“You never let a serious crisis go to waste. And what I mean by that is it’s an opportunity to do things you think you could not do before.” Rahm Emanuel, an American politician, was talking about politics when he said this. But he may as well have said it about investing in troubled financial markets.
If you’re looking to invest when the odds are in your favour then look for a crisis. When asset prices collapse it creates life-changing opportunities to buy (the right) assets on the (very) cheap.
But if you’re a victim of home market bias – and you’re over-invested in your “home” market – you might have to wait a long while for a nice ripe crisis. And even once it comes, chances are that you’ll be too caught up in it yourself, unless you were smart or lucky enough to sell early.
You might have cash to buy cheap assets… but you might have already been holding them on the way down.
Investing in markets or companies in crisis, then, requires leaving what you know, and running towards the fire. (That’s part of what I’ll be doing in our new investment research service… lifetime subscribers will have the opportunity to join me on investment research trips to off-the-radar – and big-upside – destinations around the globe. Find out more here.)
What follows are three of my favourite examples of markets in crisis that were fortune-making for savvy investors. The exciting thing is that the “before” part of each of these situations exists today – in some market or sector or company… it’s just a matter of finding it – before it becomes the “after” of the examples below.
Profiting from Spain’s “Return to Europe”
Today, it’s strange to think of Spain as a fascist dictatorship. However, from the 1930s through the 1970s, its markets and economy were largely isolated from the rest of the world. Europe effectively ended at the Pyrenees, the mountain range separating Spain and Portugal from France.