February 4, 2010

Teotihuacan, Mexico

Today I’m writing to you from the base of an ancient, Pre-Colombian pyramid in Central Mexico that pre-dates the Aztecs. Frankly this wasn’t part of my plan at all, but the reason I ended up here has a lot to do with living free.

Freedom is something that I think all people want more of in their lives– freedom of choice, freedom from financial constraints, freedom from bureaucracy and fear, etc.

One of the burdens of freedom, though is knowing what to do with it once you have it.  When the artificial handcuffs are finally broken, what are your real priorities?

In this case, for me, my priority was taking a stand.

You see, I had just spent the last two weeks in Panama– it was a great trip; I concluded quite a bit of business and attended the wedding of a close friend. Now I’m headed back to Thailand to work on a large deal out there that I hope to tell you about soon.

The most direct way from Panama to Thailand would be connecting through Los Angeles. But I absolutely refuse to transit through the United States anymore, unless I plan on staying for a while.

In my opinion, the US border is truly a “rights-free zone,” and it’s something that I simply will not subject myself to, at least on a short transit.  The sneering, the suspicion, being treated like a criminal by some gun-happy bureaucrat… I refuse to participate.

Consequently, when I was booking the ticket for this flight, the conversation with my travel agent went something like this:

Me: I need to get to Bangkok from Panama City on the 2nd or 3rd, what do you have available?

Her: Well, I can send you through LA, and then on to Bangkok after a short connection.

Me: Negative. I won’t go through the US.

Her: Uhhhh… OK… <checking> The only other thing I can do is send you through Mexico, but you’ll have to spend the night. Then connect the next evening through Vancouver, but you’ll have to spend the night again. On the 3rd day you’ll fly from Vancouver to Bangkok.

Me: Sounds good.

Her: Wait, so you’d prefer to spend 3-days traveling rather than take one stop through the US???

Me: Pretty much.

Her: Wow…

Some people might call me stubborn, or suggest that ‘security’ at the US border is for the common good. I don’t buy it, so I decided to take a stand. In exchange, it is costing me extra time, but I have the freedom to trade time for my principles.

After a three and a half hour flight from Panama City, I landed in Mexico this morning without the slightest idea of how I would be spending the next 30-hours.

Unfortunately, it was raining and the weather was miserable… but I have an American Express card. Problem solved. Again, I had the freedom to choose my desires– in this case, better weather.

30 minutes later I was in a rental car, throttling down the highway in the direction where I could see sunlight breaking through the clouds… no plan, no destination, just looking for a bit of better weather. And that’s how I ended up at this pyramid eating the best quesadillas I’ve ever had.

Freedom is a great thing, and fundamentally, this is what our conversations are all about: how to achieve more of it. Planting multiple flags gives us freedom of choice and security; business and investment opportunities give us financial freedom and control of our time.

There’s an old saying that I find absolutely true: “Freedom isn’t free.” Achieving more freedom requires effort, it requires investment, it requires dedication, it requires a long-term outlook. Most of all it requires the will to pursue it.

As always, I’d love to hear your feedback.   What’s important to you and do you have the will to pursue it?  Post your comments below.

As promised, I published my “Network Infiltration Black Paper” late Friday afternoon; I had spent all week working on this free report designed to teach anyone how to build contacts, gain influence, and infiltrate any exclusive network.

Unfortunately, I found out on Monday that, after I released the paper, the volume of people simultaneously trying to download it temporarily crashed my Ireland-based web server over the weekend.

Problem solved. If you didn’t get a chance to download it and read it over the weekend because of the website issue, click here to get your personal copy (or go to http://sovereignman.com/Network%20Infiltration.pdf)

No matter what constraints may govern your personal situation, I believe you will find the information valuable, whether you are an employee working your way up the corporate ladder, an entrepreneur seeking new funding, a lonely single searching for a companion, an investor looking for a great opportunity, or a new expatriate trying to meet local insiders.

In the world where ‘who you know’ is more important than ‘what you know,’ you’re either someone with great contacts, or you’re someone who wonders how the other guy has such great contacts.

To be clear, while the Network Infiltration Black Paper won’t cost you a single penny, the extraordinary benefits contained in the book are absolutely NOT free.  You have to be willing to work at it. You have to be willing to take action.

As Polish writer Witold Gombrowicz once pondered, “Do you want to know who you are? Don’t ask. Act. Action will delineate and define you.”

This Black Paper will help you do that– I kept it fairly short at only 15 pages, so it is concise and actionable.  As I have written before, I think this theme of building contacts and infiltrating networks is very important for anyone looking to internationalize themselves, or simply become more successful at home.

I plan on sticking with this theme for the next few days to further illustrate some of the concepts I wrote about in the paper– finding the open door, differentiation, adding value, etc.  Give it a read, and if you have any questions or feedback, you can post a comment or send an email to infiltration@sovereignman.com.

So far I’ve received some great questions, and as I mentioned on Friday, I would like to hold a free, interactive conference call next week where I can answer your questions live and explain these concepts further.

Let me know if you are interested in attending the conference call by sending me your questions and feedback in advance.

Last week during a short visit to the United States, I wrote a letter with some important updates that had been provided to me by my Panamanian lawyer.

In the letter, I discussed briefly how great connections and a solid network can make all the difference in the world, and I mentioned that I was thinking about writing a free e-book on the subject.

To put it mildly, the response was strong. The comments and emails are still rolling in a week later, and I was particularly pleased to see a number of other international investors and entrepreneurs willing to share and discuss their own resources.

I met with my partner Matt over the weekend in Chicago to talk it over, and we decided to get to work immediately on the free report. It will contain unique insights on how to build a contact list and infiltrate any network.

I hope to have it ready for release by this time next week… plus or minus a few days.

In advance of this report, though, I’d like to open a discussion on the topic. We all probably recognize that it’s not what you know, it’s who you know… and if you have both, you can be damn lethal.

In my own life, my friends, partners, and contacts have proven extraordinarily valuable.

5-years ago I was finishing up military service and trying to figure out what I wanted to do with my life. I had built up rather sizeable real estate holdings at the time, and with a fair amount of time and passive income on my hands, I set out to have an adventure.

I started in Panama… first meeting some successful young attorneys, real estate agents, and developers. They introduced me to their friends, their friends’ friends, etc., and eventually I was having drinks with some of the wealthiest people in the country.

They let me in to their deals, cut through the bureaucracy, and opened a lot of doors for me that turned out to be incredibly interesting and quite profitable.

In time, this same formula was repeated on five other continents, as well as in circles that are generally considered to be ‘inpenetrable’: political elite, Hollywood, large corporations, modeling agencies, etc.

My ultimate goal has never really been to make money; I view money in currency form as worthless paper– an inanimate commodity that I can always conjure more of with a unique business model or sensible investment.

Rather, profit is simply a byproduct of spending my time with interesting people doing interesting things… and I have plenty of both under my belt thanks to a constantly expanding network of unique individuals.

I could cite you examples all day, but honestly I’d like to hear from you– tell me about your own experiences and how knowing the right person has opened up a great opportunity for you.

Most of all, tell me what specifically you would like to see from this free e-book so I can make it as valuable as possible for you.

It normally takes me less than five minutes to pack, even for a three week trip.  In this case, though, I’m having a tough time– too many climate zones in Asia, too many events. I need to cram SCUBA gear, beach clothes, professional attire, and formal wear all into one little suitcase…

… plus leave plenty of room for all the custom suits I’m going to have tailored.

I haven’t been watching the markets much today, and frankly I’m sick to death (no pun intended) of the obsequious eulogizing of the late Senator from Massachusetts, so I’ll refrain from comment.

But in the spirit of my forthcoming Asia sojourn tomorrow, I’d like to pass along a recent email from Christine Verone who sent along her thoughts on an emerging mega-trend in China:

—-
Simon-

I’m excited for you to come; I have an ambitious agenda lined up for when you arrive in Shanghai, so don’t show up here with any jet lag… CEOs, brokers, and government officials are waiting, plus I know you will want to meet with your sovereign fund guys.

By the way, from our earlier conversation I need to clarify something (and please make this change to your website).  From the ‘Gold in China’ article a few weeks ago, it says that Chinese people were not allowed to own physical gold or silver until 2009.

This is not accurate and I think you misunderstood me when you edited the email.  Gold was attainable by Chinese via Panda coins (China’s version of Eagles) or jewelry since the 1980s.  Walking into a bank and buying coins/bars however is a recent phenomenon.

The critical point to understand is that the government has never before pushed gold and silver as an investment vehicle. It has gone from being illegal to being the hottest assets on the market simply because of the government’s marketing efforts.

I’m convinced that this will create significant upside, especially for silver. You should see how people stand in line at banks to buy silver bars now.

The other thing I wanted to discuss is an emerging megatrend on the mainland.  The Chinese are aware they need to decrease their dependence on exports, especially now that American spending power has evaporated.

Consequently, the government has prioritized building up infrastructure and domestic consumption (two things that foreign analysts on Wall Street won’t be able to see). This included Chinese tourism.

The government supports the tourism industry and encourages domestic travel far more than international travel… just watch 20 minutes of the daily CCTV news in China and you’ll begin to understand what I’m talking about– I can just about guarantee that you will see travel/tourism commercials promoting the importance of the ‘travel experience’ in some far off city with cultural flair.

Overall, domestic Chinese tourism is going to be one of the biggest China growth stories over the next decade.  You have hundreds of millions of people now that have enough money to leave their little town, their province for the first time ever.

Plus, culturally, Chinese travel in groups… we’re talking big parties on guided tours. Think Japanese tourists in the US in the 1990s and you’ll have the right idea. Naturally this creates a whole cottage industry with enormous growth potential.

A few months ago, as a play on Chinese domestic tourism, I bought a local company called Airmedia (NASDAQ: AMCN). At just a quick glance, most analysts would simply label it an innocuous ‘digital media provider.’

But if you put boots on the ground here, you’d see that Airmedia dominates Chinese airports and airplanes, particularly related to air travel advertising sector. And by ‘dominate’ I mean they are the exclusive advertising provider for some of the highest traffic airports in all of China.

Also, they’re expanding heavily into gas station advertising– on average, China is adding roughly 3000 miles of highways each year (this is expected to triple)— and its predicted they’ll soon surpass the US, taking the #1 position in terms of constructed expressways.

With so much highway construction connecting rural towns to urban mega centers (thanks to the Chinese stimulus package), there will be a lot of new gas stations sprouting up across the country… and Airmedia recently signed a deal to become the exclusive digital media provider at the state owned gas stations (Sinopec), essentially giving them the lock on road traffic as well as air traffic.

(Ironically, Mcdonalds is also capitalizing on this trend– they have signed with Sinopec to build over 30,000 drive-thru’s at highway gas stations.)

I bought at $3.91 and the stock now fluctuates between $6.90 and $7.20.  Would I buy it now? No. But if it drops below $5, I’ll consider buying more assuming the fundamentals haven’t changed… so keep this one on your radar– the company stands to profit as millions of China’s new middle class take their first family vacations this year.

By the way, when you’re picking up your luggage at the baggage claim in Shanghai, look at the massive flat screen above your head… all the mini TVs, even wall adverts– this is all Airmedia.

– Christine

Something is afoot in Panama that I want to tell you about.

Several banks, including Banvivienda and HSBC, have recently announced that they will discontinue renting safety deposit boxes.  Customers who currently rent boxes will have until the end of the year to vacate their belongings.

Furthermore, some banks that formerly used to work with US customers, including Banco General, Credicorp, and Global Bank, will no longer open accounts for Americans unless they meet a very narrow set of stipulations.

This is certainly the new landscape of Panama’s banking frontier.  So what’s going on?

Several months ago when the G8 heads of state joined in unison to strongly condemn banking and tax havens, the OECD put together a complementary ‘black list’ to mark the most egregious offenders.

The black list amounted to nothing more than fodder for headlines– nothing actually changed, and politicians were able to appear to be taking a tough stand on tax criminals.

Developed countries with strong banking secrecy laws– Hong Kong, Singapore, Switzerland, Austria, etc. did no make the list. Poorer countries (Costa Rica, Uruguay) did.

And Panama? Noticeably and conspicuously absent from the OECD black list.

Perhaps this is because Panama’s top banking officials are already on CIA and DEA payrolls… though in all fairness I believe Panama to be more strategically important because of the Canal, so the OECD left them alone.

Meanwhile, though, Panama’s banks are starting to police themselves and tighten their own regulations… hence the banking changes we are now seeing.  Panama is effectively side-stepping international regulation by making internal policy changes, and the biggest change– fewer options for customers from Estados Gringos.

There are still plenty of banks in the area who are happy to deal with US customers, and I will be scrubbing the list personally when I arrive in-country in a couple of weeks.  The strongest names and contact info will be published in my upcoming black paper.

Furthermore, second citizenship is one of the very clear, obvious solutions to what I call ‘banking discrimination’. It is ironic indeed that Swiss and Panamanian bankers will happily open their books for a hapless felon from Zimbabwe, but a US citizen is kindly shown the door.

If you’re tired of being discriminated against because of the color of your passport, the second citizenship guide is coming.

Furthermore- regarding secure storage… I think that storing bullion offshore is a very smart idea, especially if it’s in a country that you visit from time to time.  You should be storing enough metal to justify the security costs; to me, 1% to 2% is reasonable on an annual basis.

Traditionally, Panama has been a great jurisdiction for bullion storage, though our facility options just narrowed drastically now that many of the banks are closing their doors.

About 18-months ago, I explored the possibility of establishing a private secure storage facility in Panama.  After almost a year of scouting for locations and designing the building, I abandoned the idea because I simply could not find much value in commercial real estate– prices were too high to justify the investment.

Now, given the increasingly limited options available to foreigners, I intend to dust off my plans and buy some space.  Naturally, I am interested in hearing from you to see if a private, offshore secure storage facility located in Panama would fit the market’s needs.

Remember that Croatian commando-turned-entrepreneur from dinner last night?

Well it turns out he’s an aerobatic stunt pilot too… he’s got an old Soviet-made aircraft that is only designed to do one thing– be as unstable as possible. It does the trick.

This morning around 11am Central European Time, we met at a private airfield outside of Zagreb. He strapped me in to the cockpit, took me up to about 2,500 feet, and proceeded to test my manhood.

Let’s just say I’m glad I skipped breakfast.

I have never had to withstand five times the force of gravity before, nor had I much of a clue what that even meant. And yet, over 12-hours later, I am getting queasy all over again just telling you about it.

Fortunately we had the video cameras rolling, and I will be posting footage to the site in a few days for your enjoyment… but first, a little taste of where I happen to be right now in the lovely Italian Alps-

Now… since this is Friday, I wanted to take a moment to review a few topics from this week:

NATIONAL HEALTHCARE

I am deeply appreciative of the intensely personal anecdotes that were provided on the health insurance piece, particularly those accounts with specific prices and treatments.

Several stand out in my mind, including Mike’s “Chile saved her life,” and Jai’s “About a decade’s-worth of care in Asia spent in one morning.” These are powerful testimonials to overseas healthcare solutions that do not rely on insurance companies or government bureaucrats.

A few readers took umbrage with my characterization of national health plans. Fair enough. For every negative example highlighting the failures of the system (VA, Cannuck, NHS), there are certainly a plethora of examples of patients who have been healed due to the quality of care received.

My intention is not to take anything away from the medical professionals who serve under these systems, but rather to demonstrate that bureaucrats fail miserably at everything, especially healthcare.

I simply don’t think the same government that took the better part of a week to deliver water to New Orleans should be running a national healthcare program. Not to mention the idea of nationalized healthcare makes a mockery of the Constitution.

To reiterate, my solution is to build my own network of doctors in places where care is inexpensive– Panama, India, Brazil, Thailand, etc. And if you find it crazy to jump on a plane to seek quality, cost effective, potentially life saving medical care in a foreign country, then you are probably reading the wrong missive.

EURO SHORT

As always, very bright comments from everyone… and Gernot, I am on the way to Germany this weekend to verify what you said. I agree that the euro may likely show signs of stability and even strength in the short-term on the backs of the Germans and BENELUX.

My assessment of a eurozone collapse, however, is a long-term view. And betting in favor of the dollar to take a short position in the euro does not make sense to me in the long-term.

Currency markets are all about capital flows; when risk tolerance is high, institutional wealth pours into emerging market currencies and away from the dollar. When risk tolerance is low, the dollar strengthens and bond yields fall.

When investors begin to lose confidence in the euro, capital will flow away from the eurozone and have to find a home somewhere. At that point, it probably won’t be the dollar. But where?

There are only a handful of instruments in the world that can absorb hundreds of billions of euro in capital flows– and the Japanese Yen is one of them, and my sense is that the Renminbi may be one as well someday.

Long-term contracts for the future values of the Euro/Yen and Euro/Renminbi cross rate are tradable in Chicago, and a variety of overseas exchanges as well.

Furthermore, many online FOREX brokers provide the capability to short the euro against gold and silver (buy XAUEUR and XAGEUR), both of which I expect to perform even better against the euro than the dollar in the longer term.

In the meantime, selling the euro in favor of the dollar in the short-run is too risky for my taste, and I wouldn’t advise it.

Yes, you’ve been lied to.

No matter who you are or where you were born, many “rules” and expectations are fully ingrained into your life experience.   These “rules” and expectations dictate everything in your life.  For example,

• How to become successful and what success looks like
• How to behave in social environments
• How to raise your children
• Who your God is
• Who your authority figures are
• What’s valuable and what isn’t
• much, much more….

For many of us, the great liberation comes when we realize these “rules” and expectations simply do not apply to us.   Others can choose to stay asleep, but we see the light and understand that our life is our own to do with as we please.  Once we cross this bridge, a whole world of opportunity opens up for us.   From there we can go on to craft the life we want as FREE individuals.

Many are familiar with the concept of Lifestyle Design from Tim Ferriss’ popular book The Four Hour Work Week.  We, and many like us, have been practicing Lifestyle Design long before Tim’s book hit the market.  Tim helped to bring the concept mainstream.

Lifestyle Design is about ignoring the status quo in all things.   Question your assumptions and focus your energies toward the things that get you what you want.   Here’s an excerpt from The Four Hour Work Week:

Life doesn’t have to be so damn hard. It really doesn’t. Most people, my past self included, have spent too much time convincing themselves that life has to be hard, a resignation to 9-to-5 drudgery in exchange for (sometimes) relaxing weekends and the occasional keep-it-short-or-get-fired vacation.

People don’t want to be millionaires — they want to experience what they believe only millions can buy. Ski chalets, butlers, and exotic travel often enter the picture. Perhaps rubbing cocoa butter on your belly in a hammock while you listen to waves rhythmically lapping against the deck of your thatched-roof bungalow? Sounds nice.

$1,000,000 in the bank isn’t the fantasy. The fantasy is the lifestyle of complete freedom it supposedly allows. The question is then, How can one achieve the millionaire lifestyle of complete freedom without first having $1,000,000?

Freedom is what it’s all about and freedom begins when you throw off the shackles of “rules” and expectations.   What “rules” are keeping you from doing what you truly want to do today?   What if that “rule” didn’t apply to you?

William “Bud” Post is flat broke.

He has dealt with lawsuits, jail time, bankruptcy, and now lives on food stamps. It seems strange to think that he used to be a multi-millionaire… but it’s true. In 1988 he won $16.2 million from the Pennsylvania lottery (valued at $30 million in today’s increasingly worthless money), and Bud became drunk on his own wealth.

You’ve probably heard similar stories—the struggling, working class lottery hopeful hits it big in the Powerball only to return to the trailer park, broke, within a few years.

In irresponsible hands, wealth can evaporate faster than Nancy Pelosi’s approval ratings… andthe lottery winners like Bud generally make bad decisions.

They become careless and foolish with their wealth, spending enormous sums of money on opulent consumer goods, gambling trips, and nights in the champagne room. Banks line up to provide them with generous lines of credit that they blow on useless toys or handouts to a fawning entourage.

Sound familiar?

It should. Bud is the United States of America.

America hit the lottery after World War II. We had defeated the Germans, nuked the Japanese, and remained the only developed country in the world that had not been devastated by the war. The US instantly became the richest kid on the block, and like Bud, spent the next several years in an alternate universe devoid of rational thinking.

Decades of poor financial decisions were made based on the idea that the money would never run out. LBJ fought a costly war in Vietnam while building the Great Society. George W. Bush fought two wars and told America to go shopping. Barrack Obama thinks he can provide universal healthcare while bailing out every malignant company in America.

The common theme here is the avoidance of difficult choices. When Bud went to buy a new car and saw five that caught his eye, he bought all of them and built a bigger garage. America’s politicians have made a similar series of irrational choices for decades, and now the money is gone… all that remains is America’s winner syndrome.

We’ve been winners for so long we don’t know any other reality. We live in a bubble world where the United States is the biggest, richest, smartest, most powerful country on earth, even though mounting evidence suggests otherwise.

We continue to spend like Bud as if we are wealthy lottery winners, still assuming our God-given right to avoid tough decisions.

Individually, such delusional behavior and separation from reality are symptoms of a severe mental illness. If the collective body of America’s politicians were a psychological patient, he would be locked up as a danger to himself and society.

We call this affliction winner’s syndrome, and it continues to plague the decision making process in the halls of Congress. The only antidote is a healthy dose of reality and rationality. At any point, Bud could have pulled himself out of his downward spiral with a little clear thinking, a little less ‘yes we can,’ and a little more ‘maybe we can’t…’

Clear thinking could still save America. If we take it on the economic chin, allow our businesses to fail, and restructure the economy, the United States will come out of this slump stronger than before. Unfortunately, there are no near-term indications of rationality in Washington… though while the country may be on a slide, clear thinking could still save you—and that’s where we come in.

Clear, rational thinking in today’s world means considering the full range of global opportunities to protect yourself and safeguard your assets. We specialize in these opportunities; we travel the world in search of the best lifestyle choices, financial deals, privacy options, and asset protection strategies, some of which we’ll share with you in this daily letter.