As many of you know, Argentina has been in the news lately as a country dealing with extreme uncertainty. The latest news right now from Argentina in regards to defaulting on its scheduled payments is that it’s signaling the ongoing turmoil that this country is facing. For years, there has been so much chaos going on in that country with its government freezing bank accounts, restricting money flow, and severe controls to establish dominance instilling fear over its citizens. What is happening in Argentina is a prime example of what happens in a nation that gets so extremely bad that tyrannical measures from the government “need” to be taken. Of course, this leads to black market dealings and citizens hiding from the oppression caused by their big brother.
The citizens have dealt with the tyranny from the Argentinean government for years, and they have been forced to deal with it. This is a country of people that understand what it means to hide money under their mattresses to keep it from the banks and to purchase inflation protected assets knowing for certain that their purchasing power will deteriorate if only held in fiat. Things like bitcoin and gold are sold for high premiums in this country because of the high demand for currencies that are off the books and offer protection against inflation from the Argentinean pesos. The fact of the matter is, people are stuck in pesos and are forced to fend for themselves.
Perception of the American economy is really the only thing holding everything together for the U.S. In 2008, when the wheels were falling off of the bus in real estate and stocks, people flooded to U.S. dollars and saw a crash in everything else including gold and silver. This actually doesn’t make a whole lot of sense considering the logic behind what was happening. The fact that the country was dealing with major economic problems should be an indication that problems are ahead for the dollar. Instead, the U.S. dollar benefitted from being the historically safe currency to flood to when there is a problem, even if the problem is within the borders of the U.S. Argentinean citizens do not share this belief regarding their currency which was why there was no flood to pesos on the news of a government default on its payments.
Seeing what is happening in Argentina right now is a foreshadow of what is to come here in the states. The government tightening its grip on its citizens is going to be a given. Conventional wisdom still upholds the government as a good and ethical entity that is acting on behalf of the people. The slippery slope of government supervision and control by fear is a given the more out-of-hand things get.
Emerging Markets Investing
Having said that about Argentina, the first thing that came to my mind was, “how was their stock market doing?” Surprisingly, the stock market did not pull back much on the news of the default considering the magnitude of the situation. I would have really of liked to see the Argentinean stocks get smashed to provide an opportunity for an investment in a beat-up emerging market. Looking for opportunities during disasters have been instrumental in my personal wealth building strategy.
A country that has been pretty beaten-up and yet I do see as a volatile, yet great emerging market play, is Russia. Check out the broad ETF RSX if you are interested in this. Russia for many westerners and Americans in particular, still have a bad taste in their mouth when they hear the name of that country considering the associations during the Cold War and even the problems that we are seeing now. If you have the stomach to go past those things and invest in this market, consider it now while its valuations are low. This type of investing provides significant upside potential in the short-term.
In the end, all of the problems in the world wind down to health, wealth, and spirituality — however that might apply to you. As bad as things are around the world and here in the states, it comes down to those three things for your own specific happiness. Finding profit opportunities in the midst of the mess is actually something that helps me cope with the problems that we face on a regular basis. I suggest you do the same for your own investing and if the problems of this world are getting to you, consider ways to profit from the opportunities that are presenting themselves in front of you.
Prosperous Regards,
Kenneth Ameduri
Chief Editor at CrushTheStreet.com