Two Investors Did A Tour Of The Globe To Find The Best Place To Put Their Money

Tracy Alloway (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:16)

And I'm Joe Weisenthal.

Tracy Alloway (0:18)

Joe, do you remember a few months ago, wow, it seems like ages ago, actually, but back in January, we spoke to an investor in Iranian markets.

Joe Weisenthal (0:29)

Yes, and I was thinking, actually, we should invite that guy back, because when we talked in January, we talked about Iran and what investing in that market was like. But that was, of course, obviously, before it got hit with COVID, which it was one of the countries that really got hit hard very quickly after China. So I'm glad you mentioned that, because that's a reminder to us to have him back and see how things are going there.

Tracy Alloway (0:56)

We should definitely do a follow up.

But one of the sort of themes that came out of that episode, I guess, was the idea that you can find yield and you can find returns if you're willing to put in work that basically no one else is willing to do. So if you're willing to go to Iran all the time and sort of deal with all the sanctions issues and things like that, and really get to know that particular market, well, maybe you can find some decent investment opportunities.

Joe Weisenthal (1:27)

Right, I think that's a really important point. And I like the way you put it in terms of like putting in the work, because you're not gonna find much sort of like yield or obvious alpha, if you're just sort of like looking through a screen of liquid tickers traded on a US exchange, or at least it's going to be very hard to find an edge. But what made that episode striking was just the sheer amount of legwork required to even invest in Iranian companies as a foreign investor, and setting up the brokerage relationships, and getting money in and out of the country.

And if you can find a way to do that, and you can make that smoothly, operate that, then there are opportunities, but that's a lot harder than what most people are willing to do.

Tracy Alloway (2:15)

Right, most people will just put their money in SPX and think that will suffice, but clearly, again, if you're trying to generate alpha, a lot of people do look to emerging markets, they look to frontier markets, because those are considered sort of lesser known than the rest of the world.

And that, per the Iran example, is really where due diligence comes in. So, and this has been a theme in emerging markets for a long time, but we've had people, you know, who go to those markets and try to become experts in them and really get to know what's going on in those particular countries. And I'm happy to say that while we aren't talking to the Iranian investor today, we are talking to two investors who have basically made traveling to various emerging markets their raison d'etre for almost the past year. They've gone to, I think it's something like 10 countries and lived probably a month in each one, all in the name of getting that edge, doing the due diligence and getting to know the market better.

Joe Weisenthal (3:20)

I'm looking forward to it. I think I love this topic. I love the idea of putting in the legwork, actually getting to know countries, now just sort of looking at screens and looking at PE ratios and saying, oh, they're going to mean revert or actually putting in the work. And I'm looking, I think this is a great topic. And especially now, in the middle of this crisis that we're still in, I feel like there is going to be a real, I don't wanna say, maybe bifurcation isn't the word, but there are some companies that will thrive and figure out ways, some companies that won't, and different countries are going to come back in different ways eventually.

And it's going to be, there will be rewards for the investors that actually figure out sort of what works and what recovers faster and what can thrive in the sort of post-COVID order, whatever that may be.

Tracy Alloway (4:16)

Yeah, I think that's absolutely right. And the other thing that's sort of at play at the moment is just how countries are dealing with coronavirus. And I do think it's very difficult to get a sense of how different places are grappling with it without actually being on the ground and seeing everything that's happening. So this is going to be an interesting episode. We're going to talk EM, we're going to talk coronavirus.