I've been reading a new book by Daniel Frishberg called Investing Without Borders: How 6 Billion Investors Can Find Profits in the Global Economy. Frishberg, a former Marine, is the founder of BizRadio Network and the host of the MoneyMan Report, a radio program I have been a guest on many times.
The foreword to the book is written by Arthur Laffer, the father of the so-called Laffer Curve, which is a graphical depiction of the relationship between tax revenues and tax rates. In fact, Frishberg credits Laffer in his opening chapter for his unique take on the classic tale of Robin Hood. As Laffer points out, if Robin Hood keeps stealing from the rich, the rich will simply avoid traveling through Sherwood Forest.
In general, Frisherg's book provides a refreshing take on investing and challenges much of financial theory. Frishberg is a man with a tremendous amount of common sense, a trait that has served him well over the years. For example, as Frishberg points out, financial experts would tell you not to try to time the market. In fact, they say no one can do this successfully over the long run. Frishberg, however, argues that you can and should time the market. The recent financial crisis showed us all how a buy-and-hold strategy will decimate your wealth. Furthermore, the experts say you should always hold an extremely well-diversified portfolio. Frishberg argues that you should not diversify too much. Instead, you should do your research, avoid the bad stocks, and buy only the good ones.
Frishberg is also a big fan of greater foreign exposure. He believes most American investors have too little exposure to foreign markets--especially the markets that will drive much of the global growth in future periods. This is not to say he is bearish on America. He isn't. In fact, Frishberg says, "The real long-term success of the United States is still ahead of us." However, he thinks it would be foolish to ignore the fact that the rest of world wants to be like us. They are catching up and there is a lot of money to be made by investing in those markets.
As the title of the book suggests, Frishberg wants you to think about investing in global terms. Traditional borders are becoming less of an obstacle than they once were. Entrepreneurs can set up shop almost anywhere. They will go where conditions are most friendly. Governments will have less ability to force consumers to buy overpriced products simply because they are manufactured at home. These are the trends that Frishberg thinks will dominate the future. They are also trends Frishberg says will make investors rich if they are smart enough to exploit them.
