DCG Financial Blog

I met someone recently whose name is not well known and who has no formal training in finance. From what I can determine from his means and methods of thought he is the best value trader I have met. His background is political, and he is well acquainted with trade policy. This money manager confirmed several of my beliefs in the area of “what to forget” and brought me into new areas of what to remember.

Developing countries are defined by the financing of homes, cellular phones, and telecom infrastructure in that order. The financing of developing countries has always been a good business because as long as you are early in the development cycle there are plenty to come after you to provide liquidity and value to your investments. Homes and real estate in general are representative of an increased standard of living and will account for a large part of GDP growth in any developing nation. The primary driving force in homes has always been the availability of money, and our first defining factor is the growth of finance. Cellular phones are powerful hand held networked computers with a built in mechanism for financing, the service contract. Cellular phones will be a successful business for generations to come, particularly in areas where the market is not saturated or jaded by late and low product innovation. These new homes and cellular phones will be wired by copper.

India and China are at the forefront of these developments.

The move to ethanol caused waves in the corn market, not because corn is the best way to produce ethanol but because of the political machinery that existed before the move. The farming of corn which requires %80 more nitrogen based fertilizer, will have waves in the markets that produce fertilizer.

All of the above continental waves are unavoidable facts of modern development and in some cases the established trade law of the land. These things will drive fundamental directional money flow, but it may take several years to see these outcomes unfold. I am a leveraged trader and so I have little use for anything larger than 24 hours, but this self managed man has cleared my tunnel vision. The above is not the extent of my knowledge on these subjects but it is representative of where I begin.

I have acquired new and important long term biases from this conversation that will result eventually in my placing a few Leaps into play.