Have You Read The Lost Chapter? (BX, LM, STT, BLK, PFG, BK, NYX, NDAQ, CME)
Sara Nunnally: It’s nearly summertime. It was 94 degrees out here in Eastern Wisconsin yesterday. We grilled shish kebabs and had fruit salad. It’s the time for hanging out outside as the heat drifts away to a balmy evening.
It’s also the time where we have to start preparing for Taipan Publishing Group’s 2011 Global Opportunities Summit.
This year, we’ll be meeting again in Las Vegas, where summer never dies. As the week goes on, we’ll be talking to you more about this year’s exclusive conference, but I wanted to share with you a snippet of what I talked about last year.
Last year, Sandy Franks and I had just finished our book, Barbarians of Wealth: Protecting Yourself from Today’s Financial Attilas.
The final section of our book gives investors four ways to protect themselves from modern-day financial barbarians… But there was one way that we didn’t include in the book, and that’s what I told last year’s attendees.
The Lost Barbarians of Wealth Chapter
So here’s the question… Why didn’t we include this chapter in our book?
Well, because this Lost Chapter requires you to be a little cold-hearted. It’s not about defense this time around. You’ve got to be able to just take your profits and run.
Here’s what I mean.
This Lost Chapter deals with playing both sides… The barbarians and your fellow investors.
It’s a little like being Robert Morris taking advantage of a possibly profitable situation. He was the consummate businessman, coldly calculating, always on the prowl for profits.
This doesn’t mean you become a barbarian, or a pirate, or an invader.
It means something simpler.
It means putting a tollbooth on the Silk Road, for example.
The Silk Road
The Silk Road in its early years crossed an amazing distance, touching innumerable cultures and markets. That made this route extremely valuable to whoever controlled it.
No surprise then that Genghis Khan sought control over this lucrative trade route as he expanded his empire.
Genghis’ bloodline knew where the money was. At first, Genghis and his Mongol hordes had to fight for control of their surrounding territories. Then, these ruthless barbarians systematically eliminated their enemies and took control of both lands and peoples from the Korean peninsula to the Black Sea. Not only was the Silk Road a “cash cow” for the Mongols, the route made for quick movements of armies during campaigns as the empire expanded.
They now controlled major trade routes through their empire. They controlled massive amounts of territory around these routes.
Once these settlements were conquered, the Mongols found themselves in an interesting position. The Mongols were beginning to settle in little towns and villages along the Silk Road.
These villages became wealthy because of all the trade flowing through them. The great nomadic tribes were becoming aristocratic… All because of the money flowing through their realm.
So, how does this translate to today’s financial market? How can you put a tollbooth on the Silk Road?
A financial tollbooth in today’s market means an investment that makes money from two sides of a trade. More specifically, a financial tollbooth is the market itself.
For example, we could be talking about exchanges…
Financial Tollbooths, Caravans and Cartwrights
Today, there are a number of exchanges that are publicly traded:
- IntercontinentalExchange, Inc. (NYSE:ICE)
- DEUTSCHE BOERSE AG (DB1)
- Singapore Exchange Ltd. (SPXCF.PK)
- NYSE Euronext, Inc. (NYSE:NYX)
- Nasdaq OMX Group Inc. (NASDAQ:NDAQ)
- CME Group, Inc. (NYSE:CME)
While these exchanges offer a way for you to put a tollbooth on the Silk Road, there might be an even more profitable option out there.
Aside from playing the markets themselves, you can play the makers of investment vehicles, like ETFs or mutual funds, like these companies:
- Invesco Ltd. (NYSE:IVZ)
- BlackRock, Inc. (NYSE:BLK)
- AllianceBernstein Holding L.P. (NYSE:AB)
- Piper Jaffray Companies (NYSE:PJC)
- Principal Financial Group Inc. (NYSE:PFG)
- The Bank of New York Mellon Corporation (NYSE:BK)
Think of these companies like the caravans winding their way down the Silk Road. These companies make the investment vehicles you invest in… but not just you. Massive institutions pour billions of dollars into their mutual funds and ETFs.
But there’s one more link in the Silk Road we should talk about. We’ve had the Tollbooths and the Caravans. Now we need…
These are the companies that help keep the caravans moving… Asset Managers. Companies like:
- State Street Corp. (NYSE:STT)
- Artio Global Investors Inc. (NYSE:ART)
- Legg Mason Inc. (NYSE:LM)
- SEI Investments Co. (NASDAQ:SEIC)
- Eaton Vance Corp. (NYSE:EV)
- The Blackstone Group (NYSE:BX)
These companies have clients like mutual funds, hedge funds, big investment banks, pension funds, retirement plans, insurance companies and a number of other asset classes. These are the guys working behind the scenes setting up fund processing, accounting, shares distribution, investment advisories, fund structuring and a lot of other services.
The Chosen Three
With these three areas, you’re not pitting barbarians against investors, you’re playing both sides of the market… You’re even playing the market itself. This strategy makes a great addition to the protections offered in our book Barbarians of Wealth: Protecting Yourself from Today’s Financial Attilas.
The three companies, one from each group, that I told folks about at the global summit were NYSE Euronext (NYSE:NYX), Invesco (NYSE:IVZ) and State Street Corp. (NYSE:STT). Since talking about them, here’s how each has performed:
- NYX finished ahead of the other tollbooths, gaining 21% since Sept. 24, 2010.
- IVZ also finished ahead of the other caravan companies, gaining about 4%.
- STT finished second in its group of cartwrights, gaining more than 11%.
This September, our group is going to meet again, and the invitations are already being sent out. To get things started, on June 20 we will host the first of our survival-themed webinars. This one focuses on using Washington’s antics to your advantage. To join this one-of-a-kind event, click here.
As Senior Research Director, global correspondent and co-editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities. Sara Nunnally’s diverse background includes studies in history, computer science, literature and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, Bloomberg and CNBC’s Squawk Box, as well as numerous radio shows around the country.
Article brought to you by Taipan Publishing Group, www.taipanpublishinggroup.com.