers can be measured by the ease of getting a visa and the no of days taken to process.
India scored relatively low in this account with corruption very rampant.
Type of government
By type of government – it does not matter whether the country is a dictatorship or democracy – but by the nature of policies and thinking at the government level. China prospered under the Premier and so did some of the Arabian nations where the Oil barons knew how to use the oil resources. However, countries like Indonesia and Nigeria inspite of rich oil reserves continue to be poorly managed.
The Germans restructured themselves twice after being totally devastated by the world wars…each time emerging as a stronger country. The Chinese exist in difficult topography with little to boast about. But they were successful in using their population from a problem to an opportunity of low cost labor. The work ethics of CHINA is what makes it’s growing at 8-10%. Compared to this there are relatively many countries in the Africa endowed with rich deposits of minerals and food stuffs. But the economies are so used to GRANTS from the IMF/world bank that they have stopped working at all.
Well the book is a fascinating reading giving a broad framework to analyzing countries. The frankness with Jim Rogers writes he may get him killed some time – will update you on this Later.