Wealth Manages to Find a Home
I am writing you from the clean, quiet, jet-set resort city of Punta Del Este, Uruguay. This city, despite it’s numerous apartment buildings, clean commercial buildings and luxury shops is surprisingly still growing with more amenities, hotels and stores/services indicative of those who are looking to make Punta a 12-month living destination, rather than just a sunny holiday frenzy for the wealthy.
However, what is evident from talking to some whilst here is that some Uruguayans are genuinely skeptical about the future for their little tiny neutral agricultural country. From what I can tell, their reservations are valid. Margins are closing in, the welfare state is growing faster than the growth of their economy and costs have touched a new baseline with their rather strong peso against the USD.
As you can see, these trends are divergent for two different types of people. This did get me thinking that the same sort of trend is happening throughout many places we have travelled; there are pockets of wealth in some of the most poor countries. This is counter-intuitive, you’d think that wealth would always find places that are inherently wealthy, birds of a feather sort of thing, but it’s more complex than that–and I believe consultants recommending places to live or acquire residency never articulate this.
Inheritance & Management
At a time when it’s genuinely difficult to find where to allocate capital in the first place (Should you buy MORE gold bars? Should you buy a 3rd and 4th piece of property? Should you be in equities and if so, which ones?), a new layer of difficulty has been created. This is given the fact that otherwise stable jurisdictions are radically undoing their laws/policies and culture that otherwise made it a predictable place for wealth management–Switzerland are keen on being anything but private and neutral, Germany is actively anti-industrious, Canada penalizes individualism on all accounts and resource-rich Australia is only focused on importing as many Asians as possible.
Cosmos
Similar to how elephants have been noticed migrating in unison with pole shifts, whales respond differently with a varying gravitational force or birds fly differently from season to season, I believe capital, has a sort of living characteristic attached to it. It remains indifferent to the changes, unlike us humans who are just completely shattered by losses, over the moon with gains and dramatic over a minor inconvenience such as weak WiFi or a flight delay. Capital is going to move to avoid economic catastrophe and feel comfortable in a stable environment, despite that environment being chaotic or socialist-leaning from 30,000 foot view.
That stable environment, ironically, can be located in the least likely place, amongst unstable actors or regions. By analogy, you may say that a bird who has flown South still drinks the same water as the crocodiles around it, but it still feels like South is the place it ought to be for survival, next to the crocs.
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Trends/Examples
I believe it’s important to be agnostic towards the jurisdiction that we decide to place our investments and future wealth planning procedures. Does this mean you want to create an investment trust in Venezuela? No. But a percentage of one’s wealth into Venezuelan real estate or indirect exposure is a sound asymmetric investment play right now. Likewise, that volatility won’t be available in quiet, unexplored, middle-of-nowhere Cook Islands, but you’ll find some of the best asset protection laws in the entire world there which is perfect for your trust structure.
Canada, the so-called first world is absolutely emptying out, in favor of finding like-minded folks in 3rd world Paraguay and Mexico. If anyone is asked which is prettier, which has better infrastructure, which has better habits, Canada would likely still score higher.
Furthermore, We’re now seeing some fantastic tax (wealth tax and inheritance tax abolished) and austerity changes occur in Bolivia, a geo-arbitrage that resembles what Argentina was offering a few years ago and an increase in tourism from Europeans. Would I keep my Bolivian silver in the country? No way…Cayman Islands are good for that. Still, with a surge in underlying silver prices, you may see some pockets of major wealth sit in some Santa Cruz penthouse apartments in the near-future, despite it being an otherwise poor, backward and unsophisticated place. Wealth doesn’t care. Only humans care.
I believe that’s a main message we can takeaway when trying to establish an international portfolio. We already know where the desirable places to live are…but it remains a question which place is best for what you are trying to do.
For assistance, don’t be shy to set up a call with me by emailing contact@imontheball.com or messaging me on X as @0nTheB4ll
