Last updated March 24th, 2019.
There isn’t any shortage of investment advice on the internet. Everyone appears to have their own ideas about the best places to invest, whether it’s student housing in the U.K. or stocks in Japan.
It’s certainly no coincidence that the people giving the advice often stand to gain from people following their recommendations.
Of course, that doesn’t mean you should necessarily listen to me above anyone else. Hear me out for a just bit though.
There are over 190 countries in the world. Most of them are places you probably are not even aware of, let alone considered investing your money in.
We all know about China and Germany. These markets are easily accessed by anyone with an internet connection and a brokerage account.
But their high accessibility isn’t always positive. It makes those countries rather convenient for foreign investors yet completely oversaturated.
Did you know Cambodia hasn’t had a recession in over 20 years? Here’s a chart showing the frontier market’s annual GDP growth rate since 1995 alongside the world’s average.
Markets Might be Efficient… But You’re Not
In financial economics, there is a theory called the efficient market hypothesis.
Experts still disagree over what extent the theory is actually true. However, in the most basic sense, it states the price of an asset already reflects all publicly available information about it.
A direct result is that you can’t beat the market – at least according to efficient market theory.
For example, a stock can’t sell at a discount if all available information is already priced into it. The stock will always sell at its fair value because smart money, which makes up the majority of transaction value, already knows what to expect.
Efficient market hypothesis is more applicable to publicly traded companies on the New York Stock Exchange. Large financial institutions, along with their highly paid analysts and complex algorithms, will immediately buy a stock when it becomes a bargain.
They’ll also do it faster than you or I ever could. Hedge funds and other institutional investors can make the determination and follow-up with a trade in under one second.
As a result, any asset mathematically proven to be undervalued doesn’t stay that way for long. Wall Street jumps on these split-second opportunities before smaller investors even know they exist.
How to Compete with Wall Street
Individual investors are simply outcompeted by the resources and connections of big-money.
You’re looking at Google Finance and waiting for the page on your online brokerage account to load. Meanwhile, hedge funds in New York and Hong Kong are running algorithms and making dozens of trades per second.
How about places that are not yet overrun with large investors? High-growth frontier markets offer surprisingly equal playing fields in a world where it usually takes billions of dollars to buy an advantage.
Goldman Sachs and Blackstone don’t have offices in Cambodia. Vietnam has several hundred listed companies with little or no analyst coverage. Wall Street isn’t out looking for real estate in the suburbs of Manila.
Major stock exchanges don’t have any “hidden gems” or “secrets”. Places like Kazakhstan and Mongolia have plenty though.
The only caveat is that you must put forth greater effort in order to invest in frontier markets. Google Finance cannot help you in frontier market economies, so you might have to discover deals on your own. It’s a steep learning curve although the results can prove highly rewarding.
You can beat the market. However, the only way is to invest in countries where you still have a competitive advantage.
To summarize: the best places to invest on the planet are often where hardly anybody else is looking.
Skip the Next Western Recession
Learn the best places to invest – and where to avoid – by downloading our free Investment Cheat Sheet.
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