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If there’s blood in the streets-that’s your opportunity

By Dave Thrifty

Recently I addressed a seminar on the subject of Offshore Investments.

In the question and answers section one member asked, that if in view of the current economic chaos, did I think that in the future, markets would continue to grow?

I answered that despite the ongoing volatility, if markets collapsed, then the capitalist system would collapse. After all look at the 30 companies that make up the Dow Jones index. Each of these multibillion dollar companies give employment to millions not only in the USA but the world over. Can you imagine these companies selling up and putting their profits under the bed ? How many more millions would be unemployed and how damaging this action would be to an already wounded world economy? And I’m just talking about thirty companies.

Of course this will not happen and in consequence markets will continue to survive and eventually prosper. Why are there so many small companies in Pattaya?- like restaurants, computer companies, media hotels etc.etc. All of these businesses are there to make money by offering a public service. If they do this well they will prosper and be able to repay their start up loans and live a life hopefully free of financial pressure.If they could make more by keeping their money in the bank then of course that’s exactly what would happen and we would have no one to provide us with required services.

When you buy a stock you are buying equity in a listed company that over time you hope will give a better return than leaving your money on deposit. Your investment may go down in the early years but given time it will most likely prosper. Think about the blue chip companies today like Apple, Microsoft, IBM, General Electric, Google and Amazon not to mention Facebook. When these companies started up their futures were uncertain but to day they have grown bigger and better than most banks and their shareholders have grown with them.

So the answer is yes. The markets will survive. But for you to prosper care is required.

Don’t just rush in and buy the first shares on offer without your own research or assistance from a good broker. The majority of offshore providers have collective investment funds which contain a huge variety of different companies. They are usually marketed to suit your investment risk tolerance. Take for example that you are a bit of a

gambler and want to invest in a “third world” speculative fund. Right now is the perfect time to do that with some of your portfolio.

Understand how funds function. Before any of your money is invested in your fund of choice a lot of research is undertaken. The fund provider will employ a fund manager and a team of researchers to look at maybe 150 companies with a capitalization of perhaps 10 to 100 Million dollars. These researchers will look in depth at each company and if they are impressed by the management structure, the market potential and the export potential of the company then they will take it into their fund and become a major shareholder with your money. Not all of course will be successful but with proper research a majority will be so that hopefully at the end of each financial year your money will have grown substantially to reward you for taking the risk.

You could alternatively invest in a first world economy like the USA or the UK and still buy into a very similar structure only with household names as the constituent companies.

It is clear that the return will probably be smaller here and perhaps not have the same discretion in picking a good advisor who will assist you to meet your investment objectives.

Don’t be too afraid of the markets. There are always opportunities out there.

Last week I heard an investment manager on CNBC say “For those with a mid to long term investment horizon, the right time to buy is when there’s blood in the streets. You cannot fail to prosper in the long term”

I think he was right.