So I was recently listening to some additional presentations from an audio series about investment. This particular installment was called “Swiss Gnomes and Global Investing.” I found out that it was actually two presentations: one about “The Swiss Gnomes,” and one about “The Global Investors.” Both were as interesting as I expected them to be, and brought back fond memories of my days as a business major.
The Swiss Gnomes
The presentation about “The Swiss Gnomes” talked about the famously private Swiss banks. The Swiss bankers get their name from the “gnomes” of Swiss mythology, an elusive kind of troll which was hard to find. In the investment world, the Swiss banks are known for their analogous ability to keep things secret. According to Swiss law, they are not allowed to reveal the existence or contents of particular accounts, and can be hit with severe penalties by the Swiss government for doing so. Only if someone is convicted of a crime in a Swiss court can this confidentiality be broken in a legal way. A popular perception of Swiss banks is that they are used to “shield the guilty.” But the Swiss people perceive its purpose as quite the opposite: to protect the innocent. The presentation delves somewhat into the history of Switzerland, to show how this culture of secrecy emerged. They show efforts by other countries, such as the United States, to undermine this culture of secrecy. In particular, the American IRS has tried to undermine this secrecy. And, at times, Americans have not been allowed to open Swiss bank accounts. One disadvantage of banking in Switzerland is that when someone dies, it can be hard for the person’s rightful heirs to reclaim the money. But Swiss banks still carry enormous advantages to their depositors. Thus, many foreigners (including Americans) will still put a portion of their portfolio into Swiss bank accounts. At times, the focus of this presentation is as much political as financial. But this is stuff that I would want to know, if I were thinking about opening a Swiss bank account.
Worldwide headquarters of the Bank for International Settlements in Basel
The Global Investors
The presentation about “The Global Investors” talked about the possibilities of investing outside of one’s home country. Many Americans are reluctant to invest globally, because they perceive it as being more risky. And, in truth, there are some risks from investing in other countries – particularly Third World countries. Political risks, such as confiscation of foreign assets, are often substantial. Exchange rate risks can also be important. And many countries don’t require the same disclosures of their companies as the United States requires in America. Thus, financial statements are seldom released in certain countries, and those that do get released there are often a little inaccurate. Nonetheless, a surprising finding is that (overall) it can often be less risky to invest internationally. This is because it allows you to diversify your portfolio to include many different countries. If hard economic times hit one country in your portfolio, it will help if you haven’t put all of your eggs in one basket – even if that basket is the United States. A major debate in this area is about investing in developed economies versus developing economies. Many prefer to invest only in developed economies, because they perceive these kinds of investments as being safer. But this can cause others to bid up the price of these investments. Thus, investing in “emerging markets” can sometimes allow you to get a relative bargain for your money. And, if the country experiences a phenomenal growth rate due to local economic reforms, you may realize a handsome profit on your investment. Some international investors are great risk-takers, while others are more conservative. But they often tend to be contrarian, buying securities that few others would buy, and selling at moments when everyone else is buying. Most of the principles in this audiobook would still apply today, even if many particulars have changed since it was made in the 1990s. This is still a great introduction to global investing.
John Templeton, the father of global investing
Both of these presentations were quite good, and would give useful information for someone wanting to invest their own money. But I don’t have any plans to engage in investing myself, and mainly just wanted to round off my knowledge of business (and particularly finance). Thus, I found these presentations useful – not to mention interesting.
If you liked this post, you might also like:
Part of an audiobook series
Secrets of the Great Investors
Swiss Gnomes and Global Investing
Others to be covered later
See also the audiobook series
Great Economic Thinkers
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