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In January, the world watched in shock as a 26-year-old Tunisian fruit vendor lit himself on fire to protest the regime of Zine El Abidine Ben Ali and sparked a revolution that spread across the Middle East like wildfire—today even threatening governments thought to be untouchable, like the Baathist Assad Regime in Syria.
Shortly after the fall of Tunisia’s strongman, Egypt’s idealistic youth toppled the 30-year dictatorship of Hosni Mubarak with a peaceful show of resolve. With the army now in control of the country—and promising free elections—it remains to be seen how events will ultimately unfold. Jeffersonian democracy may spontaneously bloom in the desert, or—more likely—an authoritarian regime not materially different from that of Mubarak might emerge after a period of instability. Only time will tell, but we certainly wish the best for the Egyptian people in this exciting period in their history.
Today we’re going to take a look at the demographics of Egypt and of some of the country’s neighbors in the Middle East. Some of the conclusions drawn will surprise you. First, much is made of the fact that Egypt is a “young country” with the majority of its population younger than 25. But what the media doesn’t understand is that Egypt is actually much older today than it was just ten years ago and that the country is aging rapidly.
Much is also made of the fact that the Arab and Muslim world has high birthrates compared to the United States and Europe; but this too is changing. Egypt’s current birthrate, though still relatively high by world standards, is less than half the rate of the early 1990s.
With the boom years of the 1980s and 1990s now a distant memory, it is not shocking to see investors losing faith in the cult of capital gains and gravitating instead to dividend-paying stocks and ETFs. In a world in which paper gains can be ephemeral, it’s good to be paid in cold, hard cash.
In many ways, this is simply a return to the basics of investing. Historically, before federal capital gains taxes and Modern Portfolio Theory shifted the industry to a focus on growth, dividends were the primary source of investor returns (see Figure 1), and over the past twelve years dividends have been the only source of investor returns.
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I commented in a previous article that “if you think that Fed Chairman Ben Bernanke is unpopular, consider the tragic case of Takahashi Korekiyo, who served as Bank of Japan governor from 1911-1913 and as finance minister and prime minister in the 1920s and 1930s.”
Mr. Takahashi helped to pull Japan out of the Great Depression with aggressive monetary stimulus (or “quantitative easing,” in the popular jargon of today) and deficit spending. Unfortunately, like a man who joins the mafia, he found that he couldn’t get out. The Japanese economy had become dependent on stimulus, and when Mr. Takahashi finally decided to risk it by tightening monetary policy and cutting government spending, he was assassinated by a group of rogue army officers.
Ben Bernanke is at little risk of meeting such a fate, though there are certainly plenty in Congress who would love to assassinate his career. If certain members of the Tea Party had their way, the Chairman might meet the fate of John Law, the Scottish adventurer who, as France’s first central banker, became the most powerful man in international finance—and the wealthiest man in the world—before having to flee penniless into exile and obscurity.
Law presided over one of the great financial spectacles in history: the Mississippi Land Scheme, which was aided and abetted by the creation of the first modern central bank in Europe, the French Banque Generale (later re-christened the Banque Royale). Law was an interesting character; a gentleman gambler with a taste for wealth, wine, women and power. His financial career began in the gaming halls of Europe after escaping a death sentence in England for killing a man in 1694, allegedly over the affections of a woman.
One might ask, how did this murdering degenerate come to control the financial destiny of France, then the most powerful nation in Europe? It was a long, circuitous path.
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I’m often asked where I get my investment ideas and what sources I read to keep abreast of financial news. The fact is, you can’t read everything that comes across your desk; there is simply not enough time in the day to get through it all. You have to prioritize and organize your reading list, or you’ll waste your entire working day reading information that is irrelevant to your investing. Let us not forget that time is money!
I created the list below to highlight some of my regular news sources. I hope you find them as valuable as I have in my investing career.
If I could only read one publication, it would without a doubt be the Financial Times. The FT is the premier global financial newspaper for serious investors, and it covers the entire globe. Most newspapers, even the good ones, are at least half full of trivial fluff and local interest. Not the FT.
I started reading the FT when I was a graduate student at the London School of Economics, and I haven’t stopped reading it since.
If you want to know what is happening in the world, laid out in a clear, concise manner, you need to be reading the Financial Times.
For American financial news, it’s hard to beat The Wall Street Journal. I must admit, I am very partial to the Financial Times, but I do consider the Wall Street Journal a worthwhile read as well. In a typical morning, I read the FT cover-to-cover, whereas I skim the Journal for any relevant points that the FT might have missed.
Barron’s is my favorite weekly financial publication. Much of the news will be repeated from daily sources like the FT and the Journal, but Barron’s has a lot of original reporting that makes it a staple part of my weekly reading.
Barron’s routinely polls money managers about their favorite sectors, and this is a contrarian indicator I use to watch for herding behavior. I also find the annual Barron’s Round Table to be a good source for investment ideas, and I enjoy the interviews that the magazine routinely does with fund managers.
The magazine is also busting at the seams with financial statistics. Barron’s is probably the best source I’ve found for data on closed-end funds.
My only complaint with Barron’s is that its overall tone tends to be quite bearish, but this is also a source of credibility. If the editors were a bunch of glassy-eyed optimists, they wouldn’t be adding a lot of value.
If you don’t have time to read the Financial Times daily (or even if you do), reading The Economist weekly is the next best thing.
I like The Economist for two primary reasons:
1. It is an excellent source for global news and analysis.
2. I find value in seeing American domestic news through the eyes of a foreign publication.
This magazine is certainly worth including in your weekly reading routine.
Charles Sizemore is the Editor of Peak Income and Peak Profits and a contributing writer to The Rich Investor. As Dent Research's retirement expert, he specializes in income solutions. (Read More)
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