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Lucky To Listen

There are lots of geopolitical “experts.”  Ian Bremmer is one of them — the one who created The Eurasia Group, a highly regarded consulting firm,  However, he specializes in that intersection between geopolitical events and stock markets, worldwide.  I had the pleasure of attending a lecture by him today.  In no particular order, here are some of the things I learned about the Mideast:

1.  ISIS is the best funded and most effective recruiter of any terrorist group in history.
2.  Most of the land controlled by ISIS is wasteland.
3.  Saudi Arabia is more unstable than most analysts realize.
4.  The 30-year-old defense minister is likely to be ousted by the 15,000 member royal family.
5.  ISIS may take control of central Saudi Arabia, which is also a wasteland.

Not every geopolitical crisis matters . . . but some do.  If we read about North Korea putting up a satellite, which South Korea promptly shoots down, stock markets in South Korea and Japan will tank dramatically.  That would be a great buying opportunity, courtesy of a geopolitical crisis.  Then, they are other geopolitical events, such as a collapse of Saudi Arabia or Russia, for example, which have long-term consequences, including a possible redistribution of power.

He seemed particularly worried about a pending refugee crisis in Europe.  If Germany does as badly integrating the Syrian refugees into European life as the French failed to integrate the Algerian refugees, then Europe could become the new Mideast.  Integration will be expensive and will retard economic growth in Europe until a peaceful integration becomes apparent.  Europe does need more labor, but it is not clear the new refugees will fill that need, at least in the short run.

He also fretted that the same fate that caused the Putin-made oligarch of oil-giant Yukos to disappear could await the similarly-outspoken Jack Ma of Alibaba in China.  I hope not!

My takeaway is that the international component of investment portfolios should be relatively minimal for now.