Spotting Risk and Opportunity in Emerging Markets

Ian Bremmer: So if you’re a businessman and you’re thinking about how to incorporate political risk in your investment strategies, what do you need to do? First, diversify. Emerging markets are much more unstable than the developed world. If you were investing in the last 40 years and you wanted to just be in the United States or just be in a couple of European countries that was okay, but if you’re investing primarily in emerging markets the outcomes can be radically disparate and very quickly, which means you’re going to have to take a lot more bets to have the same sort of type of risk profile. That’s important to know. It can be difficult to do.

Another point is that you need to be a first mover because in an environment where there is a lot of political risk folks that come in early actually can help shape the environment, the political environment, the regulatory environment, the joint venture environment to be tailored towards them. Second and third movers won’t necessarily benefit from an environment that has been tailored for a guy that invested before you did. That is much more important in places where legal structures and systems are much more opaque and much more fluid than it is in a country like the United States.

And the other thing I would say is that from a broader investor perspective and not looking at it as a businessman is that we’ve talked about emerging markets as if they are in some ways a united asset class. They’re not. The Jasmine Revolution was never going to happen in China. The average Chinese after 30 years of 10% plus state directed growth is happier with their government than the average American is today with the American government. There is a lot of stability in China over the near to medium term. There isn’t in Tunisia. There isn’t in Libya. There isn’t in Thailand. There isn’t in Sri Lanka. There isn’t in Argentina. There are other countries that haven’t blown up yet where there is very strong political instability and yet people that want to invest in emerging markets their funds, the growth funds in your retirement accounts. They say put my money in emerging markets. Frankly, there is going to be a lot of volatility around something like that. To the extent that you have the ability to pick and choose, you want to.

The global risk expert explains the three crucial things you must know if you plan to invest in the developing world.

Modern society is as unequal as 14th century Europe

As bad as this sounds, a new essay suggests that we live in a surprisingly egalitarian age.

Getty Open Content
Politics & Current Affairs
  • A new essay depicts 700 years of economic inequality in Europe.
  • The only stretch of time more egalitarian than today was the period between 1350 to approximately the year 1700.
  • Data suggest that, without intervention, inequality does not decrease on its own.
Keep reading Show less

You are suffering from “tab overload”

Our love-hate relationship with browser tabs drives all of us crazy. There is a solution.

Photo by Anna Shvets from Pexels
Technology & Innovation
  • A new study suggests that tabs can cause people to be flustered as they try to keep track of every website.
  • The reason is that tabs are unable to properly organize information.
  • The researchers are plugging a browser extension that aims to fix the problem.
Keep reading Show less

U.S. Navy controls inventions that claim to change "fabric of reality"

Inventions with revolutionary potential made by a mysterious aerospace engineer for the U.S. Navy come to light.

Credit: Getty Images
Surprising Science
  • U.S. Navy holds patents for enigmatic inventions by aerospace engineer Dr. Salvatore Pais.
  • Pais came up with technology that can "engineer" reality, devising an ultrafast craft, a fusion reactor, and more.
  • While mostly theoretical at this point, the inventions could transform energy, space, and military sectors.
Keep reading Show less

Epicurus and the atheist's guide to happiness

Seek pleasure and avoid pain. Why make it more complicated?

Credit: Antonio Masiello via Getty Images
Personal Growth
  • The Epicureans were some of the world's first materialists and argued that there is neither God, nor gods, nor spirits, but only atoms and the physical world.
  • They believed that life was about finding pleasure and avoiding pain and that both were achieved by minimizing our desires for things.
  • The Epicurean Four Step Remedy is advice on how we can face the world, achieve happiness, and not worry as much as we do.
Keep reading Show less