Sovestor's  Instablog

Warren Buffett once said "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well." We read this quote again and again, and now even more convinced that the US and global markets are on the road of true recovery (albeit a slow one in the developed countries). The US market bottoms have been reached twice in October 2008 and March 2009 (appears to be double bottoms already.) Unless traders and investors are waiting for tripe or quadruple bottoms (unlikely in our view), we are already in early recovery phase (at least from stock markets level since markets are discounting mechanism). The economy is also getting a bit better.

Folks, despite all the bad economic indicators and market news, we are not in a  very dire shape as what most market pundits want to you to believe. The fact you can still read this article, comment and many other websites, mean you have fairly good access to internet and computers and some money to spend. For Americans in general, you are better off living in the United States than in many other countries. At least, the legal structure, democratic system, and entrepreneurship are still the strong ingredients of the US. For Americans (or even immigrants staying in the US legally or illegally), do you really think US is a bad place to work, live, prosper, and enjoy? Think twice.

We believe US-denominated assets are still cheap and attractive enough to support increasing demand for US Dollar and inflow of money from foreign investors. Global investors need US Dollar in order to buy US assets. Hence, although we are not happy with US government printing US Dollar, a fiat currency, like there is no tomorrow, we believe the demand for US Dollar will continue to be strong. Investors from cash-rich emerging countries will likely to increase their investments in the US assets including properties. The living standard & infrastructure in US are also still much higher than in many cash-rich emerging countries. Many foreigners still want to get educated in US top universities. There is no second Harvard, Stanford, MIT, Cornell, Yale, USC, UCLA, etc...anywhere else.

Don't believe it? Try to travel to BRIC countries for 3-6 months. Visit various parts of China, India, Brazil, and Russia. Don't just go the big modern cities only. Try to go the smaller cities, then go to even more rural areas. Then compare your own living standards (as well as infrastructure) with the people living there. Try to find drinking (and drinkable) water in a good pulic places such as parks (if you can find ones.) BRIC is growing. Everyone know this. It is a very easy trend to spot and capitalize. However, many people in the BRIC countries also want to live in the US if they have the means and opportunities to do so. There are countless success stories on immigrants in the US. US is an amazingly unique country built by immigrants for the immigrants for the people. Government officials from state level to federal level are also democratically elected. Recent examples:

• President Obama was born in the US soil all right, but his father was from Kenya, and attended Harvard, and now became the first African-Caucasian-American multicultural president in the US. Does he want to live in Kenya?
• Billionaire Co-Founders of Google, Inc. were sons of immigrants. Do they want to move back to Russia now?
• Kirk Kerkorian (MGM's largest shareholder) was the son of Armenian immigrants. Does he want to live in Armenia now?
• George Soros, the famous speculator, was born in Hungary, and has found great prosperity as US citizen trading all over the world. Does he want to move back to Hungary now?
• Jerry Yang, Co-Founder of Yahoo and a billionaire, was son of Taiwanese immigrants. Does he want to go back and live in Taiwan now?
• Sushi master Nobu Matsuhisa, the famous celebrity sushi chef in Beverly Hills, CA. Does he want to go back and live in Japan?
• Steven Chu, Ph.D, an American physicist and currently the 12th United States Secretary of Energy. Does he needs to hide his Chinese descent name ('Chu') to become US Secretary of Energy, a highly important position. Nope. He was son of Chinese immigrants. Does he regret being born the US and want to go back to his parents' original country?
• There are plenty multimillionaires in Silicon Valley, Los Angeles, New York, etc who are first-time immigrants (not even sons or daughters of immigrants). They are Indians, Chinese, Easter Europeans, Israelis, Australian, Pakistanis, etc. They create companies, jobs, and opportunities to Americans. Do they want to move back to their countries?
• and so on....there are too many to mention here.

The answers are clear. People all around the world like to live, work, and prosper in the US. They feel US is the true land of opportunities, the land of unlimited potential. It is true that home prices are now down, stock markets have not yet recovered to the level back in mid 2007, and American banks are under siege due to poor risk management. However, fundamentally, the diversity, multicultural mix, entreprenerial spirit, innovation and dynamism of the United States are still very strong and will continue to attract investment dollars from cash-rich foreign investors. There is simply no other harmonius multicultural country like United States. Everyday, we challenge you to observe when you visit places, restaurants, and stores in many parts of the cities or states you live in and surely, we bet that you will meet many people from different countries, cultures, and backgrounds living in harmony doing their own things, working, living, enjoying their lives in the US soil. In our view, this is a clear sign of a strong country that is currently having temporary and solvable difficulties.

Ask yourself, if you are American residents and citizens or recent immigrants in the US, do you really want to move to BRIC countries now to study, live, work, and prosper? Do you want your children to be born, live and get educated in BRIC countries or in the United States? Do you want your children to go to Harvard or let's say a famous university in China or India? This leads us to a quote from George Soros: "Markets are constantly in a state of uncertainty and flux and money is make by discounting the obvious and betting on the unexpected." Nowadays, many investors and traders now obviously are not too convinced that US economy and US stock markets will recover in a sustainable manner. Many of so called market pundits believe that US Dollar will be doomed. We beg to differ. We are bullish on America, American people, American entrepreneurs and innovators, American assets (especially the undervalued high quality assets), US Dollar (not in the near term), and American economy in the long-term.