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High Yield Strategy: The
Billionaire Watch
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Published:
August 11, 2008
A
billion dollars may not be what it used to be, but it's still a
serious pile of cash. So why are more and more of the world's most
eye-popping fortunes being made in foreign countries? Because that's
where the growth is.
Companies in these
red-hot economies are not only trouncing their U.S. counterparts in
terms of capital appreciation, they're also paying luxuriant
yields and in strong currencies. You can
add new life to your income stream with surprisingly little risk if
you just keep your eyes on the world's billionaires.
The U.S. all-star team used to lead the league. Now they're barely
warming the bench.
Five years ago, nine of the top ten richest people in the
world were U.S. citizens. Five were members of one family. Now, only Warren Buffett and Bill Gates are on the top-ten
list, and just two other Yanks had vast enough fortunes to
afford themselves a spot in the top 25.
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The
list of the world's richest folks
is compiled by the editors of
Forbes Magazine
early each summer. Bill Gates had been at the top of
the list for more than a decade. But this year he was
finally dethroned by Buffett, his friend and bridge partner,
as well as by Mexican telecom baron Carlos Slim, who
snatched the No. 2 spot. Gates' $58 billion hoard now
ranks third -- though that can hardly be considered a bad
place to be.
In all, 31 Americans made the
top 100. But that's -26% lower than it was just five
years ago.
Did all our U.S. billionaires
move away? What happened?
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The short answer: The world woke up -- and got busy.
India and Russia have produced
wealth at such a fast rate, and a few of their oligarchs
have managed to grow their fortunes at such an astonishing
clip that they're displacing even the most well-heeled Americans. To wit: Only one of the
100 wealthiest people hailed from India in 2003. Today 13
Indians are on that exclusive roster. The ranks of Russian
billionaires, meanwhile, grew from three in 2003 to 19 today.
These international captains of industry reflect the dramatic growth
playing out across the "developing" world. And the
stock markets in Russia and India tell much of the story.
The Russian MICEX index has skyrocketed +672% since the beginning of
2003. In
India, the returns have been a more modest +471% -- or roughly
+38.6% annualized since January 2003. Here at home,
the S&P 500 crept along at an +8% annualized rate.
This underscores an indisputable truth: U.S. equity markets
are lagging. The S&P hasn't been the top-performer
for 60 years.
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If you want to see your
fortunes rise, then you should look at
some of the great companies overseas and cast off some of your American equities in favor of
these international up-and-comers in
places like India, Russia, China, Peru and even Slovenia.
These are not your father's emerging markets: These are, after
all, the countries that have created enough wealth to relegate
old-line U.S. dynasties like Walton, Mars, Pritzker
and Newhouse to almost second-class status.
It's true
that as recently as a decade
ago, the prospect of owning stock in any non-European
foreign country would have seemed far too risky. But times have
changed.
With the exception of our own dollar, currencies have
stabilized. Democratic reforms have cast tin-pot
dictators onto the ash heap of history. Eastern
European, South American, African and Far East markets have
been opened to outside investment and have been stabilized
by not only globalization but by the information revolution
as well. These countries got with the program; all that's
left is for you to join them.
In 2003, three Russians were on Forbes' list of 100
wealthiest people. They were worth a
combined $18 billion, a teeny little 4%
fraction of the $414 billion held by
U.S. billionaires. This year, the
now 18 Russians on the list are worth
$267 billion, nearly half the U.S.
billionaires' $573 trove and a 1,383%
increase overall.
Are there any good investment opportunities left in
Russia?
Yes. Investors are absolutely basking in red-hot
Russian economy: They're not only inking huge returns,
they're protecting their portfolios from the weak dollar.
And many of the Russian stocks pay fat dividends, so these
investors are raking in rubles, too.
In fact, I
profiled a world-beating fund earlier this year in an issue of my premium
newsletter. The
fund invests half its assets in Russia
and distributed $10.442 last year for a yield of
62% at
current share prices!! It's benefiting from
Russia's immense reserves of oil, natural gas, and other
commodities, as well as its proximity to vital
European and Asian markets.
Russia's most prominent corporate names -- Lukoil, Gazprom,
Norilsk Nickel -- make up a quarter of this fund. And bear
in mind that these three companies alone have added five
names to the top 100 list of the world's wealthiest. Not one
of these industrial barons was on the top 100 list five years ago: Today,
they're worth a combined $78.6 billion.
Now I can't promise that all the investments in Russia have
quite that lofty a yield, but the region is certainly
fertile ground for income investors. You may not be able to become a billionaire -- that's a tall
order. But you can make money from the same companies that
are creating those megafortunes -- and without learning a
new language or cultivating an affinity for vodka and
zakuska.
If you'd like to learn
the name of this fund -- plus receive a steady stream of
foreign stocks, preferreds, and
other investing ideas with abnormally high dividend yields
each and every month -- then I'd like to extend you a
personal invitation to try my premium investing newsletter .
. . High-Yield International.
Visit this link to learn
more.
Nick Lanyi
Editor
High-Yield International
About High-Yield International
High-Yield International is
a monthly investment newsletter focused on bringing subscribers the
highest-yield securities in the world. By focusing solely on those securities
trading outside of the United States, this newsletter offers a host of relatively
unknown investment options that you probably won't find coverage of anywhere
else.
Many of these securities provide investors with annual dividend yields of 10%,
15%, even 20% or more, while also outperforming the major U.S. averages.
About Nick Lanyi[includes/bios/lanyi.htm]
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